0000893750-11-000082.txt : 20111031 0000893750-11-000082.hdr.sgml : 20111031 20111031110528 ACCESSION NUMBER: 0000893750-11-000082 CONFORMED SUBMISSION TYPE: SC 13D PUBLIC DOCUMENT COUNT: 3 FILED AS OF DATE: 20111031 DATE AS OF CHANGE: 20111031 GROUP MEMBERS: OAK HILL CAPITAL MANAGEMENT PARTNERS III LP GROUP MEMBERS: OAK HILL CAPITAL PARTNERS III LP GROUP MEMBERS: OHCP GENPAR III, L.P. GROUP MEMBERS: OHCP MGP III, LTD. GROUP MEMBERS: OHCP MGP PARTNERS III, L.P. SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: FNB United Corp. CENTRAL INDEX KEY: 0000764811 STANDARD INDUSTRIAL CLASSIFICATION: NATIONAL COMMERCIAL BANKS [6021] IRS NUMBER: 561456589 STATE OF INCORPORATION: NC FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D SEC ACT: 1934 Act SEC FILE NUMBER: 005-37059 FILM NUMBER: 111167010 BUSINESS ADDRESS: STREET 1: 150 SOUTH FAYETTEVILLE STREET STREET 2: P O BOX 1328 CITY: ASHEBORO STATE: NC ZIP: 27203 BUSINESS PHONE: 3366268300 MAIL ADDRESS: STREET 1: P.O. BOX 1328 CITY: ASHEBORO STATE: NC ZIP: 27204 FORMER COMPANY: FORMER CONFORMED NAME: FNB CORP/NC DATE OF NAME CHANGE: 19920703 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: Oak Hill Capital Management Partners III LP CENTRAL INDEX KEY: 0001417144 IRS NUMBER: 000000000 STATE OF INCORPORATION: L8 FILING VALUES: FORM TYPE: SC 13D BUSINESS ADDRESS: STREET 1: 201 Main Street STREET 2: Suite 2415 CITY: Fort Worth STATE: TX ZIP: 76102 BUSINESS PHONE: (817) 390-8400 MAIL ADDRESS: STREET 1: 201 Main Street STREET 2: Suite 2415 CITY: Fort Worth STATE: TX ZIP: 76102 SC 13D 1 sch13d.htm SCHEDULE 13D sch13d.htm

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
SCHEDULE 13D
 
Under the Securities Exchange Act of 1934
 
FNB United Corp.
(Name of Issuer)
 
Common Stock, no par value
 (Title of Class of Securities)
 
302519103
(CUSIP Number)
 
John Monsky
Oak Hill Capital Management, LLC
65 East 55th Street, 32nd Floor,
New York, NY 10022
 
With a copy to:
 
Elizabeth Cooper, Esq.
Simpson Thacher & Bartlett LLP
425 Lexington Avenue
New York, New York 10017-3954
 Telephone: (212) 455-2000
 (Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
 
October 21, 2011
 (Date of Event which Requires Filing of this Statement)
 
If the filing person has previously filed a statement on Schedule 13G to report the acquisition which is the subject of this Schedule 13D, and is filing this schedule because of §§ 240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following box [_].
 
The information required on the remainder of this cover page shall not be deemed to be “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934, as amended, (“Act”) or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act.
 

 
 
 
 


 
CUSIP No. 302519103
  
Page 2 of 16 Pages
 
1
NAMES OF REPORTING PERSONS
Oak Hill Capital Partners III, L.P.
2
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(see instructions)
(a)               ¨
(b)               þ
3
SEC USE ONLY
 
4
SOURCE OF FUNDS (see Instructions)
OO
5
CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) or 2(e)
               ¨
6
CITIZENSHIP OR PLACE OF ORGANIZATION
Cayman Islands
NUMBER OF
SHARES
BENEFICIALLY OWNED BY
EACH
REPORTING
PERSON WITH
7
SOLE VOTING POWER
477,353,838
8
SHARED VOTING POWER
0
9
SOLE DISPOSITIVE POWER
477,353,838
10
SHARED DISPOSITIVE POWER
0
11
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
477,353,838
12
CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (see instructions)
 
¨
13
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
22.63% (1)
14
TYPE OF REPORTING PERSON (see instructions)
PN

(1)  This calculation is based on 2,109,638,988 shares of common stock of FNB United Corp. outstanding as of the close of business on October 21, 2011, as provided by FNB United Corp.

 
 
 
 


CUSIP No. 302519103
  
Page 3 of 16 Pages
 
1
NAMES OF REPORTING PERSONS
Oak Hill Capital Management Partners III, L.P.
2
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(see instructions)
(a)               ¨
(b)               þ
3
SEC USE ONLY
 
4
SOURCE OF FUNDS (see instructions)
OO
5
CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) or 2(e)
               ¨
6
CITIZENSHIP OR PLACE OF ORGANIZATION
Cayman Islands
NUMBER OF
SHARES
BENEFICIALLY OWNED BY
EACH
REPORTING
PERSON WITH
7
SOLE VOTING POWER
15,677,412
8
SHARED VOTING POWER
0
9
SOLE DISPOSITIVE POWER
15,677,412
10
SHARED DISPOSITIVE POWER
0
11
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
15,677,412
12
CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (see instructions)
 
¨
13
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0.74% (2)
14
TYPE OF REPORTING PERSON (see instructions)
PN
 
(2)  This calculation is based on 2,109,638,988 shares of common stock of FNB United Corp. outstanding as of the close of business on October 21, 2011, as provided by FNB United Corp.
 

