Exhibit
10.1
FOUR OAKS BANK
& TRUST COMPANY
SEVERANCE
COMPENSATION AGREEMENT
THIS
AGREEMENT is entered into as
of this 26th day of March, 2007, by and between FOUR OAKS
BANK & TRUST COMPANY, a North Carolina banking corporation
(the “Bank”), and W. LEON HIATT, III
(“Employee”) and amends and restates the Severance
Compensation Agreement dated October 10, 1994 between the Bank and
Employee.
WITNESSETH
WHEREAS,
the
Bank considers the maintenance of a vital management group to be
essential to protecting and enhancing the best interests of the
Bank and its shareholders;
WHEREAS,
the
Bank recognizes that, as is the case with many publicly held
corporations, there is a possibility of a change in control of the
Bank, and that the uncertainty and questions which such a
possibility raise may result in the departure or distraction of
management personnel to the detriment of the Bank and its
shareholders;
WHEREAS,
the
Bank’s Board of Directors has determined that appropriate
steps should be taken (1) to reinforce and encourage the continued
attention and dedication of members of the Bank’s management
to their assigned duties without distraction arising from the
possibility of a change in control of the Bank and (2) to dispel
any concerns that Employee may have about taking an active part in
the defense against an inappropriate attempt to bring about a
change in control of the Bank; and
WHEREAS
, the
purpose of this Agreement to assure Employee that, in the event of
termination of employment after a change of control (to the extent
set forth this Agreement), Employee will continue to receive
compensation for a period which should be sufficient for Employee
to find other employment.
NOW,
THEREFORE , in consideration
of the mutual agreements set forth in this Agreement, the legal
sufficiency and adequacy of which are hereby acknowledged, the
parties agree as follows:
1.
Employment
.
Employee agrees that so long as he is employed by the Bank,
Employee shall devote his full-time efforts during normal business
hours to the business and affairs of the Bank and shall support
decisions and determinations of the Board of Directors and Bank
policy including, but not limited to, any decision or determination
with respect to responding to an approach or attempt to effect a
Change in Control (as later defined).
2.
Term
.
(a)
The
term of this Agreement shall be for two (2) years from the
Effective Date unless sooner terminated upon:
(i)
Employee’s
written notice to the Bank that he is terminating this Agreement
effective upon a specified date not less than one month after his
notice is given;
(ii)
Employee’s death;
(iii)
Employee’s illness or other disability incapacitating
Employee from performing his duties for six (6) consecutive months
as determined in good faith by Chief Executive Officer, the Board
of Directors of the Bank or a committee of the Board;
(iv) A
determination by the Chief Executive Officer or the Board of
Directors of the Bank that Employee is no longer a key executive
employee and the delivery of notice to Employee of such
determination and the termination of this Agreement. Such
termination shall be effective upon the delivery of the notice or
at a later date specified in the notice; provided, however, such
determination shall not be made, and if made, shall have no effect,
after a Change in Control;
(b)
Unless
this Agreement is terminated in accordance with subparagraph 2(a),
on each anniversary of the Effective Date of this Agreement, the
term of this Agreement automatically shall be extended for an
additional successive period of one year, unless either the
Employee or
2
the
Bank shall give written notice to the other at least three (3)
months before such anniversary date that the term of this Agreement
shall not be extended.
(c)
In the
event of a Change in Control of the Bank at any time before the
termination of this Agreement, the term of this Agreement shall be
automatically extended to the earlier of (i) a date two (2) years
after the date such Change in Control occurred and (ii) the
occurrence of an event of termination described in clause 2(a)(ii)
or (iii).
(d)
In the
event of a Termination (as later defined) of Employee’s
employment during the term of this Agreement, the term of this
Agreement shall be automatically extended until all obligations
under the Agreement are fully performed.
3.
Change in
Control . For
purposes of this Agreement, a “Change in Control” means
one or more of the following occurrences:
(a)
A
corporation, person or group acting in concert as described in
Section 14(d)(2) of the Securities Exchange Act of 1934, as amended
(“Exchange Act”), holds or acquires beneficial
ownership within the meaning of Rule l3d-3 promulgated under the
Exchange Act of a number of shares of voting capital stock of the
Bank which constitutes either (i) more than fifty percent (50%) of
the shares which voted in the election of directors of the Bank at
the shareholders’ meeting immediately preceding such
determination, or (ii) more than thirty-three percent (33%)
of the Bank’s then outstanding shares entitled to
vote.
(b)
A
merger or consolidation to which the Bank is a party (other than a
pro forma transaction for a purpose such as changing
the state of incorporation or name of the Bank), if either (i) the
Bank is not the surviving corporation, or (ii) the directors of the
Bank immediately before the merger or consolidation constitute less
than a majority of the Board of Directors of the surviving
corporation; provided, however, the occurrence described in clause
(i) shall not constitute a Change in Control if the holders of the
Bank’s voting capital stock immediately before the merger or
consolidation have the same proportional ownership of voting
capital stock of the surviving corporation immediately after the
merger or consolidation.
3
