UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of
The
Securities Exchange Act of 1934
Date of
Report (Date of earliest event reported) December
31, 2010
Crescent
Financial Corporation
(Exact
name of registrant as specified in its charter)
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North
Carolina
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000-32951
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56-2259050
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(State
or other jurisdiction
of
incorporation)
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(Commission
File Number)
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(IRS
Employer Identification No.)
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1005
High House Road, Cary, NC
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27513
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(Address
of principal executive offices)
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(Zip
Code)
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Registrant's
telephone number, including area code: (919) 460-7770
n/a
(Former
name or former address, if changed since last report)
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Check the appropriate box below
if the Form 8-K filing is intended to simultaneously satisfy the filing
obligation of the registrant under any of the following
provisions:
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o
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Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
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o
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Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
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o
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Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
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o
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Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
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Item 5.02 Departure of
Directors or Certain Officers; Election of Directors; Appointment of Certain
Officers; Compensatory Arrangements of Certain Officers
(e) Compensatory
Arrangements of Certain Officers.
On
December 31, 2010, Crescent Financial Corporation (the “Registrant”) and its
wholly-owned subsidiary, Crescent State Bank (the “Bank”), entered into
amendment agreements with several of the Registrant’s and Bank’s executive
officers to amend specific sections of such executive officers’ employment
agreements and salary continuation agreements in order to clarify, conform, or
make technical corrections to such compensatory arrangements in order to comply
with Section 409A of the Internal Revenue Code of 1986 (“IRC”).
Employment
Agreements. The Registrant
and the Bank entered into agreements to amend the existing employment agreements
of each of Michael G. Carlton, President and Chief Executive Officer of the
Registrant and the Bank, Bruce W. Elder, Vice President and Principal Financial
Officer of the Registrant and Senior Vice President and Chief Financial Officer
of the Bank, Ray D. Vaughn, Senior Vice President and Chief Operating Officer of
the Bank, Thomas E. Holder, Jr., Senior Vice President and Senior Credit Officer
of the Bank, and W. Keith Betts, Executive Vice President and Market President
of the Bank. The following describes the amendments to the
agreements:
409A Reimbursement and In-kind
Benefits Rules. The employment agreements of Messrs.
Carlton, Elder, Vaughn, Holder, and Betts were amended in order to incorporate
the 409A reimbursement rules into the agreements.
Outplacement Reimbursement
Expenses. Messrs. Carlton’s and Betts’ employment agreements
were amended to specify the period following an involuntary separation of
service during which the executive could incur reimbursable outplacement
expenses. The pre-amendment employment agreements, while containing a
maximum amount of such eligible expenses, did not specify the period during
which the expenses could be incurred. The amendments limit the
eligible period for such expenses to two years following an involuntary
separation of service.
Legal Fee
Reimbursement. Mr. Carlton’s pre-amended employment agreement
provided for reimbursement of eligible legal expenses that Mr. Carlton could
potentially incur following a change in control transaction (as defined in the
employment agreement) in the event the enforceability of the agreement was
challenged or some other action was initiated or necessitated to enforce
obligations under the employment agreement. While the pre-amended
agreement specified that the maximum amount of reimbursable legal expenses was
$250,000, it did not previously specify the period during which such expenses
could be incurred. Mr. Carlton’s agreement was amended to specify
that such eligible legal expenses could be incurred for a period of six years
after a change in control transaction, and the prior aggregate cap of $250,000
was prorated over the six year period. In order to avoid adversely
affecting Mr. Carlton by prorating the prior aggregate cap, the maximum level of
annual reimbursable legal expenses was then enhanced to $250,000 per year under
the employment agreement.
2
Clarification of the Time of Payment
of any IRC Section 280G Gross-Up Payments. Mr. Carlton’s
employment agreement was also amended to clarify the time of payment of any
Gross-Up Payment Amount that could become due under his existing employment
agreement.
