Document:

EXHIBIT
10(xvii)

    Crescent
State Bank

    Amended
Salary Continuation Agreement

    

    This Amended
Salary Continuation Agreement (this “Agreement”) is entered into as of
this 10 day of September, 2008 by and between Crescent State Bank, a North
Carolina-chartered commercial bank (the “Bank”), and Ray D. Vaughn, its Senior
Vice President and Chief Operating Officer (the “Executive”).

    

    Whereas,
the Executive has contributed substantially to the Bank’s success and the Bank
desires that the Executive continue in its employ,

    

    Whereas,
to encourage the Executive to remain an employee, the Bank is willing to provide
to the Executive salary continuation benefits payable from the Bank’s general
assets,

    

    Whereas,
none of the conditions or events included in the definition of the term “golden
parachute payment” that is set forth in section 18(k)(4)(A)(ii) of the Federal
Deposit Insurance Act [12 U.S.C. 1828(k)(4)(A)(ii)] and in Federal Deposit
Insurance Corporation Rule 359.1(f)(1)(ii) [12 CFR 359.1(f)(1)(ii)] exists or,
to the best knowledge of the Bank, is contemplated insofar as the Bank is
concerned,

    

    Whereas,
the parties hereto intend that this Agreement shall be considered an unfunded
arrangement maintained primarily to provide supplemental retirement benefits for
the Executive, and to be considered a non-qualified benefit plan for purposes of
the Employee Retirement Income Security Act of 1974, as amended
(“ERISA”).  The Executive is fully advised of the Bank’s financial
status, and

    

    Whereas,
the Bank and the Executive intend that this Agreement shall amend and restate in
its entirety the October 24, 2007 Salary Continuation Agreement between the Bank
and the Executive.

    

    Now
Therefore, in consideration of these premises and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
Executive and the Bank hereby agree as follows.

    

    Article
1

    Definitions

    

    1.1           “Accrual Balance” means the
liability that should be accrued by the Bank under generally accepted accounting
principles (“GAAP”) for the Bank’s obligation to the Executive under this
Agreement, applying Accounting Principles Board Opinion No. 12, as amended by
Financial Accounting Standard No. 106, and the calculation method and discount
rate specified hereinafter.  The Accrual Balance shall be calculated
such that when it is credited with interest each month the Accrual Balance at
Normal Retirement Age (or such later date as the Executive is entitled under
section 2.1 to receive the normal retirement benefits) equals the present value
of the normal retirement benefits.  The discount rate means the rate
used by the Plan Administrator for determining the Accrual
Balance.  In its sole discretion the Plan Administrator may adjust the
discount rate to maintain the rate within reasonable standards according to
GAAP.

    

    1.2           “Beneficiary” means each
designated person, or the estate of the deceased Executive, entitled to
benefits, if any, upon the death of the Executive, determined according to
Article 4.

    

    1.3           “Beneficiary Designation Form”
means the form established from time to time by the Plan Administrator that the
Executive completes, signs, and returns to the Plan Administrator to designate
one or more Beneficiaries.

    

    1.4           “Change in Control” means a
change in control as defined in Internal Revenue Code section 409A and rules,
regulations, and guidance of general application thereunder issued by the
Department of the Treasury, including –

    

    (a)           Change in ownership: a change
in ownership of Crescent Financial Corporation, a North Carolina corporation of
which the Bank is a wholly owned subsidiary, occurs on the date any one person
or group accumulates ownership of Crescent Financial Corporation stock
constituting more than 50% of the total fair market value or total voting power
of Crescent Financial Corporation stock,

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    (b)           Change in effective control:
(x) any one person or
more than one person acting as a group acquires within a 12-month period
ownership of Crescent Financial Corporation stock possessing 30% or more of the
total voting power of Crescent Financial Corporation stock, or (y) a majority of Crescent
Financial Corporation’s board of directors is replaced during any 12-month
period by directors whose appointment or election is not endorsed in advance by
a majority of Crescent Financial Corporation’s board of directors,
or

    

    (c)           Change in ownership of a substantial
portion of assets: a change in the ownership of a substantial portion of
Crescent Financial Corporation’s assets occurs if in a 12-month period any one
person or more than one person acting as a group acquires from Crescent
Financial Corporation assets having a total gross fair market value equal to or
exceeding 40% of the total gross fair market value of all of Crescent Financial
Corporation’s assets immediately before the acquisition or
acquisitions.  For this purpose, gross fair market value means the
value of Crescent Financial Corporation’s assets, or the value of the assets
being disposed of, determined without regard to any liabilities associated with
the assets.

    

    1.5           “Code” means the Internal
Revenue Code of 1986, as amended, and rules, regulations, and guidance of
general application issued thereunder by the Department of the
Treasury.

    

    1.6           “Disability” means, because of
a medically determinable physical or mental impairment that can be expected to
result in death or that can be expected to last for a continuous period of at
least 12 months, (x)
the Executive is unable to engage in any substantial gainful activity, or (y) the Executive is receiving
income replacement benefits for a period of at least three months under an
accident and health plan of the employer.  Medical determination of
disability may be made either by the Social Security Administration or by the
provider of an accident or health plan covering employees of the
Bank.  Upon request of the Plan Administrator, the Executive must
submit proof to the Plan Administrator of the Social Security Administration’s
or provider’s determination.

    

    1.7           “Early Termination” means
Separation from Service before Normal Retirement Age for reasons other than
death, Disability, or Termination with Cause.  Early Termination
excludes a Separation from Service governed by section 2.4.

    

    1.8           “Effective Date” means January
1, 2007.

    

    1.9           “Intentional,” for purposes of
this Agreement, no act or failure to act on the Executive’s part shall be deemed
to have been intentional if it was due primarily to an error in judgment or
negligence.  An act or failure to act on the Executive’s part shall be
considered intentional if it is not in good faith and if it is without a
reasonable belief that the action or failure to act is in the Bank’s best
interests.

    

    1.10         “Normal Retirement Age” means
the Executive’s 65th
birthday.

    

    1.11         “Plan Administrator” or “Administrator” means the plan
administrator described in Article 8.

    

    1.12         “Plan Year” means a
twelve-month period commencing on January 1 and ending on December 31 of each
year.  The initial Plan Year shall commence on the Effective
Date.

    

    1.13         “Separation from Service” shall
mean a separation from service as defined in Code section 409A, including
termination of the Executive’s service as an executive and independent
contractor to the Bank and any member of a controlled group, as defined in Code
section 414, for any reason other than because of a leave of absence approved by
the Bank or the Executive’s death.  For purposes of this Agreement, if
there is a dispute about the employment status of the Executive or the date of
the Executive’s Separation from Service, the Bank shall have the sole and
absolute right to decide the dispute unless a Change in Control shall have
occurred.

    

    1.14     
   “Termination
with Cause” and “Cause” shall have the same
meaning specified in any effective severance or employment agreement existing on
the date hereof or hereafter entered into between the Executive and the
Bank.  If the Executive is not a party to a severance or employment
agreement containing a definition of termination with cause, Termination with
Cause means the Bank terminates the Executive’s employment for any of the
following reasons –

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

    

    (a)       
    the Executive’s gross negligence or gross neglect of
duties or intentional and material failure to perform stated duties after
written notice thereof, or

    

    (b)           disloyalty
or dishonesty by the Executive in the performance of the Executive’s duties, or
a breach of the Executive’s fiduciary duties for personal profit, in any case
whether in the Executive’s capacity as a director or officer, or

    

    (c)     
      intentional wrongful damage by the Executive
to the business or property of the Bank or its affiliates, including without
limitation the reputation of the Bank, which in the judgement of the Bank causes
material harm to the Bank or affiliates, or

    

    (d)           a
willful violation by the Executive of any applicable law or significant policy
of the Bank or an affiliate that, in the Bank’s judgement, results in an adverse
effect on the Bank or the affiliate, regardless of whether the violation leads
to criminal prosecution or conviction.  For purposes of this
Agreement, applicable laws include any statute, rule, regulatory order,
statement of policy, or final cease-and-desist order of any governmental agency
or body having regulatory authority over the Bank, or

    

    (e) 
          the occurrence of
any event that results in the Executive being excluded from coverage, or having
coverage limited for the Executive as compared to other executives of
the  Bank, under the Bank’s blanket bond or other fidelity or
insurance policy covering its directors, officers, or employees, or

    

    (f)      
     the Executive is removed from office or
permanently prohibited from participating in the Bank’s affairs by an order
issued under section 8(e)(4) or section 8(g)(1) of the Federal Deposit Insurance
Act, 12 U.S.C. 1818(e)(4) or (g)(1), or

    

    (g)           conviction
of the Executive for or plea of no contest to a felony or conviction of or plea
of no contest to a misdemeanor involving moral turpitude, or the actual
incarceration of the Executive for 5 consecutive days or more.

    

    1.15 
       “Voluntary Termination with Good
Reason” means a voluntary Separation from Service by the Executive within
24 months after a Change in Control if the following conditions (x) and (y) are satisfied: (x) a voluntary Separation
from Service by the Executive will be considered a Voluntary Termination with
Good Reason if any of the following occur without the Executive’s advance
written consent –

    

    1)        
    a material diminution of the Executive’s base
salary,

    

    2)          
  a material diminution of the Executive’s authority, duties, or
responsibilities,

    

    3)            
a material diminution in the authority, duties, or responsibilities of the
supervisor to whom the Executive is required to report,

    

    4)            
a material diminution in the budget over which the Executive retains
authority,

    

    5)            
a material change in the geographic location at which the Executive must perform
services for the Bank, or

    

    6)            
any other action or inaction that constitutes a material breach by the Bank of
the agreement under which the Executive provides services to the
Bank.

    

    (y)          
 the Executive must give notice to the Bank of the existence of one or more
of the conditions described in clause (x) within 90 days after the
initial existence of the condition, and the Bank shall have 30 days thereafter
to remedy the condition.  In addition, the Executive’s voluntary
termination because of the existence of one or more of the conditions described
in clause (x) must
occur within 24 months after the earlier of the initial existence of the
condition or the date of the Change in Control.

