8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of Earliest Event Reported)     December 1, 2009

FNB United Corp.
(Exact Name of Registrant as Specified in its Charter)
North Carolina	0-13823	56-1456589
(State or Other Jurisdiction	(Commission File	(IRS Employer
of Incorporation)	Number)	Identification No.)
150 South Fayetteville Street,     Asheboro, North Carolina		27203
(Address of Principal Executive Offices)		(Zip Code)
Registrant's Telephone Number, Including Area Code	(336) 626-8300
N/A
(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

[ ]  Written communications pursuant to rule 425 under the Securities Act (17 CFR 230.425)

[ ]  Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

[ ]  Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

[ ]  Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

ITEM 5.02.  Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

FNB United Corp. is a participant in the Capital Purchase Program (“CPP”), which is a part of the Troubled Assets Relief Program (“TARP”) established by the United States Department of Treasury pursuant to the Emergency Economic Stabilization Act of 2008 (“EESA”).  EESA required that FNB United establish and comply with certain executive compensation standards applicable to its senior executive officers.  Each of Michael C. Miller, President and Chief Executive Officer of FNB United and its subsidiary, CommunityONE Bank, National Association; R. Larry Campbell, Executive Vice President and Secretary of FNB United and CommunityONE Bank; R. Mark Hensley, Executive Vice President and Chief Banking Officer of CommunityONE Bank; and Mark A. Severson, Executive Vice President and Treasurer of FNB United and Executive Vice President and Chief Financial Officer of CommunityONE Bank, entered into a letter agreement with FNB United on February 13, 2009, in which he agreed to be subject to the limitations and restrictions on compensation imposed by Section 111(b) of EESA as implemented by the guidance and regulation under EESA that was issued and in effect as of that date.  The form of these letter agreements was filed as Exhibit 10.3 to FNB United’s current report on Form 8-K filed on February 13, 2009.

Since FNB United became a participant in the CPP, the American Recovery and Reinvestment Act of 2009 (“ARRA”) was enacted.  ARRA amended in their entirety the executive compensation provisions of EESA and directed the Secretary of the Treasury to establish executive compensation and corporate governance standards applicable to TARP recipients, including FNB United, and makes these standards applicable to both senior executive officers and certain most highly compensated employees.  On June 15, 2009, the Secretary of the Treasury promulgated an interim final rule, which sets forth these standards.  On December 1, 2009, each of Messrs. Miller, Campbell, Hensley and Severson entered into a letter agreement with FNB United, in the form of Exhibit 10.1 to this current report on Form 8-K, evidencing their intent to comply with the executive compensation standards under EESA, as amended by ARRA, and as set forth in the interim final rule.  The new letter agreements supersede the prior agreements and remain in effect for the period during which FNB United is a TARP recipient.

ITEM 9.01.  Financial Statements and Exhibits.

(d) Exhibits.  The following exhibit is included with this current report on Form 8-K:

10.1           Form of Letter Agreement by Senior Executive Officers

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	FNB UNITED CORP.
Date:  December 1, 2009	By	/s/ R. Larry Campbell
		R. Larry Campbell
		Executive Vice President
		and Secretary

INDEX TO EXHIBITS

Exhibit No.	Description
10.1	Form of Letter Agreement by Senior Executive Officers

EX-10.1

FNB UNITED CORP.

150 South Fayetteville Street

Asheboro, North Carolina 27203

[Date]

[Name of officer]

[Address]

Dear [officer]:

FNB United Corp. (“FNB United”) is a participant in the Capital Purchase Program (the “CPP”).  The CPP is a part of the Troubled Assets Relief Program (“TARP”), which was established by the United States Department of the Treasury (the “Treasury”) pursuant to the Emergency Economic Stabilization Act of 2008 (“EESA”).

EESA required that FNB United, as a participant in the CPP, establish and comply with certain standards for executive compensation applicable to its senior executive officers.  As a senior executive officer, you and FNB United entered into a letter agreement dated February 13, 2009 (the “Prior Agreement”) to comply with these EESA standards.

