o	Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.

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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

Monday, May 22, 2017

_____________________________________________________________________

You are cordially invited to attend the Annual Meeting of Shareholders of Four Oaks Fincorp, Inc., which will be held on Monday, May 22, 2017 at 7:00 p.m., local time, in the cafeteria of Four Oaks Elementary School, located at 180 West Hatcher Street, Four Oaks, North Carolina, for the following purposes:

(1)    To elect the persons listed in the accompanying Proxy Statement to the board of directors of Four Oaks Fincorp, Inc.;

(2)    To vote, on an advisory (nonbinding) basis, to approve executive compensation;

(3)    To ratify the appointment of Cherry Bekaert LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2017; and

(4)    To transact such other business as may properly come before the meeting or any adjournments thereof.

Shareholders of record at the close of business on March 22, 2017 are entitled to notice of and to vote at the Annual Meeting and any and all adjournments thereof.

A copy of the Annual Report on Form 10-K, containing financial statements of Four Oaks Fincorp, Inc., for the year ended December 31, 2016, is enclosed herewith.

Your vote is very important. WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING IN PERSON, please complete and return the proxy card as soon as possible in the envelope provided for that purpose, OR vote via the Internet or telephone as provided on the proxy card. If you return your card or vote over the Internet or telephone and decide to attend the Annual Meeting in person or for any other reason desire to revoke your proxy, you may do so at any time before your proxy is voted.

By Order of the Board of Directors

/s/ Ayden R. Lee, Jr.        

Ayden R. Lee, Jr.

Chairman

April 17, 2017

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FOUR OAKS FINCORP, INC.

6114 US 301 South

Four Oaks, North Carolina 27524

PROXY STATEMENT

This Proxy Statement, accompanying proxy card, Notice of Annual Meeting of Shareholders, Annual Report on Form 10-K for the fiscal year ended December 31, 2016, and Summary 2016 Annual Report to Shareholders are being mailed to shareholders on or about April 17, 2017 by Four Oaks Fincorp, Inc. in connection with the solicitation of proxies by our board of directors for use at the Annual Meeting of Shareholders to be held in the cafeteria of Four Oaks Elementary School, located at 180 West Hatcher Street, Four Oaks, North Carolina on Monday, May 22, 2017, at 7:00 p.m., local time (the “Annual Meeting”), and at all adjournments thereof. All expenses incurred in connection with this solicitation will be paid by us. In addition to solicitation by mail, certain of our officers, directors, and regular employees, who will receive no additional compensation for their services, may solicit proxies by telephone, personal communication, or other means. We may also engage a proxy solicitation firm to solicit proxies on terms and at costs reasonably acceptable to our board of directors.

Important Notice Regarding the Availability of Proxy Materials

For the Shareholder Meeting to Be Held on May 22, 2017:

The Proxy Statement, Annual Report on Form 10-K for the fiscal year ended December 31, 2016, and Summary 2016 Annual Report to Shareholders are also available on the Internet at

www.edocumentview.com/FOFN .

ANNUAL MEETING

Purposes of the Annual Meeting

The principal purposes of the Annual Meeting are to (i) elect seven (7) nominees to our board of directors; (ii) vote, on an advisory (nonbinding) basis, to approve executive compensation; (iii) ratify the appointment of Cherry Bekaert LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2017; and (iv) transact such other business as may properly come before the Annual Meeting or any adjournments thereof. Our board of directors knows of no matters other than those stated above to be brought before the Annual Meeting or any adjournments thereof. Nonetheless, the proxies named on the enclosed proxy card may vote in accordance with their discretion on any other matter properly presented for action of which the board of directors is not now aware.

How You Can Vote

You may vote shares by proxy or in person using one of the following methods:

•	Voting by Telephone. You may vote using the directions on your proxy card by calling the toll-free telephone number printed on the card. The deadline for voting by telephone is Monday, May 22, 2017, at 3:00 a.m. Eastern Daylight Time. If you vote by telephone, you need not return your proxy card.

•	Voting by Internet. You may vote over the Internet using the directions on your proxy card by accessing the website address printed on the card. The deadline for voting over the Internet is Monday, May 22, 2017, at 3:00 a.m. Eastern Daylight Time. If you vote over the Internet, you need not return your proxy card.

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•	Voting by Proxy Card. You may vote by completing and returning your signed proxy card. To vote using your proxy card, please mark, date and sign the card and return it by mail in the accompanying postage-paid envelope. You should mail your signed proxy card sufficiently in advance for it to be received by Friday, May 19, 2017.

Proxies

Any proxy given pursuant to this solicitation may be revoked by the person giving it at any time before it is exercised. Proxies may be revoked by:

•	filing a written notice of revocation with our corporate secretary;

•	duly executing a subsequent proxy and filing it with our corporate secretary before the revoked proxy is exercised;

•	timely submitting new voting instructions by telephone or over the Internet as described above; or

•	attending the Annual Meeting and voting in person.

If the proxy card is signed and returned, but voting directions are not made, the proxy will be voted “FOR” the election of the seven (7) nominees to our board of directors, “FOR” the approval of executive compensation, and “FOR” the ratification of Cherry Bekaert LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2017.

Record Date

Our board of directors has fixed the close of business on March 22, 2017 as the record date (the “Record Date”) for determination of shareholders entitled to receive notice of and to vote at the Annual Meeting and all adjournments thereof. As of the close of business on the Record Date, we had 6,759,964 shares of common stock outstanding.

Voting Rights

On all matters to come before the Annual Meeting, each holder of common stock will be entitled to one (1) vote for each share held. Shareholders do not have the right to vote cumulatively in electing directors.

How You Can Vote Shares Held by a Broker or Other Nominee

If your shares are held by a broker, bank, custodian or other nominee, you may have received a voting instruction form with this Proxy Statement instead of a proxy card. The voting instruction form is provided on behalf of the broker or other nominee to permit you to give directions to the broker or nominee on how to vote your shares. Please refer to the voting instruction form or contact the broker or nominee to determine the voting methods available to you.

Reverse Stock Split

All numbers of shares or share prices relating to our common stock in this Proxy Statement reflect the one for five reverse stock split of our common stock effective on March 8, 2017.

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SECURITY OWNERSHIP OF MANAGEMENT

AND CERTAIN BENEFICIAL OWNERS

The following table sets forth certain information as of March 22, 2017 regarding shares of our common stock beneficially owned by: (i) each person who is known by us to own beneficially more than five percent of our common stock; (ii) each director; (iii) each executive officer named in the Summary Compensation Table in this Proxy Statement; and (iv) all current directors and executive officers as a group. Unless otherwise indicated, the business address for each of the persons listed below is 6114 US 301 South, Four Oaks, North Carolina 27524. Except as otherwise indicated, the persons listed below have sole voting and investment power with respect to all shares of our common stock owned by them, except to the extent that such power may be shared with a spouse. Fractional share amounts are rounded off to the nearest whole number.

Name of Beneficial Owner		Amount and Nature of Beneficial Ownership (1)		Percent of Class (1)
Kenneth R. Lehman (2)		3,200,000		47.3%
Ayden R. Lee, Jr. (3)		81,109		1.2%
David H. Rupp (4)		55,609		*
Dr. R. Max Raynor, Jr. (5)		46,555		*
Michael A. Weeks (6)		37,695		*
Jeff D. Pope (7)		33,958		*
Lisa S. Herring (8)		27,251		*
W. Leon Hiatt, III (9)		21,913		*
Warren L. Grimes (10)		21,046		*
Robert G. Rabon (11)		5,600		*
All Current Directors and Executive Officers as a Group (12 persons) (12)		3,565,682		52.8%

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*Less than 1%

(1)

Based upon 6,759,964 shares of common stock outstanding on March 22, 2017. The securities “beneficially owned” by an individual are determined in accordance with the definition of “beneficial ownership” set forth in the regulations of the Securities and Exchange Commission (the “SEC”). Accordingly, they may include securities owned by or for, among others, the spouse and/or minor children of the individual and any other relative who resides in the home of such individual, as well as other securities as to which the individual has or shares voting or investment power or has the right to acquire within 60 days of March 22, 2017 under outstanding stock options. Beneficial ownership may be disclaimed as to certain of the securities.

(2)

Based on information set forth in a Schedule 13D/A filed with the SEC on August 15, 2014. The address for Mr. Lehman is 1408 North Abingdon Street, Arlington, Virginia. All of Mr. Lehman’s shares have been pledged to collateralize a line of credit, and, subject to our Articles of Incorporation, our Tax Asset Protection Plan, and applicable state and federal banking laws and regulations, operation of the pledge may at a subsequent date result in a change in control of our company.

(3)	Includes (i) 34,000 shares held pursuant to a restricted stock award as to which restrictions had not lapsed as of March 22, 2017 and (ii) 11,945 shares owned by Mr. Lee’s spouse who has sole voting and investment power with respect to such shares.

(4)	Includes 42,000 shares held pursuant to a restricted stock award as to which restrictions had not lapsed as of March 22, 2017.

(5)	Includes (i) 4,250 shares held pursuant to a restricted stock award as to which restrictions had not lapsed as of March 22, 2017 and (ii) 200 shares subject to stock options which are exercisable within 60 days of March 22, 2017.

(6)	Includes (i) 4,250 shares held pursuant to a restricted stock award as to which restrictions had not lapsed as of March 22, 2017, (ii) 200 shares subject to stock options which are exercisable within 60 days of March 22, 2017, and (iii) 4,556 shares owned by Mr. Weeks’ spouse who has sole voting and investment power with respect to such shares.

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(7)	Includes (i) 21,000 shares held pursuant to a restricted stock award as to which restrictions had not lapsed as of March 22, 2017 and (ii) 1,000 shares subject to stock options which are exercisable within 60 days of March 22, 2017.

(8)	Includes (i) 21,000 shares held pursuant to a restricted stock award as to which restrictions had not lapsed as of March 22, 2017, (ii) 1,000 shares subject to stock options which are exercisable within 60 days of March 22, 2017, (ii) 1 share owned jointly with Ms. Herring’s former spouse, and (iii) 449 shares held in Ms. Herring’s name as custodian for her children.

(9)	Includes (i) 500 shares subject to stock options which are exercisable within 60 days of March 22, 2017 and (ii) 132 shares owned by Mr. Hiatt's spouse who has sole voting and investment power with respect to such shares.

(10)

Includes (i) 4,250 shares held pursuant to a restricted stock award as to which restrictions had not lapsed as of March 22, 2017, (ii) 200 shares subject to stock options which are exercisable within 60 days of March 22, 2017, (iii) 8,543 shares owned jointly with Mr. Grimes’ spouse, and (iv) 1,730 shares owned by Mr. Grimes’ spouse who has sole voting and investment power with respect to such shares.