    
      
         

      

      
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    Article
2

    Lifetime
Benefits

    

    2.1           Normal
Retirement.  For Separation from Service on or after the date
the Executive attains Normal Retirement Age, the Bank shall pay to the Executive
the benefit described in this section 2.1 instead of any other benefit under
this Agreement.  However, if the Executive’s Separation from Service
is a Termination with Cause or if this Agreement terminates under Article 5, no
benefits shall be paid.

    

    2.1.1       Amount of
benefit.  The annual benefit under this section 2.1 is
$75,000.

    

    2.1.2      Payment of
benefit.  Beginning with the seventh month after the month in
which the Executive’s Separation from Service occurs, the Bank shall pay the
annual benefit to the Executive in equal monthly installments on the first day
of each month.  The annual benefit shall be paid to the Executive for
the Executive’s lifetime.

    

    2.2           Early
Termination.  If Early Termination occurs on or after the date
the Executive attains age 58, the Bank shall pay to the Executive the benefit
described in this section 2.2 instead of any other benefit under this
Agreement.  If Early Termination occurs before the Executive attains
age 58, no benefit shall be payable.  However, if a Change in Control
occurs before Separation from Service the benefit described in this section 2.2
for Early Termination shall no longer be conditional on the Executive having
first attained age 58 before Early Termination occurs.  Neither the
Bank nor the Executive shall be entitled to elect in the 24-month period after a
Change in Control between the benefit under this section 2.2 versus the benefit
under section 2.4.  If the Executive’s Separation from Service within
24 months after a Change in Control is an involuntary termination without Cause
or a Voluntary Termination with Good Reason, no benefit shall be payable under
this section 2.2 and the Executive shall instead be entitled to the benefit
under section 2.4 or, if the Executive first attained Normal Retirement Age,
section 2.1.  No benefits shall be payable under this Agreement if the
Executive’s Separation from Service is a Termination with Cause or if this
Agreement terminates under Article 5.

    

    2.2.1      Amount of
benefit.  The annual benefit under this section 2.2 is
calculated as the amount that fully amortizes the Accrual Balance existing at
the end of the month immediately before the month in which Separation from
Service occurs, amortizing that Accrual Balance over the period beginning with
the Executive’s Normal Retirement Age and taking into account interest at the
discount rate or rates established by the Plan Administrator.

    

    2.2.2      Payment of
benefit.  Beginning with the later of (x) the seventh month after
the month in which the Executive’s Separation from Service occurs, or (y) the month immediately
after the month in which the Executive attains Normal Retirement Age, the Bank
shall pay the annual benefit to the Executive in equal monthly installments on
the first day of each month.  The annual benefit shall be paid to the
Executive for the Executive’s lifetime.

    

    2.3           Disability.  If
Separation from Service occurs because of Disability before Normal Retirement
Age, the Bank shall pay to the Executive the benefit described in this section
2.3 instead of any other benefit under this Agreement.

    

    2.3.1      Amount of
benefit.  The annual benefit under this section 2.3 is
calculated as the amount that fully amortizes the Accrual Balance existing at
the end of the month immediately before the month in which Separation from
Service occurs, amortizing that Accrual Balance over the period beginning with
the Executive’s Normal Retirement Age and taking into account interest at the
discount rate or rates established by the Plan Administrator.

    

    2.3.2      Payment of
benefit.  Beginning with the later of (x) the seventh month after
the month in which the Executive’s Separation from Service occurs, or (y) the month immediately
after the month in which the Executive attains Normal Retirement Age, the Bank
shall pay the annual benefit to the Executive in equal monthly installments on
the first day of each month.  The annual benefit shall be paid to the
Executive for the Executive’s lifetime.

    
      
         

      

      
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    2.4           Change in
Control.  If the Executive’s Separation from Service is an
involuntary termination without Cause or a Voluntary Termination with Good
Reason, in either case within 24 months after a Change in Control, the Bank
shall pay to the Executive the benefit described in this section 2.4 instead of
any other benefit under this Agreement.  Neither the Bank nor the
Executive shall be entitled to elect in the 24-month period after a Change in
Control between the benefit under this section 2.4 versus the Early Termination
benefit under section 2.2.  If the Executive’s Separation from Service
within 24 months after a Change in Control is an involuntary termination without
Cause or a Voluntary Termination with Good Reason, no benefit shall be payable
under section 2.2 and the Executive shall instead be entitled to the benefit
under this section 2.4.  But if the Executive shall have attained
Normal Retirement Age when Separation from Service within 24 months after a
Change in Control occurs, whether Separation from Service is voluntary or
involuntary for any reason other than Termination with Cause, the Executive
shall be entitled solely to the benefit provided by section 2.1, not this
section 2.4 or section 2.2.  No benefits shall be payable under this
Agreement if the Executive’s Separation from Service is a Termination with Cause
or if this Agreement terminates under Article 5.

    

    2.4.1      Amount of
benefit.  The benefit under this section 2.4 is the greater of
(x) $525,487 or (y) the Accrual Balance when
the Change in Control occurs, in either case without reduction for the time
value of money or other discount.

    

    

    2.4.2      Payment of
benefit.  The Bank shall pay the benefit under this section 2.4
to the Executive in a single lump sum on the first day of the seventh month
after the month in which the Executive’s Separation from Service
occurs.

    

    2.5           Change-in-Control Payout of Normal
Retirement Benefit, Early Termination Benefit, or Disability Benefit Being Paid
to the Executive at the Time of a Change in Control.  If a
Change in Control occurs while the Executive is receiving the Normal Retirement
Age benefit under section 2.1 or is receiving or is entitled at Normal
Retirement Age to receive the Early Termination benefit under section 2.2 or the
Disability benefit under section 2.3, the Bank shall pay the remaining salary
continuation benefits to the Executive in a single lump sum on the later of
(x) the date of the
Change in Control or (y) the first day of the
seventh month after the month in which the Executive’s Separation from Service
occurs.  The lump-sum payment due to the Executive as a result of a
Change in Control shall be an amount equal to the Accrual Balance amount
corresponding to the particular benefit when the Change in Control
occurs.

    

    2.6           Contradiction Between the Agreement
and Schedule A.  If there is a contradiction between this
Agreement and Schedule A attached hereto concerning the amount of a particular
benefit due the Executive under section 2.2, 2.3, or 2.4 hereof, the amount of
the benefit determined under this Agreement shall control.

    

    2.7           Savings Clause Relating to Compliance
with Code Section 409A.  Despite any contrary provision of this
Agreement, if when the Executive’s employment terminates the Executive is a
specified employee, as defined in Code section 409A, and if any payments under
Article 2 of this Agreement will result in additional tax or interest to the
Executive because of section 409A, the Executive shall not be entitled to the
payments under Article 2 until the earliest of (x) the date that is at least
six months after termination of the Executive’s employment for reasons other
than the Executive’s death, (y) the date of the
Executive’s death, or (z) any earlier date that does
not result in additional tax or interest to the Executive under section
409A.  If any provision of this Agreement would subject the Executive
to additional tax or interest under section 409A, the Bank shall reform the
provision.  However, the Bank shall maintain to the maximum extent
practicable the original intent of the applicable provision without subjecting
the Executive to additional tax or interest, and the Bank shall not be required
to incur any additional compensation expense as a result of the reformed
provision.

    

    2.8           One Benefit
Only.  Despite anything to the contrary in this Agreement, the
Executive and Beneficiary are entitled to one benefit only under this Agreement,
which shall be determined by the first event to occur that is dealt with by this
Agreement.  Except as provided in section 2.5 or Article 3, subsequent
occurrence of events dealt with by this Agreement shall not entitle the
Executive or Beneficiary to other or additional benefits under this
Agreement.

    
      
         

      

      
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    Article
3

    Death
Benefits

    

    3.1           Death Before Separation from
Service.  Except as provided in section 5.2, if the Executive
dies before Separation from Service, at the Executive’s death the Executive’s
Beneficiary shall be entitled to (x) an amount in cash equal to
the Accrual Balance existing at the Executive’s death, unless the
Change-in-Control benefit shall have been paid to the Executive under section
2.4 or unless a Change-in-Control payout shall have occurred under section 2.5,
and (y) the benefit
described in the Endorsement Split Dollar Agreement attached to this Agreement
as Addendum A.  No benefit shall be paid under clause (x) if the Change-in-Control
benefit shall have been paid to the Executive under section 2.4 or if a
Change-in-Control payout shall have occurred under section 2.5.  If a
benefit is payable to the Executive’s Beneficiary under clause (x), the benefit shall be paid
in a single lump sum 90 days after the Executive’s death.  However, no
benefits under this Agreement or under the Endorsement Split Dollar Agreement
shall be paid or payable to the Executive or the Executive’s Beneficiary if this
Agreement is terminated under Article 5.

    

    3.2           Death after Separation from
Service.  If the Executive dies after Separation from Service
and if Separation from Service was not a Termination with Cause, at the
Executive’s death the Executive’s Beneficiary shall be entitled to an amount in
cash equal to the Accrual Balance existing at the Executive’s death, unless the
Change-in-Control benefit shall have been paid to the Executive under section
2.4 or unless a Change-in-Control payout shall have occurred under section
2.5.  No benefit shall be paid under this section 3.2 if the
Change-in-Control benefit shall have been paid to the Executive under section
2.4 or if a Change-in-Control payout shall have occurred under section
2.5.  If a benefit is payable to the Executive’s Beneficiary under
this section 3.2, the benefit shall be paid in a single lump sum 90 days after
the Executive’s death.  However, no benefits under this Agreement
shall be paid or payable to the Executive or the Executive’s Beneficiary if this
Agreement is terminated under Article 5.

    

    Article
4

    Beneficiaries

    

    4.1           Beneficiary
Designations.  The Executive shall have the right to designate
at any time a Beneficiary to receive any benefits payable under this Agreement
at the Executive’s death.  The Beneficiary designated under this
Agreement may be the same as or different from the beneficiary designation under
any other benefit plan of the Bank in which the Executive
participates.

