Document:

Supplemental Indenture dated December 15,2004

  
 Exhibit 4.1.2

  
 SUPPLEMENTAL INDENTURE 
  
 SUPPLEMENTAL INDENTURE (this “Supplemental Indenture”),
dated as of December 15, 2004, by and among Ventas Framingham, LLC, a Delaware limited liability company, and Ventas Management, LLC, a Delaware limited liability company (each, a “Guaranteeing Subsidiary” and collectively, the
“Guaranteeing Subsidiaries”), Ventas Realty, Limited Partnership, a Delaware limited partnership, and Ventas Capital Corporation, a Delaware corporation (collectively, the “Issuers”), the other Guarantors (as
defined in the Indenture referred to herein) and U.S. Bank National Association, as trustee under the Indenture referred to herein (the “Trustee”). 
  
 W I T N E S S E T H 
  
 WHEREAS, the Issuers have heretofore executed and delivered to the Trustee an Indenture dated as of October 15, 2004 (the “Indenture”),
providing for the issuance of 6 5/8% Senior Notes due 2014 (the “Notes”); 
  
 WHEREAS, the Indenture provides that under certain circumstances each Guaranteeing Subsidiary shall execute and deliver to the Trustee a supplemental indenture pursuant to which the Guaranteeing Subsidiary shall
unconditionally guarantee all of the Issuers’ Obligations (as defined in the Indenture) under the Notes and the Indenture on the terms and conditions set forth herein (a “Note Guarantee”); and 
  
 WHEREAS, pursuant to Section 9.01 of the Indenture, the Trustee is authorized
to execute and deliver this Supplemental Indenture. 
  
 NOW
THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt of which is hereby acknowledged, each Guaranteeing Subsidiary and the Trustee mutually covenant and agree for the equal and ratable benefit of
the Holders of the Notes as follows: 
  
 1. CAPITALIZED TERMS.
Capitalized terms used herein without definition shall have the meanings assigned to them in the Indenture. 
  
 2. AGREEMENT TO GUARANTEE. Each Guaranteeing Subsidiary hereby agrees as follows: 
  
 (a) Subject to Article 10 of the Indenture, such Guaranteeing Subsidiary hereby, jointly and
severally with all other Guarantors, unconditionally guarantees to each Holder of a Note authenticated and delivered by the Trustee and to the Trustee and its successors and assigns, irrespective of the validity and enforceability of the Indenture,
the Notes or the obligations of the Issuers thereunder, that: 
  
 (i) the principal of, and premium and Liquidated Damages, if any, and interest on the Notes will be promptly paid in full when due, whether at maturity, by acceleration, redemption or otherwise, and interest on the
overdue principal of and interest on the Notes, if any, if lawful, and all other obligations of the Issuers to 

  

 
the Holders or the Trustee hereunder or thereunder will be promptly paid in full or performed, all in accordance with the terms hereof and thereof; and

  
 (ii) in case of any extension of time of
payment or renewal of any Notes or any of such other obligations, that same will be promptly paid in full when due or performed in accordance with the terms of the extension or renewal, whether at stated maturity, by acceleration or otherwise.

  
 Failing payment when due of any amount so
guaranteed or any performance so guaranteed for whatever reason, the Guarantors shall be jointly and severally obligated to pay the same immediately. 
  
 (b) The obligations hereunder shall be unconditional, irrespective of the validity, regularity or enforceability of the Notes or the
Indenture, the absence of any action to enforce the same, any waiver or consent by any Holder of the Notes with respect to any provisions hereof or thereof, the recovery of any judgment against the Issuers, any action to enforce the same or any
other circumstance which might otherwise constitute a legal or equitable discharge or defense of a Guarantor, other than payment in full of all obligations under the Notes. 
  
 (c) The following is hereby waived: diligence, presentment, demand of payment, filing of claims with a court
in the event of insolvency or bankruptcy of the Issuers, any right to require a proceeding first against the Issuers, protest, notice and all demands whatsoever. 
  
 (d) This Note Guarantee shall not be discharged except by complete performance of the obligations contained
in the Notes and the Indenture, and such Guaranteeing Subsidiary hereby accepts all obligations of a Guarantor under the Indenture. 
  
 (e) If any Holder or the Trustee is required by any court or otherwise to return to the Issuers, the Guarantors or any custodian, trustee,
liquidator or other similar official acting in relation to either the Issuers or the Guarantors, any amount paid by either to the Trustee or such Holder, this Note Guarantee, to the extent theretofore discharged, shall be reinstated in full force
and effect. 
  
 (f) Such Guaranteeing Subsidiary
shall not be entitled to any right of subrogation in relation to the Holders in respect of any obligations guaranteed hereby until payment in full of all obligations guaranteed hereby. 
  
 (g) As between the Guarantors, on the one hand, and the Holders and the Trustee, on the other hand, (1) the
maturity of the obligations guaranteed hereby may be accelerated as provided in Article 6 of the Indenture for the purposes of this Note Guarantee, notwithstanding any stay, injunction or other prohibition preventing such acceleration in
respect of the obligations guaranteed hereby, and (2) in the event of any declaration of acceleration of such obligations as provided in Article 6 of the Indenture, 

  

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such obligations (whether or not due and payable) shall forthwith become due and payable by the Guarantors for the purpose of this Note Guarantee.