 
 
 
 


CUSIP No. 302519103
  
Page 4 of 16 Pages
 
1
NAMES OF REPORTING PERSONS
OHCP GenPar III, L.P.
2
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(see instructions)
(a)               ¨
(b)               þ
3
SEC USE ONLY
 
4
SOURCE OF FUNDS (see instructions)
OO
5
CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) or 2(e)
               ¨
6
CITIZENSHIP OR PLACE OF ORGANIZATION
Cayman Islands
NUMBER OF
SHARES
BENEFICIALLY OWNED BY
EACH
REPORTING
PERSON WITH
7
SOLE VOTING POWER
493,031,250
8
SHARED VOTING POWER
0
9
SOLE DISPOSITIVE POWER
493,031,250
10
SHARED DISPOSITIVE POWER
0
11
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
493,031,250
12
CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (see instructions)
 
¨
13
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
23.37% (3)
14
TYPE OF REPORTING PERSON (see instructions)
PN
 
(3)  This calculation is based on 2,109,638,988 shares of common stock of FNB United Corp. outstanding as of the close of business on October 21, 2011, as provided by FNB United Corp.
 
 

 

 
 
 
 


 
CUSIP No. 302519103
  
Page 5 of 16 Pages
 
1
NAMES OF REPORTING PERSONS
OHCP MGP Partners III, L.P.
2
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(see instructions)
(a)               ¨
(b)               þ
3
SEC USE ONLY
 
4
SOURCE OF FUNDS (see instructions)
OO
5
CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) or 2(e)
               ¨
6
CITIZENSHIP OR PLACE OF ORGANIZATION
Cayman Islands
NUMBER OF
SHARES
BENEFICIALLY OWNED BY
EACH
REPORTING
PERSON WITH
7
SOLE VOTING POWER
493,031,250
8
SHARED VOTING POWER
0
9
SOLE DISPOSITIVE POWER
493,031,250
10
SHARED DISPOSITIVE POWER
0
11
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
493,031,250
12
CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (see instructions)
 
¨
13
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
23.37% (4)
14
TYPE OF REPORTING PERSON (see instructions)
PN

(4)  This calculation is based on 2,109,638,988 shares of common stock of FNB United Corp. outstanding as of the close of business on October 21, 2011, as provided by FNB United Corp.

 
 
 
 


CUSIP No. 302519103
  
Page 6 of 16 Pages
 
1
NAMES OF REPORTING PERSONS
OHCP MGP III, Ltd.
  
2
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(see instructions)
(a)               ¨
(b)               þ
3
SEC USE ONLY
 
4
SOURCE OF FUNDS (see instructions)
OO
5
CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) or 2(e)
               ¨
6
CITIZENSHIP OR PLACE OF ORGANIZATION
Cayman Islands
NUMBER OF
SHARES
BENEFICIALLY OWNED BY
EACH
REPORTING
PERSON WITH
7
SOLE VOTING POWER
493,031,250
8
SHARED VOTING POWER
0
9
SOLE DISPOSITIVE POWER
493,031,250
10
SHARED DISPOSITIVE POWER
0
11
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
493,031,250
12
CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (see instructions)
 
¨
13
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
23.37% (5)
14
TYPE OF REPORTING PERSON (see instructions)
OO

(5)  This calculation is based on 2,109,638,988 shares of common stock of FNB United Corp. outstanding as of the close of business on October 21, 2011, as provided by FNB United Corp.

 
 
 
 


This Statement on Schedule 13D (the “Schedule 13D”) is being filed jointly pursuant to Rule 13d-1 of the Rules and Regulations under the Securities Exchange Act of 1934, as amended, by (1) Oak Hill Capital Partners III, L.P., (2) Oak Hill Capital Management Partners III, L.P., (3) OHCP GenPar III, L.P., (4) OHCP MCP Partners III, L.P., and (5) OHCP MGP III, Ltd. (collectively, the “Reporting Persons”).  The agreement among the Reporting Persons relating to the joint filing of this Schedule 13D, in accordance with Rule 13d-1(k) of the Securities Exchange Act of 1934, as amended, is attached hereto as Exhibit 99.1.

Item 1.  Security and Issuer.
 
This Schedule 13D relates to shares of common stock, no par value (the “Common Stock”), of FNB United Corp. Inc., a North Carolina corporation (the “Issuer”).  The principal executive office of the Issuer is located at 150 South Fayetteville Street, Asheboro, North Carolina, 27203.
 
Item 2.  Identity and Background.
 
(a) – (c) This statement is being filed jointly by the Reporting Persons.