    

    4.2           Beneficiary Designation:
Change.  The Executive shall designate a Beneficiary by
completing and signing the Beneficiary Designation Form and delivering it to the
Plan Administrator or its designated agent.  The Executive’s
Beneficiary designation shall be deemed automatically revoked if the Beneficiary
predeceases the Executive or if the Executive names a spouse as Beneficiary and
the marriage is subsequently dissolved.  The Executive shall have the
right to change a Beneficiary by completing, signing, and otherwise complying
with the terms of the Beneficiary Designation Form and the Plan Administrator’s
rules and procedures, as in effect from time to time.  Upon the
acceptance by the Plan Administrator of a new Beneficiary Designation Form, all
Beneficiary designations previously filed shall be cancelled.  The
Plan Administrator shall be entitled to rely on the last Beneficiary Designation
Form filed by the Executive and accepted by the Plan Administrator before the
Executive’s death.

    

    4.3           Acknowledgment.  No
designation or change in designation of a Beneficiary shall be effective until
received, accepted, and acknowledged in writing by the Plan Administrator or its
designated agent.

    

    4.4           No Beneficiary
Designation.  If the Executive dies without a valid beneficiary
designation or if all designated Beneficiaries predecease the Executive the
Executive’s spouse shall be the designated Beneficiary.  If the
Executive has no surviving spouse the benefits shall be made to the personal
representative of the Executive’s estate.

    

    4.5           Facility of
Payment.  If a benefit is payable to a minor, to a person
declared incapacitated, or to a person incapable of handling the disposition of
his or her property, the Bank may pay the benefit to the guardian, legal
representative, or person having the care or custody of the minor, incapacitated
person, or incapable person.  The Bank may require proof of
incapacity, minority, or guardianship as it may deem appropriate before
distribution of the benefit.  Distribution shall completely discharge
the Bank from all liability for the benefit.

    
      
         

      

      
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    Article
5

    General
Limitations

    

    5.1           Termination with
Cause.  Despite any contrary provision of this Agreement, the
Bank shall not pay any benefit under this Agreement and this Agreement shall
terminate if Separation from Service is a Termination with
Cause.  Likewise, the Beneficiary shall be entitled to no benefits
under the Endorsement Split Dollar Agreement attached to this Agreement as
Addendum A and the Endorsement Split Dollar Agreement also shall terminate if
Separation from Service is a Termination with Cause.

    

    5.2           Suicide or
Misstatement.  The Bank shall not pay any benefit under this
Agreement and this Agreement shall terminate if the Executive commits suicide
within two years after the Effective Date or if the Executive makes any material
misstatement of fact on any application or resume provided to the Bank or on any
application for benefits provided by the Bank.  Likewise, the
Beneficiary shall be entitled to no benefits under the Endorsement Split Dollar
Agreement attached to this Agreement as Addendum A and the Endorsement Split
Dollar Agreement also shall terminate if the Executive commits suicide within
two years after the Effective Date or if the Executive makes any material
misstatement of fact on any application or resume provided to the Bank or on any
application for benefits provided by the Bank.

    

    5.3           Removal.  If the
Executive is removed from office or permanently prohibited from participating in
the Bank’s affairs by an order issued under section 8(e)(4) or (g)(1) of the
Federal Deposit Insurance Act, 12 U.S.C. 1818(e)(4) or (g)(1), all obligations
of the Bank under this Agreement shall terminate as of the effective date of the
order and the Endorsement Split Dollar Agreement also shall terminate as of the
effective date of the order.

    

    5.4           Default.  Despite
any contrary provision of this Agreement, if the Bank is in “default” or “in
danger of default,” as those terms are defined in section 3(x) of the Federal
Deposit Insurance Act, 12 U.S.C. 1813(x), all obligations under this Agreement
shall terminate.

    

    5.5           FDIC Open-Bank
Assistance.  All obligations under this Agreement shall
terminate, except to the extent determined that continuation of the contract is
necessary for the continued operation of the Bank, when the Federal Deposit
Insurance Corporation enters into an agreement to provide assistance to or on
behalf of the Bank under the authority contained in Federal Deposit Insurance
Act section 13(c).  12 U.S.C. 1823(c).  Rights of the
parties that have already vested shall not be affected by such action,
however.

    

    Article
6

    Claims
and Review Procedures

    

    6.1           Claims Procedure.  A
person or beneficiary (“claimant”) who has not received benefits under the
Agreement that he or she believes should be paid shall make a claim for such
benefits as follows –

    

    6.1.1      Initiation – written
claim.  The claimant initiates a claim by submitting to the
Administrator a written claim for the benefits.  If the claim relates
to the contents of a notice received by the claimant, the claim must be made
within 60 days after the notice was received by the claimant.  All
other claims must be made within 180 days after the date of the event that
caused the claim to arise.  The claim must state with particularity
the determination desired by the claimant.

    

    6.1.2      Timing of Bank
response.  The Bank shall respond to the claimant within 90
days after receiving the claim.  If the Bank determines that special
circumstances require additional time for processing the claim, the Bank may
extend the response period by an additional 90 days by notifying the claimant in
writing before the end of the initial 90-day period that an additional period is
required.  The notice of extension must state the special
circumstances and the date by which the Bank expects to render its
decision.

    

    6.1.3      Notice of
decision.  If the Bank denies part or all of the claim, the
Bank shall notify the claimant in writing of the denial.  The Bank
shall write the notification in a manner calculated to be understood by the
claimant.  The notification shall set forth –

    
      
         

      

      
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                6.1.3.1

              	
                the
      specific reasons for the
denial,

              

      

    

    
      
        	
              	
                6.1.3.2

              	
                a
      reference to the specific provisions of the Agreement on which the denial
      is based,

              

      

    

    
      
        	
              	
                6.1.3.3

              	
                a
      description of any additional information or material necessary for the
      claimant to perfect the claim and an explanation of why it is
      needed,

              

      

    

    
      
        	
              	
                6.1.3.4

              	
                an
      explanation of the Agreement’s review procedures and the time limits
      applicable to such procedures,
and

              

      

    

    
      
        	
              	
                6.1.3.5

              	
                a
      statement of the claimant’s right to bring a civil action under ERISA
      section 502(a) following an adverse benefit determination on
      review.

              

      

    

    

    6.2           Review
Procedure.  If the Bank denies part or all of the claim, the
claimant shall have the opportunity for a full and fair review by the Bank of
the denial, as follows –

    6.2.1        Initiation – written
request.  To initiate the review, within 60 days after
receiving the Bank’s notice of denial the claimant must file with the Bank a
written request for review.

    

    6.2.2      Additional submissions – information
access.  The claimant shall then have the opportunity to submit
written comments, documents, records, and other information relating to the
claim.  Upon request and free of charge, the Bank shall also provide
the claimant reasonable access to and copies of all documents, records, and
other information relevant (as defined in applicable ERISA regulations) to the
claimant’s claim for benefits.

    

    6.2.3      Considerations on
review.  In considering the review, the Bank shall take into
account all materials and information the claimant submits relating to the
claim, without regard to whether the information was submitted or considered in
the initial benefit determination.

    

    6.2.4      Timing of Bank
response.  The Bank shall respond in writing to the claimant
within 60 days after receiving the request for review.  If the Bank
determines that special circumstances require additional time for processing the
claim, the Bank may extend the response period by an additional 60 days by
notifying the claimant in writing before the end of the initial 60-day period
that an additional period is required.  The notice of extension must
state the special circumstances and the date by which the Bank expects to render
its decision.

    

    6.2.5      Notice of
decision.  The Bank shall notify the claimant in writing of its
decision on review.  The Bank shall write the notification in a manner
calculated to be understood by the claimant.  The notification shall
set forth –

    

    
      
        	
              	
                6.2.5.1

              	
                the
      specific reason for the
denial,

              

      

    

    
      
        	
              	
                6.2.5.2

              	
                a
      reference to the specific provisions of the Agreement on which the denial
      is based,

              

      

    

    
      
        	
              	
                6.2.5.3

              	
                a
      statement that the claimant is entitled to receive, upon request and free
      of charge, reasonable access to and copies of all documents, records, and
      other information relevant (as defined in applicable ERISA regulations) to
      the claimant’s claim for benefits,
and

              

      

    

    
      
        	
              	
                6.2.5.4

              	
                a
      statement of the claimant’s right to bring a civil action under ERISA
      section 502(a).

              

      

    

    

    Article
7

    Miscellaneous

    

    7.1           Amendments and
Termination.  Subject to section 7.14, this Agreement may be
amended solely by a written agreement signed by the Bank and by the Executive
and, except for termination occurring under Article 5, this Agreement may be
terminated solely by a written agreement signed by the Bank and by the
Executive.

    

    7.2           Binding
Effect.  This Agreement shall bind the Executive, the Bank, and
their beneficiaries, survivors, executors, successors, administrators, and
transferees.

    

    7.3           No Guarantee of
Employment.  This Agreement is not an employment policy or
contract.  It does not give the Executive the right to remain an
employee of the Bank nor does it interfere with the Bank’s right to discharge
the Executive.  It also does not require the Executive to remain an
employee or interfere with the Executive’s right to terminate employment at any
time.

    

    7.4           Non-Transferability.  Benefits
under this Agreement may not be sold, transferred, assigned, pledged, attached,
or encumbered.

    
      
         

      

      
        8

        
          

        

      

      
         

      

    

    

    7.5           Successors; Binding
Agreement.  By an assumption agreement in form and substance
satisfactory to the Executive, the Bank shall require any successor (whether
direct or indirect, by purchase, merger, consolidation, or otherwise) to all or
substantially all of the business or assets of the Bank to expressly assume and
agree to perform this Agreement in the same manner and to the same extent the
Bank would be required to perform this Agreement had no succession
occurred.

    

    7.6           Tax
Withholding.  The Bank shall withhold any taxes that are
required to be withheld from the benefits provided under this
Agreement.

    

    7.7           Applicable
Law.  This Agreement and all rights hereunder shall be governed
by the laws of the State of North Carolina, except to the extent preempted by
the laws of the United States of America.

    

    7.8           Unfunded
Arrangement.  The Executive and Beneficiary are general
unsecured creditors of the Bank for the payment of benefits under this
Agreement.  The benefits represent the mere promise by the Bank to pay
benefits.  Rights to benefits are not subject to anticipation,
alienation, sale, transfer, assignment, pledge, encumbrance, attachment, or
garnishment by creditors.  Any insurance on the Executive’s life is a
general asset of the Bank to which the Executive and Beneficiary have no
preferred or secured claim.

