Exhibit 10
CHANGE OF CONTROL AGREEMENT
THIS CHANGE OF CONTROL AGREEMENT (this "Agreement") is entered into
as of the 9th day of July, 2007, by and among FNB United Corp., a North Carolina
corporation and a registered bank holding company (the "Corporation"),
CommunityONE Bank, National Association, 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 Xxxx Xxxxxxx Xxxxxxxx (the "Officer"), an individual
residing in Xxxxxxxx County, North Carolina.
WHEREAS, the Officer is employed by the Company with the title of
Executive Vice President and is expected to be named Chief Financial Officer in
August 2007; 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 is and 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 (f) 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 and defined in subparagraph (e) below.
(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 the greater of: (i) two times
the Officer's total cash compensation, including salary and
bonus, paid during the calendar year ended immediately prior
to the Change of Control, and (ii) $360,000.
(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:
COMMUNITYONE BANK, NATIONAL ASSOCIATION
By /s/ Xxxxxxx X. Xxxxxx
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Name: Xxxxxxx X. Xxxxxx
Title: Chairman and President
OFFICER:
/s/ Xxxx Xxxxxxx Xxxxxxxx
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Xxxx Xxxxxxx Xxxxxxxx