  
 (h) The Guarantors shall have the right to
seek contribution from any non-paying Guarantor so long as the exercise of such right does not impair the rights of the Holders under the Note Guarantees. 
  
 (i) In accordance with Section 10.02 of the Indenture, after giving effect to any maximum amount and all other contingent and fixed
liabilities that are relevant under any applicable Bankruptcy Law or fraudulent conveyance law, and after giving effect to any collections from, rights to receive contribution from or payments made by or on behalf of any other Guarantor in respect
of the obligations of such other Guarantor under Article 10 of the Indenture, this Note Guarantee shall be limited to the maximum amount permissible such that the obligations of such Guaranteeing Subsidiary under this Note Guarantee will not
constitute a fraudulent transfer or conveyance. 
  
 3. EXECUTION
AND DELIVERY. Each Guaranteeing Subsidiary agrees that this Note Guarantee shall remain in full force and effect notwithstanding any failure to endorse on each Note a notation of such Note Guarantee. 
  
 4. GUARANTEEING SUBSIDIARIES MAY CONSOLIDATE, ETC. ON CERTAIN TERMS.

  
 (a) No Guaranteeing Subsidiary may sell or
otherwise dispose of all or substantially all of its assets to, or consolidate with or merge with or into (whether or not such Guaranteeing Subsidiary is the surviving Person) another Person, other than the Issuers or another Guarantor unless:

  
 (i) immediately after giving effect to that
transaction, no Default or Event of Default exists; and 
  
 (ii) subject to Section 10.05 of the Indenture, the Person acquiring the property in any such sale or disposition or the Person formed by or surviving any such consolidation or merger assumes all of the
obligations of that Guaranteeing Subsidiary under the Indenture, this Note Guarantee and the Registration Rights Agreement pursuant to a supplemental indenture in form and substance reasonably satisfactory to the Trustee. 
  
 (b) In case of any such consolidation, merger, sale or
conveyance and upon the assumption by the successor Person, by supplemental indenture, executed and delivered to the Trustee and satisfactory in form to the Trustee, of this Note Guarantee endorsed upon the Notes and the due and punctual performance
of all of the covenants and conditions of the Indenture to be performed by the Guaranteeing Subsidiary, such successor Person shall succeed to and be substituted for the Guaranteeing Subsidiary with the same effect as if it had been named herein as
a Guaranteeing Subsidiary. Such successor Person thereupon may cause to be signed any or all of the Note Guarantees to be endorsed upon all of the Notes issuable under the Indenture which theretofore shall 

  

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not have been signed by the Issuers and delivered to the Trustee. All the Note Guarantees so issued shall in all respects have the same legal rank and
benefit under the Indenture as the Note Guarantees theretofore and thereafter issued in accordance with the terms of the Indenture as though all of such Note Guarantees had been issued at the date of the execution hereof. 
  
 (c) Except as set forth in Articles 4 and 5
and Section 10.05 of the Indenture, and notwithstanding clauses (a) and (b) above, nothing contained in the Indenture or in any of the Notes shall prevent any consolidation or merger of a Guaranteeing Subsidiary with or into the Issuers or
another Guarantor, or shall prevent any sale or conveyance of the property of a Guaranteeing Subsidiary as an entirety or substantially as an entirety to the Issuers or another Guarantor. 
  
 5. RELEASES. 
  
 (a) The Note Guarantee of a Guaranteeing Subsidiary shall be released, and any Person acquiring assets (including by way of merger or
consolidation) or Capital Stock of a Guaranteeing Subsidiary under those circumstances specified in the Indenture shall not be required to assume the obligations of such Guaranteeing Subsidiary, in each case in accordance with the provisions of
Section 10.05 of the Indenture. The Note Guarantee of a Guaranteeing Subsidiary shall also be released in accordance with the provisions of Section 10.06 of the Indenture. Upon delivery by the Issuers to the Trustee of an
Officers’ Certificate and an Opinion of Counsel stating that the provisions of Section 10.05 or 10.06, as applicable, of the Indenture have been complied with, the Trustee shall execute any documents reasonably required in order
to evidence the release of any Guaranteeing Subsidiary from its obligations under this Note Guarantee. 
  
 (b) Any Guaranteeing Subsidiary not released from its obligations under this Note Guarantee shall remain liable for the full amount of
principal of and interest on the Notes and for the other obligations of any Guarantor under the Indenture as provided in Article 10 of the Indenture. 
  
 6. NO RECOURSE AGAINST OTHERS. No past, present or future director, officer, employee, incorporator, stockholder or agent of any Guaranteeing Subsidiary,
as such, shall have any liability for any obligations of the Issuers or any Guaranteeing Subsidiary under the Notes, this Note Guarantee, the Indenture or this Supplemental Indenture or for any claim based on, in respect of, or by reason of, such
obligations or their creation. Each Holder of the Notes by accepting a Note waives and releases all such liability. The waiver and release are part of the consideration for issuance of the Notes. Such waiver may not be effective to waive liabilities
under the federal securities laws and it is the view of the Commission that such a waiver is against public policy. 
  
 7. NEW YORK LAW TO GOVERN. THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN AND BE USED TO CONSTRUE THIS SUPPLEMENTAL INDENTURE AND NOTE GUARANTEE
WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY. 
  