    

    7.9           Entire
Agreement.  This Agreement and the Endorsement Split Dollar
Agreement attached as Addendum A constitute the entire agreement between the
Bank and the Executive concerning the subject matter.  No rights are
granted to the Executive under this Agreement other than those specifically set
forth.  This Agreement amends and restates in its entirety the October
24, 2007 Salary Continuation Agreement.

    

    7.10           Severability.  If
any provision of this Agreement is held invalid, such invalidity shall not
affect any other provision of this Agreement not held invalid, and each such
other provision shall continue in full force and effect to the full extent
consistent with law.  If any provision of this Agreement is held
invalid in part, such invalidity shall not affect the remainder of the provision
not held invalid, and the remainder of such provision together with all other
provisions of this Agreement shall continue in full force and effect to the full
extent consistent with law.

    

    7.11           Headings.  Caption
headings and subheadings herein are included solely for convenience of reference
and shall not affect the meaning or interpretation of any provision of this
Agreement.

    

    7.12           Notices.  All
notices, requests, demands, and other communications hereunder shall be in
writing and shall be deemed to have been duly given if delivered by hand or
mailed, certified or registered mail, return receipt requested, with postage
prepaid, to the following addresses or to such other address as either party may
designate by like notice.  If to the Bank, notice shall be given to
the board of directors, Crescent State Bank, 1005 High House Road, P.O. Box
5809, Cary, North Carolina  27513, or to such other or additional
person or persons as the Bank shall designate to the Executive in
writing.  If to the Executive, notice shall be given to the Executive
at the Executive’s address appearing on the Bank’s records or to such other or
additional person or persons as the Executive shall designate to the Bank in
writing.

    
      
         

      

      
        9

        
          

        

      

      
         

      

    

    7.13           Payment of Legal
Fees.  The Bank is aware that after a Change in Control
management of the Bank could cause or attempt to cause the Bank to refuse to
comply with its obligations under this Agreement, or could institute or cause or
attempt to cause the Bank to institute litigation seeking to have this Agreement
declared unenforceable, or could take or attempt to take other action to deny
Executive the benefits intended under this Agreement.  In these
circumstances the purpose of this Agreement would be frustrated.  The
Bank desires that the Executive not be required to incur the expenses associated
with the enforcement of rights under this Agreement, whether by litigation or
other legal action, because the cost and expense thereof would substantially
detract from the benefits intended to be granted to the Executive
hereunder.  The Bank desires that the Executive not be forced to
negotiate settlement of rights under this Agreement under threat of incurring
expenses.  Accordingly, if after a Change in Control occurs it appears
to the Executive that (x) the Bank has failed to
comply with any of its obligations under this Agreement, or (y) the Bank or any other
person has taken any action to declare this Agreement void or unenforceable, or
instituted any litigation or other legal action designed to deny, diminish, or
to recover from the Executive the benefits intended to be provided to the
Executive hereunder, the Bank irrevocably authorizes the Executive from time to
time to retain counsel of the Executive’s choice, at the Bank’s expense as
provided in this section 7.13, to represent the Executive in the initiation or
defense of any litigation or other legal action, whether by or against the Bank
or any director, officer, stockholder, or other person affiliated with the Bank,
in any jurisdiction.  Despite any existing or previous attorney-client
relationship between the Bank and any counsel chosen by the Executive under this
section 7.13, the Bank irrevocably consents to the Executive entering into an
attorney-client relationship with that counsel, and the Bank and the Executive
agree that a confidential relationship shall exist between the Executive and
that counsel.  The fees and expenses of counsel selected from time to
time by the Executive as provided in this section shall be paid or reimbursed to
the Executive by the Bank on a regular, periodic basis upon presentation by the
Executive of a statement or statements prepared by counsel in accordance with
counsel’s customary practices, up to a maximum aggregate amount of $50,000,
whether suit be brought or not, and whether or not incurred in trial,
bankruptcy, or appellate proceedings.  The Bank’s obligation to pay
the Executive’s legal fees provided by this section 7.13 operates separately
from and in addition to any legal fee reimbursement obligation the Bank may have
with the Executive under any separate employment, severance, or other agreement
between the Executive and the Bank.  Despite anything in this section
7.13 to the contrary however, the Bank shall not be required to pay or reimburse
the Executive’s legal expenses if doing so would violate section 18(k) of the
Federal Deposit Insurance Act [12 U.S.C. 1828(k)] and Rule 359.3 of the Federal
Deposit Insurance Corporation [12 CFR 359.3].

    

    7.14           Termination or Modification of
Agreement Because of Changes in Law, Rules or Regulations.  The
Bank is entering into this Agreement on the assumption that certain existing tax
laws, rules, and regulations will continue in effect in their current
form.  If that assumption materially changes and the change has a
material detrimental effect on this Agreement, then the Bank reserves the right
to terminate or modify this Agreement accordingly, subject to the written
consent of the Executive, which shall not be unreasonably
withheld.  This section 7.14 shall become null and void effective
immediately if a Change in Control occurs.

    

    Article
8

    Administration
of Agreement

    

    8.1           Plan Administrator
Duties.  This Agreement shall be administered by a Plan
Administrator consisting of the board or such committee or person(s) as the
board shall appoint.  The Executive may not be a member of the Plan
Administrator.  The Plan Administrator shall have the discretion and
authority to (x) make,
amend, interpret, and enforce all appropriate rules and regulations for the
administration of this Agreement and (y) decide or resolve any and
all questions that may arise, including interpretations of this
Agreement.

    

    8.2           Agents.  In the
administration of this Agreement the Plan Administrator may employ agents and
delegate to them such administrative duties as it sees fit (including acting
through a duly appointed representative) and may from time to time consult with
counsel, who may be counsel to the Bank.

    

    8.3           Binding Effect of
Decisions.  The decision or action of the Plan Administrator
concerning any question arising out of the administration, interpretation, and
application of the Agreement and the rules and regulations promulgated hereunder
shall be final and conclusive and binding upon all persons having any interest
in the Agreement.  No Executive or Beneficiary shall be deemed to have
any right, vested or nonvested, regarding the continued use of any previously
adopted assumptions, including but not limited to the discount rate and
calculation method described in section 1.1.

    

    8.4           Indemnity of Plan
Administrator.  The Bank shall indemnify and hold harmless the
members of the Plan Administrator against any and all claims, losses, damages,
expenses, or liabilities arising from any action or failure to act with respect
to this Agreement, except in the case of willful misconduct by the Plan
Administrator or any of its members.

    

    8.5           Bank
Information.  To enable the Plan Administrator to perform its
functions, the Bank shall supply full and timely information to the Plan
Administrator on all matters relating to the date and circumstances of the
retirement, Disability, death, or Separation from Service of the Executive and
such other pertinent information as the Plan Administrator may reasonably
require.

    

    In Witness
Whereof, the Executive and a duly authorized officer of the Bank have
executed this Amended Salary Continuation Agreement as of the date first written
above.

    
      
         

      

      
        10

        
          

        

      

      
         

      

    

    

    
      
        
          
            
              
                
                  
                    
                      
                        	
                                Executive:

                              	 
      	
                                Bank:

                              
	 
      	 
      	
                                Crescent
      State Bank

                              
	 
      	 
      	 
      	 
	
                                /s/ Ray D. Vaughn

                              	 
      	
                                By:

                              	 
	
                                Ray
      D. Vaughn

                              	 
      	 
      	 
	 
      	 
      	
                                Its:

                              	 
	 
      	 
      	 
      	 
	 
      	 
      	
                                And By:

                              	 
	 
      	 
      	 
      	 
	 
      	
                                  

                              	
                                Its:

                              	 

                      

                    

                  

                

              

            

          

        

      

    

    
      
         

      

      
        11

        
          

        

      

      
         

      

    

    Beneficiary
Designation

    Crescent
State Bank

    Amended
Salary Continuation Agreement

    

    I, Ray D. Vaughn, designate the
following as beneficiary of any death benefits under this Amended Salary
Continuation Agreement –

    

    Primary:
________________________________________________________________

    

                                                                                                                                                               .

    

    Contingent:
_____________________________________________________________

    

                                                                                                                                                               .

    

    Note:  To name a trust as
beneficiary, please provide the name of the trustee(s) and the exact name and
date of the trust agreement.

    

    I understand that I may change these
beneficiary designations by filing a new written designation with the
Bank.  I further understand that the designations will be
automatically revoked if the beneficiary predeceases me, or if I have named my
spouse as beneficiary and our marriage is subsequently dissolved.

    

    
      
        
          	
                  Signature:

                	
                  /s/ Ray D. Vaughn

                
	 
      	
                  Ray
      D. Vaughn

                

        

      

    

    

    
      Date:
_______________, 200__

    

    

    Accepted by the Bank this ___ day of
_______________, 200__

    

    
      
        
          
            
              
                
                  	
                          By:

                        	 
      
	 
      	 
      
	
                          Print
      Name:

                        	 
      
	 
      	 
      
	
                          Title:

                        	
                           

                        

                

              

            

          

        

      

    

    
      
         

      

      
        12

        
          

        

      

      
         

      

    

    Schedule
A

    Crescent
State Bank

    Amended
Salary Continuation Agreement

    

    Ray
D. Vaughn

     

    
      
        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              
                                
                                  
                                    
                                      
                                        
                                          
                                            	
                                                    Plan

                                                    Year

                                                  	 	
                                                    Plan Year

                                                    ending

                                                    December

                                                    31,

                                                  	 	
                                                    Age

                                                    at

                                                    Plan

                                                    Year

                                                    end

                                                  	 	 	
                                                    Accrual

                                                    Balance @

                                                    6.25% (1)

                                                  	 	 	
                                                    Early

                                                    Termination

                                                    annual

                                                    benefit

                                                    payable at

                                                    Normal

                                                    Retirement

                                                    Age (2)

                                                  	 	 	
                                                    Disability

                                                    annual

                                                    benefit

                                                    payable at

                                                    Normal

                                                    Retirement

                                                    Age (2)

                                                  	 	 	
                                                    Change-in-

                                                    Control

                                                    benefit

                                                    payable in a

                                                    lump sum

                                                    (3)

                                                  	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                                                    2

                                                  	 	
                                                    2008

                                                  	 	 	
                                                    56

                                                  	 	 	$	92,630	 	 	 	 	 	$	14,894	 	 	$	525,487	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                                                    3