The shares of Common Stock reported in this Schedule 13D are beneficially owned by Oak Hill Capital Partners III, L.P., a Cayman Islands limited partnership and Oak Hill Capital Management Partners III, L.P., a Cayman Islands limited partnership (together, the “Oak Hill Funds”).  The general partner of Oak Hill Capital Partners III, L.P. and Oak Hill Capital Management Partners III, L.P. is OHCP GenPar III, L.P., a Cayman Islands limited partnership.  The general partner of OHCP GenPar III, L.P. is OHCP MGP Partners III, L.P., a Cayman Islands limited partnership.  The general partner of OHCP MGP Partners III, L.P. is OHCP MGP III, Ltd., a Cayman Islands company.

J. Taylor Crandall, Steven Gruber and Denis Nayden are the directors OHCP MGP III, Ltd.  Each of these directors is a citizen of the United States.  J. Taylor Crandall, Steven Gruber, Denis Nayden, John Fant, Kevin Levy, Ray Pinson, Shawn Hessing and John Monsky are the executive officers of OHCP MGP III, Ltd.  Each of these executive officers is a citizen of the United States.    J. Taylor Crandall, Steven Gruber, Denis Nayden, John Fant, Kevin Levy, Ray Pinson, Shawn Hessing and John Monsky are referred to as the “Related Persons”.  Each of the Related Persons expressly disclaims beneficial ownership of the shares of Common Stock referred to herein.

The business address of each of the Reporting Persons and the Related Persons is 201 Main St, Suite 1018, Fort Worth, Texas 76102.
 
The Reporting Persons are principally engaged in the business of investments in securities.
 
(d) To the best knowledge of the Reporting Persons and the Related Persons, none of the Reporting Persons nor the Related Persons has, during the last five years, been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors).
 
 
7
 
 
(e) To the best knowledge of the Reporting Persons and the Related Persons, none of the Reporting Persons nor the Related Persons has, during the last five years, been a party to any civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws.
 
(f) The citizenship of each of the Reporting Persons and Related Persons is set forth above in this Item 2.
 
Item 3.  Source and Amount of Funds or Other Consideration.
 
The information set forth in Items 4 and 6 hereof is hereby incorporated by reference into this Item 3.

Pursuant to the Investment Agreement, dated as of April 26, 2011, by and among the Issuer and the Oak Hill Funds, as amended by Amendment No. 1, dated as of June 16, 2011, Amendment No. 2, dated as of August 4, 2011 and Amendment No. 3, dated as of October 20, 2011 (as amended by the Amendments, the “Investment Agreement”), on October 21, 2011 (the “Closing”), the Oak Hill Funds acquired, for an aggregate purchase price of $78,885,000.00 (the “Purchase Price”), 493,031,250 shares of Common Stock, including the associated preferred share purchase rights issued to the shareholders of the Issuer, including the Oak Hill Funds, pursuant to the Issuer’s Tax Benefits Preservation Plan (the “Rights Plan”).
 
The Purchase Price was funded by capital contributions by the limited partners of the Oak Hill Funds in respect of previously made commitments by their respective limited partners to provide such funds.

The foregoing references to and description of the Investment Agreement does not purport to be complete and is subject to, and is qualified in its entirety by reference to, the full text of the Investment Agreement and the Amendments, which are included as Exhibits 99.2, 99.3, 99.4 and 99.5 hereto and are each incorporated by reference to this Item 3.
 
Item 4.  Purpose of Transaction.
 
The information set forth in Items 3 and 6 is incorporated herein by reference.
 
The Oak Hill Funds acquired the Common Stock described in Item 3 (the “Investment”) for investment purposes.  The Investment was not motivated by an intent to exercise control, directly or indirectly, over the management, policies or business operations of the Issuer.

Subject to the limitations imposed by the Investment Agreement and applicable federal and state securities laws, the Reporting Persons may seek to dispose of the Common Stock (including, without limitation, distributing some or all of the Common Stock to the Reporting Persons’ respective members, partners, stockholders or beneficiaries, as applicable) from time to time, subject to market conditions and other investment considerations.  To the extent permitted by the Investment Agreement and applicable bank regulatory limitations, each Reporting Person may directly or indirectly acquire additional shares of Common Stock or associated rights or securities exercisable for or convertible into Common Stock, depending upon an ongoing evaluation of its investment in Common Stock and securities exercisable for or convertible into Common Stock, applicable legal restrictions, prevailing market conditions, liquidity requirements of such Reporting Person and/or other investment considerations.

 
8
 
 
To the extent permitted under the Investment Agreement, the Reporting Persons may engage in discussions with management, the board of directors, other stockholders of the Issuer and other relevant parties concerning the business, operations, board composition, management, strategy and future plans of the Issuer.

The foregoing references to and description of the Investment Agreement does not purport to be complete and is subject to, and is qualified in its entirety by reference to, the full text of the Investment Agreement and the Amendments, which are included as Exhibits 99.2, 99.3, 99.4 and 99.5 hereto and are each incorporated by reference to this Item 4.

Other than as described in this Schedule 13D, each of the Reporting Persons and, to the knowledge of each of the Reporting Persons, each of the Related Persons has no present plans or proposals that relate to or would result in any of the events set forth in Items 4(a) through (j) of Schedule 13D.

Item 5.  Interest in Securities of the Issuer.
 
