Document:

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                                                                    Exhibit 10.1

                                                                    CONFIDENTIAL

         STOCK PURCHASE AGREEMENT, dated as of May 2, 2002 (this "Agreement"),
among Paul G. Allen (the "Seller"), and each of the purchasers listed on
Schedule I hereto (each, a "Purchaser").

                  WHEREAS the parties hereto desire to consummate the
transaction contemplated herein, pursuant to which each Purchaser will purchase
from the Seller the number of shares of Common Stock, par value $0.01 per share
(the "Shares"), of USA Networks, Inc., a Delaware corporation (the "Company"),
set forth on Schedule I hereto,

                  NOW, THEREFORE, in consideration of the premises and the
representations, warranties and agreements herein contained, the parties hereto
agree as follows:

                                    ARTICLE I

                                   Definitions
                                   -----------

                  SECTION 1.1. Definitions. As used herein, the following terms
                               -----------
shall have the following meanings:

                  "Act" means The Securities Act of 1933, as amended, and the
                   ---
rules and regulations issued in respect thereto.

                  "Encumbrance" means any security interest, mortgage, pledge,
                   -----------
hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or
otherwise), charge against or interest in property to secure payment of a debt
or performance of an obligation or other priority or preferential arrangement of
any kind or nature whatsoever.

                  "Law" means any law, statute, regulation, rule, ordinance,
                   ---
requirement or other binding action or requirement of any governmental,
regulatory or administrative body, agency or authority or any court of judicial
authority.

                  "Order" means any decree, order, judgment, writ, award,
                   -----
injunction, stipulation or consent of or by any Federal, state or local
government or any court, administrative agency or commission or other
governmental authority or agency, domestic or foreign.

                  "Person" means any individual, corporation, general or limited
                   ------
partnership, joint venture, association, limited liability company, joint stock
company, trust, business, bank, trust company, estate (including any
beneficiaries thereof), unincorporated entity, cooperative, association,
government branch, agency or political subdivision thereof or organization of
any kind.

                  SECTION 1.2.  Other Definitions.
                                -----------------

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         Term                                   Defined in Section
         ----                                   ------------------

"Agreement" ................................................... Preamble
"Closing" .......................................................... 2.2
"Closing Date" ..................................................... 2.2
"Company" ..................................................... Preamble
"Purchaser" ................................................... Preamble
"Purchase Price" ................................................... 2.1
"Seller" ...................................................... Preamble
"Shares" ...................................................... Preamble

                                   ARTICLE II

                           Purchase and Sale of Stock
                           --------------------------

                  SECTION 2.1. Purchase and Sale. Subject to the terms and
                               -----------------
conditions of this Agreement, each Purchaser, severally and not jointly, agrees
to purchase, and the Seller agrees to sell to each Purchaser, at the Closing the
number of Shares set forth opposite the name of such Purchaser on Schedule I
hereto for a purchase price of $28.50 per share (the aggregate amount to be paid
by each Purchaser as set forth on Schedule I, the "Purchase Price").
                                                   --------------

                  SECTION 2.2.  The Closing.
                                -----------

                  (a) Subject to the terms and conditions of this Agreement, the
closing of the transactions contemplated by this Agreement (the "Closing") shall
                                                                 -------
take place at the offices of Allen & Company Incorporated, 711 Fifth Avenue, New
York, NY 10022, at 10:00 a.m. New York City Time no later than May 7, 2002, or
at such other time and place as shall be mutually agreed upon by the Seller and
each Purchaser (the "Closing Date").
                     ------------

                  (b) Subject to the conditions set forth in this Agreement, the
parties agree to consummate the following transactions no later than the Closing
Date:

                           (i) each Purchaser shall deliver to the Seller the
         Purchase Price by wire transfer of immediately available funds to the
         account designated in writing by the Seller prior to the Closing; and

                           (ii) the Seller shall assign and transfer to the
         Purchasers good and valid title in and to the Shares, free and clear of
         any Encumbrance (other than any Encumbrance arising by or through such
         Purchaser), by delivering to the Purchasers one or more stock
         certificates representing the Shares being sold, each registered in the
         name of such Purchaser or its nominee.

                                       2

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                                   ARTICLE III

                  Representations and Warranties of the Seller
                  --------------------------------------------

                  The Seller hereby represents and warrants as follows:

                  SECTION 3.1. Power and Authority; Enforceability. The Seller
                               -----------------------------------
has all requisite capacity, power and authority to execute, deliver and perform
this Agreement. This Agreement has been duly executed and delivered and
constitutes a valid and legally binding obligation of the Seller, enforceable
against the Seller in accordance with its terms, except (i) as limited by
applicable bankruptcy, insolvency, reorganization, moratorium, and other laws of
general application affecting enforcement of creditors' rights generally and
(ii) as limited by laws relating to the availability of specific performance,
injunctive relief, or other equitable remedies.

                  SECTION 3.2. Ownership; Transferability. The Shares are owned
                               --------------------------
by the Seller free and clear of any Encumbrance, and there are no restrictions
on transfer of the Shares to the Purchasers pursuant to the terms of this
Agreement.