(11)	Includes (i) 4,250 shares held pursuant to a restricted stock award as to which restrictions had not lapsed as of March 22, 2017 and (ii) 200 shares subject to stock options which are exercisable within 60 days of March 22, 2017.

(12)	For all current directors and executive officers as a group, includes a total of (i) 186,200 shares held pursuant to restricted stock awards as to which restrictions had not lapsed as of March 22, 2017 and (ii) 3,050 shares subject to stock options which are exercisable within 60 days of March 22, 2017.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), requires our officers, directors, and persons who own more than ten percent (10%) of our equity securities to file reports of ownership and changes in ownership with the SEC. Officers, directors, and ten percent (10%) shareholders are required by SEC regulations to furnish us with copies of all Section 16(a) reports they file. Based solely on a review of the reports that were furnished to us by such persons and the written representations from our officers and directors, we believe that during the fiscal year ended December 31, 2016, all Section 16(a) filing requirements applicable to our officers, directors, and ten percent (10%) shareholders were satisfied, except, that due to administrative errors, Mr. Rupp failed to timely file a Form 4 for the purchase of 600 shares on August 24, 2016, and Mr. Rupp, Ms. Hart, Ms. Herring, Mr. Pope, and Mr. Herring each failed to timely file a Form 4 for the award of 8,000, 4,000, 4,000, 4,000 and 4,000 shares of restricted stock, respectively, and the withholding of 1,800, 720, 900, 900, and 720 shares of common stock, respectively, upon the vesting of previously awarded shares of restricted stock to satisfy tax withholding obligation, in each case on January 13, 2016.

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INFORMATION ABOUT OUR BOARD OF DIRECTORS

General

Our board of directors oversees our business and affairs and monitors the performance of management. In accordance with traditional corporate governance principles, our board of directors does not involve itself in day-to-day operations. Instead, directors keep themselves informed through, among other things, discussions with our Chief Executive Officer (“CEO”), other key executives and principal external advisers (legal counsel, outside auditors, investment bankers, and other consultants), reading reports and other materials that are provided to them, and by participating in board and committee meetings. Our directors are elected annually and hold office for a period of one year or until their successors are duly elected and qualified. Our board of directors, in its business judgment, has made an affirmative determination that each of Warren L. Grimes, R. Gary Rabon, Dr. R. Max Raynor, Jr., and Michael A. Weeks meet the definition of “independent director” as that term is defined in the Nasdaq Listing Rules. Paula Canaday Bowman, who served on the board until her retirement as of December 31, 2016, also satisfied the standards with respect to independence.

   

There are no family relationships between any of our directors or executive officers. There are no material proceedings to which any of our directors or executive officers, or any of their associates, is a party adverse to us or has a material interest adverse to us.

To our knowledge, none of our directors or executive officers has been convicted in a criminal proceeding during the last ten years (excluding traffic violations or similar misdemeanors), and none of our directors or executive officers was a party to any judicial or administrative proceeding during the last ten years (except for any matters that were dismissed without sanction or settlement) that resulted in a judgment, decree, or final order enjoining the person from future violations of, or prohibiting activities subject to, federal or state securities laws, or a finding of any violation of federal or state securities laws.

Board Leadership Structure

Our board has determined that it is appropriate for Ayden R. Lee, Jr., former CEO and President, to continue to serve as Chairman at this time since Mr. Lee has the most familiarity with our company and its unique challenges from his long tenure in senior management and since he is the longest-serving member of our board of directors. As such, his ability to lead discussions on matters affecting our company maximizes the efficiency and productivity of the board of directors.

Michael A. Weeks currently serves as our Lead Independent Director. The Lead Independent Director’s responsibilities include (1) presiding over all meetings of our board of directors at which the Chairman is not present; (2) serving as liaison between the Chairman, CEO and the independent directors; (3) reviewing and providing input on the agenda and materials to be provided to directors in advance of each board meeting, in consultation with the Chairman; (4) adding items to the agenda, as necessary; (5) calling meetings of the independent directors, as necessary; (6) serving on our nominating and corporate governance committee; and (7) ensuring that he is available for consultation and direct communication, upon shareholder request.

Given the experience of the current Chairman and the role of our Lead Independent Director to further promote the governance goals of effectively overseeing risk, actively developing and implementing corporate strategy and maximizing the efficiency and effectiveness of our board and its committees, the board of directors finds the current board structure in the best interests of our company and our shareholders at this time. Although our board currently believes that it is appropriate to separate the roles of Chairman and CEO, our board has not adopted a policy on whether the roles of Chairman and CEO should be separated or combined because our board believes that there is no single best blueprint for structuring board leadership and that, as circumstances change, the optimal leadership structure may change.

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Board’s Role in Risk Oversight

We operate in a complex environment and are subject to a number of significant risks. Our board of directors works with our senior management to manage the various risks we face. The role of our board of directors is one of oversight of our risk management processes and procedures; the role of our management is to implement those processes and procedures on a daily basis and to identify, manage and mitigate the risks that we face. As part of its oversight role, our board of directors will regularly discuss, both with and without management present, our risk profile and how our business strategy effectively manages and leverages the risks that we face. Our governance policy is that our independent directors will meet in executive sessions without the presence of members of our management from time to time, but not less than annually, as the independent directors deem necessary or appropriate.

To facilitate its oversight of our company, our board of directors has delegated certain functions (including the oversight of risks related to these functions) to board committees. Our audit and risk committee assists our board of directors in fulfilling its oversight responsibilities with regard to the identification, assessment, review, and reporting of risks inherent in our business and the control processes with respect to such risks. In this role, our audit and risk committee reviews and assesses the adequacy of the framework and related processes established to identify, evaluate, prioritize, monitor, and report on current and emerging internal and external risk exposures within and across business units and provides guidance to our board of directors on ensuring risk exposures are adequately evaluated and tolerances are appropriately measured and established. The audit and risk committee is also responsible for reviewing and concurring in the appointment of our company’s Chief Risk Officer and overseeing and evaluating the Chief Risk Officer’s performance. Our compensation committee evaluates the risks presented by our compensation programs and analyzes these risks when making compensation decisions. Our nominating and corporate governance committee evaluates whether the composition of our board of directors and corporate governance policies and practices are appropriate to fulfill the board’s fiduciary duties and respond to the risks that we face. The asset liability management committee, which is composed of three board members and certain members of management and reports to the full board, considers interest rate, liquidity, and other related risks, limits, and strategies. The roles of these committees, except for the asset liability management committee, are discussed in more detail below.

Although our board of directors has delegated certain functions to various committees, each of these committees regularly reports to and solicits input from the full board regarding its activities. These ongoing discussions enable the board of directors to monitor our risk exposure and evaluate our risk mitigation efforts.

Board of Directors Meetings

During the last fiscal year, our board of directors met twelve (12) regular times, had one (1) called meeting, and one (1) strategic planning session. Each incumbent director attended seventy-five percent (75%) or more of the aggregate of the total number of board of directors meetings and the total number of meetings held by all committees of the board of directors on which he served during the periods that he served.

We do not have a stated policy regarding director attendance at our annual meeting of shareholders, but encourage our directors to attend each annual meeting of shareholders. At last year’s annual meeting of shareholders, held on May 23, 2016, eight (8) directors were present and in attendance.

Board Committees

Our board of directors has three standing committees: the audit and risk committee, the compensation committee, and the nominating and corporate governance committee.

The Audit and Risk Committee . The audit and risk committee is composed of Warren L. Grimes (chairman), R. Gary Rabon, and Michael A. Weeks and operates under a written charter, which the board reviews and reassesses annually. The board of directors has determined that Mr. Rabon meets the definition of “audit committee financial expert” as that term is defined under the Exchange Act.

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The committee’s charter is available on our website at http://www.fouroaksbank.com in the “About Us—Investor Information” section under the listing for governance documents, or free of charge upon written request to the attention of the Corporate Secretary, Four Oaks Fincorp, Inc., P.O. Box 309, Four Oaks, North Carolina 27524. Our board of directors, in its business judgment, has made an affirmative determination that each of Messrs. Grimes, Rabon, and Weeks meets the definition of “independent director” as that term is defined by Nasdaq Listing Rules and SEC rules, including the special independence requirements applicable to audit committee members. In addition, two members of our audit and risk committee have past financial experience resulting in their financial sophistication as required by Nasdaq Listing Rules.

The audit and risk committee was established by our board of directors for the purpose of overseeing our risk management, our accounting and financial reporting processes and audits of our financial statements. The audit and risk committee reviews the results and scope of the annual audit and other services provided by our independent auditor and reviews our financial statements and audit letters provided by our independent auditor. The audit and risk committee is also responsible for reviewing our systems of internal control over financial reporting with management and the independent auditor. In addition, the audit and risk committee oversees our company’s risk management, internal audit, and compliance functions and is responsible for hiring and setting the compensation of the independent auditor, reviewing and concurring in the appointment of our Chief Risk Officer, Internal Audit Director, and Compliance Officer, and reviewing and approving the evaluation and compensation of our Chief Risk Officer, Internal Audit Director, and Compliance Officer. The audit and risk committee met nine (9) times during 2016.

The Compensation Committee . The compensation committee is composed of Warren L. Grimes (chairman), Kenneth R. Lehman, Dr. R. Max Raynor, Jr., and Michael A. Weeks, each of whom, with the exception of Mr. Lehman, the board, in its business judgment, has determined meets the definition of “independent director” as that term is defined by the Nasdaq Listing Rules. The board has not determined Mr. Lehman meets the definition of “independent director” as that term is defined by Nasdaq Listing Rules due to his significant ownership in the company. The board of directors nevertheless appointed Mr. Lehman to the compensation committee because it determined that it was in our best interest to utilize Mr. Lehman’s significant experience with financial institutions through service on the compensation committee . Our securities are quoted on the OTCQX and are not listed on a national securities exchange. Therefore, the Nasdaq Listing Rules requiring committee members to be independent are not applicable to us.

During 2016 , the compensation committee met five (5) times. The committee operates pursuant to a charter that is available on our website at http://www.fouroaksbank.com in the “About Us—Investor Information” section under the listing for governance documents, or free of charge upon written request to the attention of the Corporate Secretary, Four Oaks Fincorp, Inc., P.O. Box 309, Four Oaks, North Carolina 27524. The compensation committee may not delegate its authority to other persons under its charter.