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 8. COUNTERPARTS. The parties may sign any number of copies of this Supplemental Indenture. Each signed
copy shall be an original, but all of them together represent the same agreement. 
  
 9. EFFECT OF HEADINGS. The Section headings herein are for convenience only and shall not affect the construction hereof. 
  
 10. THE TRUSTEE. The Trustee shall not be responsible in any manner whatsoever for or in respect of the validity or sufficiency of this Supplemental
Indenture or for or in respect of the recitals contained herein, all of which recitals are made solely by the Guaranteeing Subsidiaries and the Issuers. 
  

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 IN WITNESS WHEREOF, the parties hereto have caused this Supplemental Indenture to be duly executed and
attested, all as of the date first above written. 
  

					
	 GUARANTEEING SUBSIDIARIES:

	
	 Ventas Framingham, LLC

		
	By:	 	 /s/ T. Richard Riney

	 	 	 Name:
	 	 T. Richard Riney

	 	 	 Title:
	 	Executive Vice President, General Counsel and Corporate Secretary
	
	 Ventas Management, LLC

		
	By:	 	 /s/ T. Richard Riney

	 	 	 Name:
	 	 T. Richard Riney

	 	 	 Title:
	 	Executive Vice President, General Counsel and Corporate Secretary

  

							
	
	 ISSUERS:

	
	 Ventas Realty, Limited Partnership

			
	 	 	 By:
	 	 Ventas, Inc., its General Partner

			
	 	 	 By:
	 	 /s/ T. Richard Riney

	 	 	 	 	 Name:
	 	 T. Richard Riney

	 	 	 	 	Title:	 	Executive Vice President, General Counsel and Corporate Secretary

  

					
	 Ventas Capital Corporation

		
	By:	 	 /s/ T. Richard Riney

	 	 	 Name:
	 	 T. Richard Riney

	 	 	 Title:
	 	Executive Vice President, General Counsel and Corporate Secretary

  

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	 EXISTING GUARANTORS:

	
	 Ventas, Inc.

		
	By:	 	 /s/ T. Richard Riney

	 	 	 Name:
	 	 T. Richard Riney

	 	 	 Title:
	 	Executive Vice President, General Counsel and Corporate Secretary

  

							
	
	 Ventas LP Realty, L.L.C.

			
	 	 	 By:
	 	 Ventas, Inc., its Sole Member

			
	 	 	 By:
	 	 /s/ T. Richard Riney

	 	 	 	 	 Name:
	 	 T. Richard Riney

	 	 	 	 	Title:	 	Executive Vice President, General Counsel and Corporate Secretary

  

					
	 Ventas Healthcare Properties, Inc.

		
	By:	 	 /s/ T. Richard Riney

	 	 	 Name:
	 	 T. Richard Riney

	 	 	 Title:
	 	Executive Vice President, General Counsel and Corporate Secretary
	
	 Ventas TRS, LLC

		
	By:	 	 /s/ T. Richard Riney

	 	 	 Name:
	 	 T. Richard Riney

	 	 	 Title:
	 	Executive Vice President
	
	 ElderTrust

		
	By:	 	 /s/ T. Richard Riney

	 	 	 Name:
	 	 T. Richard Riney

	 	 	 Title:
	 	Secretary

  

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	ElderTrust Operating Limited Partnership
			
	 	 	By:	 	 ElderTrust, its General Partner

			
	 	 	By:	 	 /s/ T. Richard Riney

	 	 	 	 	 Name:
	 	 T. Richard Riney

	 	 	 	 	 Title:
	 	 Secretary

  

					
	ET Capital Corp.
		
	By:	 	 /s/ T. Richard Riney

	 	 	 Name:
	 	 T. Richard Riney

	 	 	 Title:
	 	 Secretary

  

							
	 ET Sub-Berkshire Limited Partnership

			
	 	 	By:	 	 ET Berkshire, LLC, its General Partner

	 	 	By:	 	ElderTrust Operating Limited Partnership, its Sole Member
	 	 	By:	 	 ElderTrust, its General Partner

			
	 	 	By:	 	 /s/ T. Richard Riney

	 	 	 	 	 Name:
	 	 T. Richard Riney

	 	 	 	 	 Title:
	 	 Secretary

  
  

							
	 ET Berkshire, LLC

			
	 	 	By:	 	ElderTrust Operating Limited Partnership, its Sole Member
	 	 	By:	 	ElderTrust, its General Partner
			
	 	 	By:	 	 /s/ T. Richard Riney

	 	 	 	 	 Name:
	 	 T. Richard Riney

	 	 	 	 	 Title:
	 	 Secretary

  

 8 

							
	 Cabot ALF, L.L.C.

			
	 	 	By:	 	 ElderTrust Operating Limited
 Partnership, its Sole Member

	 	 	By:	 	ElderTrust, its General Partner
			
	 	 	By:	 	/s/ T. Richard Riney
	 	 	 	 	 Name:
	 	 T. Richard Riney

	 	 	 	 	 Title:
	 	 Secretary

  

							
	 Cleveland ALF, L.L.C.

