CHANGE OF CONTROL AGREEMENT
THIS CHANGE OF CONTROL AGREEMENT (this "Agreement") is entered into
as of the 28th day of December, 2006, by and among FNB United Corp., a North
Carolina corporation and a registered bank holding company (the "Corporation"),
First National Bank and Trust Company, a national banking association and a
wholly owned subsidiary of the Corporation (the "Bank") (hereinafter the
Corporation and the Bank, or their successors, are collectively referred to as
the "Company"), and Xxxxxx X. Xxxxxxx (the "Officer"), an individual residing in
Cabarrus County, North Carolina.
WHEREAS, the Officer has heretofore been employed by the Company
with the title(s) of Executive Vice President and Chief Administrative Officer;
and
WHEREAS, the services of the Officer, the Officer's experience and
knowledge of the affairs of the Company and reputation and contacts in the
industry are extremely valuable to the Company; and
WHEREAS, the Company wishes to attract and retain such
well-qualified executives and it is in the best interest of the Company and of
the Officer to secure the continued services of the Officer notwithstanding any
change of control of the Corporation or the Bank; and
WHEREAS, the Company considers the establishment and maintenance of
a sound and vital management team to be part of their overall corporate strategy
and to be essential to protecting and enhancing the best interests of the
Company and its shareholders; and
WHEREAS, the parties desire to enter into this Agreement to provide
the Officer with security in the event of a change of control of the Corporation
or the Bank to ensure the continued loyalty of the Officer during any change of
control in order to maximize shareholder value as well as the continued safe and
sound operation of the Company; and
WHEREAS, the Officer and the Company acknowledge and agree that the
Officer's employment with the Company will continue to be on an at-will basis
and that this Agreement is not an employment agreement but is limited to
circumstances giving rise to a change of control of the Corporation or the Bank
as set forth herein.
NOW, THEREFORE, for and in consideration of the premises and mutual
promises, covenants, and conditions hereinafter set forth, and other good and
valuable consideration, the receipt and sufficiency of which hereby are
acknowledged, the parties hereby agree as follows:
1. Term. The initial term of 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. On each anniversary date of
this Agreement, the term automatically shall be extended for an additional
one-year period so that the term shall again be three years unless either the
Company or the Officer notifies the other of its decision not to continue such
annual renewal by written notice given not less than 90 days prior to such
anniversary date.
2. Change of Control.
(a) In the event of a termination of the Officer's employment by the
Company in connection with, or within twenty-four (24) months after, a
"Change of Control" (as defined in subparagraph (e) below) of the
Corporation or the Bank, for reasons other than for "cause" (as defined in
subparagraph (b) below), death or "disability" (as defined in subparagraph
(c) below), the Officer shall be entitled to receive the sum set forth on
Schedule A attached hereto.
(b) For purposes of this Agreement, termination for "cause" shall mean
termination by reason of (i) an intentional, willful and continued failure
by the Officer to perform his duties as an employee of the Company (other
than due to disability); (ii) an intentional, willful and material breach
by the Officer of his fiduciary duties of loyalty and care to the Company;
(iii) a conviction of, or the entering of a plea of nolo contendere by the
Officer for any felony or any crime involving fraud or dishonesty, or (iv)
a willful and knowing violation of any material federal or state law or
regulation applicable to the Corporation or the Bank or the occurrence of
any act or event as a result of which the Officer becomes unacceptable to,
or is removed, suspended or prohibited from participating in the conduct of
the Company's affairs by any regulatory authority having jurisdiction over
the Corporation or the Bank.
(c) For purposes of this Agreement, "disability" shall mean the
inability, by reason of bodily injury or physical or mental disease, or any
combination thereof, of the Officer to perform his customary or other
comparable duties with the Company for a period of 90 consecutive days. In
the event that the Officer and the Company are unable to agree as to
whether the Officer is suffering a disability, the Officer and the Company
shall each select a physician and the two physicians so chosen shall make
the determination or, if they are unable to agree, they shall select a
third physician, and the determination as to whether the Officer is
suffering a disability shall be based upon the determination of a majority
of the three physicians. The Company shall pay the reasonable fees and
expenses of all physicians selected pursuant to this subparagraph (c).
(d) The Officer shall have the right to resign his employment with the
Company and terminate this Agreement upon the occurrence of any of the
following events (the "Termination Events") within twenty-four (24) months
following a Change of Control of the Corporation or the Bank:
(i) Officer is assigned any duties and/or responsibilities
that are inconsistent with his duties or responsibilities at the
time of the Change of Control;
(ii) Officer's annual base salary rate is reduced below the
annual amount in effect as of the effective date of a Change of
Control or as the same shall have been increased from time to
time following such effective date;
(iii) Officer's life insurance, medical or hospitalization
insurance, disability insurance, stock option plans, stock
purchase plans, deferred compensation plans, management retention
plans, retirement plans, or similar plans or benefits being
provided by the Company to the Officer as of the effective date
of the Change of 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 Company who
participated in such benefits prior to such Change of Control; or
(iv) Officer is required to transfer performance of his
day-to-day services required hereunder to a location which is
more than fifty (50) miles from the Officer's 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.
(e) In the event that the Officer resigns his employment and
terminates this Agreement pursuant to subparagraph (d) above, the Company
will be obligated to pay or cause to be paid to the Officer an amount equal
to one times the Officer's base annual salary at the rate in effect
immediately prior to the Change of Control or the Termination Event,
whichever is higher; provided that if the Officer has been employed by the
Company for more than five years at the time of the Termination Event, then
the amount payable to the Officer pursuant to this subparagraph (e) shall
be equal to two times the Officer's base annual salary at such rate.