                  SECTION 3.3. Consents and Approvals. Subject to the accuracy
                               ----------------------
of the representations and warranties made by each Purchaser in Article IV
hereof, neither the execution, delivery and performance of this Agreement by the
Seller, nor the consummation by the Seller of any transaction related hereto
will require any consent, approval, Order or authorization of, filing,
registration, declaration or taking of any other action with, or notice to, any
Person, other than such consents, approvals, filings or actions (i) as may be
required under the Federal securities laws which have or will be made or (ii)
which have already been obtained.

                  SECTION 3.4. Brokers, etc. Except for a fee payable to Allen &
                               ------------
Company Incorporated, the Seller is not obligated to pay any fee or commission
to any broker, finder or other similar Person in connection with the
transactions contemplated by this Agreement.

                  SECTION 3.5. Litigation. There are no actions, suits,
                               ----------
proceedings, orders, investigations or claims pending or, to the knowledge of
the Seller, threatened against or affecting the Seller, at law or in equity,
before any court, arbitration panel, tribunal or governmental commission,
bureau, agency or instrumentality which seeks to enjoin or restrain the
consummation of the transactions contemplated by this Agreement.

                  SECTION 3.6. Information. The Seller is not aware of any
                               -----------
material adverse change in the condition (financial or otherwise), business or
results of operations of the Company and its subsidiaries taken as a whole
except as publicly disclosed by the Company subsequent to the date of the most
recent financial statements included with the Company's filings with the
Securities and Exchange Commission.

                                       3

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                                   ARTICLE IV

                Representations and Warranties of the Purchasers
                ------------------------------------------------

                  Each Purchaser hereby represents and warrants with respect to
itself as follows:

                  SECTION 4.1. Existence; Power and Authority. If the Purchaser
                               ------------------------------
is a corporation, the Purchaser is a corporation duly organized, is validly
existing and is in good standing under the laws of its jurisdiction of
formation. If the Purchaser is a partnership or limited liability company, the
Purchaser is duly organized, validly existing and in good standing under the
laws of the jurisdiction where it is organized. If the Purchaser is an
individual, the Purchaser has the legal capacity to enter into this Agreement.
The Purchaser has full power and authority to execute, deliver and perform this
Agreement. This Agreement has been duly executed and delivered and constitutes a
valid and legally binding obligation of such Purchaser, enforceable against such
Purchaser in accordance with its terms, except (i) as limited by applicable
bankruptcy, insolvency, reorganization, moratorium, and other laws of general
application affecting enforcement of creditors' rights generally and (ii) as
limited by laws relating to the availability of specific performance, injunctive
relief, or other equitable remedies. Each of the Purchasers listed on Schedule I
hereto under the heading "Separate Account Purchasers" (each, an "Account
Purchaser") is entering into this Agreement and the transactions contemplated
hereby through its agent (the "Agent"), which has full discretionary authority
to manage the account of such Account Purchaser into which the Shares are being
purchased, and which has full authority to enter into this Agreement on behalf
of such Account Purchaser and to bind such Account Purchaser to the terms
hereof.

                  SECTION 4.2. Purchase Entirely for Own Account. This Agreement
                               ---------------------------------
is made with each Purchaser in reliance upon each Purchaser's representation to
the Seller, which by each Purchaser's execution of this Agreement each Purchaser
hereby confirms, that (i) the Shares to be received by each Purchaser will be
acquired (by the Agent on behalf of the Purchaser, in the case of the Account
Purchasers) for investment for each Purchaser's own account, not as a nominee or
agent, and not with a view to the resale or distribution of any part thereof,
and (ii) each Purchaser has no present intention of selling, granting any
participation in, or otherwise distributing the same, except, in the case of (i)
and (ii) of this Section, as permitted by the Act. By executing this Agreement,
each Purchaser further represents that it does not have any contract,
undertaking, agreement or arrangement with any Person to sell, transfer or grant
participation to such Person or to any third person, with respect to any of the
Shares being purchased by it hereunder.

                  SECTION 4.3. Disclosure of Information. Each Purchaser
                               -------------------------
believes it or, in the case of the Account Purchasers, the Agent, has all the
information it or the Agent, in the case of the Account Purchasers, considers
necessary or appropriate for deciding whether to purchase the Shares.

                  SECTION 4.4. Investment Experience. Each Purchaser, and the
                               ---------------------
Agent, on behalf of the Account Purchasers, acknowledges that it (i) has such
knowledge and experience in

                                       4

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financial and business matters that it is capable of evaluating the merits and
risks of the investment in the Shares, (ii) believes that it has the information
it considers necessary or appropriate for deciding whether to purchase the
Shares and (iii) is able, without materially impairing its financial condition,
to hold the Shares for an indefinite period of time and to suffer a complete
loss of its investment. Each Purchaser also represents that it has not been
organized solely for the purpose of acquiring the Shares being purchased by it
hereunder.

                  SECTION 4.5. Accredited Investor. Each Purchaser is an
                               -------------------
"accredited investor" within the meaning of Rule 501 of Regulation D under the
Act, as presently in effect.