			
	 	 	By:	 	 ElderTrust Operating Limited
 Partnership, its Sole Member

	 	 	By:	 	ElderTrust, its General Partner
			
	 	 	By:	 	/s/ T. Richard Riney
	 	 	 	 	 Name:
	 	 T. Richard Riney

	 	 	 	 	 Title:
	 	 Secretary

  

							
	 ET Sub-Heritage Woods, L.L.C.

			
	 	 	By:	 	 ElderTrust Operating Limited
 Partnership, its Sole Member

	 	 	By:	 	ElderTrust, its General Partner
			
	 	 	By:	 	/s/ T. Richard Riney
	 	 	 	 	 Name:
	 	 T. Richard Riney

	 	 	 	 	 Title:
	 	 Secretary

  

							
	 ET Sub-Highgate, L.P.

			
	 	 	By:	 	 ET GENPAR, L.L.C., its General
 Partner

	 	 	By:	 	 ElderTrust Operating Limited
 Partnership,
its Sole Member

	 	 	By:	 	ElderTrust, its General Partner
			
	 	 	By:	 	/s/ T. Richard Riney
	 	 	 	 	 Name:
	 	 T. Richard Riney

	 	 	 	 	 Title:
	 	 Secretary

  

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	 ET GENPAR, L.L.C.

			
	 	 	By:	 	 ElderTrust Operating Limited
 Partnership, its Sole Member

	 	 	By:	 	ElderTrust, its General Partner
			
	 	 	By:	 	/s/ T. Richard Riney
	 	 	 	 	 Name:
	 	 T. Richard Riney

	 	 	 	 	 Title:
	 	 Secretary

  

							
	 ET Sub-Lacey I, L.L.C.

			
	 	 	By:	 	 ElderTrust Operating Limited
 Partnership, its Sole Member

	 	 	By:	 	ElderTrust, its General Partner
			
	 	 	By:	 	/s/ T. Richard Riney
	 	 	 	 	 Name:
	 	 T. Richard Riney

	 	 	 	 	 Title:
	 	 Secretary

  

							
	 ET Sub-Lehigh Limited Partnership

			
	 	 	By:	 	 ET Lehigh, LLC, its General
 Partner

	 	 	By:	 	 ElderTrust Operating Limited
 Partnership,
its Sole Member

	 	 	By:	 	ElderTrust, its General Partner
			
	 	 	By:	 	/s/ T. Richard Riney
	 	 	 	 	 Name:
	 	 T. Richard Riney

	 	 	 	 	 Title:
	 	 Secretary

  

							
	 ET Lehigh, LLC

			
	 	 	By:	 	 ElderTrust Operating Limited
 Partnership, its Sole Member

	 	 	By:	 	ElderTrust, its General Partner
			
	 	 	By:	 	/s/ T. Richard Riney
	 	 	 	 	 Name:
	 	 T. Richard Riney

	 	 	 	 	 Title:
	 	 Secretary

  

 10 

					
	 ET Sub-Lopatcong, L.L.C.

		
	 By:
	 	 /s/ T. Richard Riney

	 	 	 Name: T. Richard Riney

	 	 	 Title:   Secretary

	
	ET Sub-Pennsburg Manor Limited Partnership, L.L.P.
			
	 	 	 By:
	 	ET Pennsburg Finance, L.L.C., its General Partner
			
	 	 	 By:
	 	 /s/ T. Richard Riney

	 	 	 	 	 Name: T. Richard Riney

	 	 	 	 	 Title:   Secretary

	
	 ET Pennsburg Finance, L.L.C.

		
	 By:
	 	 /s/ T. Richard Riney

	 	 	 Name: T. Richard Riney

	 	 	 Title:   Secretary

	
	 ET Sub-Phillipsburg I, L.L.C.

			
	 	 	 By:
	 	ElderTrust Operating Limited Partnership, its Sole Member
	 	 	 By:
	 	 ElderTrust, its General Partner

	 
			
	 	 	 By:
	 	 /s/ T. Richard Riney

	 	 	 	 	 Name: T. Richard Riney

	 	 	 	 	 Title:   Secretary

	
	 ET Sub-Pleasant View, L.L.C.

		
	 By:
	 	 /s/ T. Richard Riney

	 	 	 Name: T. Richard Riney

	 	 	 Title:   Secretary

  

 11 

							
	ET Sub-Rittenhouse Limited Partnership, L.L.P.
			
	 	 	By:	 	GENPAR, L.L.C., its General Partner
	 	 	By:	 	ElderTrust Operating Limited Partnership, its Sole Member
	 	 	By:	 	ElderTrust, its General Partner
			
	 	 	By:	 	/s/ T. Richard Riney
	 	 	 	 	Name:	 	T. Richard Riney
	 	 	 	 	Title:	 	Secretary
	
	ET Sub-Riverview Ridge Limited Partnership, L.L.P.
			