The information contained on the cover pages to this Schedule 13D and the information set forth or incorporated in Items 2, 3, 4 and 6 is incorporated herein by reference.
 
(a) –(b)
 
Reporting Person
Amount Beneficially Owned
Percent of Class
Sole Power to Vote or Direct the Vote
Shared Power to Vote or Direct the Vote
Sole Power to Dispose or to Direct the Disposition
Shared Power to Dispose or to Direct the Disposition
Oak Hill Capital Partners III, L.P.
477,353,838
22.63%(1)
477,353,838
0
477,353,838
0
Oak Hill Capital Management Partners III, L.P.
15,677,412
0.74%(2)
15,677,412
0
15,677,412
0
OHCP GenPar III, L.P.
493,031,250
23.37%(3)
493,031,250
0
493,031,250
0
OHCP MGP Partners III, L.P.
493,031,250
23.37%(3)
493,031,250
0
493,031,250
0
OHCP MGP III, Ltd.
493,031,250
23.37%(3)
493,031,250
0
493,031,250
0

 

(1)  
Based on 2,109,638,988 shares of Common Stock of the Issuer outstanding as of October 21, 2011, as provided by the Issuer.
 
(2)  
Based on 2,109,638,988 shares of Common Stock of the Issuer outstanding as of October 21, 2011, as provided by the Issuer.
 
(3)  
Based on 2,109,638,988 shares of Common Stock of the Issuer outstanding as of October 21, 2011, as provided by the Issuer.
 
 
9
 
 
The general partner of each of the Oak Hill Funds is OHCP GenPar III, L.P., whose general partner is OHCP MGP Partners III, L.P., whose general partner is OHCP MGP III, Ltd.  Each of the Related Persons expressly disclaims beneficial ownership of the shares of Common Stock referred to herein.

(c)  Except as set forth in this Item 5, none of the Reporting Persons nor, to the knowledge of each of the Reporting Persons, without independent verification, any of the Related Persons, has engaged in any transaction during the past 60 days involving the securities of the Issuer.
 
(d) Other than the Reporting Persons, no other person has the right to receive or the power to direct the receipt of dividends from, or the proceeds from the sale of, the securities of the Issuer referred to in this Item 5.
 
(e) Not applicable.
 
Item 6.  Contracts, Arrangements, Understandings or Relationships With Respect to Securities of the Issuer.
 
The information set forth in Items 2, 3, 4 and 5 is incorporated herein by reference.
 
Investment Agreement
 
The Investment Agreement includes, among other provisions, the following terms:

Representations and Warranties. Customary representations and warranties were made by the Issuer to the Oak Hill Funds relating to the Issuer, its business and the issuance of the Common Stock.  The Issuer and the Oak Hill Funds each agreed to indemnify the other party for breaches of its respective representations and warranties, subject to certain limitations.

Board Representation. Pursuant to the terms of the Investment Agreement, Scott Kauffman was appointed as the Oak Hill Funds’ representative to the board of directors of the Issuer (the “Board of Directors”) as well as the boards of directors of the following subsidiaries of the Issuer: CommunityONE Bank, National Association and Bank of Granite (the “Bank Boards”).  The Oak Hill Funds will be entitled to maintain a representative on the Board of Directors and the Bank Boards for so long as the Oak Hill Funds and their affiliates own in the aggregate 5% or more of the outstanding shares of Common Stock ((as adjusted from time to time for any reorganization, recapitalization, stock dividend, stock split, reverse stock split, or other like changes in the Issuer’s capitalization) ) (the “Ownership Threshold”).  Subject to applicable law, the Oak Hill Funds representative shall be appointed to two committees of each of the Board of Directors and the Bank Boards, as applicable.  Subject to the Ownership Threshold, the Oak Hill Funds shall also be entitled to designate one nonvoting board observer to attend meetings of the Board of Directors and the Bank Boards, including any meeting of committees which the Oak Hill Funds representative is a member.

 
10
 
 
Avoidance of Control.    Neither the Issuer nor any of its subsidiaries shall take any action that would cause the Oak Hill Funds’ ownership of voting securities of the Issuer and its affiliates (as such term is used under the Bank Holding Company Act of 1956, as amended (the “BHC Act”)) to increase above 24.9% without the prior written consent of the Oak Hill Funds, or to increase to an amount that would constitute “control” under the BHC Act, or otherwise cause the Oak Hill Funds to “control” the Issuer under and for purposes of the BHC Act the Oak Hill Funds (together with their affiliates (as such term is used under the BHC Act)) shall not have the ability to exercise any voting rights of any securities in excess of 24.9% of the total outstanding voting securities of the Issuer.  In addition, the Oak Hill Funds shall not take, permit or allow any action that would cause any of the Issuer’s subsidiaries to become a “commonly controlled insured depository institution” (as that term is defined for purposes of 12 U.S.C. §1815(e), as may be amended or supplemented from time to time, and any successor thereto) with respect to any institution that is not a direct or indirect subsidiary of the Issuer.