                  SECTION 4.6. Restricted Securities. Each Purchaser and the
                               ---------------------
Agent, in the case of the Account Purchasers, understands that the Shares are
characterized as "restricted securities" under the Federal securities laws
inasmuch as they are being acquired from an affiliate of the Company in a
transaction not involving a public offering and that under such laws and
applicable regulations such securities may be resold without registration under
the Act only in certain limited circumstances.

                  SECTION 4.7. Further Limitations on Disposition. Without in
                               ----------------------------------
any way limiting the above, each Purchaser further agrees not to make any sale
or transfer of all or any portion of the Shares unless:

                  (a) there is then in effect a registration statement under the
         Act covering such proposed disposition and such disposition is made in
         accordance with such registration statement; or

                  (b) (i) such Purchaser shall have notified the Company of the
         proposed disposition and shall have furnished the Company with a
         reasonably detailed statement of the circumstances surrounding the
         proposed disposition, and (ii) if requested by the Company, such
         Purchaser shall have furnished the Company with an opinion of counsel,
         reasonably satisfactory to the Company, that such disposition is exempt
         from the registration and prospectus delivery requirements under the
         Act. The obligations of each Purchaser pursuant to (b)(i) and (ii) of
         this Section shall terminate upon the second anniversary of the Closing
         Date.

                  SECTION 4.8. Consents and Approvals. Neither the execution,
                               ----------------------
delivery and performance of this Agreement by such Purchaser, nor the
consummation by such Purchaser of any transaction related hereto will require
any consent, approval, Order or authorization by, filing, registration,
declaration or taking of any other action with, or notice to, any Person, other
than such consents, approvals, filings or actions (i) as may be required under
the Federal securities laws or (ii) which have already been obtained. The
acquisition of the Shares by such Purchaser is not subject to the notice and
waiting period requirements of the Hart-Scott-Rodino Antitrust Improvements Act
of 1976, as amended.

                  SECTION 4.9. Legends. It is understood that the certificate(s)
                               -------
evidencing the Shares shall bear the following legend:

                                       5

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                  THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED
         FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
         1933, AS AMENDED (THE "ACT"). SUCH SHARES MAY NOT BE SOLD OR
         TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS THE COMPANY
         RECEIVES AN OPINION OF COUNSEL REASONABLY ACCEPTABLE TO IT STATING THAT
         SUCH SALE OR TRANSFER IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS
         DELIVERY REQUIREMENTS UNDER THE ACT.

                  SECTION 4.11. Brokers, etc. Each Purchaser represents that it
                                ------------
is not obligated to pay any fee or commission to any broker, finder or other
similar Person in connection with the transactions contemplated by this
Agreement.

                                    ARTICLE V

                     Conditions Precedent; Related Covenants
                     ---------------------------------------

                  SECTION 5.1. Conditions Precedent to Obligations of All
                               ------------------------------------------
Parties. The respective obligations of each party to this Agreement shall be
-------
subject to the fulfillment, at or prior to the Closing Date, to the following
conditions, or waiver by such party:

                  (a) Legality. At the time of the Closing, the transactions
                      --------
         contemplated by this Agreement shall be legally permitted by all
         applicable Laws and Orders.

                  (b) Absence of Proceedings to Restrain Consummation of the
                      ------------------------------------------------------
         Agreement. No judgment, injunction or order shall have been entered
         ---------
         restraining or prohibiting the transactions contemplated by this
         Agreement.

                  SECTION 5.2. Conditions Precedent to Obligations of each
                               -------------------------------------------
Purchaser. The obligation of each Purchaser to purchase Shares at the Closing is
---------
subject to the fulfillment of each of the following conditions:

                  (a) Representations and Warranties. The representations and
                      ------------------------------
         warranties of the Seller set forth in this Agreement shall be true and
         correct in all material respects as of the date of this Agreement and
         as of the Closing Date.

                  (b) Performance. The Seller shall have performed and complied
                      -----------
         in all material respects with all agreements, obligations and
         conditions contained in this Agreement that are required to be
         performed or complied with by it on or before the Closing.

                  (c) Registration Rights Agreement. The Registration Rights
                      -----------------------------
         Agreement among the Company and the Purchasers substantially in the
         form previously agreed by the parties shall have been executed
         and delivered by the Company, assuming the execution and delivery
         thereof by each Purchaser.

                                       6

<PAGE>

                  SECTION 5.3. Conditions Precedent to Obligations of the
                               ------------------------------------------
Seller. The obligations of the Seller to each Purchaser shall be subject to the
------
fulfillment, at or prior to the Closing, of the following conditions:

                  (a) Representations and Warranties. The representations and
                      ------------------------------
         warranties of such Purchaser set forth in this Agreement shall be true
         and correct in all material respects as of the date of this Agreement
         and as of the Closing Date.

                  (b) Performance. Such Purchaser shall have performed and
                      -----------
         complied in all material respects with all agreements, obligations and
         conditions contained in this Agreement that are required to be
         performed or complied with by it on or before the Closing Date.