	 	 	 By:
	 	ET GENPAR, L.L.C., its General Partner
	 	 	 By:
	 	ElderTrust Operating Limited Partnership, its Sole Member
	 	 	 By:
	 	ElderTrust, its General Partner
			
	 	 	 By:
	 	/s/ T. Richard Riney
	 	 	 	 	 Name:
	 	T. Richard Riney
	 	 	 	 	 Title:
	 	Secretary
	
	ET Sub-Sanatoga Limited Partnership
			
	 	 	 By:
	 	ET Sanatoga, LLC, its General Partner
	 	 	 By:
	 	ElderTrust Operating Limited Partnership, its Sole Member
	 	 	 By:
	 	ElderTrust, its General Partner
			
	 	 	 By:
	 	/s/ T. Richard Riney
	 	 	 	 	Name:	 	T. Richard Riney
	 	 	 	 	Title:	 	Secretary

  

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	 ET Sanatoga, LLC

			
	 	 	By:	 	ElderTrust Operating Limited Partnership, its Sole Member
	 	 	By:	 	ElderTrust, its General Partner
			
	 	 	By:	 	/s/ T. Richard Riney
	 	 	 	 	Name:	 	T. Richard Riney
	 	 	 	 	Title:	 	Secretary

							
	
	ET Sub-SMOB, L.L.C.
		
	 By:
	 	/s/ T. Richard Riney
	 	 	 Name:
	 	T. Richard Riney
	 	 	 Title:
	 	Secretary	 	 

							
	
	 Vernon ALF, L.L.C.

			
	 	 	 By:
	 	ElderTrust Operating Limited Partnership, its Sole Member
	 	 	 By:
	 	ElderTrust, its General Partner
			
	 	 	 By:
	 	/s/ T. Richard Riney
	 	 	 	 	Name:	 	T. Richard Riney
	 	 	 	 	Title:	 	Secretary

							
	
	ET Sub-Willowbrook Limited Partnership, L.L.P.
			
	 	 	 By:
	 	GENPAR, L.L.C., its General Partner
	 	 	 By:
	 	ElderTrust Operating Limited Partnership, its Sole Member
	 	 	 By:
	 	ElderTrust, its General Partner
			
	 	 	 By:
	 	/s/ T. Richard Riney
	 	 	 	 	 Name:
	 	T. Richard Riney
	 	 	 	 	 Title:
	 	Secretary

  

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	 ET Sub-Wayne I Limited Partnership, L.L.P.

			
	 	 	By:	 	 ET Wayne Finance, L.L.C., its
 General Partner

			
	 	 	 By:
	 	 /s/ T. Richard Riney

	 	 	 	 	 Name:
	 	 T. Richard Riney

	 	 	 	 	 Title:
	 	 Secretary

							
	
	 ET Wayne Finance, L.L.C.

		
	 By:
	 	 /s/ T. Richard Riney

	 	 	 Name:
	 	 T. Richard Riney

	 	 	 Title:
	 	 Secretary

	
	 ET Wayne Finance, Inc.

		
	 By:
	 	 /s/ T. Richard Riney

	 	 	 Name:
	 	 T. Richard Riney

	 	 	 Title:
	 	 Chairman, Executive Vice President and Secretary

  

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	 TRUSTEE:

	
	 U.S. Bank National Association

		
	 By:
	 	 /s/ Robert T. Jones

	 	 	 Name:
	 	 Robert T. Jones

	 	 	 Title:
	 	 Vice President

  

 15Crescent State Bank Directors' Deferral Plan

 Exhibit 10.1 
  
 CRESCENT STATE BANK 
 DIRECTORS’ DEFERRAL PLAN 
  
 By a vote of the Board of Directors of Crescent State Bank, (hereinafter referred to as the “Bank”) on the 16th day of December, 2004, the Bank has established the Crescent State Bank Directors’ Deferral Plan (hereinafter referred to as the “Plan”) to allow eligible directors the opportunity to participate in the Plan
and defer all or a portion of their fees in accordance herewith. 
  
 It is the intent of the Bank that this Plan be considered an unfunded arrangement maintained primarily to provide supplemental retirement benefits and to be considered a non-qualified benefit plan for purposes of the Employee
Retirement Income Security Act of 1974, as amended (“ERISA”). 
  

	I.	ELIGIBILITY 

  
 Those individuals who are members of the Board of Directors of the Bank shall be eligible to become a participant in this Plan (hereinafter referred to as
the “Participant”). 
  

	II.	FEES  

  
 The amounts eligible for deferral under this Plan shall be any and all fees paid to the Participant for the Participant’s services as a director of
the Bank, including but not limited to annual fees, meeting fees, and committee fees. Participants may elect to defer one hundred percent (100%) of such fees (the “Deferred Fees”). The Deferred Fees covered under this Plan shall be
credited to the Participant subject to the election requirement of Subsection III (A) hereof. 
  

	III.	DEFERRED FEES 

  

	 	A.	Participant’s Election of Deferred Fees: 

  
 An individual eligible to participate in the Plan shall complete and file a written statement with the Bank notifying the Bank of his or her election to
defer all fees (the “Election Form”). A copy of the said Election Form is attached hereto and marked as Exhibit “A-1.” If the eligible individual elects to defer his or her fees, the Participant shall notify the Bank as to
whether the Participant elects to have his or her Deferred Fees invested in an interest-bearing financial instrument chosen by the Bank or credited to an account (plus a bonus equal to 25% of such fees) for the purpose of purchasing common stock of
Crescent Financial Corporation (the “Common Stock”) in accordance with the terms of the Election Form (either choice being the “Deferral Election”). To defer fees in any one year, a Participant must complete and file with the
Bank the Election Form indicating the Participant’s Deferral Election not later than December 31 of the Bank’s preceding taxable year. The Deferral Election shall remain in effect for the taxable year for which the Deferral Election is
made and may not be changed thereafter. 