Salary Continuation
Agreements. The Bank entered
into agreements to amend its existing salary continuation agreements with each
of Messrs. Carlton, Elder, Vaughn, Holder, and Betts. The following
describes the amendments to those agreements:
409A Reimbursement and In-kind
Benefits Rules. The salary continuation agreements of
Messrs. Carlton, Elder, Vaughn, Holder, and Betts were amended in order to
incorporate the 409A reimbursement rules into the agreements.
Legal Fee
Reimbursement. Messrs. Carlton’s, Elder’s, Vaughn’s, Holder’s,
and Betts’ pre-amended salary continuation agreements provided for the
reimbursement of eligible legal expenses that the relevant executive could
potentially incur following a change in control transaction (as defined in the
salary continuation agreement) in the event the enforceability of the relevant
agreement was challenged or some other action was initiated or necessitated to
enforce obligations under the relevant agreement. While the
pre-amended agreements specified the maximum amount of reimbursable legal
expenses, the salary continuation agreements did not previously specify the
period during which such expenses could be incurred. Each executive’s
agreement was amended to specify that such eligible legal expenses could be
incurred for a period of six years after a change in control transaction, and
the prior applicable aggregate cap (which reimbursable caps were, in the case of
Mr. Carlton - $250,000, in the cases of Messrs. Vaughn and Betts - $50,000, and
in the cases of Messrs. Elder and Holder - $25,000) was prorated over the six
year period. In order to avoid adversely affecting the executives by
prorating the prior aggregate caps, the maximum level of annual reimbursable
legal expenses, in each case, was then enhanced to the prior indicated aggregate
caps.
Time and Form of Payment Upon a
Change in Control. Messrs. Carlton’s and Betts’ salary
continuation agreements were amended to bring them into compliance with Section
409A rules regarding single time and form of payment. The pre-amended
agreements provided for differing time and form of payments depending upon
whether a Separation from Service occurred prior or subsequent to a change in
control (as defined in the agreements). The agreements were amended
to provide for any payment due upon a change in control to occur in a lump sum
on the first day of the seventh month after the month in which the executive’s
Separation from Service occurs, which represented the latest potential payment
date.
Clarification of the Time of Payment
of any IRC Section 280G Gross-Up Payments. Mr. Carlton’s
salary continuation agreement was also amended to clarify the time of payment of
any Gross-Up Payment Amount that could become due under his existing salary
continuation agreement.
The
foregoing descriptions of the amendments to the executives’ employment
agreements and salary continuation agreements are qualified in their entirety by
reference to the full text of the amendments to such agreements, which will be
filed with the Registrant’s Annual Report on Form 10-K for the fiscal year
ending December 31, 2010. Capitalized terms or phrases not
otherwise herein defined have the same meanings as those ascribed to them in the
particular compensatory agreements.
This
Current Report on Form 8-K (including information included or incorporated by
reference herein) may contain, among other things, certain forward-looking
statements within the meaning of the Private Securities Litigation Reform Act of
1995, including, without limitation, (i) statements regarding certain of the
Registrant's goals and expectations with respect to earnings, income per share,
revenue, expenses and the growth rate in such items, as well as other measures
of economic performance, including statements relating to estimates of credit
quality trends, and (ii) statements preceded by, followed by or that include the
words “may,” “could,” “should,” “would,” “believe,” “anticipate,” “estimate,”
“expect,” “intend,” “plan,” “projects,” “outlook” or similar
expressions. These statements are based upon the current belief and
expectations of the Registrant’s management and are subject to significant risks
and uncertainties that are subject to change based on various factors (many of
which are beyond the Registrant’s control).
3
SIGNATURES
Pursuant to the requirements of the
Securities Exchange Act of 1934, the registrant has duly caused this report to
be signed on its behalf by the undersigned hereunto duly
authorized.
| CRESCENT FINANCIAL CORPORATION | |||
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By:
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/s/ Bruce W. Elder | |
| Bruce W. Elder | |||
| Vice President and Principal Financial Officer | |||
Dated:
January 06, 2011