The primary function of the compensation committee is to assist the board of directors in fulfilling its oversight responsibilities for all manner of compensation including salaries, benefits, incentives and bonuses, equity compensation arrangements and other forms of compensation. The compensation committee has overall responsibility for evaluating and administering all compensation plans, policies and programs of the company, ensuring that the compensation programs are consistent with the company’s strategy, properly balance risk and reward and adhere to all laws and regulations. The compensation committee is charged directly with execution of compensation planning for the board of directors, CEO and other executive officers. The compensation committee administers the Four Oaks Fincorp, Inc. 2015 Restricted Stock Plan (the “Restricted Stock Plan”), subject to the provisions thereof, and has broad discretion to construe and interpret the terms and the intent of the Restricted Stock Plan, to designate award recipients, to determine the number of shares of restricted stock and/or restricted stock units (“RSUs”) to be subject to each award, and to determine the terms and conditions of each award. The compensation committee, subject to the provisions of our Amended and Restated Nonqualified Stock Option Plan, as amended (referred to herein as the “Nonqualified Stock Option Plan” or the “Option Plan”), also has authority in its discretion to determine the employees and directors to whom stock options shall be granted, the number of shares to be granted to each employee or director, and the time or times at which options should be granted. Beginning in 2017, the compensation committee does not intend to issue any additional option awards under the Option Plan. The compensation committee also administers the Four Oaks Bank & Trust Company Death Benefit Only Plan, which was approved by the board in February of 2017.

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The CEO reviews the performance of our executive officers (other than the CEO) and, based on that review, the CEO makes recommendations to the compensation committee about the compensation of executive officers (other than the CEO), including equity awards. The CEO does not participate in any deliberations or approvals by the compensation committee with respect to his own compensation. The compensation committee approves all compensation decisions involving the CEO and our other executive officers.

The compensation committee considered publicly-available executive compensation information of peer banks when making compensation decisions for fiscal year 2016. The compensation committee considered executive officer compensation information provided by Matthews, Young - Management Consulting, a management consulting firm (“Matthews, Young”), in 2016 when making compensation decisions for fiscal year 2016. Management engaged Matthews, Young to provide an assessment of and to provide recommendations for executive officer compensation for 2016 based on executive officer compensation practices at peer banks. Matthews, Young reviewed all forms of executive officer compensation for a broad-based peer group of publicly held banks in the Southeast ranging from $500 million to $1 billion in total assets. Management also requested Matthews, Young to include certain North Carolina banks in its analysis. Our compensation committee did not rely on the information provided by Matthews, Young exclusively and retains the ultimate responsibility for recommending executive officer compensation to our board of directors.

The Nominating and Corporate Governance Committee. The members of our nominating and corporate governance committee are Dr. R. Max Raynor, Jr. (chairman), Warren L. Grimes, Kenneth R. Lehman, and Michael A. Weeks, each of whom, with the exception of Mr. Lehman, the board has determined, in its business judgment, meets the definition of “independent director” as that term is defined by the Nasdaq Listing Rules. The board has not determined Mr. Lehman meets the definition of “independent director” as that term is defined by Nasdaq Listing Rules due to his significant ownership in the company. The board of directors nevertheless appointed Mr. Lehman to the nominating and corporate governance committee because it determined that it was in our best interest to utilize Mr. Lehman’s significant experience with financial institutions through service on the nominating and corporate governance committee. Our securities are quoted on the OTCQX and are not listed on a national securities exchange. Therefore, the Nasdaq Listing Rules requiring committee members to be independent are not applicable to us.

During 2016, the nominating and corporate governance committee met two (2) times. The committee operates pursuant to a charter that is available on our website at http://www.fouroaksbank.com in the “About Us—Investor Information” section under the listing for governance documents, or free of charge upon written request to the attention of the Corporate Secretary, Four Oaks Fincorp, Inc., P.O. Box 309, Four Oaks, North Carolina 27524. Pursuant to the committee’s charter, the board of directors has delegated certain responsibilities to the committee regarding director nominations, criteria for proposing or recommending proposed nominees for election and re-election to the board of directors and providing guidance to the board on corporate governance policies and practices.

To be considered by our nominating and corporate governance committee, a director nominee must have certain minimum qualifications, including the ability to read and understand basic financial statements, business experience, relevant industry knowledge, high moral character, meeting certain stock ownership requirements, having his or her primary banking relationship with us (subject to certain exceptions approved by our board), meeting certain age requirements, and the willingness to devote sufficient time to attend meetings and participate effectively on the board of directors. When evaluating candidates, the committee considers the following attributes and corresponding criteria set forth by the committee: education, additional training, knowledge, work experience, perspective, skills, expertise, diversity, personal and professional integrity, character, business judgment, time availability, dedication, absence of conflicts of interest, independence, and any other relevant factors the committee deems appropriate in the context of the needs of our board of directors. The committee may retain recruiting professionals to assist in identifying and evaluating candidates for director nominees.

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The nominating and corporate governance committee will consider, in the same manner and based on the same qualifications as its own nominations, shareholder nominations for directors. To be considered, a shareholder nomination must be sent to the Corporate Secretary, Four Oaks Fincorp, Inc., P.O. Box 309, Four Oaks, North Carolina 27524. The nomination must be received no later than the close of business on the 90th day prior to the first anniversary of the preceding year’s annual meeting, and it must contain enough information regarding the nominee to permit the committee to assess the relevant qualifications of the nominee, such as biographical profile, list of affiliated companies, and potential conflicts of interest.

Shareholder Communications

Our shareholders may communicate directly with the members of the board of directors or the individual chairmen of standing board committees by writing directly to those individuals at the following address: Four Oaks Fincorp, Inc., P.O. Box 309, Four Oaks, North Carolina 27524. Our general policy is to forward, and not to intentionally screen, any mail received at our corporate office that is sent directly to an individual unless we believe the communication may pose a security risk.

Code of Ethics

Our board of directors has adopted a code of ethics (our “Code of Ethics”) that applies to our principal executive officer, principal financial officer, principal accounting officer or controller, and persons performing similar functions. A copy of our Code of Ethics is available at http://www.fouroaksbank.com in the “About Us—Investor Information” section under the listing for governance documents, or free of charge upon written request to the attention of the Corporate Secretary, Four Oaks Fincorp, Inc., P.O. Box 309, Four Oaks, North Carolina 27524 ((919) 963-2177). Consistent with Item 5.05 of Form 8-K, we intend to disclose future amendments to, or waivers from, our Code of Ethics on our website within four business days following the date of such amendment or waiver.

Proposal No. 1

ELECTION OF DIRECTORS

The following table and accompanying biographies provide information on our nominees for election to the board of directors:

Name		Age		Director Since		Positions and Offices with our Company & Business Experience During Past Five (5) Years
Ayden R. Lee, Jr.		68		1983		Chairman of the Board of Directors of Four Oaks Fincorp, Inc. and Four Oaks Bank & Trust Company. Mr. Lee served as the President of Four Oaks Fincorp, Inc. and Four Oaks Bank & Trust Company from 1997 and 1989, respectively, until March 2015 and as Chief Executive Officer of the company and the bank from 1997 and 1980, respectively, until July 2015. Mr. Lee also served as Executive Chairman of the company from July 2015 to December 2015.

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Name		Age		Director Since		Positions and Offices with our Company & Business Experience During Past Five (5) Years
David H. Rupp		53		2015		Director, Chief Executive Officer and President of Four Oaks Fincorp, Inc. and Four Oaks Bank & Trust Company. Mr. Rupp became the President of the company and the bank in March 2015 and Chief Executive Officer in July 2015 after serving as Executive Vice President from September 2014 to March 2015 and Chief Operating Officer from September 2014 to July 2015. Mr. Rupp joined the company and the bank as Senior Vice President, Strategic Project Manager in June 2014. Prior to joining the company and the bank, he most recently served as Retail Banking and Mortgage President of VantageSouth Bank from 2012 to 2014. From 2009 to 2011, Mr. Rupp served as Chief Executive Officer of Greystone Bank and, from 2008 to 2009, he served as Senior Executive Vice President of Regions Financial Corporation. Prior to his employment with Regions Financial Corporation, Mr. Rupp held various positions at Bank of America and First Union Corporation.
Warren L. Grimes		68		1992		Director of Four Oaks Fincorp, Inc. and Four Oaks Bank & Trust Company.  From 2001 through 2013, Mr. Grimes served as Executive Director of Smithfield Housing Authority, which provides public housing for low income persons.  Mr. Grimes has also served as Partner in Reedy Creek Direct Marketing Associates, a website hosting company, as Chief Financial Officer of Reedy Creek Technologies, a software development company, and owned and operated a private solid waste business for 22 years.
Kenneth R. Lehman		58		2015		Director and principal shareholder of Four Oaks Fincorp, Inc. and Four Oaks Bank & Trust Company. Kenneth R. Lehman is a private investor and former attorney. Over the last five years, Mr. Lehman has served as a director of several banks and bank holding companies including the following publicly-traded companies: Four Oaks Fincorp. Inc., Village Bank & Trust Financial Corporation, where he has served as a director since July 2016, First Capital Bancorp, Inc., where he served as a director from 2012 through 2016, Virginia Commerce Bancorp, Inc., where he served as a director from 2009 through 2014, and Tower Bancorp, Inc., where he served as a director from 2009 through 2012. Mr. Lehman also currently serves as a director of Delmar Bancorp, Inc. and the Bank of Delmarva; Liberty Bell Bank; Liberty Shares, Inc. and The Heritage Bank; Marine Bank & Trust Company; Village Bank & Trust Financial Corporation and Village Bank; and Virginia Partners Bank.
Robert G. Rabon		63		2012		Director of Four Oaks Fincorp, Inc. and Four Oaks Bank & Trust Company. Mr. Rabon is a founding partner of Rabon & Dailey, LLP, an accounting firm established in 1981. Since 2001, he has also served as CEO or Co-CEO of Coldwell Banker Advantage, a residential real estate firm. Mr. Rabon is a principle partner of Advantage Lending, LLC, a residential mortgage broker, and a partner in Cardinal Title, LLC, an affiliated title insurance company. He is also a managing member of various limited liability companies that own and manage office properties and an industrial site. Mr. Rabon is a licensed real estate broker and certified public accountant (CPA).
Dr. R. Max Raynor, Jr.		59		2000		Director of Four Oaks Fincorp, Inc. and Four Oaks Bank & Trust Company.  Dr. Raynor has been an optometrist since 1985 and owns Professional Eye Care, a full scope eye care practice, with locations in Benson, Clinton and Roseboro, North Carolina.

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Name		Age		Director Since		Positions and Offices with our Company & Business Experience During Past Five (5) Years
Michael A. Weeks		65		2006		Lead Independent Director of Four Oaks Fincorp, Inc. and Four Oaks Bank & Trust Company.  Since 1987, Mr. Weeks has served as architect and President of Weeks Turner Architecture, P.A., a full service architectural firm.  Mr. Weeks is also Member Manager of the following real estate development companies: Atlantic Park, LLC, Weeks & Sherron, LLC, Weeks Sherron & Turner, LLC, Serwee Associates, LLC, South Main Associates, LLC, Durant Business Center, LLC, Tryon Theater, LLC, Knightdale Business Partners, LLC, WRS, LLC, SWR, LLC, Brown Street Associates, LLC, and Mann’s Chapel Properties, LLC.  Mr. Weeks also serves as Member Manager of a family farm, Weeks Associates, LLC, and co-owner of Lake Wheeler Mobile Estates, LLC, a mobile home park.  In addition, Mr. Weeks has diverse experience serving on various government, community and private boards.