         SECTION 5.4. Satisfaction of Conditions and Consummation of
                      ----------------------------------------------
Transactions. Notwithstanding anything to the contrary in this Agreement, (i)
------------
each Purchaser shall use its best efforts to cause the conditions to the
Seller's obligations hereunder and (ii) the Seller shall use its best efforts to
cause the conditions to each Purchaser's obligations hereunder, (including in
the case of both (i) and (ii) of this Section those obligations set forth in
Section 5.1) to be satisfied as soon as reasonably possible, and to consummate
the transactions contemplated by this Agreement as soon as reasonably possible
after the satisfaction thereof and in any event no later than May 7, 2002.

                                   ARTICLE VI

                                   Termination
                                   -----------

                  SECTION 6.1. Termination by Mutual Consent. This Agreement may
                               -----------------------------
be terminated and the transactions contemplated hereby may be abandoned at any
time prior to the Closing by the written consent of each party hereto.

                  SECTION 6.2. Termination by either the Seller or a Purchaser.
                               -----------------------------------------------
This Agreement may be terminated (upon written notice from the terminating party
hereto to the other parties hereto) and the transactions contemplated hereby may
be abandoned by action of any party hereto, if (i) the Closing shall not have
occurred on or prior to May 7, 2002, or (ii) any Federal, state or local
government or any court, administrative agency or commission or other
governmental authority or agency, domestic or foreign shall have issued a Law or
Order permanently restraining, enjoining or otherwise prohibiting the
transactions contemplated hereby and such Law or Order shall have become final
and nonappealable.

                  SECTION 6.3. Effect of Termination and Abandonment. In the
                               -------------------------------------
event of termination of this Agreement pursuant to this Article VI hereof, no
party hereto (or in the case of the Seller, any of his representatives or, in
the case of each Purchaser, its directors or officers or other controlling
persons) shall have any liability or further obligation to any other party
hereto pursuant to this Agreement, except that Article VII hereof shall survive
termination of this Agreement and nothing herein will relieve any party hereto
from liability for any breach of this

                                       7

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Agreement occurring prior to such termination. Notwithstanding anything to the
contrary, the termination of this Agreement pursuant to this Article 6 by one or
more, but not all of the Purchasers shall not terminate the obligations or
requirements of the remaining Purchasers under this Agreement.

                                   ARTICLE VII

                      General Provisions; Other Agreements
                      ------------------------------------

                  SECTION 7.1. Default by a Purchaser. The failure of one or
                               ----------------------
more, but not all of the Purchasers, to fulfill their respective obligations
under this Agreement shall not discharge or release the remaining Purchasers
from their obligations hereunder.

                  SECTION 7.2. Press Releases. No press release or public
                               --------------
announcement related to this Agreement or the transactions contemplated hereby
shall be issued or made by any party hereto without the approval of the
Purchasers and the Seller, other than disclosures and public filings by the
Seller related to the transactions contemplated by this Agreement or as
otherwise required by Law. If any such press release or public announcement is
so required by a Purchaser (except in the case of any disclosure required under
the Federal securities laws to be made in a filing with the Securities and
Exchange Commission), the Purchaser making such disclosure shall consult with
the other parties prior to making such disclosure, and the parties shall use all
reasonable efforts, acting in good faith, to agree upon a text for such
disclosure which is satisfactory to each of the parties.

                  SECTION 7.3. Expenses. Regardless of whether the transactions
                               --------
contemplated hereby are consummated, all legal and other costs and expenses
incurred in connection with this Agreement and the transactions contemplated
hereby shall be paid by the party hereto incurring such costs and expenses.

                  SECTION 7.4. Governing Law. This Agreement shall be governed
                               -------------
by and construed in accordance with the laws of the State of New York without
regard to the conflicts of laws provisions thereof.

                  SECTION 7.5. Headings. Article and Section headings used in
                               --------
this Agreement are for convenience only and shall not affect the meaning or
construction of this Agreement.

                  SECTION 7.6. Notices. All notices, requests, demands or other
                               -------
communications required by or otherwise with respect to this Agreement shall be
in writing and shall be deemed to have been duly given to any party hereto when
delivered by hand, by messenger or by a nationally recognized overnight delivery
company, when delivered by facsimile and confirmed by return facsimile, in each
case to the applicable addresses set forth below:

                  (a)      if to a Purchaser, to the address specified on the
                           signature page hereof;

                  (b)      if to the Seller to:

                                       8

<PAGE>

                           Paul G. Allen
                           c/o Vulcan, Inc.
                           505 Union Station
                           505 Fifth Avenue South, Suite 900
                           Seattle, WA 98104
                           Facsimile: (206) 342-3002

                           with copies to:

                           William D. Savoy
                           Vulcan, Inc.
                           505 Union Station
                           505 Fifth Avenue South, Suite 900
                           Seattle, WA 98104
                           Facsimile: (206) 342-3000

                           and

                           Irell & Manella LLP
                           1800 Avenue of the Stars, Suite 900
                           Los Angeles, CA 90067
                           Attn: Alvin G. Segel, Esq.
                           Facsimile: (310) 203-7199

                  SECTION 7.7. Parties in Interest. All the terms and provisions
                               -------------------
of this Agreement shall be binding upon and inure to the benefit of and be
enforceable by the parties hereto and their respective successors and permitted
assigns; provided that, except as otherwise expressly set forth in this
Agreement, neither the rights nor the obligations of (i) the Seller, may be
assigned or delegated without the prior written consent of each of the
Purchasers or (ii) any Purchaser, may be assigned or delegated without the prior
written consent of the Seller, and any purported assignment in violation hereof
shall be null and void.