Transfer Restrictions.  Subject to certain exceptions specified in the Investment Agreement, prior to the Lockup Termination Date, the Oak Hill Funds will not transfer, sell, assign or otherwise dispose of (“Transfer”) any shares of Common Stock.  On or after the Lockup Termination Date, the Oak Hill Funds may Transfer shares of Common Stock (1) only in a privately negotiated transaction to any person or group of persons that would not require pursuant to such Transfer beneficial ownership of Common Stock in violation of the Passivity Commitments (described below) or (2) into the public market (in a registered public offering, pursuant to Rule 144 under the Securities Act of 1933, as amended, or otherwise, including through any broker, dealer or underwriter, acting in a capacity as such, that purchases shares of Common Stock for distribution); provided that the Oak Hill Funds do not knowingly (without, however, imposing a duty of inquiry on the Oak Hill Funds) effect any public market sale or transfer that would result in beneficial ownership in violation of the Oak Hill Funds’ obligations as set forth under “Avoidance of Control” above. As used in the Investment Agreement, the term “Lockup Termination Date” means the earlier of: (1) July 21, 2012, (2) the date on which the Oak Hill Funds own in aggregate with their affiliates less than 5% of the outstanding shares of Common Stock (as adjusted from time to time for any reorganization, recapitalization, stock dividend, stock split, reverse stock split, or other like changes in the Issuer’s capitalization), (3) the date on which any person commences a bona fide public tender or exchange offer which, if consummated, would result in a Change in Control (as defined in the Investment Agreement), (4) the public announcement (including a public filing) by the Issuer that it is “for sale” in a transaction that would result in a Change in Control and (5) the execution by Issuer of a definitive agreement which, if consummated, would result in a Change in Control.

Registration Rights. The Issuer has granted the Oak Hill Funds customary registration rights, including “shelf” registration rights, demand registration rights and “piggy-back” registration rights with respect to the Common Stock acquired by the Oak Hill Funds in connection with the Investment Agreement.  Pursuant to such registration rights, the Issuer has agreed to prepare and file with the Securities and Exchange Commission a shelf registration statement covering the resale of the Common Stock (or, if permitted by securities laws, otherwise designate an existing shelf registration statement to cover the resale of the Common Stock) as promptly as practicable after (and in any event no more than fifteen (15) days after) the Lockup Termination Date.
 
 
11
 
 
          
Preemptive Rights. So long as the Oak Hill Funds own shares of Common Stock equal to the Ownership Threshold, if the Issuer at any time makes any public or non-public offering or sale of any equity (including Common Stock, preferred stock and restricted stock), or any securities, options or debt that is convertible or exchangeable into equity or that include an equity component (any such security, a “New Security”) (other than the issuance and sale of securities (i) in connection with the Warrant  Offering, (ii) upon conversion of convertible securities issued in compliance with preemptive rights requirements set forth in the Investment Agreement, (iii) to employees, officers, directors or consultants of the Issuer pursuant to employee benefit plans or compensatory arrangements approved by the Board of Directors (including upon the exercise of employee stock options granted pursuant to any such plans or arrangements), (iv) as consideration in connection with any bona fide, arm’s-length direct or indirect merger, acquisition or similar transaction or joint venture, strategic alliance, license agreement or other similar commercial transaction (including, for the avoidance of doubt, the Granite Merger), (v) in connection with the exercise of the TARP Warrant (as such term is defined in the Investment Agreement) or (vi) pursuant to the Rights Plan or any other rights plan, the Oak Hill Funds shall first be afforded the opportunity to acquire from the Issuer for the same price and on the same terms (except that, to the extent permitted by law and the articles of incorporation and bylaws of the Issuer, the Oak Hill Funds may elect to receive such securities in nonvoting form, convertible into voting securities in a widely dispersed offering) as such securities are proposed to be offered to others, up to the amount of such New Securities to be offered in the aggregate required to enable the Oak Hill Funds to maintain their proportionate equivalent interest in the Common Stock of the Issuer immediately prior to any such issuance of New Securities.  Notwithstanding the foregoing, in no event shall the Oak Hill Funds have the right to purchase New Securities to the extent that such purchase would result in the Oak Hill Funds exceeding the ownership limitations set forth under “Avoidance of Control” above.  The above provisions are not applicable to any New Securities offered or issued at the written direction of a banking regulator of the Issuer or an insured depository institution subsidiary of the Issuer, as applicable.

Warrant Offering. Following the Closing, but no earlier than January 1, 2012, subject to applicable law, the Issuer will distribute non-transferable warrants to the holders of record of the Common Stock as of the close of business on October 20, 2011 giving such shareholders the right to purchase one share of Common Stock for each four shares of Common Stock held as of the close of business on October 20, 2011 at the same price per share paid by the Oak Hill Funds under the Investment Agreement; provided that the beneficial ownership of any such holder, together with any other person aggregated with such holder under applicable law, shall not thereby exceed 4.99% of the Issuer’s equity securities.  The warrants will be exercisable for a period of 30 days after the later of the date of distribution of such warrants or the effective date of a registration statement related to the warrant offering.

