EXHIBIT 10.30

AMENDED AND RESTATED EMPLOYMENT AGREEMENT

THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT (this "Agreement") is made and
entered into effective as of the 31st day of December, 2008 (the “Effective
Date”) by and among FNB United Corp., a North Carolina corporation (“FNB”),
CommunityONE Bank, National Association, a national banking corporation formerly
known as First National Bank and Trust Company and wholly owned subsidiary of
FNB (the “Bank”), and Michael C.  Miller, President of each of FNB and the Bank
(the “Executive”).  FNB and the Bank are hereinafter sometimes referred to
together or individually as the “Employer.”

WITNESSETH:

WHEREAS, the Executive is currently employed as the President of each of FNB and
the Bank pursuant to the terms of an employment agreement between the Executive
and the Bank dated as of January 1, 2006 (the “Prior Agreement”) and is highly
knowledgeable about their businesses, operations, markets and customers; and

WHEREAS, the Executive is a valued executive of the Employer and, to induce the
Executive to continue employment with the Employer and to enhance the
Executive’s job security, the Employer entered into the Prior Agreement to
provide compensation to the Executive in certain events, including but not
limited to the Executive’s termination of employment following a change in
control of the Employer; and

WHEREAS, because the Executive is familiar with and will continue to gain
extensive knowledge regarding the Employer’s products, relationships, trade
secrets and confidential information relating to the Employer and its business,
products, processes and developments and has generated and will continue to
generate confidential information in the course of his duties, the Employer
wished to protect its long-term interests by having the Executive enter into
certain nondisclosure and noncompetition covenants set forth in the Prior
Agreement; and

WHEREAS, the parties desire to amend and restate the Prior Agreement to bring
the Prior Agreement into compliance with Section 409A of the Internal Revenue
Code of 1986, as amended from time to time (including corresponding provisions
of succeeding law) (the “Code”), the regulations promulgated thereunder, and
other guidance issued thereunder by the Department of the Treasury and/or the
Internal Revenue Service (“Section 409A”); and

WHEREAS; the parties intend that this Agreement shall amend, restate and
supersede the Prior Agreement in its entirety, and that from and after the
effective date of this Agreement, the Prior Agreement shall be of no further
force and effect; and

WHEREAS, none of the conditions or events included in the definition of the term
“golden parachute payment” that is set forth in Section 18(k)(4)(A)(ii) of the
Federal Deposit Insurance Act [12 U.S.C. 1828(k)(4)(A)(ii)] and in Federal
Deposit Insurance Corporation Rule

 
 

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

 

359.1(f)(1)(ii) [12 CFR 359.1(f)(1)(ii)] exists or, to the best knowledge of the
Employer, is contemplated insofar as the Employer or any affiliates are
concerned.

NOW, THEREFORE, in consideration of the terms contained herein, including the
compensation the Employer agrees to pay to the Executive upon certain events,
the Executive's continued employment with the Employer, the Executive's
covenants and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the Employer and the Executive hereby agree as
follows:

1.           Employment and Duties.
 
(a)           Employment.  During the Employment Term (as defined in Section 3
below), and upon the terms and conditions set forth in this Agreement, the
Employer shall employ the Executive, and the Executive shall serve, as President
and Chief Executive Officer of each of FNB and the Bank. As such, the Executive
shall have the responsibilities, duties and authority reasonably accorded to,
expected of, and consistent with those positions and will report directly to the
board of directors of each of FNB and the Bank (hereinafter sometimes referred
to together or individually as the “Board”).  The Executive shall serve the
Employer faithfully, diligently, competently, and to the best of his ability,
and he shall exclusively devote his full time, energy, and attention to the
business of the Employer and to the promotion of the Employer’s interests
throughout the Employment Term.  The Executive shall faithfully adhere to,
execute and fulfill all lawful requests, instructions and policies made by the
Board or its authorized agent(s).
 
(b)           No Other Employment.  Without the written consent of FNB’s board
of directors, during the Employment Term, the Executive shall not render
services to or for any person, firm, corporation, or other entity or
organization in exchange for compensation, regardless of the form in which such
compensation is paid and regardless of whether it is paid directly or indirectly
to the Executive. The foregoing limitation shall not be construed as prohibiting
the Executive from managing his personal affairs in a manner that does not
interfere with the proper performance of his duties and responsibilities as
President or making or managing personal investments in such form or manner as
will not require his services in the operation or affairs of the companies or
enterprises in which such investments are made and will not violate Section 6
below.
 
(c)           Board of Directors of FNB.  The Executive is currently serving as
a director of FNB.  FNB shall nominate the Executive for election as a director
at such times as necessary so that the Executive will, if elected by
shareholders, remain a director of FNB throughout the term of this
Agreement.  The Executive hereby consents to serve as a director of FNB, and the
Executive hereby consents to being named as a director of FNB in documents filed
by FNB with the Securities and Exchange Commission.  The Executive shall be
deemed to have resigned as a director of FNB effective immediately after
termination of the Executive’s employment under Section 4 of this Agreement
other than by reason of the Executive’s retirement under Section 4(g),
regardless of whether the Executive submits a formal, written resignation as
director.
 

 
2

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

 

(d)           Board of Directors of the Bank.   The Executive is currently
serving as a director of the Bank.  The Board shall undertake every lawful
effort to ensure that the Executive continues throughout the term of his
employment to be elected or reelected as a director of the Bank.  The Executive
shall be deemed to have resigned as a director of the Bank effective immediately
after termination of the Executive’s employment under Section 4 of this
Agreement other than by reason of the Executive’s retirement under Section 4(g),
regardless of whether the Executive submits a formal, written resignation as
director.
 
2.           Compensation.   For all services rendered by the Executive during
the Employment Term as defined in Section 3 below, the Employer shall compensate
the Executive as follows:
 
(a)           Base Salary.  During the Employment Term, the Employer shall pay
the Executive an annual salary in an amount not less than the amount of the
Executive’s annual salary as of the Effective Date (such salary as it may be
increased from time to time being hereinafter referred to as the “Base
Salary”).  Such salary shall be payable in accordance with the Employer’s
customary payroll practices and shall be subject to all applicable federal and
state withholding, payroll and other taxes.  During the Employment Term, the
Base Salary shall be reviewed annually by the Compensation Committee of FNB’s
board of directors or by such other board committee as has jurisdiction over
executive compensation and may be increased from time to time consistent with
such review.
 
(b)            Perquisites, Benefits and Other Compensation.   During the
Employment Term, the Executive shall be entitled to receive additional benefits
and compensation from the Employer in such form and to such extent as specified
below:
 
(i)           Benefit Plans and Programs.  The Executive will be entitled to
participate, in accordance with the provisions thereof, in all group health,
disability and life insurance, and all bonus, pension, retirement and other
employee benefit plans and programs made available by the Employer to its
employees generally or to its senior officers.  Without limiting the generality
of the foregoing, the Executive shall be entitled to participate, in accordance
with the provisions thereof, in the Employer’s arrangement for performance
compensation for stakeholders (or any successor plan) (the “Stakeholders Plan”)
and the FNB United/CommunityONE Executive Short-Term Incentive Plan (hereinafter
together referred to as the “Bonus Plans”).  In addition, the Executive shall be
eligible to participate in the Employer’s stock-based incentive compensation
plans then available to other employees or executives of the Employer in
accordance with the provisions of such plans and with awards thereunder
determined by FNB’s board of directors or by the Compensation Committee of the
Board, in its sole discretion.
 
(ii)           Supplemental Plan.  The Executive will be entitled to
participate, in accordance with the provisions thereof, in the FNB Supplemental
Executive Retirement Plan, as such plan may be amended from time to time.
 