                                                  	 	
                                                    2009

                                                  	 	 	
                                                    57

                                                  	 	 	$	157,482	 	 	 	 	 	$	23,792	 	 	$	525,487	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                                                    4

                                                  	 	
                                                    2010

                                                  	 	 	
                                                    58

                                                  	 	 	$	226,506	 	 	$	32,152	
                                                    (4)

                                                  	 	$	32,152	 	 	$	525,487	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                                                    5

                                                  	 	
                                                    2011

                                                  	 	 	
                                                    59

                                                  	 	 	$	299,969	 	 	$	40,006	 	 	$	40,006	 	 	$	525,487	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                                                    6

                                                  	 	
                                                    2012

                                                  	 	 	
                                                    60

                                                  	 	 	$	378,158	 	 	$	47,386	 	 	$	47,386	 	 	$	525,487	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                                                    7

                                                  	 	
                                                    2013

                                                  	 	 	
                                                    61

                                                  	 	 	$	461,375	 	 	$	54,320	 	 	$	54,320	 	 	$	525,487	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                                                    8

                                                  	 	
                                                    2014

                                                  	 	 	
                                                    62

                                                  	 	 	$	549,946	 	 	$	60,835	 	 	$	60,835	 	 	$	549,946	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                                                    9

                                                  	 	
                                                    2015

                                                  	 	 	
                                                    63

                                                  	 	 	$	644,213	 	 	$	66,956	 	 	$	66,956	 	 	$	644,213	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                                                    10

                                                  	 	
                                                    2016

                                                  	 	 	
                                                    64

                                                  	 	 	$	744,544	 	 	$	72,707	 	 	$	72,707	 	 	$	744,544	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
      	 	
                                                    May
      2017

                                                  	 	 	
                                                    65

                                                  	 	 	$	788,230	
                                                    (5)

                                                  	 	$	75,000	 	 	$	75,000	 	 	$	788,230	 

                                          

                                        

                                      

                                    

                                  

                                

                              

                            

                          

                        

                      

                    

                  

                

              

            

          

        

      

    

    (1)           Calculations
are approximations.  Benefit calculations are based on prior year-end
accrual balances for illustrative purposes.  The accrual balance
reflects payment at the beginning of each month during
retirement.  For purposes of this illustration, the accrual balance
figures do not take account of the six-month delay under Internal Revenue Code
section 409A and section 2.1 of the Amended Salary Continuation Agreement
between Separation from Service and the date when benefits under section 2.1
commence.

    (2)           The
Early Termination and Disability benefits are calculated as the annual amount
that fully amortizes the Accrual Balance existing at the end of the month
immediately before the month in which Separation from Service occurs, amortizing
that Accrual Balance over the period beginning with the Executive’s Normal
Retirement Age and taking into account interest at the discount rate or rates
established by the Plan Administrator.  Using a standard discount
rate, Early Termination and Disability benefits are shown for illustrative
purposes only.  The Early Termination and Disability benefits shown
assume the Executive’s Separation from Service occurs more than six months
before the Executive’s Normal Retirement Age and that the Early Termination
benefit and the Disability benefit therefore become payable beginning in the
month after the Executive attains Normal Retirement Age.

    (3)           The
change-in-control benefit under section 2.4 of the Second Amended Salary
Continuation Agreement is the greater of (x) $525,487 or (y) the accrual balance when
the Change in Control occurs, in either case without reduction for the time
value of money or other discount.

    (4)           The
Executive becomes vested in the Early Termination benefit at age 58 on May 25,
2010.

    (5)           Projected
retirement occurs in May of 2017, with the first monthly normal retirement
benefit payment on the first day of the seventh month after retirement, or
December 1, 2017.  For purposes of this illustration, the accrual
balance figure as of May 2017 does not take account of the six-month delay under
Internal Revenue Code section 409A and section 2.1 of the Amended Salary
Continuation Agreement between Separation from Service and the date when
benefits under section 2.1 commence.

    
      
         

      

      
        13

        
          

        

      

      
         

      

    

    

    If there is a contradiction between the
terms of the Agreement and Schedule A concerning the amount of the benefit due
the Executive under sections 2.2, 2.3, or 2.4 of the Agreement, the amount of
the benefit determined under the Agreement shall control.

    
      
         

      

      
        14EXHIBIT 10
(xix)

    Employment
Agreement

    

    This Employment
Agreement (this “Agreement”)
is entered into effective as of this 10 day of September, 2008 by and among Ray
D. Vaughn (the “Executive”),
Crescent Financial Corporation, a North Carolina corporation (the “Corporation”),
and Crescent State Bank, a North Carolina-chartered bank and wholly owned
subsidiary of Crescent Financial Corporation (the “Bank”).  The
Corporation and the Bank are hereinafter sometimes referred to together or
individually as the “Employer.”

    

    Whereas,
the Executive is the Senior Vice President of the Bank, possessing unique
skills, knowledge, and experience relating to the business of banking, and the
Executive has made and is expected to continue to make major contributions to
the profitability, growth, and financial strength of the Corporation and
affiliates,

    

    Whereas,
the Executive and the Employer intend that this Agreement shall supersede and
replace in its entirety the October 24, 2007 Employment Agreement between the
Executive and the Employer, and

    

    Whereas,
none of the conditions or events included in the definition of the term “golden
parachute payment” that is set forth in Section 18(k)(4)(A)(ii) of the Federal
Deposit Insurance Act [12 U.S.C. 1828(k)(4)(A)(ii)] and in Federal Deposit
Insurance Corporation Rule 359.1(f)(1)(ii) [12 CFR 359.1(f)(1)(ii)] exists or,
to the best knowledge of the Employer, is contemplated insofar as the Employer
or any affiliates are concerned.

    

    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 as
follows.

     

    Article
1

    Employment

    

    1.1           Employment.  The
Employer hereby employs the Executive to serve as Senior Vice President
according to the terms and conditions of this Agreement and for the period
stated in section 1.3.  The Executive hereby accepts employment
according to the terms and conditions of this Agreement and for the period
stated in section 1.3.

    

    1.2           Duties.  The
Executive shall serve under the direction of the Employer’s President and Chief
Executive Officer and in accordance with the Employer’s Articles of
Incorporation and Bylaws, as the Articles of Incorporation and Bylaws may be
amended or restated from time to time.  The Executive shall report
directly to the President and Chief Executive Officer.  The Executive
shall serve the Employer faithfully, diligently, competently, and to the best of
the Executive’s ability.  The Executive shall exclusively devote full
time, energy, and attention to the business of the Employer and to the promotion
of the Employer’s interests throughout the term of this
Agreement.  Without the written consent of the board of directors of
each of the Corporation and the Bank, the Executive shall not render services to
or for any person, firm, corporation, or other entity or organization in
exchange for compensation, regardless of the form in which such compensation is
paid and regardless of whether it is paid directly or indirectly to the
Executive.  Nothing in this Article 2 shall prevent the Executive from
managing personal investments and affairs, provided that doing so does not
interfere with the proper performance of the Executive’s duties and
responsibilities under this Agreement.

    

    1.3           Term of
Employment.  The initial term of this Agreement shall be for a
period of three years commencing on the effective date of this
Agreement.  On the first anniversary of the effective date of this
Agreement and on each anniversary thereafter, this Agreement shall be extended
automatically for one additional year unless the Employer’s board of directors
determines that the term shall not be extended.  If the board of
directors determines not to extend the term, it shall promptly notify the
Executive in writing, and this Agreement shall nevertheless remain in force
until its term expires.  The board’s decision not to extend the term
of this Agreement shall not – by itself – give the Executive any rights under
this Agreement to claim an adverse change in position, compensation, or
circumstances or otherwise to claim entitlement to severance benefits under
Articles 4 or 5.  References herein to the term of this Agreement mean
the initial term, as the same may be extended.  Unless sooner
terminated, the Executive’s employment and the term of this Agreement shall
terminate when the Executive attains age 65.

    

    
      
        
        

      

      
         

        
          

        

      

      
        
        

      

    

    

    Article
2

    Compensation
and Benefits

    

    2.1           Base Salary.  In
consideration of the Executive’s performance of the obligations under this
Agreement, the Employer shall pay or cause to be paid to the Executive a salary
at the annual rate of not less than $184,000, payable in semi-monthly
installments.  No less frequently than annually the Executive’s salary
shall be reviewed by the Compensation Committee of the Employer’s board of
directors or by the board committee with jurisdiction over executive
compensation.  The Executive’s salary shall be increased no more
frequently than annually to account for cost of living increases.  The
Executive’s salary also may be increased beyond the amount necessary to account
for cost of living increases at the discretion of the committee having
jurisdiction over executive compensation.  However, the Executive’s
salary shall not be reduced.  The Executive’s salary, as the same may
be increased from time to time, is referred to in this Agreement as the “Base
Salary.”

    

    2.2           Benefit Plans and
Perquisites.  The Executive shall be entitled throughout the
term of this Agreement to participate in any and all officer or employee
compensation, bonus, incentive, and benefit plans in effect from time to time,
including without limitation stock option and other stock-based compensation,
incentive, bonus, or purchase plans existing on the date of this Agreement or
adopted during the term of this Agreement and plans providing pension, medical,
dental, disability, and group life benefits, including the Employer’s 401(k)
plan, and to receive any and all other fringe benefits provided from time to
time, provided that the Executive satisfies the eligibility requirements for any
such plans or benefits.  Without limiting the generality of the
foregoing, the Executive shall be entitled to reimbursement for all reasonable
business expenses incurred performing the Executive’s obligations under this
Agreement, including but not limited to all reasonable business travel and
entertainment expenses incurred while acting at the request of or in the service
of the Employer and reasonable expenses for attendance at annual and other
periodic meetings of trade associations.

    

    2.3           Vacation.  The
Executive shall be entitled to paid annual vacation and sick leave in accordance
with the policies established from time to time by the Employer, but in no event
fewer than four weeks of vacation per year.  The Executive shall
schedule at least five consecutive days of vacation per year.  The
timing of vacations shall be scheduled in a reasonable manner by the
Executive.  The Executive shall not be entitled to any additional
compensation for failure to use allotted vacation or sick leave nor shall the
Executive be entitled to accumulate unused sick leave from one year to the next,
unless authorized by the Employer’s board of directors to do so.