Factors Bearing on Qualifications of Directors

The experience, qualifications, attributes, skills and other factors that lead our board of directors to conclude that each of our directors listed in the table above should serve or continue to serve as a director are described below.

Ayden R. Lee, Jr.

•	Management experience and understanding of our goals, values and culture through service as a director since 1983, Chairman of the Board of Directors since 2006, Executive Chairman from July 2015 to December 2015, Chief Executive Officer from 1980 to 2015, and President from 1989 to 2015;

•	Extensive knowledge of the banking industry and experience with various regulatory agencies;

•	A certified public accountant (CPA) (inactive);

•	Accounting background and ability to read and analyze financial information;

•	Leadership skills and ability to work with and motivate others; and

•	Visible and active community leader.

David H. Rupp

•	Leadership skills and ability to effectively communicate goals, values and culture that motivate others within an organization;

•	Experience serving in leadership roles of a number of banking institutions, including as our Chief Executive Officer since July 2015, President since March 2015, and Chief Operating Officer from September 2014 to July 2015;

•	Diverse perspective of the banking industry gained by serving in the management of banks of varying sizes and geographic footprints; and

•	Extensive knowledge of the banking industry and experience with various regulatory agencies.

Warren L. Grimes

•	Understanding of our goals, values and culture through service as a director of our company since 1992;

•	Ability to read and analyze financial statements;

•	Management experience as owner and operator of a private solid waste business for 22 years; and

•	Familiarity with regulatory agencies and procedures gained from service as executive director of a public housing authority.

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Kenneth R. Lehman

•	Experience as an attorney representing private and public financial institutions;

•	Knowledge of banking and securities laws and regulations;

•	Understanding of the banking industry including bank valuations and mergers and acquisitions; and

•	Service as a director of other banking institutions and public companies.

Robert G. Rabon

•	Understanding of our goals, values and culture through service as a director of our company since 2012;

•	A certified public accountant (CPA);

•	Accounting background and ability to read and analyze financial information;

•	Extensive knowledge of the real estate market in a portion of our banking market through experience as a real estate broker;

•	Leadership skills and ability to effectively communicate goals, values and culture that motivate others within an organization; and

•	Management experience in multiple industries.

Dr. R. Max Raynor, Jr.

•	Understanding of our goals, values and culture through service as a director of our company since 2000;

•	Management experience through managing, operating, and growing a successful eye care practice since 1985;

•	Ability to identify with the financial needs of small and mid-sized businesses, which is an important segment of our customer base; and

•	Visible and active community leader.

Michael A. Weeks

•	Understanding of our culture, values and goals through service as a director of our company since 2006;

•	Management experience through managing, operating, and growing a successful architectural firm since 1987;

•	Ability to read and analyze financial statements and communicate with accounting professionals;

•	Knowledge of the real estate market in a portion of our banking market through managing various real estate development companies;

•	Familiarity with regulatory agencies and procedures gained from his broad-ranging experience on government and private boards and his real estate development activities; and

•	Visible and active community leader.

Number of Directors and Term

The number constituting our board of directors must be at least five (5), but not more than twenty-one (21). The number of directors within this variable range may be fixed or changed from time to time by our shareholders or our board of directors. Our board of directors has set the number of directors at seven (7). The members of our board of directors are elected by our shareholders to serve one (1) year terms.

All of our directors hold office until the next annual meeting or until their successors are elected and qualified. Pursuant to agreements entered with each of our directors, each director is required to retire from his or her position as a director upon the occurrence of certain events, including, among other things, the attainment of age 70 or residence outside of North Carolina (subject to certain exceptions approved by our board).

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Our board of directors has no reason to believe that the persons named above as nominees will be unable or will decline to serve as a director if elected. However, in the event of death or disqualification of any nominee or refusal or inability of any nominee to serve, it is the intention of the proxyholders to vote for the election of such other person or persons as the proxyholders determine in their discretion; but in no circumstance will the proxy be voted for more than seven (7) nominees. Properly executed and returned proxies, unless revoked, will be voted as directed by the shareholder or, in the absence of such direction, will be voted in favor of the election of the recommended nominees.

Vote Requirement

Pursuant to North Carolina law, the seven (7) candidates who receive the highest number of votes will be elected as directors.

Abstentions and broker non-votes are counted for purposes of determining the presence or absence of a quorum for the transaction of business, but are not counted in the election of directors and will not be included in determining which candidates received the highest number of votes.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” ALL OF THE NOMINEES FOR ELECTION AS DIRECTORS.

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AUDIT AND RISK COMMITTEE REPORT

As described above, the audit and risk committee of our board of directors is composed of Warren L. Grimes (chairman), R. Gary Rabon, and Michael A. Weeks and operates under a written charter adopted by the board of directors, which is available on our website at http://www.fouroaksbank.com in the “About Us—Investor Information” section under the listing for governance documents.

Management is responsible for our internal control over financial reporting and the financial reporting process, including the presentation and integrity of our financial statements. Our independent auditor is responsible for performing an independent audit of our consolidated financial statements in accordance with auditing standards generally accepted in the United States of America and issuing a report thereon. The audit and risk committee’s responsibility is to monitor and oversee these processes. The audit and risk committee also hires and sets the compensation for our independent auditor. Members of the audit and risk committee rely without independent verification on the information provided to them and on representations of management and our independent auditor.

Accordingly, the audit and risk committee’s oversight does not provide an independent basis to determine that management has maintained appropriate accounting and financial reporting principles or appropriate internal controls and procedures designed to assure compliance with accounting standards and applicable laws and regulations. Furthermore, the audit and risk committee’s considerations and discussions referred to below do not assure that the audit of our financial statements has been carried out in accordance with auditing standards generally accepted in the United States of America, that our financial statements are presented in accordance with accounting principles generally accepted in the United States of America, or that our auditors are in fact “independent.”

In this context, the audit and risk committee has met and held discussions with our management, who represented to the audit and risk committee that our consolidated financial statements were prepared in accordance with accounting principles generally accepted in the United States of America. The audit and risk committee has reviewed and discussed the consolidated financial statements with both management and the independent auditor. The audit and risk committee also discussed with the independent auditor matters required to be discussed by Public Company Accounting Oversight Board (“PCAOB”) Auditing Standard No. 1301, Communications with Audit Committees. Our independent auditor also provided to the audit and risk committee the written disclosures and letter required by applicable requirements of the PCAOB regarding the independent auditor’s communications with the audit and risk committee concerning independence, and the audit and risk committee has discussed with the independent auditor its independence.

Based upon the audit and risk committee’s discussions with management and the independent auditor and the audit and risk committee’s review of our consolidated financial statements, representations of management, and the report of the independent auditor to the audit and risk committee, and subject to the limitations on the role and responsibility of the audit and risk committee referred to above and the audit and risk committee charter, the audit and risk committee recommended that our board of directors include the audited consolidated financial statements in our Annual Report on Form 10-K for the fiscal year ended December 31, 2016 for filing with the SEC.

Audit and Risk Committee

Warren L. Grimes (chairman)

R. Gary Rabon

Michael A. Weeks

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INFORMATION CONCERNING EXECUTIVE OFFICERS

Certain information regarding our executive officers is set forth below. Executive officers are appointed by our board of directors, or a duly appointed officer if authorized by the board of directors, to hold office until their death, resignation, retirement, removal, disqualification or until their successor is appointed and qualified. Additional information regarding Mr. Rupp is included in the director profiles set forth above.

Name		Age		Executive Officer Since		Positions and Offices with our Company & Business Experience During Past Five (5) Years
David H. Rupp		53		2014		Director, Chief Executive Officer and President of Four Oaks Fincorp, Inc. and Four Oaks Bank & Trust Company. Mr. Rupp became the President of the company and the bank in March 2015 and Chief Executive Officer in July 2015 after serving as Executive Vice President from September 2014 to March 2015 and Chief Operating Officer from September 2014 to July 2015. Mr. Rupp joined the company and the bank as Senior Vice President, Strategic Project Manager in June 2014.
Jeff D. Pope		60		2004		Executive Vice President of Four Oaks Fincorp, Inc. and Four Oaks Bank & Trust Company, Chief Banking Officer of Four Oaks Bank & Trust Company.  Mr. Pope has been our Executive Vice President and Chief Banking Officer of Four Oaks Bank & Trust Company since January 2009.  From 2005 until January 2009, he served as Executive Vice President and Branch Administrator, and from 2000 until 2005, he served as Senior Vice President and Regional Executive.
Lisa S. Herring		41		2009		Executive Vice President, Chief Operating Officer of Four Oaks Fincorp, Inc. and Four Oaks Bank & Trust Company and Chief Risk Officer of the bank. Ms. Herring was named Chief Operating Officer of the company and the bank in December 2015. Ms. Herring has been an Executive Vice President of the company and Chief Risk Officer of the bank since July 2009. From 2005 until July 2009, Ms. Herring served as the bank’s Senior Vice President and General Auditor. From 2002 until 2005, Ms. Herring served as the bank’s Vice President and General Auditor.
Deanna W. Hart		39		2015		Executive Vice President, Chief Financial Officer of Four Oaks Fincorp, Inc. and Four Oaks Bank & Trust Company. Ms. Hart was appointed to her current position in September 2015. Prior to her appointment as Chief Financial Officer, Ms. Hart served as the bank’s Senior Vice President and Controller since January 2014 and as acting CFO for the company and the bank beginning in September 2015. Prior to that, Ms. Hart served as the bank’s Senior Vice President and Director of Internal Audit starting in January 2010. From 2005 to 2010, Ms. Hart served as Vice President and Senior Auditor and previously served as Assistant Vice President and Staff Auditor from 2003 to 2005.

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Name		Age		Executive Officer Since		Positions and Offices with our Company & Business Experience During Past Five (5) Years
Warren D. Herring, Jr.		47		2015		Executive Vice President of Four Oaks Fincorp, Inc. and Four Oaks Bank & Trust Company and Chief Credit Officer of Four Oaks Bank & Trust Company. Mr. Herring joined the company and the bank in March 2015, initially serving as Chief Credit Officer on an acting basis until May 2015. Prior to joining the company and the bank, he most recently served as Chief Credit Officer and Executive Vice President of Premier Commercial Bank from August 2010 until March 2015. From 2008 until 2010, Mr. Herring served as Senior Credit Administration Manager of CommunityOne Bank and, from 2007 to 2008, he served as Senior Regional Risk Manager of RBC Bank. Prior to his employment with RBC Bank, Mr. Herring held positions at First National Bank and Trust Company and Central Carolina Bank.
Lawrence F. DesPrés		53		2016		Executive Vice President of Four Oaks Fincorp, Inc. and Four Oaks Bank & Trust Company and Chief Information Officer of Four Oaks Bank & Trust Company. Mr. DesPrés joined the company and the bank in April 2016. Prior to joining the company and the bank, he most recently served as IT Director of Community & Southern Bank in Atlanta Georgia from August 2014 to March 2016. From February 2011 to July 2013, Mr. DesPrés served as Chief Information Officer of LoneStar National Bank in McAllen, Texas and from January 2010 to February 2011, he served as Chief Technology Officer of City National Bank in Miami, Florida. Prior to his employment with City National Bank, Mr. DesPrés served as IT Director of United Community Bank in Blairsville, Georgia from February 2002 to August 2009.