(iii)           Club Dues.  The Employer shall pay or reimburse the Executive
for the monthly dues and assessments necessary for the Executive to maintain the
status of an active member of the Asheboro Country Club and Pinewood Country
Club or such other clubs as
 

 
3

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

 

are reasonably necessary to the conduct of the Employer’s business and as the
Compensation Committee of FNB’s board of directors may from time to time
approve.  The Employer shall also pay or reimburse the Executive for the dues
and expenses incurred by the Executive for membership in such civic clubs or
groups as are reasonably necessary to the conduct of the Employer’s business and
as may be approved by the Compensation Committee.
 
(iv)           Vacation.  The Executive shall be entitled to paid annual
vacation and sick leave in accordance with the policies established from time to
time by the Employer.
 
(v)           Automobile.  The Employer shall provide the Executive with a
suitable vehicle for his exclusive use in the discharge of his duties hereunder
and shall pay all operating and service expenses, including automobile
insurance, related to such vehicle.  Any personal use of such vehicle by the
Executive will be appropriately accounted for and reported as additional
compensation.
 
(vi)           Business Expenses.  The Employer shall reimburse the Executive
for any reasonable out-of-pocket business and travel expenses incurred by the
Executive in the ordinary course of performing his duties for the Employer upon
presentation by the Executive, from time to time, of appropriate documentation
therefor and in accordance with the Employer’s policies and practices as
established or modified from time to time.
 
(vii)           Meeting and Convention Attendance.  The Employer shall pay all
registration, travel, accommodation and meal expenses for the Executive to
attend such meetings and conferences as are approved by the Board or an
appropriate committee of the Board.  The Employer shall also pay all
registration, travel, accommodation and meal expenses for the Executive and his
spouse to attend the annual conventions of the American and North Carolina
Bankers Associations each year.
 
3.            Term.  The initial term of this Agreement shall be for a period of
three years commencing on the Effective Date.  On the first anniversary of the
Effective Date of this Employment Agreement and on each anniversary thereafter,
this Agreement shall be extended automatically for one additional year unless
FNB’s board of directors determines that the term shall not be extended.  If the
board of directors determines not to extend the term, it shall promptly notify
the Executive in writing.  If the board of directors decides not to extend the
term of this Agreement, this Agreement shall nevertheless remain in full force
until its term expires.  The board of director’s decision not to extend the term
of this Agreement shall not – by itself – give the Executive any rights under
this Agreement to claim an adverse change in his position, compensation, or
circumstances or otherwise to claim entitlement to severance benefits under this
Agreement.  Unless sooner terminated, this Agreement and the Executive’s
employment hereunder shall terminate on December 31 of the year in which the
Executive attains age 65.  The Executive's total term of employment with the
Employer during the initial and any extended term is collectively defined and
sometimes referred to under this Agreement as the "Employment Term."
 
4.           Termination.    The Executive’s term of employment under this
Agreement may be terminated before the end of the initial term or any extension
thereof as set forth in this Section 4.  Notwithstanding anything contained
herein to the contrary, the Executive’s
 

 
4

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

 

employment with the Employer shall not be considered to have terminated for
purposes of the Executive’s receiving any compensation or other benefits
otherwise provided under this Agreement unless (i) he would be considered to
have incurred a “separation from service” within the meaning of Section 409A
from the Employer and any other entity that, along with the Employer, would be
considered a “service recipient” within the meaning of Section 409A or (ii) the
payment of such compensation or such other benefits would not be subject to
Section 409A.
 
(a)           Death.  In the event of the death of the Executive during his
employment under this Agreement, this Agreement shall be terminated as of the
date of death.  In such event, the Employer shall pay the Executive’s Base
Salary, at the rate in effect at the time of his death and through the last day
of the calendar month in which such death occurs, to the Executive’s designated
beneficiary, or, in the absence of such designation, to the estate or other
legal representative of the Executive.  In addition, the Employer shall pay to
the Executive’s designated beneficiary, or, in the absence of such designation,
to the estate or other legal representative of the Executive, at the same time
as bonus payments for the year of death would otherwise be payable under the
Stakeholders Plan, a prorated bonus for the year of death that the Executive
would have received if he had been employed throughout such year and had
received the same performance rating as he received for the immediately
preceding year, prorated on a daily basis as of the date of the Executive’s
death.  Any rights and benefits the Executive’s estate or any other person may
have under employee benefit plans and programs of the Employer in the event of
the Executive’s death shall be determined in accordance with the terms of such
plans and programs.
 
(b)           Long-Term Disability.  If the Executive suffers any disability
while employed under this Agreement that prevents him from performing his duties
under this Agreement for a period of 90 consecutive days, then, unless otherwise
then agreed in writing by the parties hereto, the employment of the Executive
under this Agreement shall, at the election of the Employer, be terminated
effective as of the ninetieth day of such period.  Upon termination of the
Executive’s employment by reason of disability under this Section 4(b), the
Executive shall be entitled to receive his Base Salary, at the rate in effect on
the date of such termination, less any disability insurance payments paid to the
Executive on a policy maintained for the benefit of the Executive by the
Employer, through the end of the then current term of this Agreement.  Such
salary continuation shall be subject to all applicable federal and state
withholding taxes and any postponement of payment that may be required pursuant
to Section 15 below.  Any rights and benefits the Executive may have under the
employee benefit plans and programs of the Employer in the event of the
Executive’s disability shall be determined in accordance with the terms of such
plans and programs.
 
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 Executive to perform his customary or other comparable duties with the
Employer, with or without reasonable accommodation.  In the event that the
Executive and the Employer are unable to agree as to whether the Executive is
suffering a disability, the Executive and the Employer 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 Executive is suffering a disability shall be
based upon the determination of a majority of the three physicians.
 

 
5

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

 

The Employer shall pay the reasonable fees and expenses of all physicians
selected pursuant to this Section 4(b).
 
(c)           Termination for Cause.  Nothing herein shall prevent the Employer
from terminating the Executive’s employment at any time for Cause (as
hereinafter defined).  Upon termination for Cause, the Executive shall receive
his Base Salary only through the date that such termination becomes effective
and the amount of any compensation previously deferred by the Executive,
provided that the payment of any such deferred amount will be made in accordance
with the provisions of the plan, program or arrangement of the Employer
permitting the deferral.  Neither the Executive nor any other person shall be
entitled to any further payments from the Employer, for salary or any other
amounts.  Notwithstanding the foregoing, any rights and benefits the Executive
may have under the employee benefit plans and programs of the Employer following
a termination of the Executive’s employment for Cause shall be determined in
accordance with the terms of such plans, agreements and programs.
 
For purposes of this Agreement, termination for Cause shall mean a termination
by the Employer of the Executive’s employment by a vote of the majority of the
Board members then in office, as a result of (i) an intentional, willful and
continued failure by the Executive to perform his duties in the capacities
indicated above (other than due to disability); (ii) an intentional, willful and
material breach by the Executive of his fiduciary duties of loyalty and care to
the Employer; (iii) an intentional, willful and knowing violation by the
Executive of any provision of this Agreement; (iv) an intentional, willful and
knowing violation by the Executive of the Employer’s Code of Business Ethics or
Code of Ethics for Senior Financial Officers; (v) a conviction of, or the
entering of a plea of nolo contendere by the Executive for any felony or any
crime involving fraud or dishonesty, or (vi) a willful and knowing violation of
any material federal or state banking law or regulation applicable to the
Employer or the occurrence of any event described in Section 19 of the Federal
Deposit Insurance Act or any other act or event as a result of which the
Executive becomes unacceptable to, or is removed, suspended or prohibited from
participating in the conduct of the Employer’s affairs by any regulatory
authority having jurisdiction over the Employer; provided, however, that the
Board has given the Executive advance notice of such termination for Cause,
including the reasons therefor, together with a reasonable opportunity for the
Executive to appear with counsel before the Board and to reply to such notice.
 