    

    2.4           Indemnification and
Insurance.  (a)  Indemnification.  The
Employer shall indemnify the Executive or cause the Executive to be indemnified
for the Executive’s activities as a director, officer, employee, or agent of the
Employer or as a person who is serving or has served at the request of the
Employer (a “representative”)
as a director, officer, employee, agent, or trustee of an affiliated
corporation, joint venture, trust or other enterprise, domestic or foreign, in
which the Employer has a direct or indirect ownership interest against expenses
(including without limitation attorneys’ fees, judgments, fines, and amounts
paid in settlement) actually and reasonably incurred (“Expenses”)
in connection with any claim against the Executive that is the subject of any
threatened, pending, or completed action, suit, or other type of proceeding,
whether civil, criminal, administrative, investigative, or otherwise and whether
formal or informal (a “Proceeding”),
to which the Executive was, is, or is threatened to be made a party by reason of
the Executive being or having been such a director, officer, employee, agent, or
representative.

    

    The indemnification provided herein
shall not be exclusive of any other indemnification or right to which the
Executive may be entitled and shall continue after the Executive has ceased to
occupy a position as an officer, director, employee, agent, or representative
with respect to Proceedings relating to or arising out of the Executive’s acts
or omissions during the Executive’s service in such position.  The
indemnification provided to the Executive under this Agreement for the
Executive’s service as a representative shall be payable if and only if and only
to the extent that reimbursement to the Executive by the affiliated entity with
which the Executive has served as a representative, whether pursuant to
agreement, applicable law, articles of incorporation or association, by-laws or
regulations of the entity, or insurance maintained by such affiliated entity, is
insufficient to compensate the Executive for Expenses actually incurred and
otherwise payable by the Employer under this Agreement.  Any payments
in fact made to or on behalf of the Executive directly or indirectly by the
affiliated entity with which the Executive served as a representative shall
reduce the obligation of the Employer hereunder.

    

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

       

    

    (b)           Exclusions.  Despite
anything herein to the contrary, however, nothing in this section 2.4 requires
indemnification, reimbursement, or payment by the Employer, and the Executive
shall not be entitled to demand indemnification, reimbursement, or payment
–

    

    1)          if
and to the extent indemnification, reimbursement, or payment constitutes a
“prohibited indemnification payment” within the meaning of Federal Deposit
Insurance Corporation Rule 359.1(l)(1) [12 CFR 359.1(l)(1)], or

    

    2)          for
any claim or any part thereof for which the Executive shall have been determined
by a court of competent jurisdiction, from which no appeal is or can be taken,
by clear and convincing evidence, to have acted with deliberate intent to cause
injury to the Employer or with reckless disregard for the Employer’s best
interests, or

    

    3)          for
any claim or any part thereof arising under section 16(b) of the Securities
Exchange Act of 1934 as a result of which the Executive is required to pay any
penalty, fine, settlement, or judgment, or

    

    4)          for
any obligation of the Executive based upon or attributable to the Executive
gaining in fact any personal gain, profit, or advantage to which the Executive
was not entitled, or

    

    5)          any
proceeding initiated by the Executive without the consent or authorization of
the Employer’s board of directors, but this exclusion shall not apply to any
claims brought by the Executive (x) to enforce the Executive’s
rights under this Agreement, or (y) in any Proceeding
initiated by another person or entity whether or not such claims were brought by
the Executive against a person or entity who was otherwise a party to such
proceeding.

    

    (c)           Insurance.  The
Employer shall maintain or cause to be maintained liability insurance covering
the Executive throughout the term of this Agreement.

    

    Article
3

    Termination

    

    3.1           Termination Because of Death or
Disability.  (a)  Death.  The
Executive’s employment shall terminate automatically on the date of the
Executive’s death.  If the Executive’s employment terminates because
of the Executive’s death, the Executive’s estate shall receive any sums due the
Executive as Base Salary and reimbursement of expenses through the end of the
month in which death occurred, plus any bonus earned or accrued through the date
of death, including any unvested amounts awarded for previous
years.  If the Executive dies in active service to the Employer, for
12 months after the Executive’s death the Employer shall provide without cost to
the Executive’s family continuing health care coverage under COBRA substantially
identical to that provided for the Executive before death.

    

    (b) Disability. By delivery of
written notice 30 days in advance to the Executive, the Employer may terminate
the Executive’s employment if the Executive is disabled. For purposes of this
Agreement the Executive shall be deemed to be “disabled”
if an independent physician selected by the Employer and reasonably acceptable
to the Executive or the Executive’s legal representative determines that,
because of illness or accident, the Executive is unable to perform the
Executive’s duties and will be unable to perform the Executive’s duties for a
period of 90 consecutive days. The Executive shall not be deemed to be disabled,
however, if the Executive returns to work on a full-time basis within 30 days
after the Employer gives notice of termination because of disability. If the
Executive is terminated by either of the Corporation or the Bank because of
disability, the Executive’s employment with the other shall also terminate at
the same time. During the period of incapacity leading up to termination of the
Executive’s employment under this provision, the Employer shall continue to pay
the full Base Salary at the rate then in effect and all perquisites and other
benefits (other than bonus) until the Executive becomes eligible for benefits
under any disability plan or insurance program maintained by the Employer,
provided that the amount of the Employer’s payments under this section 3.1(b) to
the Executive shall be reduced by the sum of the amounts, if any, payable to the
Executive for the same period under any disability benefit or pension plan
covering the Executive. Furthermore, the Executive shall receive any bonus
earned or accrued through the date of incapacity, including any unvested amounts
awarded for previous years.

    

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

       

    

    3.2           Involuntary Termination with
Cause.  The Employer may terminate the Executive’s employment
with Cause.  If the Executive’s employment is terminated with Cause by
either of the Corporation or the Bank, the Executive’s employment with the other
shall also terminate at the same time.  If the Executive’s employment
terminates with Cause, the Executive shall receive the Base Salary through the
date on which termination becomes effective and reimbursement of expenses to
which the Executive is entitled when termination becomes
effective.  For purposes of this Agreement “Cause”
means any of the following occur –

    

    (a)           an
act of fraud, embezzlement, or theft by the Executive in the course of
employment or misconduct involving dishonesty, or

    

    (b)           intentional
violation of any law or significant policy of the Employer or an affiliate,
which in the Employer’s sole judgement causes material harm to the Employer or
affiliate, regardless of whether the violation leads to criminal prosecution or
conviction.  For purposes of this Agreement applicable laws include
any statute, rule, regulatory order, statement of policy, or final
cease-and-desist order of any governmental agency or body having regulatory
authority over the Employer.  For purposes of this Agreement no act or
failure to act on the Executive’s part shall be deemed to have been intentional
if it was due primarily to an error in judgment or negligence.  An act
or failure to act on the Executive’s part shall be considered intentional if it
is not in good faith and if it is without a reasonable belief that the action or
failure to act is in the Employer’s best interests, or

    

    (c)           the
Executive’s gross negligence or gross neglect in the performance of duties,
or

    

    (d)           intentional
wrongful damage by the Executive to the business or property of the Employer or
its affiliates, including without limitation the reputation of the Employer,
which in the Employer’s sole judgment causes material harm to the Employer,
or

    

    (e)           a
breach by the Executive of fiduciary duties as an officer or director of the
Employer, or misconduct involving dishonesty, or

    

    (f)           a
breach by the Executive of this Agreement that in the sole judgment of the
Employer is a material breach, which breach is not corrected by the Executive
within ten days after receiving written notice of the breach, or

    

    (g)           removal
of the Executive from office or permanent prohibition of the Executive from
participating in the Employer’s affairs by an order issued under section 8(e)(4)
or (g)(1) of the Federal Deposit Insurance Act, 12 U.S.C. 1818(e)(4) or (g)(1),
or

    

    (h)           the
occurrence of any event that results in the Executive being excluded from
coverage, or having coverage limited for the Executive as compared to other
executives of the Employer, under the Employer’s blanket bond or other fidelity
or insurance policy covering its directors, officers, or employees,
or

    

    (i)           conviction
of the Executive for or plea of no contest to a felony or conviction of or plea
of no contest to a misdemeanor involving moral turpitude, or the actual
incarceration of the Executive for 5 consecutive days or more.

    

    3.3           Voluntary Termination by the
Executive.  If the Executive terminates employment voluntarily,
the Executive shall receive the Base Salary and expense reimbursement to which
the Executive is entitled through the date on which termination becomes
effective.

    

    3.4           Involuntary Termination Without
Cause.  With written notice to the Executive 60 days in
advance, the Employer may terminate the Executive’s employment without
Cause.  Termination shall take effect at the end of the 60-day
period.  If the Executive’s employment terminates involuntarily
without Cause, the Executive shall be entitled to the benefits specified in
Article 4 of this Agreement.

    

    3.5           Notice.  Any
purported termination by the Employer or by the Executive shall be communicated
by written notice of termination to the other.  The notice must state
the specific termination provision of this Agreement relied upon.  The
notice must also state the date on which termination shall become effective,
which shall be a date not earlier than the date of the termination
notice.  If termination is an involuntary termination with Cause, the
notice must state in reasonable detail the facts and circumstances forming the
basis for termination of the Executive’s employment.