 Notwithstanding the foregoing, the election to defer fees may only be made for fees not yet earned and to
which the Participant has not yet become entitled as of the date of said Deferral Election. 
  

	 	B.	Distribution of Participant’s Deferred Fees: 

  
 At all times, a Participant shall be one hundred percent (100%) vested in the Participant’s Deferral Account (as defined in Subsection IV (A) (i)).

  
 Distribution of the Participant’s Deferral Account
balance, which will take the form of cash or Common Stock, in accordance with the Participant’s Deferral Election, shall commence or occur not earlier than the first day of the calendar month following (w) the end of the Participant’s term
of office due to resignation, removal, failure to be re-elected, retirement, or separation from service (within the meaning of Section 409A of the Internal Revenue Code (the “Code”) and any regulations promulgated thereunder); (x) the
Participant’s death; (y) the date the Participant becomes disabled (within the meaning of Section 409A of the Code and any regulations promulgated thereunder); or (z) the occurrence of a Change In Control as that term is defined in the Rabbi
Trust Agreement for the Crescent State Bank Directors’ Deferral Plan (but in any event the definition of Change In Control shall agree with, and not exceed in scope, the change in control provisions pursuant to Section 409A of the Code and any
regulations promulgated thereunder). Subsequent to making his or her Deferral Election, a Participant may not elect to delay the commencement or occurrence of his or her Deferral Account distribution beyond the date on which distribution would
otherwise commence or occur as set forth above. 
  
 Notwithstanding the foregoing provision (w), any Participant who is also a key employee (as that term is defined in Section 416(i) of the Code) of Crescent Financial Corporation shall not receive any distribution of his or her Deferral
Account before the date which is six months after the date of his or her separation from service (or, if earlier, the date of death of the key employee). 
  
 In the event the Participant experiences an unforeseeable emergency (within the meaning of Section 409A of the Code or any regulations promulgated
thereunder), the Participant may receive a partial distribution of his or her Deferral Account after the Participant complies with the provisions of Subsection III (B)(ii) hereunder. 
  
 (i) Retirement: Retirement age for Directors shall be age seventy (70) or such other date as the Participant may
actually retire. 
  
 (ii) Partial Distribution: A
Participant who experiences an unforeseeable emergency or a representative of any such Participant shall notify the Bank within 60 days of the occurrence of such emergency. At the time the Participant or his or her representative notifies the Bank
of the occurrence of an unforeseeable 

 emergency, he or she shall estimate the costs of such emergency to the Participant less the extent to
which any hardship may be relieved by any reimbursement or compensation by insurance or by liquidation of the Participant’s assets (to the extent liquidation of such assets would not itself cause severe financial hardship). The Bank shall cause
the Trustee of the Rabbi Trust, described in Subsection IV (A), to make a partial distribution of such Participant’s Deferral Account to the extent necessary to satisfy such emergency (and as further delineated in Section 409A of the Code). If
the Participant desires a partial distribution in excess of that which is necessary to satisfy such emergency, the Bank shall cause said Trustee to make such distribution, but shall not become liable thereupon for any tax penalty to which the
Participant would then become obligated by virtue of the provisions of the Code including, but not limited to, Section 409A. 
  

	 	C.	Bank Contributions: 

  
 The Bank may make matching or other contributions to this Plan for the benefit of the Participants from time to time at the discretion of the Bank.
Participants shall be one hundred percent (100%) vested in any Bank contributions hereunder. 
  

	 	D.	Distribution of Bank’s Contributions: 

  
 The vested amounts in the Participant’s Deferral Account attributed to Bank contributions shall also be distributed under the terms and conditions of
Subsection III (B). 
  

	 	E.	Investment of Bank’s Contribution to the Participant’s Deferral Account: 

  
 The Bank’s contribution to the Participant’s Deferral Account, if any, shall be invested under the terms and
conditions of the Participant’s Deferral Election (Subsection III (A)). 

	IV.	PARTICIPANT’S DEFERRAL ACCOUNT AND RABBI TRUST 

  

	 	A.	Rabbi Trust: 

  
 The Bank shall establish a Rabbi Trust for the Plan. The Bank shall pay all Deferred Fees and matching contributions, if any, to the Rabbi Trust. The
trustee for said trust (the “Trustee”) shall make actual investments and payments in accordance with this Plan. 
  

	 	(i)	Participant’s Deferral Account: 

  
 The Trustee shall establish and maintain a Deferral Account on behalf of each Participant. A Participant’s Deferral Account shall be credited with
(i) the Participant’s Deferred Fees, if any, pursuant to the Election Form, (ii) other Bank Contributions, if any, and (iii) earnings or losses attributable to the Deferral Account. Deferred Fees shall be credited to a Participant’s
Deferral Account as of the day of the month or quarter on which such fees would otherwise have been paid to the Participant in the absence of the Plan. Each Deferral Account of a Participant shall be maintained until the value thereof has been
distributed to or on behalf of such Participant or the Participant’s beneficiary(ies). The value of said Deferral Account shall be calculated quarterly. 
  