(d)           Termination Other than for Cause and Not in Connection with a
Change in Control.  The Employer may terminate the Executive’s employment under
this Agreement at any time upon 90 days written notice to the Executive for
whatever reason it deems appropriate, or for no reason.  In the event such
termination by the Employer occurs and is not due to death as provided in
Section 4(a) above, disability as provided in Section 4(b) above or for Cause as
provided in Section 4(c) above, the Employer shall (i) continue the Executive’s
Base Salary, at the rate in effect at the time of such termination, through the
end of the then current term of this Agreement, (ii) pay to the Executive for
the year of termination and for each subsequent calendar year or portion thereof
through the end of the then current term of this Agreement an amount (prorated
in the case of any partial year) equal to the average of the bonuses paid to the
Executive under the Bonus Plans for the three calendar years immediately
preceding the year of termination, such payments to be made at the normal times
for payment of bonuses under the Bonus Plans, and (iii) pay to the Executive the
amount of any compensation previously deferred
 

 
6

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

 

by the Executive, provided that the payment of any such deferred amount will be
made in accordance with the provisions of the plan, program or arrangement of
the Employer permitting the deferral.  All compensation continuation shall be
subject to applicable federal and state withholding taxes and any postponement
of payment that may be required pursuant to Section 15 below.  Any rights and
benefits the Executive may have under employee benefit plans and programs of the
Employer following a termination of the Executive’s employment by the Employer
other than for Cause, including rights and benefits under retirement plans and
programs, shall be determined in accordance with the terms of such plans and
programs; provided that all stock options and restricted stock awards granted to
the Executive and outstanding as of the date of termination (other than those
under which vesting is performance-based or is dependent upon the satisfaction
of conditions other than continued employment) shall become immediately and
fully vested and the Executive shall have up to three years to exercise all such
outstanding options following the date of termination but in no event beyond
their specified term.  Notwithstanding the foregoing, no such accelerated
vesting or change in exercise period shall be permitted if it would cause an
option or restricted stock award that is not otherwise subject to Section 409A
to become subject to Section 409A or if it would cause an option or restricted
stock award that is subject to Section 409A to violate Section 409A.
 
In addition to the foregoing, in the event of a termination pursuant to this
Section 4(d) and provided the Executive properly elects coverage under the
Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”),
the Employer shall reimburse the Executive for one hundred percent (100%) of all
applicable premiums for continuation coverage for the Executive under the group
health plan of the Employer in which the Executive was a participant at the time
of the termination of his employment.  On a monthly basis following a
termination pursuant to this Section 4(d), the Employer shall pay to Executive a
cash payment that shall equal the premium costs that the Executive paid on an
after-tax basis over the preceding month period for such COBRA coverage until
the earlier of (w) the end of the term remaining under this Agreement at the
time the Executive’s employment is terminated, (x) December 31 of the year the
Executive attains age 65, (y) the date on which the Executive is eligible to
participate in a group health plan of another employer as a full-time employee,
or (z) the Executive’s death; provided, however that, as of the nineteenth month
following a termination pursuant to this Section 4(d), the Executive shall not
be entitled to further reimbursement for premium costs for such COBRA coverage.
 
In the event the Executive is eligible to be covered by the Postretirement
Medical and Life Insurance Benefits Plan, or any successor or similar plan, of
the Employer at the time of his termination pursuant to this Section 4(d), the
Executive may elect, in lieu of electing COBRA continuation coverage under the
provisions of the immediately preceding paragraph, to participate in such
Postretirement Medical and Life Insurance Benefits Plan of the Employer. On a
monthly basis following a termination pursuant to this Section 4(d), the
Employer shall pay to the Executive a cash payment that shall equal the premium
costs that the Executive paid on an after-tax basis over the month period for
coverage under such Postretirement Medical and Life Insurance Benefits Plan, as
adjusted to reflect the Employer’s subsidized cost-sharing arrangement, if any,
that is otherwise provided to all similarly situated employees based on their
years of service with the Employer until the earlier of (w) the end of the term
remaining under this Agreement at the time the Executive’s employment is
terminated, (x) December 31 of the year the Executive attains age 65, (y) the
date on which the Executive is eligible to participate in
 

 
7

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

 

a group health plan of another employer as a full-time employee, or (z) the
Executive’s death; provided, however that, as of the nineteenth month following
the Executive’s termination pursuant to this Section 4(d), the Executive shall
not be entitled to further reimbursement for premium costs for coverage under
such Postretirement Medical and Life Insurance Benefits Plan. After the 18th
month following a termination pursuant to this Section 4(d), the Executive shall
continue to be entitled to participate in the Postretirement Medical and Life
Insurance Benefits Plan of the Employer and to receive the Employer’s subsidized
cost-sharing arrangement, if any, that is otherwise provided to all similarly
situated employees based on their years of service with the Employer.
 
In addition to the foregoing, in the event of a termination pursuant to this
Section 4(d) the Employer shall reimburse the Executive for one hundred percent
(100%) of all applicable premiums actually paid by the Executive for disability
insurance and, if the Executive does not elect to participate in the
Postretirement Medical and Life Insurance Benefits Plan of the Employer pursuant
to the immediately preceding paragraph, life insurance policies following
termination of employment not to exceed, in scope or benefit, any group
disability or life insurance plan made available by the Employer to similarly
situated employees in which the Executive was a participant at the time of his
termination of employment.  On a monthly basis following a termination pursuant
to this Section 4(d), the Employer shall pay to the Executive a cash payment
that shall equal the premium costs that the Executive paid on an after-tax basis
over the month period for coverage under such disability and, if applicable,
life insurance policies until the earlier of (w) the end of the term remaining
under this Agreement at the time the Executive’s employment is terminated, (x)
December 31 of the year the Executive attains age 65, (y) the date on which the
Executive is eligible to participate in a group disability and, if applicable,
life insurance plan of another employer as a full-time employee, or (z) the
Executive’s death; provided, however that, as of the nineteenth month following
the Executive’s termination pursuant to this Section 4(d), the Executive shall
not be entitled to further reimbursement for premium costs for coverage under
such disability and, if applicable, life insurance policies.
 
In no event shall the amount of expenses eligible for reimbursement under this
Section 4(d) for any calendar year affect the expenses eligible for
reimbursement in another calendar year.  In no event shall any reimbursement
made pursuant to the two immediately preceding paragraphs be made later than the
last day of the calendar year following the year in which the Executive incurred
the expenses being reimbursed.  Any reimbursement payments made pursuant to
either of the two immediately preceding paragraphs shall be subject to any
postponement of payment that may be required by Section 15.  In the event a
termination by the Employer of the Executive’s employment under this Agreement
occurs within 24 months following a Change in Control (as defined in Section
5(c)) and is not due to death as provided in Section 4(a) above, disability as
provided in Section 4(b) above, or for Cause as provided in Section 4(c) above,
then the Executive’s rights to compensation shall be governed by Section 5 and
not this Section 4(d).
 