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EXECUTIVE COMPENSATION

Summary Compensation Table

The following table sets forth summary compensation information for, (i) our current CEO, (ii) our next two most highly compensated executive officers during 2016 who were serving in such roles at the end of the year, and (iii) a former executive officer who was one of the two most highly compensated executive officers during 2016 but was not serving as such at the end of the year, for services rendered to us during the fiscal year ended December 31, 2016 and, for those individuals that were named in the Summary Compensation Table included in the proxy statement for our 2016 Annual Meeting of Shareholders, the fiscal year ended December 31, 2015. We refer to the persons identified in the table below as our “named executive officers.”

Name and Principal Position		Year		Salary ($)			Bonus ($)		Stock awards ($) (1)			All other compensation ($)			Total ($)
David H. Rupp, Chief Executive Officer and President		2016		$275,000			$71,214		$3,800	(2)		$7,249	(3)		$357,263
		2015		$240,000			$90,214		$46,455	(4)		$5,994	(5)		$382,663
Jeff D. Pope, Executive Vice President, Chief Banking Officer		2016		$190,000			$60,718		$1,900	(6)		$10,292	(7)		$262,910
		2015		$172,000			$60,216		$23,228	(8)		$6,091	(9)		$261,535
Lisa S. Herring, Executive Vice President, Chief Operating Officer and Chief Risk Officer		2016		$187,000			$60,236		$1,900	(10)		$6,028	(11)		$255,164
		2015		$165,000			$60,226		$23,228	(12)		$5,891	(13)		$254,345
W. Leon Hiatt, III, Former Executive Vice President, Chief Administrative Office (14)		2016		$37,089	(15)		—		$17,800	(16)		$353,965	(17)		$408,854

(1)

Reflects the aggregate grant date fair value computed in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification Topic 718, Compensation – Stock Compensation (“ASC Topic 718”) of the restricted stock awards granted to each of our named executive officers. Assumptions used in the calculation of this amount for the restricted stock awards made during the fiscal years ended December 31, 2016 and December 31, 2015 are based on management’s assessment of the probability of reaching the applicable performance goals as of the grant dates for performance-based vesting of restricted stock awards. The specific assumptions used to compute this amount for restrict stock awards for our named executive officers for the fiscal year ended December 31, 2016 are as follows:

		Performance Period ending December 31, 2018
Grant Date*		January 13, 2016
Market Price at Grant Date			$9.50
Probability at Grant Date		5		%

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*Based on the date on which the compensation committee set the performance measures and goals for the applicable Performance Period (as defined below).

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The specific assumptions used to compute this amount for our named executive officers for restricted stock awards made during the fiscal year ended December 31, 2015 are as follows:

		Performance Period ending December 31, 2016				Performance Period ending December 31, 2018
Grant Date*		January 20, 2015				December 21, 2015
Percent Allocation		15		%		85		%
Market Price at Grant Date			$7.60				$8.55
Probability at Grant Date		70		%		5		%

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*Based on the date on which the compensation committee set the performance measures and goals for the applicable Performance Period (as defined below).

Additional information on the Restricted Stock Plan is included in Note O of the Annual Report on Form 10-K filed with the SEC on March 30, 2017. See “Restricted Stock Plan” below for more information on the performance-based vesting of the restricted stock awards made to our named executive officers during 2016 and 2015.

(2)	Pursuant to ASC Topic 718, the aggregate value of the awards at the grant date assuming the highest level of performance conditions are achieved equals $83,600.

(3)	Includes $6,842 in contributions under our Four Oaks Bank & Trust Company Retirement Plan (the “Retirement Plan”) and $407 in life insurance premiums paid by us on behalf of the named executive officer.

(4)	Pursuant to ASC Topic 718, the aggregate value of the awards at the grant date assuming the highest level of performance conditions are achieved equals $365,370.

(5)	Includes $5,604 in contributions under our Four Oaks Bank & Trust Company Retirement Plan (the “Retirement Plan”) and $390 in life insurance premiums paid by us on behalf of the named executive officer.

(6)	Pursuant to ASC Topic 718, the aggregate value of the awards at the grant date assuming the highest level of performance conditions are achieved equals $41,800.

(7)	Includes $9,885 in contributions under the Retirement Plan and $407 in life insurance premiums paid by us on behalf of the named executive officer.

(8)	Pursuant to ASC Topic 718, the aggregate value of the awards at the grant date assuming the highest level of performance conditions are achieved equals $182,685.

(9)	Includes $5,701 in contributions under the Retirement Plan and $390 in life insurance premiums paid by us on behalf of the named executive officer.

(10)	Pursuant to ASC Topic 718, the aggregate value of the awards at the grant date assuming the highest level of performance conditions are achieved equals $41,800.

(11)	Includes $5,621 in contributions under the Retirement Plan and $407 in life insurance premiums paid by us on behalf of the named executive officer.

(12)	Pursuant to ASC Topic 718, the aggregate value of the awards at the grant date assuming the highest level of performance conditions are achieved equals $182,685.

(13)	Includes $5,501 in contributions under the Retirement Plan and $390 in life insurance premiums paid by us on behalf of the named executive officer.

(14)	Effective as of February 1, 2016, Mr. Hiatt’s employment as our Executive Vice President and Chief Administrative Officer was terminated.

(15)	Includes $23,987 for accrued, unused vacation and sick time paid in connection with Mr. Hiatt’s termination (see “Severance and Change in Control Arrangements—Severance and General Release Agreement with W. Leon Hiatt, III” below for more information).

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(16)

Includes 2,000 shares of restricted stock previously awarded to Mr. Hiatt that, pursuant to the Severance and General Release Agreement between Mr. Hiatt and Four Oaks Bank & Trust Company (the “bank”), remained issued and outstanding instead of being forfeited on his termination date as provided in the award of such restricted stock, subject to modified vesting terms (see “Severance and Change in Control Arrangements-Severance and General Release Agreement with W. Leon Hiatt, III” below for more information). Pursuant to ASC Topic 718, the aggregate value of the awards at the grant date assuming the highest level of performance conditions are achieved equals $17,800.

(17)

Includes $337,932 paid pursuant to the Severance and General Release Agreement between Mr. Hiatt and the bank (see “Severance and Change in Control Arrangements—Severance and General Release Agreement with W. Leon Hiatt, III” below for more information), $16,000 for the value of the company automobile previously used by Mr. Hiatt that was granted to him in connection with his termination, and $33 in life insurance premiums paid by us on behalf of the named executive officer.

Amended and Restated Executive Employment Agreements

On December 3, 2015, the bank entered into Amended and Restated Executive Employment Agreements (the “Employment Agreements”) with our CEO and other currently-employed named executive officers. The Employment Agreements provide each executive a base annual salary that may be increased at the discretion of the board of directors and also provide that each executive is eligible for an annual cash bonus of up to 33% of his or her base salary, which actual amount each year will be determined by the compensation committee. The Employment Agreements also provide additional benefits generally available to executive personnel and to all salaried employees, including insurance benefits, sick leave, and reimbursement of expenses incurred in the course of performing duties under the Employment Agreements.

The severance and change in control arrangement provided by the Employment Agreements are described below in “Severance and Change in Control—Employment Agreements.” Each Employment Agreement includes a requirement that the executive sign a release of all claims as a condition to receiving severance thereunder. Finally, during each executive’s employment with us and for a period of one year following termination of such employment, the executive is prohibited from competing with us or attempting to solicit our customers or employees, unless such employment is terminated without Cause or by notice of non-renewal and following a Change in Control.

Restricted Stock Plan

On January 16, 2015, the board of directors approved and adopted the Restricted Stock Plan. Pursuant to the Restricted Stock Plan, we may award up to 384,000 shares of our common stock to eligible employees, directors, and third party service providers in the form of restricted stock and/or RSUs. The compensation committee administers the Restricted Stock Plan and has broad discretion to construe and interpret the terms and the intent of the Restricted Stock Plan, to designate award recipients, to determine the number of shares of restricted stock and/or RSUs to be subject to each award, and to determine the terms and conditions of each award. The Restricted Stock Plan will terminate after ten years unless earlier terminated, and the compensation committee may alter, amend, suspend or modify the Restricted Stock Plan at any time.

The Restricted Stock Plan includes certain limitations on awards made by the compensation committee thereunder. The Restricted Stock Plan does not permit a nonemployee director to be granted awards in any calendar year that would result in our company recognizing an aggregate compensation expense for such awards in excess of $250,000. Further, except as may otherwise be permitted under the terms the Tax Asset Protection Plan, dated as of August 18, 2014, between our company and ComputerShare, formerly Registrar and Transfer Company, as Rights Agent (the “Rights Agreement”), in no case shall any individual receive awards pursuant to the Restricted Stock Plan that would result in such individual, together with such individual’s Affiliates (as defined in the Restricted Stock Plan), becoming the Beneficial Owners (as such term is defined in the Rights Agreement) of more than 4.9% of our then-outstanding shares of common stock. The maximum aggregate awards of restricted stock or RSUs in any one calendar year to any one individual is generally limited to 100,000 shares, subject to certain adjustments.

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The compensation committee may impose any conditions or restrictions it deems advisable on restricted stock or RSUs granted under the Restricted Stock Plan, including a requirement that grantees pay a stipulated purchase price for each share of restricted stock or each RSU, restrictions based upon the achievement of specific performance goals, time-based restrictions on vesting following the attainment of the performance goals, other time-based restrictions, or holding requirements or sale restrictions placed on the shares upon vesting of such restricted stock or RSUs, such restrictions to be set forth in individual award agreements. Generally, holders of restricted stock granted under the Restricted Stock Plan may be granted the right to exercise full voting rights with respect to those shares during the period of restriction, while holders of RSUs will have no voting rights. Unless the compensation committee determines otherwise (and in no case for value), awards granted under the Restricted Stock Plan may not be assigned or transferred, other than by will or the applicable laws of descent and distribution. In the event of a Change in Control (as defined below), all restrictions and deferral limitations and other conditions applicable to any awards under the Restricted Stock Plan will lapse.