    

    
      
        
        

      

      
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    Article
4

    Severance

    

    4.1           Termination Without
Cause.  Subject to the possibility that continued Base Salary
for the first six months after employment termination might be delayed because
of section 4.2, if the Executive’s employment terminates involuntarily but
without Cause the Executive shall be entitled to receive from the Employer
continued Base Salary for 12 months from the date of termination.  The
severance benefit provided by this section 4.1 shall not be payable, however, if
the Executive’s employment is terminated within 24 months after a change in
control of the Corporation.  In addition, if the Executive becomes
employed elsewhere during the 12-month period in which severance benefits are
payable under this section 4.1, the severance benefit provided by this section
4.1 shall be reduced by the amount of any other compensation earned by the
Executive during the 12-month period.  A change in control of the
Corporation means a change in control as defined in Internal Revenue Code
section 409A and rules, regulations, and guidance of general application
thereunder issued by the Department of the Treasury, including –

    

    (a)           Change in ownership: a change
in ownership of the Corporation occurs on the date any one person or group
accumulates ownership of Corporation stock constituting more than 50% of the
total fair market value or total voting power of the Corporation’s
stock,

    

    (b)           Change in effective control:
(x) any one person or
more than one person acting as a group acquires within a 12-month period
ownership of Corporation stock possessing 30% or more of the total voting power
of the Corporation’s stock, or (y) a majority of the
Corporation’s board of directors is replaced during any 12-month period by
directors whose appointment or election is not endorsed in advance by a majority
of the Corporation’s board of directors, or

    

    (c)           Change in ownership of a substantial
portion of assets: a change in the ownership of a substantial portion of
the Corporation’s assets occurs if in a 12-month period any one person or more
than one person acting as a group acquires from the Corporation assets having a
total gross fair market value equal to or exceeding 40% of the total gross fair
market value of all of the Corporation’s assets immediately before the
acquisition or acquisitions.  For this purpose, gross fair market
value means the value of the Corporation’s assets, or the value of the assets
being disposed of, determined without regard to any liabilities associated with
the assets.

    

    4.2           Possible Delay Because of
409A.  If when employment termination occurs the Executive is a
specified employee within the meaning of section 409A of the Internal Revenue
Code of 1986, and if continued Base Salary under section 4.1 would be considered
deferred compensation under section 409A, and finally if an exemption from the
six-month delay requirement of section 409A(a)(2)(B)(i) is not available, the
Executive’s severance benefit under section 4.1 for the first six months after
employment termination shall be paid to the Executive in a single lump sum on
the first day of the seventh month after the month in which the Executive’s
employment terminates.  References in this Agreement to section 409A
of the Internal Revenue Code of 1986 include rules, regulations, and guidance of
general application issued by the Department of the Treasury under Internal
Revenue Code section 409A.

    

    4.3           Lump-sum Benefit After a Change in
Control.  If a change in control occurs during the term of this
Agreement, within 15 business days after the change in control the Employer
shall make or cause to be made to the Executive a lump-sum cash payment in the
amount of $75,000.  The Executive shall be entitled to the $75,000
payment after a change in control on no more than one occasion during the term
of this Agreement.  For purposes of this section 4.3 the term change
in control means a change in control as defined in section 4.1.

    

    Article
5

    Confidentiality
and Creative Work

    

    5.1           Non-disclosure.  The
Executive covenants and agrees not to reveal to any person, firm, or corporation
any confidential information of any nature concerning the Employer or its
business.  As used in this Article 5, the term “confidential
information” means all of the Employer’s and its affiliates’ confidential
and proprietary information and trade secrets in existence on the date hereof or
existing at any time during the term of this Agreement, including but not
limited to –

    

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

       

    

    (a)           the
whole or any portion or phase of any business plans, financial information,
purchasing data, supplier data, accounting data, or other financial
information,

    

    (b)           the
whole or any portion or phase of any research and development information,
design procedures, algorithms, or processes, or other technical
information,

    

    (c)           the
whole or any portion or phase of any marketing or sales information, sales
records, customer lists, prices, sales projections, or other sales information,
and

    

    (d)           trade
secrets, as defined from time to time by the laws of the State of North
Carolina.

    

    Despite
the foregoing, confidential information excludes information that – as of the
date hereof or at any time after the date hereof – is published or disseminated
without obligation of confidence or that becomes a part of the public domain
(x) by or through
action of the Employer or (y) otherwise than by or at
the Executive’s direction.  This section 5.1 does not prohibit
disclosure required by an order of a court having jurisdiction or a subpoena
from an appropriate governmental agency or disclosure made by the Executive in
the ordinary course of business and within the scope of the Executive’s
authority.

    

    5.2           Return of
Materials.  The Executive agrees to deliver or return to the
Employer upon employment termination, upon expiration of this Agreement, or as
soon thereafter as possible, all written information and any other similar items
furnished by the Employer or prepared by the Executive in connection with the
Executive’s services hereunder.  The Executive will retain no copies
thereof after termination of this Agreement or termination of the Executive’s
employment.

    

    5.3           Injunctive
Relief.  The Executive acknowledges that it is impossible to
measure in money the damages that will accrue to the Employer if the Executive
fails to observe the obligations imposed by this Article
5.  Accordingly, if the Employer institutes an action to enforce the
provisions hereof, the Executive hereby waives the claim or defense that an
adequate remedy at law is available to the Employer, and the Executive agrees
not to urge in any such action the claim or defense that an adequate remedy at
law exists.

    

    5.4           Affiliates’ Confidential Information
is Covered; Confidentiality Obligation Survives
Termination.  For purposes of this Agreement the term “affiliate”
of the Employer includes the Bank and any entity that directly, or indirectly
through one or more intermediaries, controls, is controlled by, or is under
common control with the Corporation.  The rights and obligations set
forth in this Article 5 shall survive termination of this
Agreement.

    

    5.5           Creative Work.  The
Executive agrees that all creative work and work product, including but not
limited to all technology, business management tools, processes, software,
patents, trademarks, and copyrights developed by the Executive during the term
of this Agreement, regardless of when or where such work or work product was
produced, constitutes work made for hire, all rights of which are owned by the
Employer.  The Executive hereby assigns to the Employer all rights,
title, and interest, whether by way of copyrights, trade secret, trademark,
patent, or otherwise, in all such work or work product, regardless of whether
the same is subject to protection by patent, trademark, or copyright
laws.

    

    Article
6

    Competition
After Employment Termination

    

    6.           Restrictions on the Executive’s
Post-Employment Activities.  These restrictions have been
negotiated, presented to and accepted by the Executive contemporaneous with the
offer and acceptance by the Executive of this Agreement and the benefits
promised in an Amended Salary Continuation Agreement signed or to be signed in
2008 by the Executive and the Bank.  The Employer’s decision to enter
into this Agreement and the Amended Salary Continuation Agreement is conditioned
upon the Executive’s agreement to be bound by the restrictions contained in this
Article 6.

    

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

       

    

    (a)           Promise of no
solicitation.  The Executive promises and agrees that during
the Restricted Period (as defined below), and in the Restricted Territory (as
defined below), the Executive will1:

    

    1.           not directly or indirectly
solicit, or attempt to solicit any Customer (as defined below) to accept or
purchase Financial Products or Services (as defined below) of the same nature,
kind or variety as provided to the Customer by the Employer during the two years
immediately preceding the Executive’s employment termination with the
Employer;

    

    2.           not directly or indirectly
influence, or attempt to influence any Customer, joint venturer or other
business partner of the Employer to alter that person or entity’s business
relationship with the Employer in any respect; and

    

    3.           not accept the Financial
Products or Services business of any Customer or provide Financial Products or
Services to any Customer on behalf of anyone other than the
Employer.

    

    (b)           Promise of no
competition.  The Executive promises and agrees that during the
Restricted Period in the Restricted Territory, the Executive will not engage, undertake or
participate in the business of providing, selling, marketing or distributing
Financial Products or Services of a similar nature, kind or variety (i) as
offered by the Employer to Customers during the two years immediately preceding
the Executive’s employment termination with the Employer; or (ii) as offered by
the Employer to any of its Customers during the Restricted Period.2  Subject to the above provisions and
conditions of this subparagraph (b), the Executive promises that during the
Restricted Period the Executive will not become employed by or
serve as a director, partner, consultant, agent, or owner of 5% or more of the
outstanding stock of or contractor to any entity providing these prohibited
Financial Products or Services which is located in, or conducts business in the
Restricted Territory.

    

    (c)           Promise of no
raiding/hiring.  The Executive promises and agrees that during
the Restricted Period, the Executive will not solicit or attempt to
solicit and will not
encourage or induce in any way, any employee, joint venturer or business partner
of the Employer to terminate an employment or contractual relationship with the
Employer.  The Executive agrees that the Executive will not hire any person employed
by Employer during the two (2) year period prior to the Executive’s employment
termination with the Employer or any person employed by the Employer during the
Restricted Period.

    

    (d)           Promise of no
disparagement.  The Executive promises and agrees that during
the Restricted Period, the Executive will not cause statements to be
made (whether written or oral) which reflect negatively on the business
reputation of the Employer.

    

    (e)           Acknowledgment.  The
Executive and the Employer acknowledge and agree that the provisions of this
Article 6 have been negotiated and carefully determined to be reasonable and
necessary for the protection of legitimate business interests of the
Employer.  Both parties agree that a violation of Article 6 is likely
to cause immediate and irreparable harm which will give rise to the need for
court ordered injunctive relief.  In the event of a breach or
threatened breach by the Executive of any provision of this Agreement, the
Employer shall be entitled to obtain an injunction restraining the Executive
from violating the terms of this Agreement, and to institute an action against
the Executive to recover damages from the Employee for such
breach.  These remedies for default or breach are in addition to any
other remedy or form of redress provided under North Carolina law. The parties
acknowledge that the provisions of this Article 6 survive termination of the
employment relationship.  The parties agree that if any of the
provisions of this Article 6 are deemed unenforceable by a court of competent
jurisdiction, that such provisions may be stricken as independent clauses by the
court in order to enforce the remaining territory restrictions and that the
intent of the parties is to afford the broadest restriction on post-employment
activities as set forth in this Agreement.  Without limiting the
generality of the foregoing, without limiting the remedies available to the
Employer for violation of this Agreement, and without constituting an election
of remedies, if the Executive violates any of the terms of Article 6 the
Executive shall forfeit on the Executive’s own behalf and that of
beneficiary(ies) any rights to and interest in any severance or other benefits
under this Agreement or other contract the Executive has with the Bank or the
Corporation.

     

    
      
        

      

      1 For Example, the promise of no
solicitation applies if the Executive is conducting prohibited business in the
Restricted Territory or if the entity with, for or to whom the
Executive is conducting prohibited business is located within the Restricted
Territory. 

    

    
      2 For Example, the promise of no
competition applies if the Executive is conducting prohibited business in the
Restricted Territory or if the entity with, for or to whom the
Executive is conducting prohibited business is located within the Restricted
Territory.