(e)           At the Executive’s Option with Good Reason.  The Executive may
terminate his employment with Good Reason (as defined below) upon at least 60
days advance notice to Employer; provided that the termination will take effect
at the end of the 60-day notice period unless the event or circumstance
constituting Good Reason is cured by the Employer or
 

 
8

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

 

unless the notice of termination with Good Reason is revoked by the Executive
within such 60-day period.  In the event of such a voluntary termination of
employment with Good Reason, the Employer shall (i) continue the Executive’s
Base Salary, at the rate in effect at the time of such termination, through the
end of the then current term of this Agreement, (ii) pay to the Executive for
the year of termination and for each subsequent calendar year or portion thereof
through the end of the then current term of this Agreement an amount (prorated
in the case of any partial year) equal to the average of the bonuses paid to the
Executive under the Bonus Plans for the three calendar years immediately
preceding the year of termination, such payments to be made at the normal times
for payment of bonuses under the Bonus Plans, and (iii) pay to the Executive the
amount of any compensation previously deferred by the Executive, provided that
the payment of any such deferred amount will be made in accordance with the
provisions of the plan, program or arrangement of the Employer permitting the
deferral.  All compensation continuation shall be subject to applicable federal
and state withholding taxes and any postponement of payment that may be required
pursuant to Section 15 below.  Any rights and benefits the Executive may have
under employee benefit plans and programs of the Employer following a
termination by the Executive of his employment for Good Reason, including rights
and benefits under retirement plans and programs, shall be determined in
accordance with the terms of such plans and programs; provided that all stock
options and restricted stock awards granted to the Executive and outstanding as
of the date of termination (other than those under which vesting is
performance-based or is dependent upon the satisfaction of conditions other than
continued employment) shall become immediately and fully vested and the
Executive shall have up to three years to exercise all such outstanding options
following the date of termination but in no event beyond their specified
term.  Notwithstanding the foregoing, no such accelerated vesting or change in
exercise period shall be permitted if it would cause an option or restricted
stock award that is not otherwise subject to Section 409A to become subject to
Section 409A or if it would cause an option or restricted stock award that is
subject to Section 409A to violate Section 409A.
 
In addition to the foregoing, in the event of a termination pursuant to this
Section 4(e) and provided the Executive properly elects coverage under the
Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”),
the Employer shall reimburse the Executive for one hundred percent (100%) of all
applicable premiums for continuation coverage for the Executive under the group
health plan of the Employer in which the Executive was a participant at the time
of the termination of his employment.  On a monthly basis following a
termination pursuant to this Section 4(e), the Employer shall pay to Executive a
cash payment that shall equal the premium costs that the Executive paid on an
after-tax basis over the preceding month period for such COBRA coverage until
the earlier of (w) the end of the term remaining under this Agreement at the
time the Executive’s employment is terminated, (x) December 31 of the year the
Executive attains age 65, (y) the date on which the Executive is eligible to
participate in a group health plan of another employer as a full-time employee,
or (z) the Executive’s death; provided, however that, as of the nineteenth month
following a termination pursuant to this Section 4(e), the Executive shall not
be entitled to further reimbursement for premium costs for such COBRA coverage.
 
In the event the Executive is eligible to be covered by the Postretirement
Medical and Life Insurance Benefits Plan, or any successor or similar plan, of
the Employer at the time of his termination pursuant to this Section 4(e), the
Executive may elect, in lieu of electing COBRA
 

 
9

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

 

continuation coverage under the provisions of the immediately preceding
paragraph, to participate in such Postretirement Medical and Life Insurance
Benefits Plan of the Employer. On a monthly basis following a termination
pursuant to this Section 4(e), the Employer shall pay to the Executive a cash
payment that shall equal the premium costs that the Executive paid on an
after-tax basis over the month period for coverage under such Postretirement
Medical and Life Insurance Benefits Plan, as adjusted to reflect the Employer’s
subsidized cost-sharing arrangement, if any, that is otherwise provided to all
similarly situated employees based on their years of service with the Employer
until the earlier of (w) the end of the term remaining under this Agreement at
the time the Executive’s employment is terminated, (x) December 31 of the year
the Executive attains age 65, (y) the date on which the Executive is eligible to
participate in a group health plan of another employer as a full-time employee,
or (z) the Executive’s death; provided, however that, as of the nineteenth month
following the Executive’s termination pursuant to this Section 4(e), the
Executive shall not be entitled to further reimbursement for premium costs for
coverage under such Postretirement Medical and Life Insurance Benefits Plan.
After the 18th month following a termination pursuant to this Section 4(e), the
Executive shall continue to be entitled to participate in the Postretirement
Medical and Life Insurance Benefits Plan of the Employer and to receive the
Employer’s subsidized cost-sharing arrangement, if any, that is otherwise
provided to all similarly situated employees based on their years of service
with the Employer.
 
In addition to the foregoing, in the event of a termination pursuant to this
Section 4(e) the Employer shall reimburse the Executive for one hundred percent
(100%) of all applicable premiums actually paid by the Executive for disability
insurance and, if the Executive does not elect to participate in the
Postretirement Medical and Life Insurance Benefits Plan of the Employer pursuant
to the immediately preceding paragraph, life insurance policies following
termination of employment not to exceed, in scope or benefit, any group
disability or life insurance plan made available by the Employer to similarly
situated employees in which the Executive was a participant at the time of his
termination of employment.  On a monthly basis following a termination pursuant
to this Section 4(e), the Employer shall pay to the Executive a cash payment
that shall equal the premium costs that the Executive paid on an after-tax basis
over the month period for coverage under such disability and, if applicable,
life insurance policies until the earlier of (w) the end of the term remaining
under this Agreement at the time the Executive’s employment is terminated, (x)
December 31 of the year the Executive attains age 65, (y) the date on which the
Executive is eligible to participate in a group disability and, if applicable,
life insurance plan of another employer as a full-time employee, or (z) the
Executive’s death; provided, however that, as of the nineteenth month following
the Executive’s termination pursuant to this Section 4(e), the Executive shall
not be entitled to further reimbursement for premium costs for coverage under
such disability and, if applicable, life insurance policies.
 
In no event shall the amount of expenses eligible for reimbursement under this
Section 4(e) for any calendar year affect the expenses eligible for
reimbursement in another calendar year.  In no event shall any reimbursement
made pursuant to the two immediately preceding paragraphs be made later than the
last day of the calendar year following the year in which the Executive incurred
the expenses being reimbursed.  Any reimbursement payments made pursuant to
either of the two immediately preceding paragraphs shall be subject to any
postponement of payment that may be required by Section 15.
 

 
10

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

 

For purposes of this Agreement, termination with Good Reason means a termination
of the Executive’s employment by the Executive due to a failure of the Employer
or any successor to fulfill its obligations under this Agreement in any material
respect, including (a)any failure to elect or reelect or to appoint or reappoint
the Executive to the office of President and Chief Executive Officer of each of
FNB and the Bank or as a member of each of their boards of directors, or (b) any
other material change by the Employer in the functions, duties or
responsibilities of the Executive’s position as chief executive officer with the
Employer that would reduce the ranking or level, dignity, responsibility,
importance or scope of such position, or (c) any imposition on the Executive of
a requirement to be permanently based at a location more than 50 miles from the
principal office of the Employer as of the date of this Agreement without the
consent of the Executive, or (d) any reduction without the consent of the
Executive in the Executive’s annual salary below the Base Salary then provided
for under Section 2(a).
 
In the event a termination by the Executive of his employment under this
Agreement occurs within 24 months following a Change in Control (as defined in
Section 5(c)) and such termination is for Good Reason, then the Executive’s
rights to compensation shall be governed by Section 5 and not this Section 4(e).
 
(f)           At the Executive’s Option without Good Reason.  The Executive may
terminate his employment without Good Reason at any time upon at least 60 days
advance written notice to the Employer; provided, however, that the Employer, in
its discretion, may cause such termination to be effective at any time during
such notice period.  In the event of such a voluntary termination of employment
without Good Reason, the Executive will be entitled to receive only any earned
but unpaid Base Salary and the other benefits of this Agreement through the date
on which the Executive's termination becomes effective.  Notwithstanding the
foregoing, any rights and benefits the Executive may have under employee benefit
plans and programs of the Employer following a voluntary termination of the
Executive’s employment without Good Reason, including rights and benefits under
retirement plans and programs, shall be determined in accordance with the terms
of such plans and programs.
 