On January 16, 2015, the compensation committee approved the grant of restricted stock to certain employees of our company, including our named executive officers, under and pursuant to the terms of the Restricted Stock Plan. Awards of restricted stock to our executives in 2015 vest in two separate tranches, 15% at the end of the one-year period ended on December 31, 2015 and 85% at the end of the three-year period ending on December 31, 2018 (each such period, a “Performance Period”), in each case based on the attainment of the performance measures and goals for that Performance Period. The compensation committee approved additional grants of restricted stock to the members of the executive team, including our currently employed named executive officers, on January 13, 2016, 100% of which vest subject to the performance measures for the three-year Performance Period described below. The performance measures for the one-year period ended December 31, 2015 were (i) budgeted net income as set forth in our 2015 budget and (ii) the company having net income in each quarter of 2015. We achieved our targeted performance level for the one-year Performance Period ended December 31, 2015, and therefore 15% of the shares of restricted stock awarded during 2015 to the named executive officers vested as of January 13, 2016, the date the compensation committee determined that the performance goals had been met. The performance measures for the three-year Performance Period are cumulative earnings per share. Earnings per share must be achieved at the 60% threshold performance level in order for 50% of the remaining awards to vest and at the 100% target performance level in order for 100% of the awards to vest. Where achievement against earnings per share falls between these performance levels, the number of shares vest also falls within these levels. Achievement of 70%, 80%, and 90% of target earnings per share results in vesting of 60%, 75%, and 87.5% respectively. Additionally, if 110% or more of the target performance level is obtained, 100% of the awards will vest and an additional 10% of the applicable restricted stock grant amount will be awarded to each recipient in fully-vested shares.

Prior to the adoption of the Restricted Stock Plan, the board of directors historically granted options during its annual February meeting following the end of a fiscal year. Grants of stock options to our named executive officers under our Nonqualified Stock Option Plan have been made completely at the discretion of the board of directors or the compensation committee after a fiscal year is ended based upon the actual performance of our common stock, the compensation committee’s discretionary assessment of an individual’s performance and responsibilities, and position with our company.

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The following table contains information about the options and shares of restricted stock held by our named executive officers at December 31, 2016.

Outstanding Equity Awards at 2016 Fiscal Year-End

	Option Awards								Stock Awards
Name	Number of Securities underlying unexercised options (#) Exercisable			Number of Securities underlying unexercised options (#) Unexercisable			Option Exercise Price ($)	Option Expiration Date	Number of shares of units of stock that have not vested (#)		Market value of shares of units of stock that have not vested ($) (4)	Equity incentive plan awards: Number of unearned shares, units or other rights that have not vested (#)		Equity incentive plan awards: Market or payout value of unearned shares, units or other rights that have not vested ($) (4)
David H. Rupp	—			—			—	—	—		—	42,000	(5)	$556,500
Jeff D. Pope	—			—			—	—	—		—	21,000	(5)	$278,250
	500		(1)	0			$8.50	2/24/2019
	500		(2)	0			$5.75	3/11/2018
	500		(3)	0			$8.50	2/27/2017
Lisa S. Herring	—			—			—	—	—		—	21,000	(5)	$278,250
	500		(1)	0			$8.50	2/24/2019
	500		(2)	0			$5.75	3/11/2018
	500		(3)	0			$8.50	2/27/2017
W. Leon Hiatt, III	—			—			—	—	2,000	(6)	$26,500	—		—
	500		(1)	0			$8.50	2/24/2019

(1)	Option was granted on February 24, 2014 pursuant to our Nonqualified Stock Option Plan. This option is fully vested and exercisable and expires five years after the date of grant.

(2)	Option was granted on March 11, 2013 pursuant to our Nonqualified Stock Option Plan. This option is fully vested and exercisable and expires five years after the date of grant.

(3)	Option was granted on February 27, 2012 pursuant to our Nonqualified Stock Option Plan. This option is fully vested and exercisable and expires five years after the date of grant.

(4)	The market value of shares is based on a price of $13.25 per share (the closing price of our common stock as reported by OTCQX on December 31, 2016).

(5)

Performance-based restricted stock will vest, if at all, on the later of the last day of the Performance Period or upon the determination by the compensation committee that the performance measures for the three-year Performance Period ending December 31, 2018 have been achieved, provided that the named executive officer continues to render services to the company through the applicable vesting date.

(6)

Vesting of shares of restricted stock was dependent upon the bank’s determination that Mr. Hiatt complied with his obligations under the Severance and General Release Agreement between Mr. Hiatt and the bank from his termination date to December 31, 2016. The Compensation Committed determined that the shares vested effective January 13, 2017. (See “Severance and Change in Control Arrangements-Severance and General Release Agreement with W. Leon Hiatt, III” below for more information.)

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All of the options listed above expire on the earlier of the date indicated in the option expiration date column or 15 months after termination of the recipient’s employment, except in cases of death or disability, in which case the vesting is accelerated. Options may be exercised to the extent they are vested. Upon a merger in which we are not the surviving corporation, or liquidation or a sale of substantially all of our assets, outstanding options will become fully vested and exercisable and, to the extent not exercised, will terminate upon the effective date of such a transaction.

Any shares of restricted stock listed above that have not vested at the time of the termination of the recipient’s service relationship will be forfeited, although, consistent with the Restricted Stock Plan, the compensation committee has the power, in its sole and absolute discretion, to accelerate vesting where such termination is as a result of the recipient’s death or disability or in other termination situations. In the event that (i) we are liquidated, (ii) we merge or consolidate with another entity and are not the surviving or resulting corporation, or (iii) we sell all or substantially all of our assets, the restrictions and deferral limitations and other conditions applicable to any awards under the Restricted Stock Plan will lapse, and such awards will become free of all restrictions, limitations, or conditions and become fully vested and transferable to the full extent of the original grant.

Qualified Retirement Plan

We sponsor the Four Oaks Bank & Trust Company Retirement Plan, which is a contributory profit-sharing plan in effect for substantially all employees, including the named executive officers. Participants may make voluntary contributions resulting in salary deferrals in accordance with Section 401(k) of the Code. The plan provides for employee contributions as a percentage of their annual salary up to the limit allowed by the Internal Revenue Service. Since January 1, 2015, our company has contributed matching funds of 50% of the first 6% of pre-tax salary contributed by each participant; however, contributions under the plan are made at the discretion of our board of directors. Additionally, effective March 1, 2016, our company increased the 401(k) matching contribution under the Retirement Plan from 50% to 75% of the first 6% of pre-tax salary contributed by each participant.

Severance and Change in Control Arrangements

Employment Agreements. As described in the “Amended and Restated Executive Employment Agreements” section above, the bank has Employment Agreements with our CEO and each of our currently-employed named executive officers that contain certain severance arrangements. In the event an executive’s employment is terminated by the bank without Cause or by notice of non-renewal prior to a Change in Control or because of Disability (each as defined below), the executive will be entitled to receive as a lump sum an amount equal to 12 months of his or her then current monthly salary.

If the executive’s employment is terminated by the bank within 18 months following a Change in Control without Cause or by notice of non-renewal or if the executive terminates his or her employment for Good Reason (as defined below) within 18 months following a Change in Control, then the executive is entitled to receive as a lump sum a severance payment equal to two times his or her most recent annual compensation, including the amount of his or her most recent bonus. In addition, Mr. Pope and Ms. Herring were also entitled to receive such severance if he or she was terminated by the bank without Cause or such executive terminated his or her employment for Good Reason prior to August 15, 2016, the two-year anniversary of the closing date of the company’s shareholder rights offering and standby offering. Under each Employment Agreement, the applicable executive is also entitled to receive such severance if, following a Redundancy Transaction (as defined below), the executive’s employment is terminated by the bank without Cause or by notice of non-renewal or by the executive pursuant to the Redundancy Transaction provision. In addition, in each case the executive is entitled to reimbursement for additional costs he or she incurs in obtaining health insurance benefits equivalent to the group benefit plan in which he or she participated prior to termination of employment for a 24-month period following the termination of employment or, if sooner, until he or she obtains comparable coverage in connection with subsequent employment.

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For purposes of each Employment Agreement:

“Cause” includes (i) the executive’s demonstrated gross negligence or willful misconduct in the execution of his or her duties; (ii) the executive’s refusal to comply with the bank’s policies, procedures, practices, or directions, after notice and opportunity to cure within 15 days after such notice; (iii) the executive’s commission of an act of dishonesty; (iv) the executive’s being convicted of a felony; or (v) the executive’s breach of the Employment Agreement;

“Change in Control” occurs when (i) any “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act), other than the company or any entity owned, directly or indirectly, by the shareholders of the company in substantially the same proportions as their ownership of the company’s common stock, becomes the beneficial owner (as defined in Rules 13d-3 and 13d-5 under the Exchange Act) of shares representing more than 33% of the combined voting power of the then-outstanding securities entitled to vote generally in the election of directors of the company, unless such person or group becomes such a beneficial owner by certain transfers made for bona fide estate planning purposes; or (ii) (a) the company merges with any other entity, (b) the company consummates a statutory share exchange with another entity, or (c) the company conveys, transfers or leases all or substantially all of its assets to any entity, subject to the customary exception for clauses (ii)(a) and (b) above, where the shareholders of the company immediately before such transaction own immediately following such transaction more than 50% of the combined voting power of the outstanding securities of the corporation resulting from such transaction in substantially the same proportions as their ownership of securities immediately before such transaction;

“Disability” means the executive’s physical or mental inability to perform substantially all of the executive’s duties, with or without reasonable accommodation, for a period of 90 days, whether or not consecutive, during any 365-day period, as determined in the bank’s reasonable discretion and in accordance with any applicable law;

“Good Reason” means the occurrence of any of the following events or conditions without the executive’s consent: (i) a material diminution in the executive’s title, authority, duties, or responsibilities from such immediately prior to the Change in Control; (ii) a material diminution in the executive’s base salary; (iii) a material change in the geographic location at which the executive must perform his or her services under the Employment Agreement; or (iv) any other action or inaction that constitutes a material breach by the bank of the Employment Agreement; provided that the executive provides notice within 30 days of the initial existence of such condition and the bank does not remedy the condition within 30 days of such notice; and

“Redundancy Transaction” means (i) the company (a) merges with any bank holding company or bank, (b) consummates a statutory share exchange with any bank holding company or bank, or (c) purchases all or substantially all of the stock or assets of any bank holding company or bank, (ii) such merger, exchange or purchase is not a Change in Control as defined above, and (iii) in connection with such merger, exchange, or purchase, a senior executive of another party to such merger, exchange, or purchase is hired by the bank in a role or position and such hiring causes a material diminution in the executive’s title, authority, duties, or responsibilities from such immediately prior to the Redundancy Transaction.