                  SECTION 7.8. Entire Agreement. This Agreement constitutes the
                               ----------------
entire agreement between the parties hereto and supersedes all prior agreements
and understandings, both written and oral, with respect to the subject matter
hereof.

                  SECTION 7.9. Counterparts. This Agreement may be executed in
                               ------------
one or more counterparts, each of which shall be deemed an original but all of
which together shall constitute one and the same instrument. Signatures on this
Agreement may be communicated by facsimile transmission and shall be binding
upon the parties hereto so transmitting their signatures. Counterparts with
original signatures shall be provided to the other parties hereto following the
applicable facsimile transmission; provided that the failure to provide the
original counterpart shall have no effect on the validity or the binding nature
of this Agreement.

                  SECTION 7.10. Amendment. Any term of this Agreement may be
                                ---------
modified or amended only by an instrument in writing signed by each of the
parties hereto. Any amendment

                                       9

<PAGE>

or modification effected in accordance with this paragraph shall be binding upon
each holder of any securities purchased under this Agreement at the time
outstanding, each future holder of all such securities and the Seller.

                  SECTION 7.11. Severability. If one or more provisions of this
                                ------------
Agreement are held to be unenforceable under applicable law, such provision
shall be excluded from this Agreement and the balance of the Agreement shall be
interpreted as if such provision were so excluded and shall be enforced in
accordance with its terms.

                                       10

<PAGE>

         IN WITNESS WHEREOF, the parties hereto have caused this Stock Purchase
Agreement to be duly executed and delivered as of the date set forth above.

PAUL G. ALLEN

-----------------------------------

[Purchaser Signature Pages Follow]

<PAGE>

NAME OF PURCHASER:                       ADDRESS FOR NOTICES (Please Print):

------------------------------           ---------------------------------------

                                         ---------------------------------------

SIGNATURE:                               ---------------------------------------
                                         Attention:
                                                   -----------------------------
                                         Telecopy:
                                                   -----------------------------
By:
   ----------------------------
   Name:
   Title:

<PAGE>

                                   SCHEDULE I

PURCHASER
                                 -------------------------------------------

AGGREGATE # OF SHARES
                                 -------------------------------------------

PURCHASE PRICE
                                 -------------------------------------------

"SEPARATE ACCOUNT PURCHASERS" (if applicable)<PAGE>

                                                                    Exhibit 10.4

                              EMPLOYMENT AGREEMENT

     THIS AGREEMENT is entered into as of ____________, 200__ by and between
CRESCENT STATE BANK, a North Carolina banking corporation (hereinafter referred
to as the "Bank") and ______________ of ________, North Carolina (hereinafter
referred to as the "Officer").

     For and in consideration of their mutual promises, covenants and conditions
hereinafter set forth, and other good and valuable consideration, the receipt
and sufficiency of which hereby is acknowledged, the parties agree as follows:

     1. Employment. The Bank agrees to employ the Officer and the Officer agrees
        ----------
to accept employment upon the terms and conditions stated herein as
__________________ of the Bank. The Officer shall render such administrative and
management services to the Bank as are customarily performed by persons situated
in a similar executive capacity. The Officer shall promote the business of the
Bank and perform such other duties as shall, from time to time, be reasonably
assigned by the President. Upon the request of the President, the Officer shall
disclose all business activities or commercial pursuits in which Officer is
engaged, other than Bank duties.

     2. Compensation. The Bank shall pay the Officer during the term of this
        -------------
Agreement, as compensation for all services rendered by the Officer to the Bank,
a base salary at the rate of $___________ per annum, payable in cash not less
frequently than monthly. The rate of such salary shall be reviewed by the Board
of Directors of the Bank (the "Directors") not less often than annually and the
Directors may increase, but shall not decrease, such rate during the term of
this Agreement. Such rate of salary, or increased rate of salary, as the case
may be, may be further increased from time to time in such amounts as the
Directors, in their discretion, may decide. In determining salary increases, the
Directors shall compensate the Officer for increases in the cost of living and
may also provide for performance or merit increases. Participation in the Bank's
incentive compensation, deferred compensation, discretionary bonus,
profit-sharing, retirement and other employee benefit plans and participation in
any fringe benefits shall not reduce the salary payable to the Officer under
this Paragraph. In the event of a Change in Control (as defined in Paragraph
10), the Officer's rate of salary shall be increased not less than four percent
annually during the term of this Agreement. Any payments made under this
Agreement shall be subject to such deductions as are required by law or
regulation or as may be agreed to by the Bank and the Officer.