(g)           Retirement.  The Executive’s employment under this Agreement shall
terminate upon the date of the Executive’s retirement, which date (hereinafter
referred to as the “Retirement Date”) shall be the earlier to occur of (i)
December 31 of the year in which the Executive attains age 65, and (ii) the date
on which the Executive voluntarily terminates his employment upon satisfaction
of the requirements for early retirement under the Employer’s retirement
plans.  In the event of the Executive’s retirement, (i) the Executive shall be
entitled to receive all earned but unpaid Base Salary through the Retirement
Date; (ii) the Employer shall pay to the Executive, at the same time as bonus
payments for the year in which the Retirement Date occurs would otherwise be
made under the Stakeholders Plan, subject to any postponement of such payment
that may be required by Section 15, a prorated bonus for such year equal to the
amount of the bonus the Executive would have received if he had been employed
throughout such year; prorated on a daily basis as of the Retirement Date; (iii)
all stock options and restricted stock awards granted to the Executive and
outstanding as of the date the Retirement Date (other than those under which
vesting is performance-based or is dependent upon the satisfaction of conditions
other than continued employment) shall become immediately and fully vested; and
(iv) the Executive shall receive such retirement and other benefits as he is
entitled to receive under, and in accordance with, the terms of the Employer’s
retirement and other benefit plans.  Notwithstanding the foregoing, no such
accelerated vesting provided for in clause (iii)
 

 
11

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

 

above shall be permitted if it would cause an option or restricted stock award
that is not otherwise subject to Section 409A to become subject to Section 409A
or if it would cause an option or restricted stock award that is subject to
Section 409A to violate Section 409A.
 
5.           Termination Following a Change in Control.
 
(a)           Change in Control Cash Benefits.  If the Executive’s employment is
terminated by the Employer other than for Cause or by the Executive with Good
Reason within 24 months following a Change in Control, then the Executive shall
be entitled to receive an aggregate amount in cash equal to 2.99 multiplied by
the Executive’s average annual cash compensation for the five fiscal years
immediately preceding the Change in Control.  Such amount shall be payable on
the date that is six months after termination of employment.
 
(b)           Benefit Plans.  In addition to the benefit set forth in Section
5(a), in the event of a termination pursuant to Section 5(a) and provided the
Executive properly elects coverage under the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended (“COBRA”), the Employer shall reimburse
the Executive for one hundred percent (100%) of all applicable premiums for
continuation coverage for the Executive under the group health plan of the
Employer in which the Executive was a participant at the time of the termination
of his employment.  On a monthly basis following a termination pursuant to
Section 5(a), the Employer shall pay to Executive a cash payment that shall
equal the premium costs that the Executive paid on an after-tax basis over the
preceding month period for such COBRA coverage until the earlier of (w) the end
of the term remaining under this Agreement at the time the Executive’s
employment is terminated, (x) December 31 of the year the Executive attains age
65, (y) the date on which the Executive is eligible to participate in a group
health plan of another employer as a full-time employee, or (z) the Executive’s
death; provided, however that, as of the nineteenth month following a
termination pursuant to Section 5(a), the Executive shall not be entitled to
further reimbursement for premium costs for such COBRA coverage.
 
In the event the Executive is eligible to be covered by the Postretirement
Medical and Life Insurance Benefits Plan, or any successor or similar plan, of
the Employer at the time of his termination pursuant to Section 5(a), the
Executive may elect, in lieu of electing COBRA continuation coverage under the
provisions of the immediately preceding paragraph, to participate in such
Postretirement Medical and Life Insurance Benefits Plan of the Employer. On a
monthly basis following a termination pursuant to Section 5(a), the Employer
shall pay to the Executive a cash payment that shall equal the premium costs
that the Executive paid on an after-tax basis over the month period for coverage
under such Postretirement Medical and Life Insurance Benefits Plan, as adjusted
to reflect the Employer’s subsidized cost-sharing arrangement, if any, that is
otherwise provided to all similarly situated employees based on their years of
service with the Employer until the earlier of (w) the end of the term remaining
under this Agreement at the time the Executive’s employment is terminated, (x)
December 31 of the year the Executive attains age 65, (y) the date on which the
Executive is eligible to participate in a group health plan of another employer
as a full-time employee, or (z) the Executive’s death; provided, however that,
as of the nineteenth month following the Executive’s termination pursuant to
Section 5(a), the Executive shall not be entitled to further reimbursement for
premium costs for coverage under such Postretirement Medical and Life Insurance
Benefits Plan. After the 18th month following a termination pursuant to Section
5(a), the Executive shall
 

 
12

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

 

continue to be entitled to participate in the Postretirement Medical and Life
Insurance Benefits Plan of the Employer and to receive the Employer’s subsidized
cost-sharing arrangement, if any, that is otherwise provided to all similarly
situated employees based on their years of service with the Employer.
 
In addition to the foregoing, in the event of a termination pursuant to Section
5(a) the Employer shall reimburse the Executive for one hundred percent (100%)
of all applicable premiums actually paid by the Executive for disability
insurance and, if the Executive does not elect to participate in the
Postretirement Medical and Life Insurance Benefits Plan of the Employer pursuant
to the immediately preceding paragraph, life insurance policies following
termination of employment not to exceed, in scope or benefit, any group
disability or life insurance plan made available by the Employer to similarly
situated employees in which the Executive was a participant at the time of his
termination of employment.  On a monthly basis following a termination pursuant
to Section 5(a), the Employer shall pay to the Executive a cash payment that
shall equal the premium costs that the Executive paid on an after-tax basis over
the month period for coverage under such disability and, if applicable, life
insurance policies until the earlier of (w) the end of the term remaining under
this Agreement at the time the Executive’s employment is terminated, (x)
December 31 of the year the Executive attains age 65, (y) the date on which the
Executive is eligible to participate in a group disability and, if applicable,
life insurance plan of another employer as a full-time employee, or (z) the
Executive’s death; provided, however that, as of the nineteenth month following
the Executive’s termination pursuant to Section 5(a), the Executive shall not be
entitled to further reimbursement for premium costs for coverage under such
disability and, if applicable, life insurance policies.
 
In no event shall the amount of expenses eligible for reimbursement under this
Section 5(b) for any calendar year affect the expenses eligible for
reimbursement in another calendar year.  In no event shall any reimbursement
made pursuant to the two immediately preceding paragraphs be made later than the
last day of the calendar year following the year in which the Executive incurred
the expenses being reimbursed.  Any reimbursement payments made pursuant to
either of the two immediately preceding paragraphs shall be subject to any
postponement of payment that may be required by Section 15.
 
The Employer shall also cause the Executive to become fully vested in any
qualified and nonqualified plans, programs or arrangements in which the
Executive participated if the plan, program or arrangement does not address the
effect of a Change in Control; provided, that (x) such vesting does not cause
any such plan, program or arrangement that is not otherwise subject to Section
409A to become subject to Section 409A and (y) such vesting does not cause any
such plan, program or arrangement that is subject to Section 409A to violate
Section 409A.  Subject to the foregoing, any rights and benefits the Executive
may have under the employee benefit plans and programs of the Employer following
a termination of the Executive’s employment by the Employer other than for Cause
or by the Executive with Good Reason shall be determined in accordance with the
terms of such plans and programs.
 