Nonqualified Stock Option Plan. Our Nonqualified Stock Option Plan and the stock option agreements with each named executive officer provide the following:

•	In the event of any termination of a named executive officer’s employment that is either for cause or voluntary on the part of the officer and without our written consent, the options held by such officer immediately terminate.

•

In the event that (i) we are liquidated, (ii) we merge or consolidate with another entity and are not the surviving or resulting corporation, or (iii) we sell all or substantially all of our assets (each, an “Acceleration Event”), the vesting period accelerates for options held by all named executive officers and such options are treated as fully vested immediately prior to such Acceleration Event. The named executive officers then have the right to exercise the fully vested options before the effective date of the Acceleration Event and, to the extent not exercised before the effective date of the Acceleration Event, such options terminate.

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•

In the event that the named executive officer’s employment shall otherwise terminate (except by reason of his or her death), such officer may exercise his or her options (to the extent vested) at any time within 15 months after such termination but not more than five years after the date of the option grant. In the event that a named executive officer shall die while employed by the company or within 15 months after the termination of employment, any legatee by will, personal representative or distribution of the options, may exercise the officer’s options (to the extent vested) at any time within 15 months after his or her death but not more than five years after the date of the option grant.

Restricted Stock Plan. Our Restricted Stock Plan and the award agreements with each named executive officer provide the following:

•

Any restricted stock that has not vested at the time of the termination of the named executive officer’s service relationship will be forfeited, although, consistent with the Restricted Stock Plan, the compensation committee has the power, in its sole and absolute discretion, to accelerate vesting where such termination is as a result of the named executive officer’s death or Disability (as defined in the Restricted Stock Plan) or in other termination situations.

•

In the event that (i) we are liquidated, (ii) we merge or consolidate with another entity and are not the surviving or resulting corporation, or (iii) we sell all or substantially all of our assets (each, a “Change in Control”), the restrictions and deferral limitations and other conditions applicable to any awards under the Restricted Stock Plan shall lapse, and such awards shall become free of all restrictions, limitations, or conditions and become fully vested and transferable to the full extent of the original grant.

Insurance. Upon the death of an executive, he or she is entitled to the life and accidental death and dismemberment insurance proceeds available through our benefit plans.

Severance and General Release Agreement with W. Leon Hiatt, III . In connection with Mr. Hiatt’s termination, Mr. Hiatt, the bank’s former Chief Administrative Officer and former Executive Vice President of the company, and the bank entered a Severance and General Release Agreement, effective as of his termination date on February 1, 2016. Under the Severance and General Release, Mr. Hiatt was paid severance of $310,400, which equals two times his most recent annual salary, less applicable taxes and withholdings, on February 29, 2016. Further, the bank paid Mr. Hiatt $27,532, which equals the salary he would have received for the 90-day notice period under Paragraph 4(d) of his Amended and Restated Employment Agreement with the bank dated December 11, 2008 (“Mr. Hiatt’s Employment Agreement”). The bank will also reimburse Mr. Hiatt for the premiums he pays to continue coverage under the bank’s group health insurance policy pursuant to COBRA for the 18-month period from his termination date, and, following the end of that 18-month period until the end of the 24-month period following his termination date, the bank will reimburse Mr. Hiatt for additional reasonable costs of obtaining comparable health insurance coverage through an insurance policy or policies he chooses to purchase on his own, provided, however, such reimbursement shall cease if Mr. Hiatt obtains comparable coverage in connection with subsequent employment. The bank also agreed that 2,000 shares of restricted stock previously awarded to Mr. Hiatt, instead of being forfeited on his termination date as provided in the award of such restricted stock, remained issued and outstanding and vested on December 31, 2016 upon the bank’s determination that Mr. Hiatt complied with his obligations under the Severance and General Release Agreement from his termination date to such date. Pursuant to the Severance and General Release Agreement, the bank transferred to Mr. Hiatt the title of the automobile that was owned by the bank and provided to Mr. Hiatt for his use as an employee of the bank. Finally, the bank paid Mr. Hiatt for all of his accrued, unused vacation and sick time in a lump sum of $23,987 on February 29, 2016. The severance benefits afforded under the Severance and General Release Agreement are in lieu of any other compensation or benefits to which Mr. Hiatt otherwise might have been entitled, including without limitation under Mr. Hiatt’s Employment Agreement, which was terminated along with any remaining obligations thereunder upon execution of the Severance and General Release Agreement.

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2016 Director Compensation

We use a combination of cash and equity awards to attract and retain qualified candidates to serve on our board of directors. In setting director compensation, we consider the significant amount of time directors expend in fulfilling their duties to us as well as the skill level required.

Our non-management directors were paid fees of $1,500 per month in 2016. The chairman and lead director each were paid fees of $1,850 per month in 2016. In addition, the non-management chairman of each board committee was paid $450 and the other non-management directors were paid $400 for each board committee meeting they attended. During 2016, all of the non-management directors were paid a discretionary cash Christmas bonus of $200.

On January 16, 2015, the compensation committee awarded each non-management director 5,000 shares of restricted stock under the Restricted Stock Plan. The shares of restricted stock vest 50% performance-based and 50% time-based. Performance-based restricted stock vests, subject to achievement of certain performance goals, with respect to 7.5% of the award for the one-year Performance Period ended December 31, 2015 and with respect to 42.5% of the award for the three-year Performance Period ending December 31, 2018. The performance measures for the one-year period ended December 31, 2015 were (1) budgeted net income as set forth in our 2015 budget and (2) the company having net income in each quarter of 2015. We achieved our targeted performance level for the one-year Performance Period ended December 31, 2015, and therefore 7.5% of the shares of restricted stock awarded during 2015 to the directors vested as of January 13, 2016, the date the compensation committee determined that the performance goals had been met. The performance measure for the three-year Performance Period is cumulative earnings per share. Earnings per share must be achieved at the 60% threshold performance level in order for 50% of the remaining performance-based awards to vest and at the 100% target performance level in order for 100% of the remaining performance-based awards to vest. Where achievement against earnings per share falls between these performance levels, the number of shares vest also falls within these levels. Achievement of 70%, 80%, and 90% of target earnings per share results in vesting of 60%, 75%, and 87.5%, respectively. Additionally, if 110% or more of the target performance level is obtained, 100% of the performance-based awards will vest and an additional 10% of the applicable restricted stock grant amount will be awarded to each recipient in fully-vested shares. Time-based restricted stock vested, subject to passage of time, with the grantee remaining on the board as of December 31, 2015 (7.5% of the award) and as of December 31, 2018 (42.5% of the award). As of December 31, 2016, the aggregate number of unvested shares of restricted stock outstanding for each director was as follows: Ms. Bowman, 4,250 shares; Mr. Grimes: 4,250 shares; Mr. Lee: 34,000; Mr. Rabon: 4,250 shares; Mr. Raynor: 4,250 shares; and Mr. Weeks: 4,250 shares.

Prior to the adoption of the Restricted Stock Plan, each non-management member of the board of directors was historically granted options during its annual February meeting following the end of a fiscal year. As of December 31, 2016, the number of shares underlying outstanding options for each director was as follows: Ms. Bowman: 300 shares; Mr. Grimes: 300 shares; Mr. Lee: 2,000 shares; Mr. Rabon: 200 shares; Mr. Raynor: 300 shares; and Mr. Weeks: 300 shares.

The table below summarizes the compensation paid by us to non-management directors for the fiscal year ended December 31, 2016.

Name (1)		Fees Earned or Paid in Cash ($)		All Other Compensation ($) (2)		Total ($)
Paula Canaday Bowman (3)		$19,600		$200		$19,800
Warren L. Grimes		$29,500		$200		$29,700
Ayden R. Lee, Jr.		$29,000		$200		$29,200
Kenneth Lehman		$20,800		$200		$21,000
Robert G. Rabon		$26,250		$200		$26,450
Dr. R. Max Raynor, Jr.		$21,300		$200		$21,500
Michael A. Weeks		$35,850		$200		$36,050

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(1)	David H. Rupp, our current CEO, is not included in the table as he was an employee during 2016 and thus received no additional compensation for his service as a director. The compensation received by Mr. Rupp is shown in the Summary Compensation Table that appears earlier in this Proxy Statement.

(2)	Reflects a discretionary cash bonus of $200 for each director.

(3)	Ms. Bowman retired from the board of directors effective as of December 31, 2016.

Equity Compensation Plan Information

We maintain a Nonqualified Stock Option Plan, an Amended and Restated Employee Stock Purchase and Bonus Plan, as amended (referred to herein as the “Employee Stock Purchase and Bonus Plan” or the “Purchase Plan”), and the Restricted Stock Plan. None of these plans are required to be, or has been, approved by our shareholders. We have also assumed certain outstanding stock options granted under the Nuestro Banco 2007 Nonstatutory Stock Option Plan and Nuestro Banco 2007 Incentive Stock Option Plan in connection with our acquisition of Nuestro Banco in December 2009. The following table sets forth aggregate information regarding our equity compensation plans as of December 31, 2016:

	(a)		(b)	(c)
Plan Category	Number of securities to be issued upon exercise of outstanding options, warrants and rights		Weighted-average exercise price of outstanding options, warrants and rights	Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))
Equity compensation plans approved by security holders	N/A		N/A	N/A
Equity compensation plans not approved by security holders	21,280 (1)		$7.71	134,858 (2)
Total	21,280		$7.71	134,858

(1)	Represents shares issuable upon exercise of outstanding stock options under our Nonqualified Stock Option Plan. Excludes 2,469 shares issuable upon exercise of outstanding stock options assumed in the acquisition of Nuestro Banco, which have a weighted-average exercise price of $203.95 per share.

(2)	Includes 42,969 shares of our common stock remaining available for future issuance under our Nonqualified Stock Option Plan, 23,389 shares of our common stock remaining available for future issuance under our Employee Stock Purchase and Bonus Plan, and 68,500 shares of our common stock remaining available for future issuance as restricted stock or RSUs under our Restricted Stock Plan.

Nonqualified Stock Option Plan

The Option Plan provides for grants of nonqualified stock options to officers and directors of our company and its subsidiaries. The Option Plan is administered by the compensation committee of our board of directors, which has broad discretionary authority to administer the Option Plan. The board of directors may amend or terminate the Option Plan at any time, but no amendment or termination of the Option Plan may adversely affect the rights of optionees under prior awards without the optionees’ approval.

The Option Plan provides that the exercise price and number of shares subject to outstanding options will be appropriately adjusted upon a stock split, stock dividend, recapitalization, combination, consolidation, or similar transaction involving a change in our capitalization. Upon a merger in which we are not the surviving corporation, or a liquidation or a sale of substantially all of our assets, outstanding options will become fully vested and exercisable and, to the extent not exercised, will terminate upon the effective date of such a transaction.