     3. Discretionary Bonuses. During the term of this Agreement, the Officer
        ---------------------
shall be entitled to such discretionary bonuses as may be authorized, declared
and paid by the Directors to the Bank's key management employees. No other
compensation provided for in this

<PAGE>
Agreement shall be deemed a substitute for the Officer's right to such
discretionary bonuses when and as declared by the Directors.

     4.  Participation in Retirement and Employee Benefit Plans; Fringe
         --------------------------------------------------------------
         Benefits.
         ---------
     (a) The Bank shall provide family medical coverage and disability insurance
for the Officer and the Officer shall also be entitled to participate in any
plan relating to deferred compensation, stock options, stock purchases, pension,
thrift, profit sharing, group life insurance, education, or other retirement or
employee benefits that the Bank has adopted, or may, from time to time adopt,
for the benefit of its executive employees or for employees generally, subject
to the eligibility rules of such plans.

     (b) The Bank shall pay the expenses of the Officer for membership dues in
civic clubs.

     (c) The Officer shall also be entitled to participate in any other fringe
benefits which are now or may be or become applicable to the Bank's executive
employees, including the payment of reasonable expenses for attending annual and
periodic meetings of trade associations, and any other benefits which are
commensurate with the duties and responsibilities to be performed by the Officer
under this Agreement. Additionally, the Officer shall be entitled to such
vacation and sick leave as shall be established under uniform employee policies
promulgated by the Directors. The Bank shall reimburse the Officer for all
out-of-pocket reasonable and necessary business expenses which the Officer may
incur in connection with the Officer's services on behalf of the Bank.

     5. Term. The initial term of employment under this Agreement shall be for
        ----
the period commencing upon the effective date of  this Agreement and ending
three calendar years from the effective date of this Agreement.

     6.  Loyalty;  Noncompetition.
         ------------------------
     (a) The Officer shall devote his full efforts and entire business time to
the performance of the Officer's duties and responsibilities under this
Agreement.

     (b) During the term of this Agreement, or any renewals thereof, and for a
period of one year after termination, the Officer agrees he will not, within
Wake County, North Carolina, or within 15 miles of any Bank office opened during
the term of this Agreement, directly or indirectly, own, manage, operate, join,
control or participate in the management, operation or control of, or be
employed by or connected in any manner with any business which competes with the
Bank or any of its subsidiaries without the prior written consent of the Bank;
provided, however, that the provisions of this Paragraph shall not apply in the
event the Officer's employment is unilaterally terminated by the Bank for Cause,
(as such term is defined in Paragraph 8(c) hereof) or in the event the Officer
terminates his employment with the Bank after the occurrence of a "Termination
Event" (as such term is defined in Paragraph 10(b) hereof) following a "Change
of Control" (as such term is defined in Paragraph 10(d) hereof). Notwithstanding
the foregoing, the Officer shall be free, without such consent, to purchase or
hold as an investment or otherwise, up to five percent of the outstanding stock
or
                                       2

<PAGE>
other security of any corporation which has its securities publicly traded on
any recognized securities exchange or in any over-the counter market.

     (c) The Officer agrees he will hold in confidence all knowledge or
information of a confidential nature with respect to the business of the Bank or
any subsidiary received by the Officer during the term of this Agreement and
will not disclose or make use of such information without the prior written
consent of the Bank. The Officer agrees that he will be liable to the Bank for
any damages caused by unauthorized disclosure of such information. Upon
termination of his employment, the Officer agrees to return all records or
copies thereof of the Bank or any subsidiary in his possession or under his
control which relate to the activities of the Bank or any subsidiary.

     (d) The Officer acknowledges that it would not be possible to ascertain the
amount of monetary damages in the event of a breach by the Officer under the
provisions of this Paragraph 6. The Officer agrees that, in the event of a
breach of this Paragraph 6, injunctive relief enforcing the terms of this
Paragraph 6 is an appropriate remedy. If the scope of any restriction contained
in this Paragraph 6 is determined to be too broad by any court of competent
jurisdiction, then such restriction shall be enforced to the maximum extent
permitted by law and the Officer consents that the scope of this restriction may
be modified judicially.

     7. Standards. The Officer shall perform his duties and responsibilities
       -----------
under this Agreement in accordance with such reasonable standards expected of
employees with comparable positions in comparable organizations and as may be
established from time to time by the Directors. The Bank will provide the
Officer with the working facilities and staff customary for similar executives
and necessary for the Officer to perform his duties.

     8. Termination and Termination Pay. (a) The Officer's employment under this
        --------------------------------
Agreement shall be terminated upon the death of the Officer during the term of
this Agreement, in which event, the Officer's estate shall be entitled to
receive the compensation due the Officer through the last day of the calendar
month in which the Officer's death shall have occurred and for a period of one
month thereafter.

     (b) The Officer's employment under this Agreement may be terminated at any
time by the Officer upon 60 days' written notice to the Directors. Upon such
termination, the Officer shall be entitled to receive compensation through the
effective date of such termination.