(c)           Definition of Change in Control.  For the purposes of this
Agreement, the term “Change of Control” shall mean a change in control as
defined in Section 409A, including –
 
(i)           Change in ownership: a change in ownership of the Bank occurs on
the date any one person, or more than one person acting as a group, acquires
ownership of
 

 
13

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

 

stock of FNB or the Bank, that together with stock of FNB or the Bank held by
such person or group, constitutes more than 50% of the total fair market value
or total voting power of stock of FNB or the Bank,
 
(ii)           Change in effective control: (x) any one person, or more than one
person acting as a group, acquires (or has acquired during the 12-month period
ending on the date of the most recent acquisition by such person or persons)
ownership of stock possessing 30% or more of the total voting power of the stock
of FNB or the Bank, or (y) a majority of the board of directors of FNB is
replaced during any 12-month period by directors whose appointment or election
is not endorsed by a majority of the board of directors of FNB before the date
of the appointment or election; provided, however, for purposes of this Section
5(c)(ii), the terms FNB or the Bank shall refer to the relevant corporation
identified in Treasury Regulation 1.409A-3(i)(5)(ii) for which no other
corporation is a majority shareholder for purposes of that regulation, or
 
(iii)           Change in ownership of a substantial portion of assets: a change
in ownership of a substantial portion of the assets of the Bank or FNB occurs on
the date that any one person, or more than one person acting as a group,
acquires (or has acquired during the 12-month period ending on the date of the
most recent acquisition by such person or persons) assets of FNB or the Bank
having a total gross fair market value equal to or exceeding 40% of the total
gross fair market value of all of the assets of FNB or the Bank, as applicable,
immediately before the acquisition or acquisitions.  For this purpose, gross
fair market value means the value of the assets of FNB or the Bank, as
applicable, or the value of the assets being disposed of, determined without
regard to any liabilities associated with the assets.
 
(d)           No Multiple Severance Payments.  If the Executive receives payment
under this Section 5, he shall not be entitled to any severance benefits under
Section 4.
 
(e)           No Solicitation of Change in Control.  The Executive will not
solicit, counsel or encourage any third party to offer, propose or pursue, or to
solicit, counsel or encourage another third party to offer, propose or pursue,
any acquisition, merger or other change in control of FNB or the Bank without
the prior authorization of the Board of Directors of the Bank or FNB as
reflected in the minutes of a regular or special meeting, or in a written
consent action, of the Board of Directors of the Bank or FNB.  Any violation of
this Section 5(e) occurring in connection with an offer, proposal or pursuit by
a third party to engage in an acquisition, merger or other change in control of
FNB or the Bank shall be deemed to constitute a forfeiture by the Executive of
all of his rights under Sections 5(a) and 5(b) hereof.
 
(f)           Gross-Up for Taxes.
 
(i)           If the Executive receives the cash payment under Section 5(a) and
acceleration of benefits under any benefit, compensation, or incentive plan or
arrangement with the Employer (collectively, the “Total Benefits”), and if any
part of the Total Benefits is subject to excise taxes (the “Excise Tax”) under
section 280G and section 4999 of the Internal Revenue Code of 1986, as amended
(the “Code”), the Employer shall pay to the Executive at the time specified in
subsection (iii) below an additional amount (the “Gross-Up Payment”) such that
the net amount retained by the Executive, after deduction of any Excise Tax on
the Total Benefits
 

 
14

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

 

and any U.S federal, state, and for local income or payroll tax upon the
Gross-Up Payment, but before deduction for any U.S. federal, state and local
income or payroll tax on the Total Benefits, shall be equal to the Total
Benefits.  For purposes of calculating the Gross-Up Payment, the Executive shall
be deemed to pay income taxes at the highest applicable marginal rate of
federal, state or local income taxation for the calendar year in which the
Gross-Up Payment is to be made.
 
(ii)           Subject to any determination made by the Internal Revenue Service
(the “IRS”), all determinations as to whether a Gross-Up Payment is required and
the amount of Gross-Up Payment and the assumptions to be used in arriving at the
determination shall be made by the Employer’s independent certified public
accountants or tax counsel selected by such accountants or both (the
“Accountants”) in accordance with the principles of section 280G of the
Code.  All fees and expenses of the Accountants will be borne by the
Employer.  Subject to any determinations made by the IRS, determinations of the
Accountants under this Agreement with respect to (x) the initial amount of any
Gross-Up Payment and (y) any subsequent adjustment of such payment shall be
binding on the Employer and the Executive.
 
(iii)           The Gross-Up Payment calculated pursuant to Section 5(f)(ii)
shall be paid no later than the 30th day following an event occurring that
subjects the Executive to the Excise Tax; provided, however, that if the amount
of such Gross-Up Payment or portion thereof cannot be reasonably determined on
or before such day, the Employer shall pay to the Executive the amount of the
Gross-Up Payment no later than 10 days following the determination of the
Gross-Up Payment by the Accountants.  Notwithstanding the foregoing, the
Gross-Up Payment shall be paid to or for the benefit of the Executive no later
than 15 business days prior to the date by which the Executive is required to
pay the Excise Tax or any portion of the Gross-Up Payment to any federal, state
or local taxing authority, without regard to extensions and shall be subject to
any delay required by Section 15.
 
(iv)           In the event that the Excise Tax is subsequently determined by
the Accountants to be less than the amount taken into account hereunder at the
time the Gross-Up Payment is made, the Executive shall repay to the Employer, at
the time that the amount of such reduction in Excise Tax is finally determined,
the portion of the prior Gross-Up Payment attributable to such reduction (plus
the portion of the Gross-Up Payment attributable to the Excise Tax and U.S.
federal, state and local income tax imposed on the portion of the Gross-Up
Payment being repaid by the Executive if such repayment results in a reduction
in Excise Tax or a U.S. federal, state and local income tax deduction), plus
interest on the amount of such repayment at the rate provided in section
1274(b)(2)(B) of the Code.  Notwithstanding the foregoing, in the event any
portion of the Gross-Up Payment to be refunded to the Employer has been paid to
any U.S. federal, state and local tax authority, repayment thereof (and related
amounts) shall not be required until actual refund or credit of such portion has
been made to the Executive and interest payable to the Employer shall not exceed
the interest received or credited to the Executive by such tax authority for the
period it held such portion.  The Executive and the Employer shall cooperate in
good faith in determining the course of action to be pursued (and the method of
allocating the expense thereof) if the Executive’s claim for refund or credit is
denied.  However, if agreement cannot be reached, the Employer shall decide the
appropriate course of action to pursue provided that the action does not
adversely affect any issues the Executive may have with respect to his tax
return, other than the Excise Tax.
 

 
15

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

 

 
(v)           In the event that the Excise Tax is later determined by the
Accountants or the IRS to exceed the amount taken into account hereunder at the
time the Gross-Up Payment is made (including by reason of any payment the
existence or amount of which cannot be determined at the time of the Gross-Up
Payment), the Employer shall make an additional Gross-Up Payment to or for the
benefit of the Executive in respect of such excess (plus any interest or
penalties payable with respect to such excess) at the time that the amount of
such excess is finally determined; provided, that such payment shall be made no
later than the end of Executive’s taxable year next following the Executive’s
taxable year in which the Executive remits the related taxes to any federal,
state or local taxing authority.
 
(vi)           In the event of any controversy with the IRS (or other taxing
authority) with regard to the Excise Tax, the Executive shall permit the
Employer to control issues related to the Excise Tax (at its expense), provided
that such issues do not potentially materially adversely affect the
Executive.  In the event issues are interrelated, the Executive and the Employer
shall in good faith cooperate so as not to jeopardize resolution of either or
any issue.  In the event of any conference with any taxing authority as to the
Excise Tax or associated income taxes, the Executive shall permit the
representative of the Employer to accompany the Executive, and the Executive and
the Executive’s representative shall cooperate with the Employer and its
representative.
 
(vii)           The Employer shall be responsible for all charges of the
Accountant.  Any amounts paid pursuant to this Section 5(f)(vii) shall be made
no later than the last day of the calendar year following the year in which the
expenses were incurred.  In no event shall the amount of expenses eligible for
payment by the Company under this Section 5(f)(vii) for any calendar year affect
the expenses eligible for payment in another calendar year, and in no event may
the right to payments under this paragraph be liquidated or exchanged for any
other right or benefit.
 