Reverse Stock Split.  Pursuant to the terms of the Investment Agreement, the Issuer has agreed to take all steps necessary to prevent the Common Stock from being delisted from NASDAQ, including, without limitation, effecting a reverse stock split of the Common Stock, if necessary, to comply with NASDAQ Listing Rule 5450(a)(1).  The shareholders of the Issuer have approved an amendment to the Issuer’s articles of incorporation to effect a reverse stock split of the Common Stock on a one-for-100 basis.

 
12
 
 
Preservation of Tax Benefits.  Until the first day of a taxable year of the Issuer as to which the Board of Directors determines that no Tax Benefit of the Issuer, or any direct or indirect subsidiary thereof, may be carried forward, the Issuer shall not take any action with respect to its stock or any “options” (within the meaning of Section 1.382-4(d) of the Treasury Regulations) to acquire its stock following the Closing, unless the Issuer shall have first received an unqualified opinion (based on reasonable assumptions and factual representations) of nationally recognized tax counsel or a private letter ruling from the Internal Revenue Service, in either case to the effect that such action would not cause an “ownership change” of the Company (within the meaning of Section 382(g) of the Internal Revenue Code of 1986, as amended (the “Code”) and applicable Treasury Regulations), taking into account the maximum reasonably expected effect of the exercise of any outstanding “options” (as defined above).  As used in the Investment Agreement “Tax Benefits” means net operating loss carryovers, capital loss carryovers, general business credit carryovers, alternative minimum tax credit carryovers and foreign tax credit carryovers, as well as any potential loss or deduction attributable to an existing “net unrealized built-in loss” within the meaning of Section 382 of the Code. 
 
The foregoing references to and description of the Investment Agreement  does not purport to be complete and is subject to, and is qualified in its entirety by reference to, the full text of the Investment Agreement and the Amendments, which are included as Exhibits 99.2, 99.3, 99.4 and 99.5 hereto and are incorporated by reference to this Item 6.

Passivity Commitments

In connection with the Investment Agreement, the Oak Hill Funds made certain commitments to the Board of Governors of the Federal Reserve System to ensure that none of the Oak Hill Funds or any of their affiliates will, among other things, exercise or attempt to exercise a controlling influence over the management or policies of the Issuer or any of its subsidiaries for purposes of the BHC Act.

 
Item 7.  Material to be Filed as Exhibits.
 
99.1
Joint Filing Agreement, dated October 31, 2011, by and among OHCP MGP III, Ltd., OHCP MGP Partners III, L.P., OHCP GenPar III, L.P., Oak Hill Capital Partners III, L.P. and Oak Hill Capital Management Partners III, L.P.
 
99.2
Investment Agreement, dated as of April 26, 2011, by and among FNB United Corp., Oak Hill Capital Partners III, L.P. and Oak Hill Capital Management Partners III, L.P. (filed as Exhibit 10.2 to the Issuer’s Current Report on Form 8-K filed on April 27, 2011 and incorporated by reference herein).
 
99.3
Amendment No. 1, dated as of June 16, 2011, to the Investment Agreement, dated as of April 26, 2011, by and among FNB United Corp., Oak Hill Capital Partners III, L.P. and Oak Hill Capital Management Partners III, L.P. (filed as Exhibit 10.3 to the Issuer’s Current Report on Form 8-K filed on June 16, 2011 and incorporated by reference herein).
 
 
13
 
 
99.4
Amendment No. 2, dated as of August 4, 2011, to the Investment Agreement, dated as of April 26, 2011, as amended by Amendment No. 1, dated as of June 16, 2011, by and among FNB United Corp., Oak Hill Capital Partners III, L.P. and Oak Hill Capital Management Partners III, L.P. (filed as Exhibit 10.3 to the Issuer’s Current Report on Form 8-K filed on August 5, 2011 and incorporated by reference herein).
 
99.5
Amendment No. 3, dated as of October 20, 2011, to the Investment Agreement, dated as of April 26, 2011, as amended by Amendment No. 1, dated as of June 16, 2011 and Amendment No. 2, dated as of August 4, 2011, by and among FNB United Corp., Oak Hill Capital Partners III, L.P. and Oak Hill Capital Management Partners III, L.P.
 

 

 

 
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SIGNATURES
 
After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct.
 
Dated:  October 31, 2011
 
OAK HILL CAPITAL PARTNERS III, L.P.
By: OHCP GENPAR III, L.P., its general partner
By: OHCP MGP Partners III, L.P., its general partner
By: OHCP MGP III, LTD., its general partner


By:  /s/ John R. Monsky                                                                 
        John R. Monsky
        Vice President


OAK HILL CAPITAL MANAGEMENT PARTNERS   III, L.P.
By: OHCP GENPAR III, L.P., its general partner
By: OHCP MGP Partners III, L.P., its general partner
By: OHCP MGP III, LTD., its general partner


By:  /s/ John R. Monsky                                                                 
        John R. Monsky
        Vice President


OHCP GENPAR III, L.P.
By: OHCP MGP Partners III, L.P., its general partner
By: OHCP MGP III, LTD., its general partner


By:  /s/ John R. Monsky                                                                 
        John R. Monsky
        Vice President


OHCP MGP PARTNERS III, L.P.
By: OHCP MGP III, LTD., its general partner

By:  /s/ John R. Monsky                                                                 
        John R. Monsky
        Vice President


OHCP MGP III, LTD.