	 	(ii)	Dividends: 

  
 To the extent any cash dividends are paid on the Common Stock, the Bank shall credit the Deferral Accounts of those Participants who have elected to
receive Deferred Fees in the form of Common Stock in an amount equal to the cash dividends that the Participant would have received had he or she been the owner on each record date of the number of shares of Common Stock credited to his Deferral
Account on such record date. To the extent any stock dividends are paid, the Bank shall credit to the Deferral Accounts of those Participants who have elected to receive Deferred Fees in the form of Common Stock a number of shares or fraction
thereof of the Common Stock that the Participant would have received had he or she been the owner on each record date of the number of shares of Common Stock credited to his Deferral Account on such record date. 
  

	 	(iii)	Taxes: 

  
 To the extent required by law and in accordance with Subsection II (c) of the Rabbi Trust, the Bank shall instruct the Trustee in writing to withhold the
taxes and other amounts required to be withheld by federal, state or local laws on any payments made pursuant to this Section IV. 

	V.	DEATH OF PARTICIPANT 

  

	 	A.	Prior to Initial Distribution: 

  
 In the event of the death of the Participant prior to the initial distribution of the Participant’s Deferral Account, within thirty (30) days after
the Participant’s death, the Participant’s Deferral Account balance as of the date of death shall be distributed as set forth in the Election Form, or in one lump sum if no distribution election has been made on the Election Form, to such
individual or individuals as the Participant may have designated in writing and filed with the Bank. In the event no designation has been made in accordance with this Plan, the Participant’s Deferral Account balance shall be paid in one lump
sum to the duly qualified executor or administrator of the Participant’s estate for the benefit of said Participant’s estate. 
  

	 	B.	Subsequent to Initial Distribution: 

  
 In the event of the death of the Participant after the initial distribution from the Participant’s Deferral Account but prior to the Participant
receiving all payments due the Participant under this Plan, within thirty (30) days after the Participant’s death, the remaining Deferral Account balance as of the date of death shall be distributed as set forth in the Election Form, or in one
lump sum if no distribution election has been made on the Election Form, to such individual or individuals as the Participant may have designated in writing and filed with the Bank. In the event no designation has been made in accordance with this
Plan, the Participant’s Deferral Account balance shall be paid in one lump sum to the duly qualified executor or administrator of the Participant’s estate for the benefit of said Participant’s estate.  
  

	VI.	MISCELLANEOUS 

  

	 	A.	Amendment or Revocation: 

  
 It is understood that, during the lifetime of the Participant, this Plan may be amended or revoked at any time or times, in whole or in part, by the
mutual written consent of the Participant, the Bank, and the Trustee. In the event the Plan is revoked, no additional amounts may be deferred for the fiscal year in which the Plan is revoked. Distribution of each Participants’ Deferred Fees
upon revocation of the Plan will be made in accordance with Subsection III (B). 
  

	 	B.	Gender: 

  
 Whenever in this Plan words are used in the masculine or neuter gender, they shall be read and construed as in the masculine, feminine or neuter gender,
whenever they should so apply. 

	 	C.	Effect on Other Bank Plans: 

  
 Nothing contained in this Plan shall affect the right of the Participant to participate in or be covered by any qualified or non-qualified pension,
profit-sharing, group, bonus or other supplemental compensation or fringe benefit plan constituting a part of the Bank’s existing or future compensation structure. 
  

	 	D.	Headings: 

  
 Headings and subheadings in this Plan are inserted for reference and convenience only and shall not be deemed a part of this Plan. 
  

	 	E.	Partial Invalidity: 

  
 If any term, provision, covenant, or condition of this Plan is determined by an arbitrator or a court, as the case may be, to be invalid, void, or
unenforceable, such determination shall not render any other term, provision, covenant, or condition invalid, void, or unenforceable, and this Plan shall remain in full force and effect notwithstanding such partial invalidity. 
  

	 	F.	Continuation as Participant: 

  
 Neither this Plan nor the payments of any benefits hereunder shall be construed as giving to the Participant any right to be retained as a member of the
Board of Directors of the Bank. 
  

	 	G.	Applicable Law: 

  
 This Plan shall be governed and construed in accordance with the laws of the State of North Carolina.  
  

	VII.	ADMINISTRATION AND CLAIMS 

  

	 	A.	Plan Administrator: 

  
 The Plan Administrator of this Plan shall be the Bank until its resignation or removal by the Board. As Plan Administrator, the Bank shall be responsible
for the management and administration of this Plan. The Plan Administrator may delegate to others certain aspects of the management and operation responsibilities of this Plan including the employment of advisors and the delegation of ministerial
duties to qualified individuals. 

	 	B.	Claims Procedure and Arbitration: 

  
 In the event a dispute arises over benefits under this Plan and benefits are not paid to the Participant (or to the Participant’s beneficiary(ies) in
the case of the Participant’s death) and such claimants feel they are entitled to receive benefits hereunder, then a written claim must be made to the Plan Administrator named above, or its successor, within sixty (60) days from the date
payments are refused. The Plan Administrator shall review the written claim and if the claim is denied, in whole or in part, it shall provide in writing within sixty (60) days of receipt of such claim the specific reasons for such denial, reference
to the provisions of this Plan upon which the denial is based and any additional material or information necessary to perfect the claim. Such written notice shall further indicate the additional steps to be taken by claimants if a further review of
the claim denial is desired. A claim shall be deemed denied if the Plan Administrator fails to take any action within the aforesaid sixty (60) day period. 
  