(viii)           The Employer and the Executive shall promptly deliver to each
other copies of any written communications, and summaries of any oral
communications, with any taxing authority regarding the Excise Tax.
 
6.           Covenant Not to Compete.   For a period commencing on the date
hereof and continuing until (i) one year after the date of expiration of the
Employment Term or the date that any termination of Executive’s employment under
this Agreement becomes effective or (ii) the last day of the period after the
date that any termination of the Executive’s employment under this Agreement
becomes effective in which the Executive is entitled to receive any Base Salary
pursuant to Section 4 hereof, whichever is later, the Executive will not,
without the written consent of FNB or the Bank, directly or indirectly:
 
(a)           own any interest in, manage, operate, control, be employed by,
render consulting or advisory services to, or participate in or be connected
with the management or control of any business that is then engaged, or
proposing to engage, in the operation of a bank, savings bank, credit union,
mortgage company, savings and loan association or similar financial institution
that conducts any of its operations within the counties in North Carolina in
which the Employer or any affiliate conducts operations as of the Effective Date
and within any other counties in North Carolina or in any other states added
during the Employment Term by the
 

 
16

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

 

Employer’s, or any affiliate’s, conducting operations therein; provided,
however, that the Executive may, without violating this Agreement, own as a
passive investment not in excess of three percent (3%) of the outstanding
capital stock of any such business whose stock is publicly traded or quoted on
the NASDAQ over-the-counter market, the New York Stock Exchange, the American
Stock Exchange, the National Daily Quotation System “Pink Sheets” or the OTC
Bulletin Board;
 
(b)           influence or attempt to influence any customer of the Employer or
any affiliate to discontinue its use of the Employer’s (or such affiliate’s)
services or to divert such business to any other person, firm or corporation;
 
(c)           interfere with, disrupt or attempt to disrupt the relationship,
contractual or otherwise, between the Employer or any affiliate and any of its
respective customers, suppliers, principals, distributors, lessors or licensors;
and
 
(d)           solicit any officer or executive of the Employer or any affiliate,
whose base annual salary at the time of the Executive’s termination was $20,000
or more, to work for any other person, firm or corporation.
 
It is expressly agreed that the provisions and covenants in this Section 6 shall
not apply and shall be of no force or effect in the event that (i) the Employer
fails to honor its obligations under this Agreement after termination of the
Executive’s employment, or (ii) the Executive’s employment hereunder is
terminated within 24 months after a Change in Control either by the Employer
other than for Cause or by the Executive with Good Reason.
 
In the event the Executive breaches any of the provisions contained herein and
the Employer seeks compliance with such provisions by judicial proceedings, the
time period during which the Executive is restricted by such provisions shall be
extended by the time during which the Executive has actually competed with the
Employer or been in violation of any such provision and any period of litigation
required to enforce the Executive’s obligations under this Agreement.
 
The Executive and the Employer intend that Section 6 of this Agreement be
enforced as written.  However, if one or more of the provisions contained in
Section 6 shall for any reason be held to be unenforceable because of the
duration or scope of such provision or the area covered thereby, the Executive
and the Employer agree that the court making such determination shall have the
full power to reform, by “blue penciling” or any other means, the duration,
scope and/or area of such provision and in its reformed form such provision
shall then be enforceable and shall be binding on the parties.
 
7.           Covenant Not to Disclose Confidential Information.   The Executive
hereby acknowledges and agrees that (i) in the course of his service as an
executive of the Employer, he has and will gain substantial knowledge of and
familiarity with the Employer’s customers and its dealings with them, and other
information concerning the business of the Employer, all of which constitute
valuable assets and privileged information that is particularly sensitive due to
the fiduciary responsibilities inherent in the Employer’s business; and (ii) to
protect the interest in and to assure the benefit of the business of the
Employer, it is reasonable and necessary to place
 

 
17

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

 

certain restrictions on the Executive’s ability to disclose information about
the business and customers of the Employer.  For that purpose, and in
consideration of the agreements contained herein, the Executive covenants and
agrees that any and all data, figures, projections, estimates, lists, files,
records, documents, manuals or other such materials or information (financial or
otherwise) relating to the Employer and its business, regulatory examinations,
financial results and condition, lending and deposit operations, customers
(including lists of the customers and information regarding their accounts and
business dealings with the Employer), policies and procedures, computer systems
and software, shareholders, executives, officers and directors (herein referred
to as “Confidential Information”) are proprietary to the Employer and are
valuable, special and unique assets of the business to which the Executive will
have access during his employment hereunder.  The Executive shall consider,
treat and maintain all Confidential Information as the confidential, private and
privileged records and information of the Employer.  Further, at all times
during the term of his employment and following the termination of his
employment under this Agreement for any reason, and except as shall be required
in the course of the performance by the Executive of his duties on behalf of the
Employer or otherwise pursuant to the direct, written authorization of the
Employer, the Executive will not divulge any Confidential Information to any
other person, firm, corporation, employer, bank or similar financial
institution, remove any such Confidential Information in written or other
recorded form from the Employer’s premises, or make any use of the Confidential
Information for his own purposes or for the benefit of any person, firm,
corporation, employer, bank or similar financial institution other than the
Employer.  However, following the termination of the Executive’s employment with
the Employer, this Section 7 shall not apply to any Confidential Information
which then is in the public domain (provided that the Executive was not
responsible, directly or indirectly, for permitting such Confidential
Information to enter the public domain without the Employer’s consent), or which
is obtained by the Executive from a third party which or who is not obligated
under an agreement of confidentiality with respect to such information.
 
8.           Acknowledgements.
 
(a)           Reasonableness.  The Executive hereby acknowledges that the
enforcement of Sections 6 and 7 of this Agreement is necessary to ensure the
preservation, protection and continuity of the business, trade secrets and
goodwill of the Employer, and that the restrictions set forth in Sections 6 and
7 of this Agreement are reasonable as to time, scope and territory and in all
other respects.
 
(b)           Survival of Obligations.  The Executive understands that his
obligations under Sections 6 and 7 of this Agreement will continue whether or
not his employment with the Employer is terminated voluntarily or involuntarily,
or whether for Cause, or other than for Cause, with Good Reason or without Good
Reason or not.  The existence of any claim or cause of action by the Executive
against the Employer shall not constitute and shall not be asserted as a defense
to the enforcement by the Employer of this Agreement.
 
(c)           Remedies.  The Executive acknowledges that in the event of any
breach of the provisions of Sections 6 and 7 hereof by the Executive, the
Employer’s remedies at law would be inadequate, and the Employer shall be
entitled to an injunction (without any bond or other security being required),
restraining such breach, and costs and attorneys' fees relating to
 

 
18

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

 

any such proceeding or any other legal action to enforce the provisions of this
Agreement, but nothing herein shall be construed to preclude the Employer from
pursuing any other remedies at law or in equity available to it for any such
breach.
 
9.           Assignment and Binding Effect.   This Agreement shall be binding
upon, and shall inure to the benefit of, the Executive and the Employer and, as
permitted by this Agreement, their respective successors and assigns.  This
Agreement is personal to the Executive and, without the prior written consent of
the Employer, neither this Agreement nor any right or interest hereunder shall
be assignable by the Executive other than by will or the laws of descent and
distribution, and any attempt, voluntary or involuntary, to effect any such
prohibited assignment (including, without limitation, by transfer, charge,
pledge, hypothecation or sale) shall be null, void and of no effect.  The
Employer will require any successor (whether direct or indirect, by purchase,
merger, consolidation, share exchange or otherwise) to all or substantially all
of the business or assets or both of the Employer to assume expressly in writing
and agree to perform this Agreement in the same manner and to the same extent
that the Employer would be required to perform it if no such succession had
taken place.  As used in this Agreement, “the Employer” shall mean the Employer
as defined in the preamble and any successor to the business or assets or both
of FNB or the Bank as stated above that assumes and agrees to perform this
Agreement by operation of law or otherwise.
 