By:  /s/ John R. Monsky                                                                 
        John R. Monsky
        Vice President
 
 

 
15
 
 
 
 
EXHIBIT INDEX
 
Exhibit No.                   Description

Exhibit 99.1
Joint Filing Agreement, dated October 31, 2011, by and among OHCP MGP III, Ltd., OHCP MGP Partners III, L.P., OHCP GenPar III, L.P., Oak Hill Capital Partners III, L.P. and Oak Hill Capital Management Partners III, L.P.
 
Exhibit 99.2
Investment Agreement, dated as of April 26, 2011, by and among FNB United Corp., Oak Hill Capital Partners III, L.P. and Oak Hill Capital Management Partners III, L.P. (filed as Exhibit 10.2 to the Issuer’s Current Report on Form 8-K filed on April 27, 2011 and incorporated by reference herein).
 
Exhibit 99.3
Amendment No. 1, dated as of June 16, 2011, to the Investment Agreement, dated as of April 26, 2011, by and among FNB United Corp., Oak Hill Capital Partners III, L.P. and Oak Hill Capital Management Partners III, L.P. (filed as Exhibit 10.3 to the Issuer’s Current Report on Form 8-K filed on June 16, 2011 and incorporated by reference herein).
 
Exhibit 99.4
Amendment No. 2, dated as of August 4, 2011, to the Investment Agreement, dated as of April 26, 2011, as amended by Amendment No. 1, dated as of June 16, 2011, by and among FNB United Corp., Oak Hill Capital Partners III, L.P. and Oak Hill Capital Management Partners III, L.P. (filed as Exhibit 10.3 to the Issuer’s Current Report on Form 8-K filed on August 5, 2011 and incorporated by reference herein).
 
Exhibit 99.5
Amendment No. 3, dated as of October 20, 2011, to the Investment Agreement, dated as of April 26, 2011, as amended by Amendment No. 1, dated as of June 16, 2011 and Amendment No. 2, dated as of August 4, 2011, by and among FNB United Corp., Oak Hill Capital Partners III, L.P. and Oak Hill Capital Management Partners III, L.P.
 
 
16
 EX-99.1 2 exh991.htm JOINT FILING AGREEMENT exh991.htm
EXHIBIT 99.1
JOINT FILING AGREEMENT
 
In accordance with Rule 13d-1(k)(1) under the Securities Exchange Act of 1934, as amended, the undersigned acknowledge and agree that the foregoing statement on Schedule 13D is filed on behalf of each of the undersigned and that all subsequent amendments to this statement on Schedule 13D may be filed on behalf of each of the undersigned without the necessity of filing additional joint filing agreements. The undersigned acknowledge that each shall be responsible for the timely filing of such amendments, and for the completeness and accuracy of the information concerning him or it contained herein or therein, but shall not be responsible for the completeness and accuracy of the information concerning the others, except to the extent that he or it knows or has reason to believe that such information is inaccurate.

Dated: October 31, 2011
 
 

OAK HILL CAPITAL PARTNERS III, L.P.
 
By: OHCP GenPar III, L.P., its General Partner
 
By: OHCP MGP Partners III, L.P., its General Partner
 
By: OHCP MGP III, LTD., its General Partner


By:  /s/ John R. Monsky                              10/31/2011                                        
John R. Monsky                  Date
Vice President
 
 
OAK HILL CAPITAL MANAGEMENT PARTNERS III, L.P.
 
By: OHCP GenPar III, L.P., its General Partner
 
By: OHCP MGP Partners III, L.P., its General Partner
 
By: OHCP MGP III, LTD., its General Partner


By:  /s/ John R. Monsky                             10/31/2011                       
John R. Monsky                  Date         
Vice President

 
 
OHCP GENPAR III, L.P.
 
By: OHCP MGP Partners III, L.P., its General Partner
 
By: OHCP MGP III, LTD., its General Partner


By:  /s/ John R. Monsky                              10/31/2011                                                 
John R. Monsky                  Date
Vice President

 
OHCP MGP PARTNERS III, L.P.
 
By: OHCP MGP III, LTD., its General Partner
 

By:  /s/ John R. Monsky                              10/31/2011                                                 
John R. Monsky                  Date
Vice President
 

OHCP MGP III, LTD.
 
By:  /s/ John R. Monsky                              10/31/2011                                                 
John R. Monsky                  Date
Vice President
 
 
[Signature Page to PE SPA]
 
 EX-99.5 3 exh995.htm INVESTMENT AGREEMENT - AMENDMENT NO. 3 exh995.htm
Exhibit 99.5
AMENDMENT NO. 3, dated as of October 20, 2011 (this “Amendment”), to that Investment Agreement, dated as of April 26, 2011, as amended by Amendment No. 1, dated as of June 16, 2011, and Amendment No. 2, dated as of August 4, 2011 (as amended, the “Agreement”), by and between FNB United Corp., a North Carolina corporation (the “Company”), and Oak Hill Capital Partners III, L.P., a Delaware limited partnership, and Oak Hill Capital Management Partners III, L.P. (together, the “Investor”).  Capitalized terms used but not defined herein have the meanings ascribed to such terms in the Agreement.