    

    

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

    

    (f)           Definitions:

    

    1.           “Restricted
Period” as used herein means the one (1) year immediately following the
Executive’s termination and/or separation of employment with the Employer,
regardless of the reason for termination and/or separation.  The
Restricted Period shall be extended in an amount equal to any time period during
which a violation of Article 6 of this Agreement is proven.

    

    2.           “Restricted
Territory” as used herein means: (1) Wake County, North Carolina; (2) all
contiguous counties to Wake County, North Carolina; and (3) any county with a
branch or loan office established during the term of this
Agreement.  The parties agree that if any of these separate
territories are deemed too broad to be enforced by a court of competent
jurisdiction, that the territories are divisible and severable territories which
may be stricken as independent clauses by the court in order to enforce the
remaining territory restrictions.

    

    3.           “Customer”
as used herein means any individual, joint venturer, entity of any sort, or
other business partner of the Employer, with, for or to whom the Employer has
provided Financial Products or Services during the last two (2) years of the
Executive’s employment with the Employer; or any individual, joint venturer,
entity of any sort, or business partner whom the Employer has identified as a
prospective customer of Financial Products or Services within the last two (2)
years of the Executive’s employment with the Employer.

    

    4.           “Financial
Products or Services” as used herein means any product or service that a
financial institution or a financial holding company could offer by engaging in
any activity that is financial in nature or incidental to such a financial
activity under Article 4(k) of the Bank Holding Company Act of 1956 and that is
offered by the Employer or an affiliate on the date of the Executive’s
employment termination, including but not limited to banking activities and
activities that are closely related and a proper incident to banking, or other
products or services of the type of which the Executive was involved during the
Executive’s employment with the Employer.

    

    Article
7

    Miscellaneous

    

    7.1           Successors and
Assigns.  (a)  This Agreement is binding on
successors.  This Agreement shall be binding upon the Employer
and any successor to the Employer, including any persons acquiring directly or
indirectly all or substantially all of the business or assets of the Employer by
purchase, merger, consolidation, reorganization, or otherwise.  But
this Agreement and the Employer’s obligations under this Agreement are not
otherwise assignable, transferable, or delegable by the Employer.  By
agreement in form and substance satisfactory to the Executive, the Employer
shall require any successor to all or substantially all of its business or
assets expressly to assume and agree to perform this Agreement in the same
manner and to the same extent the Employer would be required to perform had no
succession occurred.

    

    (b)           This Agreement is enforceable by the
Executive’s heirs.  This Agreement shall inure to the benefit
of and be enforceable by the Executive’s personal or legal representatives,
executors, administrators, successors, heirs, distributees, and
legatees.

    

    (c)           This Agreement is personal and is
not assignable.  This Agreement is personal in
nature.  Without written consent of the other parties, no party shall
assign, transfer, or delegate this Agreement or any rights or obligations under
this Agreement except as expressly permitted.  Without limiting the
generality or effect of the foregoing, the Executive’s right to receive payments
hereunder is not assignable or transferable, whether by pledge, creation of a
security interest, or otherwise, except for a transfer by the Executive’s will
or by the laws of descent and distribution.  If the Executive attempts
an assignment or transfer that is contrary to this section 7.1, the Employer
shall have no liability to pay any amount to the assignee or
transferee.

    

    
      
        
        

      

      
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    7.2           Governing Law, Jurisdiction and
Forum.  This Agreement shall be construed under and governed by
the internal laws of the State of North Carolina, without giving effect to any
conflict of laws provision or rule (whether of the State of North Carolina or
any other jurisdiction) that would cause the application of the laws of any
jurisdiction other than North Carolina.  By entering into this
Agreement, the Executive acknowledges that the Executive is subject to the
jurisdiction of both the federal and state courts in North
Carolina.  Any actions or proceedings instituted under this Agreement
shall be brought and tried solely in courts located in Wake County, North
Carolina or in the federal court having jurisdiction in Cary, North
Carolina.  The Executive expressly waives the right to have any such
actions or proceedings brought or tried elsewhere.

    

    7.3           Entire
Agreement.  This Agreement sets forth the entire agreement of
the parties concerning the employment of the Executive.  Any oral or
written statements, representations, agreements, or understandings made or
entered into before or contemporaneously with the execution of this Agreement
are hereby rescinded, revoked, and rendered null and void by the
parties.  Benefits payable under this Agreement shall not be reduced
by any benefits payable under the Salary Continuation Agreement between the
Executive and the Bank, as that agreement may be amended or restated, and
benefits payable under the Salary Continuation Agreement likewise shall not be
reduced by any benefits payable under this Agreement.  This Agreement
supersedes and replaces in its entirety the October 24, 2007 Employment
Agreement entered into by the Executive, the Bank, and the
Corporation.

    

    7.4           Notices.  Any notice
under this Agreement shall be deemed to have been effectively made or given if
in writing and personally delivered, delivered by mail properly addressed in a
sealed envelope, postage prepaid by certified or registered mail, delivered by a
reputable overnight delivery service, or sent by facsimile.  Unless
otherwise changed by notice, notice shall be properly addressed to the Executive
if addressed to the address of the Executive on the books and records of the
Employer at the time of the delivery of such notice, and properly addressed to
the Employer if addressed to Crescent Financial Corporation, 1005 High House
Road, Cary, North Carolina 27513, Attention: Corporate Secretary.

    

    7.5           Severability.  In
the case of conflict between any provision of this Agreement and any statute,
regulation, or judicial precedent, the latter shall prevail, but the affected
provisions of this Agreement shall be curtailed and limited solely to the extent
necessary to bring them within the requirements of law.  If any
provision of this Agreement is held by a court of competent jurisdiction to be
indefinite, invalid, void or voidable, or otherwise unenforceable, the balance
of this Agreement shall continue in full force and effect unless such
construction would clearly be contrary to the intentions of the parties or would
result in an injustice.

    

    7.6           Captions and
Counterparts.  The captions in this Agreement are solely for
convenience.  The captions do not define, limit, or describe the scope
or intent of this Agreement.  This Agreement may be executed in
several counterparts, each of which shall be deemed to be an original but all of
which together shall constitute one and the same instrument.

    

    7.7           Amendment and
Waiver.  This Agreement may not be amended, released,
discharged, abandoned, changed, or modified except by an instrument in writing
signed by each of the parties hereto.  The failure of any party hereto
to enforce at any time any of the provisions of this Agreement shall not be
construed to be a waiver of any such provision, nor in any way to affect the
validity of this Agreement or any part thereof or the right of any party
thereafter to enforce each and every provision.  No waiver or any
breach of this Agreement shall be held to be a waiver of any other or subsequent
breach.

    

    7.8           Compliance with Internal Revenue Code
Section 409A.  The Employer and the Executive intend that their
exercise of authority or discretion under this Agreement shall comply with
section 409A of the Internal Revenue Code of 1986.  If when the
Executive’s employment terminates the Executive is a specified employee, as
defined in section 409A of the Internal Revenue Code of 1986, and if any
payments under this Agreement, including Articles 4 or 5, will result in
additional tax or interest to the Executive because of section 409A, then
despite any contrary provision of this Agreement the Executive shall not be
entitled to the payments until the earliest of (x) the date that is at least
six months after termination of the Executive’s employment for reasons other
than the Executive’s death, (y) the date of the
Executive’s death, or (z) any earlier date that does
not result in additional tax or interest to the Executive under section
409A.  As promptly as possible after the end of the period during
which payments are delayed under this provision, the entire amount of the
delayed payments shall be paid to the Executive in a single lump
sum.  If any provision of this Agreement does not satisfy the
requirements of section 409A, such provision shall nevertheless be applied in a
manner consistent with those requirements.  If any provision of this
Agreement would subject the Executive to additional tax or interest under
section 409A, the Employer shall reform the provision.  However, the
Employer shall maintain to the maximum extent practicable the original intent of
the applicable provision without subjecting the Executive to additional tax or
interest, and the Employer shall not be required to incur any additional
compensation expense as a result of the reformed provision.

    

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

    

    In Witness
Whereof, the parties have executed this Employment Agreement as of the
date first written above.

     

    
      
        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              
                                
                                  
                                    
                                      
                                        
                                          
                                            
                                              	
                                                      Witnesses

                                                    	 
      	
                                                      Crescent
      Financial Corporation

                                                    
	 
      	 
      	 
      
	 
      	 
      	
                                                      By:  

                                                    	 
      
	 
      	 
      	 
      
	 
      	 
      	
                                                      Its: 

                                                    	
                                                        
      

                                                    
	 
      	 
      	 
      
	 
      	 
      	 
      
	
                                                      Witnesses

                                                    	 
      	
                                                      Crescent
      State Bank

                                                    
	 
      	 
      	 
      
	 
      	 
      	
                                                      By: 

                                                    	 
      
	 
      	 
      	 
      
	 
      	 
      	
                                                      Its: 

                                                    	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	
                                                      Witnesses

                                                    	 
      	
                                                      Executive

                                                    
	 
      	 
      	 
      
	 
      	 
      	
                                                      /s/ Ray D. Vaughn

                                                    
	 
      	 
      	
                                                      Ray
      D. Vaughn

                                                    
	 
      	 
      	 
      
	 
      	 
      	 
      

                                            

                                          

                                        

                                      

                                    

                                  

                                

                              

                            

                          

                        

                      

                    

                  

                

              

            

          

        

      

       

      
        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              
                                
                                  
                                    
                                      
                                        
                                          
                                            
                                              
                                                
                                                  	
                                                          County
      of Wake

                                                        	
                                                          )

                                                        	 
      
	 
      	
                                                           )
      ss:

                                                        	 
      
	
                                                          State
      of North Carolina)

                                                        	 
      	 
      

                                                

                                              

                                            

                                          

                                        

                                      

                                    

                                  

                                

                              

                            

                          

                        

                      

                    

                  

                

              

            

          

        

      

       

      Before me
this ___ day of _______________, 2008, personally appeared the above named
____________________ and Ray D. Vaughn, who acknowledged that they did sign the
foregoing instrument and that the same was their free act and deed.

      

      
        
          
            
              
                	 
      	 
      
	
                        (Notary
      Seal)

                      	
                        Notary
      Public

                      
	 
      	 
      
	 
      	
                        My
      Commission
Expires:

                      

              

            

          

        

      

    

     

    
      
        
        

      

      
        10

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00156-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00156-of-00352.parquet"}]]