10.           Complete Agreement.   This Agreement replaces any previous
agreement relating to the same or similar subject matter which the Executive and
the Employer may have entered into with respect to the Executive's employment by
the Employer, including specifically the Agreement entered into between the
Executive and the Employer dated January 1, 2006.  The Executive has no oral
representations, understandings or agreements with the Employer or any of its
officers, directors or representatives covering the same subject matter as this
Agreement. This written Agreement is the final, complete and exclusive statement
and expression of the Employment Agreement between the Employer and the
Executive and of all the terms of this Agreement, and it cannot be varied,
contradicted or supplemented by evidence of any prior or contemporaneous oral or
written agreements. Except as set forth in Section 15, this written Agreement
may not be later modified except by a further writing signed by a duly
authorized officer of the Employer and the Executive, and no term of this
Agreement may be waived except by writing signed by the party waiving the
benefit of such term.
 
11.           Full Settlement; No Duty to Mitigate.   The Employer’s obligation
to make any payment provided for in this Agreement and otherwise to perform its
obligations hereunder shall be in lieu and in full settlement of all other
severance payments to the Executive under any other severance plan, arrangement
or agreement of the Employer and its affiliates, and in full settlement of any
and all claims or rights of the Executive for severance, separation or salary
continuation payments resulting from the termination of his employment.  In no
event shall the Executive be obligated to seek other employment or to take other
action by way of mitigation of the amounts payable to the Executive under any of
the provisions of this Agreement, and except as specifically provided herein,
such amounts shall not be reduced whether or not the Executive obtains other
employment.
 
12.           Payment of Legal Fees.   In the event of any litigation or other
proceeding between the Employer and the Executive with respect to the subject
matter of this Agreement
 

 
19

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

 

and the enforcement of rights hereunder, the Employer shall reimburse the
Executive for his reasonable costs and expenses relating to such litigation or
other proceeding, including reasonable attorneys’ fees and expenses, provided
that such litigation or other proceeding results in any: (i) settlement
requiring the Employer to make a payment, continue to make payments or provide
any other benefits to the Executive, or (ii) judgment, order or award against
the Employer in favor of the Executive or his spouse, legal representative or
heirs, unless such judgment, order or award is subsequently reversed on appeal
or in a collateral proceeding.  At the request of the Executive, costs and
expenses (including reasonable attorneys’ fees) of up to $100,000 incurred in
connection with any litigation or other proceeding referred to in this Section
shall be paid by the Employer in advance of the final disposition of the
litigation or other proceeding referred to in this Section shall be paid by the
Employer in advance of the final disposition of the litigation or other
proceeding upon receipt of an undertaking by or on behalf of the Executive to
repay the amounts advanced if it is ultimately determined that he is not
entitled to reimbursement of such costs and expenses by the Employer as set
forth in this Section.
 
13.           Source of Payment.   All payments provided for under this
Agreement shall be paid in cash from the general funds of the Employer.  The
Employer shall not be required to establish a special or separate fund or other
segregation of assets to assure such payments, and, if the Employer shall make
any investments to aid it in meeting its obligations hereunder, the Executive
shall have no right, title or interest whatever in or to any such investments
except as may otherwise be expressly provided in a separate written instrument
relating to such investments.  Nothing contained in this Agreement, and no
action taken pursuant to its provisions, shall create or be construed to create
a trust of any kind, or a fiduciary relationship, between the Employer and the
Executive or any other person.  To the extent that any person acquires a right
to receive payments from the Employer hereunder, such right shall be no greater
than the right of an unsecured creditor.
 
14.           Consultation with Counsel and Interpretation of this
Agreement.   The Executive acknowledges and agrees that he has had the
assistance of counsel of his choosing in the negotiation of this Agreement, or
he has chosen not to have the assistance of his own counsel.  Both parties
hereto having participated in the negotiation and drafting of this Agreement,
they hereby agree that there shall not be strict interpretation against either
party in connection with any review of this Agreement in which interpretation
thereof is an issue.
 
15.           Code § 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 Employer or the
Executive 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 or benefits 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 Executive,
then payment of such amounts shall be postponed to comply with section
409A.  Any and all payments that are postponed under this Section 15 shall be
paid to the Executive in a lump sum at the earliest time that does not result in
adverse tax consequences to the Executive under section 409A.
 

 
20

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

 

 
16.           Notices.   All notices hereunder shall be (i) delivered by hand,
(ii) sent by first-class certified mail, postage prepaid, return receipt
requested, (iii) delivered by overnight commercial courier, or (iv) transmitted
by telecopy or facsimile machine, to the following address of the party to whom
such notice is to be made, or to such other address as such party may designate
in the same manner provided herein: 
 
If to the Employer:

FNB United Corp.
Attention:  Compensation Committee
101 Sunset Avenue
Asheboro, North Carolina 27203

With copy to:

Schell Bray Aycock Abel & Livingston PLLC
Attention: Melanie S. Tuttle
230 North Elm Street
1500 Renaissance Plaza
Greensboro, North Carolina 27420

If to the Executive, to his last address as shown on the personnel records of
the Employer.

17.           Headings.  The section headings herein are for reference purposes
only and are not intended in any way to describe, interpret, define or limit the
extent or intent of the Agreement or of any part hereof.
 
18.           Governing Law.  This Agreement shall in all respects be construed
according to the internal laws of the State of North Carolina, without giving
effect to any conflict of laws provision or rule.  By entering into this
Agreement, the Executive acknowledges that he is subject to the jurisdiction of
both the federal and state courts in the State of North Carolina.  Any actions
or proceedings instituted under this Agreement shall be brought and tried solely
in courts located in Randolph County, North Carolina or in the federal court
having jurisdiction in Asheboro, North Carolina.  The Executive expressly waives
his rights to have any such actions or proceedings brought or tried elsewhere.
 
19.           Severability.  In case any one or more of the provisions contained
in this Agreement for any reason shall be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provision of this Agreement and each such other
provision shall to the full extent consistent with law continue in full force
and effect.
 
20.           Counterparts.  This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original and all of which
together shall constitute one and the same instrument.
 

 
21

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

 

 
21.           Compliance with Requirements of Troubled Assets Relief Program.
Notwithstanding anything herein to the contrary, in the event that the Employer
is a participant in the Troubled Assets Relief Program (“TARP”), including,
without limitation, the Capital Purchase Program, established under the
Emergency Economic Stabilization Act of 2008, then during such time as the
United States Department of the Treasury (“Treasury”) holds an equity or debt
position in the Employer, the terms of this Agreement shall be deemed
automatically amended without further action on the part of the Employer or the
Executive to comply with any applicable executive compensation requirements of
TARP, including, without limitation, (i) requiring the Executive to relinquish
to the Employer any bonus or incentive compensation paid that is based on
statements of earnings, gains, or other criteria that are later proven to be
materially inaccurate; and (ii) if necessary, reducing any compensation of the
Executive so as not to receive any excess “golden parachute” payments (based on
the applicable Code provision). The Executive shall waive any claims he may have
against the Employer or Treasury as a result of any amendments to this Agreement
required by TARP.
 
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and
year first above written.

 
FNB UNITED CORP.
       
By
/s/ Thomas A. Jordan
   
Thomas A. Jordan
   
Chair, Compensation Committee
   
of the Board of Directors
       
COMMUNITYONE BANK, NATIONAL
 
ASSOCIATION
       
By
/s/ Thomas A. Jordan
   
Thomas A. Jordan
   
of the Board of Directors
       
EXECUTIVE:
       
/s/ Michael C. Miller
 
Michael C. Miller

 
22