The American Recovery and Reinvestment Act of 2009 (“ARRA”) amended in their entirety the executive compensation provisions of EESA and directed the Secretary of the Treasury to establish executive compensation and corporate governance standards applicable to TARP recipients, including FNB United, and makes these standards applicable to both senior executive officers and certain most highly compensated employees.  On June 15, 2009, the Secretary of the Treasury promulgated an interim final rule under 31 CFR Part 30 (the “Interim Final Rule”), which sets forth these standards.  The EESA executive compensation standards, as amended by ARRA, and the standards and guidance set forth in the Interim Final Rule are collectively referred to in this letter as the “TARP Compensation Standards.”

Among others, the TARP Compensation Standards impose the following requirements and prohibitions upon FNB United:

· FNB United must comply with the requirements of Internal Revenue Code section 162(m)(5).

· FNB United is prohibited from making any golden parachute or severance payment to any of its senior executive officers or any of the five next most highly compensated employees.

· FNB United is prohibited from paying or accruing any bonus payment to the five most highly compensated employees, except as permitted by the TARP Compensation Standards.  For this purpose, the five most highly compensated employees may include the senior executive officers.

· FNB United is required to recover or “clawback” any bonus payment to its senior executive officers or any of the 20 next most highly compensated employees if payment was based on materially inaccurate financial statements or performance metric criteria.

· FNB United is prohibited from maintaining any employee compensation plan that would encourage the manipulation of reported earnings to enhance the compensation of any employee.

· FNB United is prohibited from maintaining any compensation plan for senior executive officers that would encourage such officers to take unnecessary and excessive risks that threaten the value of FNB United.

· FNB United is prohibited from providing tax gross-ups to its senior executive officers or any of the 20 next most highly compensated employees.

In addition, any bonus payment made prior to February 17, 2009 by FNB United to any of its senior executive officers or any of the 20 next most highly compensated employees is subject to recovery by the Treasury if the Secretary of the Treasury determines that such payment was inconsistent with the purposes of the TARP Compensation Standards or otherwise contrary to the public interest.

This letter is evidence of your intent and the intent of FNB United to comply with the TARP Compensation Standards.  In consideration of the benefits received by FNB United through its participation in the CPP, by signing below, you agree to consent to all such modifications or amendments to FNB United’s stock, compensation, bonus, incentive and other benefit plans, arrangements and agreements (including employment, change-of-control and severance agreements) in which you are a participant or to which you are a party as are necessary to give effect to the TARP Compensation Standards as now in effect or as such may be amended or modified from time to time during the period that FNB United is a TARP Recipient.  You further agree that to the extent that specific revisions to any Benefit Plans are required for compliance with the TARP Compensation Standards or that any payments made to you are the subject of recovery by FNB United or reimbursement to the Treasury, you will negotiate promptly and in good faith with respect to such revisions, repayment or reimbursement to permit full compliance with the TARP Compensation Standards.

This letter supersedes and replaces the Prior Agreement and will remain in effect during the period in which FNB United is a TARP Recipient and for so long as you are a senior executive officer or, to the extent applicable, a most highly compensated employee.

For purposes of this letter:

· The TARP Compensation Standards are intended, and will be interpreted, administered and construed, to comply with the requirements of ARRA and the Interim Final Rule, as currently in effect or as such may be amended, modified or supplemented from time to time, and any other guidance promulgated by the Treasury.  To the maximum extent possible and consistent with the foregoing, the TARP Compensation Standards will be

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interpreted, administered and construed to permit operation of the Benefit Plans in accordance with their terms before giving effect to this letter.

· Terms used in this letter that are not defined herein but are defined in the Interim Final Rule have the meanings ascribed to them in the Interim Final Rule and will be interpreted and construed consistent with the Interim Final Rule.

· Any reference to FNB United means FNB United and any entity that, along with FNB United, would be considered a TARP Recipient determined pursuant to 31 CFR § 30.2, including, CommunityONE Bank, National Association and Dover Mortgage Company.

· The determination of whether you are or remain a most highly compensated employee will be made pursuant to 31 CFR § 30.3.

To the extent not subject to federal law, this letter will be governed by and construed in accordance with the laws of the State of North Carolina.  This letter may be executed in two or more counterparts, each of which will be deemed an original and all of which together will be deemed the same agreement.

The Board of Directors appreciates your willingness to agree to the provisions in this letter and looks forward to your continued efforts and leadership on behalf of FNB United.

Very truly yours,
FNB UNITED CORP.
By
	[Name of officer executing agreement
	on behalf of FNB United]
	[Title]

Agreed and accepted:

_______________________

[Name of officer]

Date:___________________

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