(f) For the purposes of this Agreement, the term "Change of Control"
shall mean any of the following events:
(i) After the effective date of this Agreement, any "person"
(as such term is defined 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 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 Corporation or the Bank, or acquires control of
in any manner the election of a majority of the directors of the
Corporation or the Bank;
(ii) The Corporation or the Bank consolidates or merges with
or into another corporation, association, or entity, or is
otherwise reorganized, where the Corporation or the Bank is not
the surviving corporation in such transaction and the holders of
the voting securities of the Corporation or the Bank immediately
prior to such acquisition own less than a majority of the voting
securities of the surviving entity immediately after the
transaction; or
(iii) All or substantially all of the assets of the
Corporation or the Bank are sold or otherwise transferred to or
are acquired by any other corporation, association, or other
person, entity, or group; or
(iv) Individuals who, as of the date hereof, constitute the
Board of Directors of the Corporation (the "Incumbent Board")
cease for any reason to constitute at least a majority of the
Board; provided, however, that any individual becoming a director
after the date hereof whose election, or nomination for election
by the Corporation's shareholders, was approved by a vote of at
least a majority of the directors then comprising the Incumbent
Board shall be considered as though such individual were a member
of the Incumbent Board, but excluding, for this purpose, any such
individual whose initial assumption of office occurs as a result
of an actual or threatened election contest with respect to the
election or removal of directors or other actual or threatened
solicitation of proxies or consents by or on behalf of any
"person" (as defined above) other than the Corporation's Board of
Directors.
Notwithstanding the other provisions of this Paragraph 2, a transaction or event
shall not be considered a Change of Control if, prior to the consummation or
occurrence of such transaction or event, the Officer and the Company agree in
writing that the same shall not be treated as a Change of Control for purposes
of this Agreement.
(g) Except as otherwise provided in Paragraph 3, amounts payable
pursuant to this Paragraph 2 shall be paid in one lump sum within five
business days following the date of the termination of the Officer's
employment.
(h) Following a Termination Event which gives rise to the Officer's
rights hereunder, the Officer shall have six months from the date of
occurrence of the Termination Event to resign his employment and terminate
this Agreement pursuant to this Paragraph 2. Any such termination shall be
deemed to have occurred only upon delivery to the Corporation or Bank, or
any successors thereto, of written notice of termination, which describes
the Change of Control and Termination Event. If the Officer does not so
resign his employment and terminate this Agreement within such six-month
period, the Officer 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.
(i) It is the intent of the parties hereto that all payments made
pursuant to this Agreement be deductible by the Corporation or 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(b)(2) of the Internal Revenue Code of 1986, as amended (the
"Code"), shall be modified or reduced to the extent deemed to be necessary
by the Company's Board of Directors to avoid the imposition of an excise
tax on the Officer under Section 4999 of the Code or the disallowance of a
deduction to the Company under Section 280G(a) of the Code.
(j) In the event any dispute shall arise between the Officer and the
Company as to the terms or interpretation of this Agreement, including this
Paragraph 2, whether instituted by formal legal proceedings or otherwise,
including any action taken by the Officer to enforce the terms of this
Paragraph 2 or in defending against any action taken by the Corporation or
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.
3. Code ss. 409A. It is the intent of the parties that this Agreement and
all payments made hereunder shall be in compliance with the requirements of
section 409A of the Code and the regulations promulgated thereunder. If any
provision of this Agreement shall not be in compliance with section 409A of the
Code and the regulations thereunder, then such provision shall be deemed
automatically amended without further action on the part of the Company or the
Officer to the minimum extent necessary to cause such provision to be in
compliance and such provision will thereafter be given effect as so amended. If
postponing payment of any amounts due under this Agreement is necessary for
compliance with the requirements of section 409A of the Code and the regulations
thereunder to avoid adverse tax consequences to the Officer, then payment of
such amounts shall be postponed to comply with section 409A. Any and all
payments that are postponed under this Section 3 shall be paid to the Officer in
a lump sum at the earliest time that does not result in adverse tax consequences
to the Officer under section 409A.
4. Successors and Assigns. This Agreement shall inure to the benefit of and
be binding upon any corporate or other successor of the Corporation or the Bank,
which shall acquire, directly or indirectly, by conversion, merger,
consolidation, purchase, or otherwise, all or substantially all of the assets of
the Corporation or the Bank.
5. Modification; Waiver; Amendments. No provision of this Agreement may be
modified, waived or discharged unless such waiver, modification or discharge is
agreed to in writing and signed by the Officer, the Company, except as herein
otherwise provided. No waiver by any party hereto, at any time, of any breach by
any party hereto, or compliance with, any condition or provision of this
Agreement to be performed by such party shall be deemed a waiver of similar or
dissimilar provisions or conditions at the same or at any prior or subsequent
time. No amendments or additions to this Agreement shall be binding unless in
writing and signed by the parties, except as herein otherwise provided.
6. 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.
7. Severability. The provisions of this Agreement shall be deemed severable
and the invalidity or unenforceability of any provision hereof shall not affect
the validity or enforceability of the other provision hereof.
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the day and year first above written.
CORPORATION:
FNB UNITED CORP.
By /s/ Xxxxxxx X. Xxxxxx
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Name: Xxxxxxx X. Xxxxxx
Title: Chairman and President
BANK:
FIRST NATIONAL BANK AND TRUST COMPANY
By /s/ Xxxxxxx X. Xxxxxx
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Name: Xxxxxxx X. Xxxxxx
Title: Chairman and President
OFFICER:
/s/ Xxxxxx X. Xxxxxxx
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Xxxxxx X. Xxxxxxx