     (c) The Directors may terminate the Officer's employment at any time, but
any termination by the Directors, other than termination for Cause, shall not
prejudice the Officer's right to compensation or other benefits under this
Agreement. The Bank shall provide written notice specifying the grounds for
termination for Cause. The Officer shall have no right to receive compensation
or other benefits for any period after termination for Cause. Termination for
Cause shall include termination because of the Officer's personal dishonesty or
moral turpitude, incompetence, willful misconduct, breach of fiduciary duty
involving personal profit, intentional failure to perform stated duties, willful
violation of any law, rule, or regulation (other than traffic violations or
similar offenses) or final cease-and-desist order, or

                                       3

<PAGE>

material breach of any provision of this Agreement. Notwithstanding such
termination, the obligations under Paragraph 6(c) shall survive any termination
of employment.

     (d) Subject to the Bank's obligations and the Officer's rights under (i)
Title I of the Americans with Disabilities Act, ss.504 of the Rehabilitation
Act, and the Family and Medical Leave Act, and to (ii) the vacation leave,
disability leave, sick leave and any other leave policies of the Bank, the
Officer's employment under this Agreement automatically shall be terminated in
the event the Officer becomes disabled during the term of this Agreement and it
is determined by the Bank that the Officer is unable to perform the essential
functions of the Officer's job under this Agreement for ninety (90) business
days or more during any 12-month period. Upon any such termination, the Officer
shall be entitled to receive any compensation the Officer shall have earned
prior to the date of termination but which remains unpaid, and shall be entitled
to any payments provided under any disability income plan of the Bank which is
applicable to the Officer.

     In the event of any disagreement between the Officer and the Bank as to
whether the Officer is physically or mentally incapacitated such as will result
in the termination of the Officer's employment pursuant to this Paragraph 8(d),
the question of such incapacity shall be submitted to an impartial physician
licensed to practice medicine in North Carolina for determination and who will
be selected by mutual agreement of the Officer and the Bank, or failing such
agreement, by two (2) physicians (one (1) of whom shall be selected by the Bank
and the other by the Officer), and such determination of the question of such
incapacity by such physician or physicians shall be final and binding on the
Officer and the Bank. The Bank shall pay the reasonable fees and expenses of
such physician or physicians in making any determination required under this
Paragraph 8(d).

     9. Additional Regulatory Requirements. Notwithstanding anything contained
        ----------------------------------
in this Agreement to the contrary, it is understood and agreed that the Bank (or
any of its successors in interest) shall not be required to make any payment or
take any action under this Agreement if:

     (a) such payment or action is prohibited by any governmental agency having
jurisdiction over the Bank (hereinafter referred to as "Regulatory Authority")
because the Bank is declared by such Regulatory Authority to be insolvent, in
default or operating in an unsafe or unsound manner; or,

     (b) in the reasonable opinion of counsel to the Bank, such payment or
action (i) would be prohibited by or would violate any provision of state or
federal law applicable to the Bank, including, without limitation, the Federal
Deposit Insurance Act as now in effect or hereafter amended, (ii) would be
prohibited by or would violate any applicable rules, regulations, orders or
statements of policy, whether now existing or hereafter promulgated, of any
Regulatory Authority, or (iii) otherwise would be prohibited by any Regulatory
Authority.

     10. Change in Control. (a) In the event of a termination of the Officer's
         ------------------
employment in connection with, or within twenty-four (24) months after, a
"Change in Control" (as defined in Subparagraph (d) below) of the Bank other
than for Cause (as defined in Paragraph 8), the

                                       4

<PAGE>
Officer shall be entitled to receive the amount set forth in Subparagraph (c)
below. Said sum shall be payable as provided in Subparagraph (e) below.

     (b) In addition to any rights the Officer might have to terminate this
Agreement contained in Paragraph 8, the Officer shall have the right to
terminate this Agreement upon the occurrence of any of the following events (the
"Termination Events") within twenty-four months following a Change in Control of
the Bank:

         (i) Officer is assigned any duties and/or responsibilities that, in
     Officer's reasonable determination, are inconsistent with or constitute a
     demotion or reduction in the Officer's position, duties, responsibilities
     or status as such existed at the time of the Change in Control or with his
     reporting responsibilities or titles with the Bank in effect at such time,
     regardless of Officer's resulting position; or

         (ii) Officer's annual base salary rate is reduced below the annual
     amount in effect as of the effective date of a Change in Control or as the
     same shall have been increased from time to time following such effective
     date; or

         (iii) Officer's life insurance, medical or hospitalization insurance,
     disability insurance, stock options plans, stock purchase plans, deferred
     compensation plans, management retention plans, retirement plans or similar
     plans or benefits being provided by the Bank to the Officer as of the
     effective date of the Change in Control are reduced in their level, scope
     or coverage, or any such insurance, plans or benefits are eliminated,
     unless such reduction or elimination applies proportionately to all
     salaried employees of the Bank who participated in such benefits prior to
     such Change in Control; or

         (iv) Officer is transferred to a location which is an unreasonable
     distance from his current principal work location without the Officer's
     express written consent.

A Termination Event shall be deemed to have occurred on the date such action or
event is implemented or takes effect.

     (c) In the event that the Officer's employment is terminated pursuant to
this Paragraph 10, the Bank will be obligated to pay or cause to be paid to
Officer an amount equal to 2.99 times the Officer's "base amount" as defined in
Section 280G(b)(3) of the Internal Revenue Code of 1986, as amended (the
"Code").