RECITALS

A.           Pursuant to Section 6.4 of the Agreement, the Company and the Investor may amend the Agreement in writing; and

B.            The parties desire to make certain amendments to the Agreement as set forth below.

NOW, THEREFORE, in consideration of the foregoing mutual covenants contained in this Amendment, and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the Company and the Investor hereby agree to amend the Agreement as follows:

1.           Amendments.

(a) Recital A is hereby amended and restated in its entirety as follows:

A.           The Investment.  The Company intends to issue and sell to the Investor, and the Investor intends to purchase from the Company, on the terms and conditions described herein, 493,031,250 shares of common stock of the Company, no par value (the “Common Stock” or “Common Shares”), at a price of $0.16 per share for aggregate cash consideration of $78,885,000 (the “Investment”).  The number of Common Shares purchased by the Investor pursuant to this Agreement shall not exceed 23.37% of the Common Shares outstanding as of the Closing Date after giving effect to the issuance of Common Shares in the Other Private Placements (as defined below), the TARP Exchange and the Granite Merger but excluding any issuance of Common Shares pursuant to outstanding Company Options and the TARP Warrant (“Pro Forma Basis”) (rounded down to the nearest whole share).

(b) Recital B is hereby amended and restated in its entirety as follows:

B.           Other Private Placements.  The Company intends to issue (i) to Carlyle Financial Services Harbor, L.P (“Investor 2”), on the terms and subject to the conditions set forth in the Investment Agreement between Investor 2 and the Company, dated as of the date hereof (the “Investor 2 Investment Agreement”), 493,031,250 shares of Common Stock, at a price of $0.16 per share for aggregate cash consideration of $78,885,000 (the “Investor 2 Investment”), and (ii) in one or more private placement transactions with other investors (the “Additional Investors,” and together with the Investor and Investor 2, the “Investors”) pursuant to agreements with the Additional Investors (the “Additional Agreements”), Common Shares at the same per share price and for an aggregate purchase price of, together with the Investment and the Investor 2 Investment, $310 million, with the closing of such transactions to occur simultaneously with the Closing (together with the Investor 2 Investment, the “Other Private Placements”).  The number of shares of Common Stock purchased by Investor 2 pursuant to the Investor 2 Investment Agreement will not exceed 23.37% of the Common Shares outstanding as of the Closing date on a Pro Forma Basis (rounded down to the nearest whole shares).  The number of shares of Common Stock purchased by any Additional Investor pursuant to any Additional Agreements will not exceed 4.99% of the Common Shares outstanding as of the Closing date on a Pro Forma Basis (rounded down to the nearest whole share).

 
 
 
 
(c) Section 1.1 is hereby amended and restated in its entirety as follows:
 
1.1           Issuance, Sale and Purchase.  On the terms and subject to the satisfaction or waiver of the conditions set forth herein, the Company agrees to issue and sell to the Investor, and the Investor agrees to purchase from the Company, free and clear of any Liens, 493,031,250 shares of Common Stock equal to 23.37% of the Common Shares outstanding at the Closing Date on a Pro Forma Basis (rounded down to the nearest whole share) at a price of $0.16 per share, for an aggregate cash consideration of $78,885,000 (the aggregate purchase price payable pursuant to this Section 1.1, the “Purchase Price”).
 
2.            General.

(a) Except as expressly amended hereby, the Agreement shall remain in full force and effect in accordance with the terms thereof.  All references in the Agreement to “this Agreement” shall be deemed to refer to the Agreement as amended by this Amendment.

(b) For the convenience of the parties hereto, this Amendment may be executed in any number of separate counterparts, each such counterpart being deemed to be an original instrument, and all such counterparts will together constitute the same agreement.  Executed signature pages to this Amendment may be delivered by facsimile and such facsimiles will be deemed as sufficient as if actual signature pages had been delivered.

(c) The provisions of Article 6 (Miscellaneous) of the Agreement shall apply mutatis mutandis to this Amendment, and to the Agreement as modified by this Amendment, taken together as a single agreement, reflecting the terms therein as modified hereby.

[Signature page follows.]



 
 
2
 
 
 

IN WITNESS WHEREOF, this Amendment has been duly executed and delivered by the duly authorized officers of the parties hereto as of the date first above written.
 
FNB UNITED CORP.

By:           /s/ Mark A. Severson                                                                      

Name:      Mark A. Severson

Title:        Treasurer and Executive Vice President


OAK HILL CAPITAL PARTNERS III, L.P.

By:           OHCP GenPar III, L.P., its general partner
By:           OHCP MGP Partners III, L.P., its general
 partner
By:           OHCP MGP III, Ltd., its general partner

By:           /s/ Steven B. Gruber                                                                      

Name:      Steven B. Gruber

Title:        Vice President


OAK HILL CAPITAL MANAGEMENT PARTNERS III, L.P.

By:           OHCP GenPar III, L.P., its general partner
By:           OHCP MGP Partners III, L.P., its general
 partner
By:           OHCP MGP III, Ltd., its general partner

By:           /s/ Steven B. Gruber                                                                      

Name:     Steven B. Gruber

Title:       Vice President

 
 
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