 If claimants desire a second review they shall notify the Plan Administrator in writing within sixty (60) days of the first claim denial. Claimants may
review this Plan or any documents relating hereto and submit any written issues and comments it deems appropriate. In its sole discretion, the Plan Administrator shall then review the second claim and provide a written decision within sixty (60)
days of receipt of such claim. This decision shall likewise state the specific reasons for the decision and shall include reference to specific provisions of this Plan upon which the decision is based. 
  
 If claimants continue to dispute the benefit denial, then claimants may
submit the dispute to an arbitrator for final arbitration. The arbitrator shall be selected by mutual agreement of the Bank and the claimants. The arbitrator shall operate under any generally recognized set of arbitration rules. The parties hereto
agree that they and their heirs, personal representatives, successors and assigns shall be bound by the decision of such arbitrator with respect to any controversy properly submitted to it for determination. 
  

	VIII.	COMPLIANCE WITH LAW AND APPROVAL OF REGULATORY BODIES 

  
 No shares of Common Stock shall be issued, no certificates for shares of Common Stock shall be delivered, no payments shall be made except in compliance
with all applicable federal and state laws and regulations (including, without limitation, withholding tax requirements), any listing agreement with any stock exchange to which Crescent Financial Corporation is a party, and the rules of any domestic
stock exchange on which Crescent Financial Corporation’s shares of Common Stock may be listed. The Bank and Crescent Financial Corporation shall have the right to rely on an opinion of counsel as to such compliance. Any certificates for shares
issued to evidence Common Stock may bear such legends and statements as the Board of Directors of Crescent Financial Corporation may deem to be advisable to assure compliance with federal and state laws and regulations. No Common Stock shall be
issued and no certificates shall be delivered under this Plan until Crescent Financial Corporation and the Bank shall have received such approvals as either may deem advisable from regulatory bodies having jurisdiction over such matters. 

 IN WITNESS WHEREOF, the undersigned has executed this Plan instrument by authority of its Board of Directors this
16th day of December, 2004. 
  

			
	CRESCENT STATE BANK
	 Cary, North Carolina

		
	 By:
	 	 /s/ Bruce I. Howell

	 	 	 Chairman of the Board

 EXHIBIT “A-1” 
  
 CRESCENT STATE BANK 
  
 Directors’ Deferral Plan 
 Election Form 
  

	1.      	__________________________________________________________________________________________________________________ 

					
	    Last Name	 	First Name	 	Middle Initial      

  
 ____________________

 Social Security Number 
  
 ____________________________________________________________________________________ 
 Mailing Address (Street, City, State, Zip Code) 
  

	2.	Deferral Election 

  
 (a)          Yes, I choose to elect to defer 100% of the directors’ meeting and committee
meeting fees to which I am entitled from Crescent State Bank. 
  
 (b)              No, I decline to participate in the Directors’ Deferral Plan and choose to have my fees paid to me in cash on a quarterly basis. 
  

	3.	If deferral is chosen above, choose one of the following: 

  

	 	(a)	             Invest all deferral fees in an interest-bearing financial instrument chosen by Crescent State Bank.

  
 Or 
  

	 	(b)	             Credit all deferral fees (plus a bonus equal to 25% of such fees) to my account for the purpose of
purchasing common stock of Crescent Financial Corporation in accordance with the terms of the Directors’ Deferral Plan. 

	4.	Distribution Election 

  
 I have elected choice (a) in Item 3 above, and I hereby elect to have any distribution of the balance in my Deferral Account that was invested thereby paid to me as designated below: 
  

			
	______	  	one lump sum;
		
	______	  	five (5) annual installments with the amount of each installment determined as of each installment date by dividing the entire amount in my Deferral Account by the number of installments then
remaining to be paid, with the final installment to be the entire remaining balance in the Deferral Account;
		
	______	  	ten (10) annual installments with the amount of each installment determined as of each installment date by dividing the entire amount in my Deferral Account by the number of installments then
remaining to be paid, with the final installment to be the entire remaining balance in the Deferral Account; or
		
	______	  	                            
(            ) monthly installments with the amount of each installment determined as of each installment date by dividing the entire amount in my Deferral Account by the number of
installments then remaining to be paid, with the final installment to be the entire remaining balance in the Deferral Account.

  
 I understand that the distribution of
my Deferral Account, or any scheduled installments thereof, may not be accelerated. 
  
 If a distribution election is not made herein for those Participants selecting choice (a) of Item 3 above, then the benefit shall be paid in one lump sum. 
  
              I have elected choice (b) of Item 3. I understand the
distribution of the balance of my Deferral Account, consisting of common stock of Crescent Financial Corporation, will be transferred to me upon withdrawal from the Crescent State Bank Directors’ Deferral Plan in compliance with Subsection III
(B) of the Directors’ Deferral Plan. 
  
 Authorization

  
 I authorize Crescent Financial Corporation and Crescent State Bank to
effect the elections designated above. I understand that this election is for the taxable year ending December 31, 2005. Any change to these elections must be made prior to the taxable year ending December 31, 2004. The elections made herein shall
remain in effect for the taxable year for which the elections have been made and may not be changed thereafter. 
  

			
	
 Signature of Director
	 	
 Date

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