     (d) For the purposes of this Agreement, the term Change in Control shall
mean any of the following events:

         (i) After the effective date of this Agreement, any "person" (as such
     term is defined in Section 7(j)(8)(A) of the Change in Bank Control Act of
     1978), directly or indirectly, acquires beneficial ownership of voting
     stock, or acquires beneficial ownership of voting stock, or acquires
     irrevocable proxies or any combination of voting stock and irrevocable
     proxies, representing twenty-five percent (25%) or more of any class of
     voting securities of the Bank, or acquires control of, in any manner, the
     election of a majority of the Directors; or

         (ii) The Bank consolidates or merges with or into another corporation,
     association or entity, or is otherwise reorganized, where the Bank is not
     the surviving corporation in such transaction; or

                                       5

<PAGE>

         (iii) All or substantially all of the assets of the Bank are sold or
     otherwise transferred to or are acquired by any other corporation,
     association or other person, entity or group.

Notwithstanding the other provisions of this Paragraph 10, a transaction or
event shall not be considered a Change in Control if, prior to the consummation
or occurrence of such transaction or event, Officer and Bank agree in writing
that the same shall not be treated as a Change in Control for purposes of this
Agreement.

     (e) Such amounts payable pursuant to this Paragraph 10 shall be paid, at
the option of the Officer, either in one lump sum or in thirty-six (36) equal
monthly payments following termination of Officer's employment.

     (f) Following a Termination Event which gives rise to Officer's rights
hereunder, the Officer shall have twelve (12) months from the date of occurrence
of the Termination Event to terminate this Agreement pursuant to this Paragraph
10. Any such termination shall be deemed to have occurred only upon delivery to
the Bank (or to any successor corporation) of written notice of termination
which describes the Change in Control and the Termination Event. If Officer does
not so terminate this Agreement within such twelve-month period, he shall
thereafter have no further rights hereunder with respect to that Termination
Event, but shall retain rights, if any, hereunder with respect to any other
Termination Event as to which such period has not expired.

     (g) It is the intent of the parties hereto that all payments made pursuant
to this Agreement be deductible by the Bank for federal income tax purposes and
not result in the imposition of an excise tax on the Officer. Notwithstanding
anything contained in this Agreement to the contrary, any payments to be made to
or for the benefit of the Officer which are deemed to be "parachute payments" as
that term is defined in Section 280G of the Code, shall be modified or reduced
to the extent deemed to be necessary by the Directors to avoid the imposition of
excise taxes on the Officer under Section 4999 of the Code or the disallowance
of a deduction to the Bank under Section 162 of the Code.

     (h) In the event any dispute shall arise between the Officer and the Bank
as to the terms or interpretation of this Agreement, including this Paragraph
10, whether instituted by formal legal proceedings or otherwise, including any
action taken by the Officer to enforce the terms of this Paragraph 10 or in
defending against any action taken by the Bank, the Bank shall reimburse the
Officer for all costs and expenses, proceedings or actions, in the event the
Officer prevails in any such action.

     11. Successors and Assigns. (a) This Agreement shall inure to the benefit
         ----------------------
of and be binding upon any corporate or other successor of the Bank which shall
acquire, directly or indirectly, by conversion, merger, purchase or otherwise,
all or substantially all of the assets of the Bank.

     (b) Since the Bank is contracting for the unique and personal skills of the
Officer, the Officer shall be precluded from assigning or delegating his rights
or duties hereunder without first obtaining the written consent of the Bank.

                                       6

<PAGE>

     12. Modification; Wavier; Amendments. No provision of this Agreement may be
         ---------------------------------
modified, waived or discharged unless such waiver, modification or discharge is
agreed to in writing, signed by the Officer and on behalf of the Bank by such
officer as may be specifically designated by the Board of Directors. No waiver
by either party hereto, at any time, of any breach by the other party hereto of,
or compliance with, any condition or provision of this Agreement to be performed
by such other party shall be deemed a waiver of similar or dissimilar provisions
or conditions at the same or at any prior or subsequent time. No amendment or
addition to this Agreement shall be binding unless in writing and signed by both
parties, except as herein otherwise provided.

     13. Applicable Law. This Agreement shall be governed in all respects
         ---------------
whether as to validity, construction, capacity, performance or otherwise, by the
laws of North Carolina, except to the extent that federal law shall be deemed to
apply.

     14. Severability. The provisions of this Agreement shall be deemed
         -------------
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof.

     15. Entire Agreement. This Agreement contains the entire agreement of the
         -----------------
parties with respect to the transactions described herein and supersedes any and
all other oral or written agreements between any of the parties hereto other
than those contained herein in writing.

                            [Signature page follows.]

                                       7

<PAGE>

     IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first hereinabove written.

                                     CRESCENT STATE BANK

                                     By:________________________
                                     Michael G. Carlton
                                     President and Chief Executive Officer

ATTEST:

-----------------------
Corporate Secretary

                                     OFFICER

                                     ---------------------------------[SEAL]

                                     ----------------

                                       8

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