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As of March 22, 2017, 12,670 shares had been reserved for issuance under the Option Plan issuable upon the exercise of outstanding stock options. During 2016, there were no stock options granted under the Option Plan. Beginning in 2017, the compensation committee does not intend to issue any additional option awards under the Option Plan.

Employee Stock Purchase and Bonus Plan

The Purchase Plan is a voluntary plan that enables full-time employees of our company and its subsidiaries to purchase shares of our common stock. The Purchase Plan is administered by the compensation committee of our board of directors, which has broad discretionary authority to administer the Purchase Plan. The board of directors may amend or terminate the Purchase Plan at any time. The Purchase Plan is not intended to be qualified as an employee stock purchase plan under Section 423 of the Code.

Participants in the Purchase Plan may purchase our common stock at fair market value equal to 5% of their compensation, up to $1,000. We match in cash 50% of the amount of each participant’s purchase, up to $500. After we withhold for income and employment taxes, participants use the balance of our matching grant to purchase shares of our common stock.

The Purchase Plan will terminate upon a merger in which we are not the surviving corporation, or a liquidation or a sale of substantially all of our assets. The Purchase Plan provides that the number of shares reserved for issuance thereunder will be appropriately adjusted upon a stock split, stock dividend, recapitalization, combination, consolidation, or similar transaction involving a change in our capitalization.

As of March 22, 2017, 23,389 shares of our common stock had been reserved for issuance under the Purchase Plan, and 110,322 shares had been purchased. During 2016, 14,374 shares were purchased under the Purchase Plan.

Restricted Stock Plan

See “Restricted Stock Plan” above for information about the Restricted Stock Plan. As of March 22, 2017, 75,300 shares of our common stock had been reserved for issuance under the Restricted Stock Plan. As of March 22, 2017, there were 249,270 shares of restricted stock outstanding and 75,300 shares remained available for future grants.

Death Benefit Only Plan

On February 27, 2017, the Board of Directors of the bank approved the Four Oaks Bank & Trust Company Death Benefit Only Plan (the “Death Benefit Only Plan”), with an effective date of January 1, 2017. Under the Death Benefit Only Plan, the bank, through bank-owned life insurance policies, provides death benefits to employees of the bank selected by the Compensation Committee. The bank is the sole owner of each life insurance policy, pays all premiums due under the policies, and is the beneficiary of any death benefit payable from the policies. Provided that the bank receives a death benefit from a life insurance policy on the participant’s life, on such participant’s death, the participant’s beneficiaries will be paid the amount specified in an individual Participation Agreement, unless the participant’s employment has terminated under certain circumstances. The bank entered into separate Participation Agreements with our CEO and each of our currently employed named executive officers providing for a benefit upon death of $100,000, subject to the terms of the Death Benefit Only Plan.

Certain Transactions

Certain of our directors and executive officers, members of their immediate families, and entities with which they are involved are customers of, and borrowers from, Four Oaks Bank & Trust Company in the ordinary course of business. All loans and other extensions of credit made by the bank to such individuals are made substantially on the same terms, including interest rates and collateral, as those prevailing at the time in comparable transactions with other customers. In the opinion of management, these loans do not involve more than normal risk of collectibility or contain other unfavorable features.

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Subordinated Promissory Notes. We sold $12 million aggregate principal amount of subordinated promissory notes in several closings from May through August 2009. In the initial closing on May 15, 2009, Percy Y. Lee, a former director of our company, and his spouse Joyce Lee jointly purchased $250,000 principal amount of the notes, and Peggy Edwards, the spouse of William J. Edwards, another former director, also purchased $250,000 principal amount of the notes. Additionally, on June 29, 2015, Four Oaks Food Stores, Inc., an affiliate of Mr. Edwards, purchased an outstanding note with an aggregate principal amount of $500,000 in a private transaction with a third-party noteholder not affiliated with the Company or Mr. Edwards. We were obligated to pay interest on the notes at an annualized rate of 8.5% payable in quarterly installments commencing on the third month anniversary of the date of issuance of the notes.

We prepaid the principal amount and accrued but unpaid interest under the notes held by Mrs. Edwards and Four Oaks Food Stores, Inc. on December 16, 2015 totaling $251,805 and $503,610, respectively.

On December 1, 2015, in exchange for cancellation of the indebtedness under the notes held by Mr. and Mrs. Lee, the company issued to Mr. and Mrs. Lee new subordinated promissory notes. As of that date, we had paid, or accrued but not yet paid, $139,069 in interest on the original notes held by Mr. and Mrs. Lee. Accrued but unpaid interest as of December 1, 2015 under the original notes was paid to Mr. and Mrs. Lee in connection with the first interest payment under the new notes. The company is obligated to pay interest on the new notes at an annualized rate of 6.25% payable in quarterly installments commencing on March 1, 2016. The company may prepay the new notes at any time after November 30, 2020, subject to compliance with applicable law.

Upon the occurrence, and during the continuation, of an event of default, including if the company fails to pay any amounts when due or fails to observe or perform any material covenant that remains uncured for 30 days, the new notes shall bear interest at a rate equal to the lesser of the existing interest rate plus 2% or the maximum rate permissible under law. In addition, payment of the new notes will be automatically accelerated if the company enters voluntary or involuntary bankruptcy or insolvency proceedings.

The new notes are unsecured and subordinated to (i) all indebtedness owed by the company to its secured creditors and general creditors; (ii) obligations arising from off-balance sheet guarantees and direct credit substitutes; (iii) obligations associated with derivative products such as interest rate and foreign exchange contracts, commodity contracts, and similar arrangements; and (iv) any such indebtedness or any debentures, notes, or other evidence of indebtedness issued in exchange for or to refinance any senior indebtedness or any indebtedness arising from the satisfaction of any such senior indebtedness by a guarantor.

Consulting Agreement with Clifton L. Painter . In connection with his retirement, Mr. Painter, our former Senior Executive Vice President, Chief Operating Officer and Chief Credit Officer, and the bank entered into a Consulting Agreement on October 1, 2014. The Consulting Agreement had a term of 24 months, during which time Mr. Painter served as an independent contractor of the bank and received consulting fees in the amount of $11,000 per month for the first 12 months and $10,000 during the second 12 months. Furthermore, the Consulting Agreement entitled Mr. Painter to an award of 80,000 shares of restricted stock in accordance with the terms of the Restricted Stock Plan, which was granted on January 16, 2015. The award vested over the term of the Consulting Agreement, with 50% of the award vesting on each anniversary of the Consulting Agreement.

The compensatory arrangements afforded under the Consulting Agreement are in lieu of any other compensation or benefits to which Mr. Painter otherwise was entitled under his Employment Agreement, which was terminated along with any remaining obligations thereunder upon execution of the Consulting Agreement.

On September 30, 2016, the bank and Mr. Painter executed an amendment to the Consulting Agreement which provides that Mr. Painter will continue to serve as an independent contractor for an additional 12-month term and will receive consulting fees of $8,000 per month during this term.

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Employment Agreement and SERP with Ayden R. Lee, Jr. The rights offering and standby offering to Kenneth R. Lehman that the company closed on August 15, 2014, in which Mr. Lehman became a 49% owner of the company, constituted a Change in Control under the Amended and Restated Executive Employment Agreement between the bank and Mr. Lee dated December 11, 2008 (“Mr. Lee’s Employment Agreement”). As a result of this Change in Control and the management transition plan approved by our board of directors on June 8, 2015 and pursuant to Mr. Lee’s Employment Agreement, Mr. Lee was entitled to receive a lump sum, cash severance payment equal to two times the amount of his most recent annual compensation, including the amount of his most recent bonus. In addition, Mr. Lee is entitled to reimbursement for additional costs he incurs in obtaining health insurance benefits equivalent to the group benefit plan in which he participated prior to termination of employment for a 24-month period following the termination of employment or, if sooner, until he obtains comparable coverage in connection with subsequent employment. Under the terms of the Supplemental Executive Retirement Plan (“SERP”) adopted for Ayden R. Lee, Jr. by the bank, following Mr. Lee’s retirement from the bank effective December 31, 2015, the bank is obligated to provide him with supplemental annual payments for the remainder of his life in the amount of $50,000, subject to certain limitations.

Severance and General Release Agreement with Nancy Wise . In connection with Ms. Nancy Wise’s resignation, Ms. Wise, the former Chief Financial Officer and Executive Vice President of the company and the bank, the company, and the bank entered a Severance and General Release Agreement, effective September 15, 2015. Under the Severance and General Release Agreement, Ms. Wise was paid severance in an amount equal to 16 months of her current base salary plus $10,000 (the “Severance Payment”), less applicable taxes and withholdings, on September 30, 2015. Pursuant to the Severance and General Release Agreement, the bank transferred to Ms. Wise the title of the automobile that was owned by the bank and provided to Ms. Wise for her use as an employee of the bank. Further, the bank paid Ms. Wise for all of her accrued, unused vacation and sick time in a lump sum on September 30, 2015. The bank will also reimburse Ms. Wise for the premiums she pays to continue coverage under the bank’s group health insurance policy pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”) for the 18-month period beginning October 1, 2015. The severance benefits afforded under the Severance and General Release Agreement are in lieu of any other compensation or benefits to which Ms. Wise otherwise might be entitled, including without limitation under the Amended and Restated Executive Employment Agreement between the bank and Ms. Wise dated December 11, 2008, which was terminated along with any remaining obligations thereunder upon execution of the Severance and General Release Agreement.

We had no other transactions with related persons in 2016 or 2015 required to be disclosed under Item 404(a) of Regulation S-K of the Exchange Act, and there are no such transactions currently proposed for 2016.

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Proposal No. 2

ADVISORY (NONBINDING) APPROVAL OF EXECUTIVE COMPENSATION

Our executive compensation program is designed to attract and retain the executive talent essential to the achievement of our strategic and operational goals and the achievement of increased shareholder value. We believe that our compensation policies and procedures are competitive and focused on performance and that such compensation policies and procedures create interests for our executive officers that are strongly aligned with the long-term interests of our shareholders.

As required by Section 14A of the Exchange Act, we are providing our shareholders with an advisory (nonbinding) vote on the compensation of our executive officers. At the 2013 Annual Meeting of Shareholders, a majority of our shareholders recommended that an advisory resolution, with respect to our executive compensation program, be presented to our shareholders every year, and our board of directors adopted this recommendation. This proposal, commonly known as a “Say-on-Pay” proposal, is designed to give you as a shareholder the opportunity to endorse or not endorse our executive compensation program through the following resolution:

“ RESOLVED , that the shareholders approve, on an advisory basis, the compensation of our named executive officers, as disclosed in this proxy statement pursuant to the compensation disclosure rules of the Securities and Exchange Commission, including the compensation tables and the related narrative disclosure.”

When you cast your vote, we urge you to consider the description of our executive compensation program contained in this proxy statement, including in the compensation tables and narrative disclosure, as well as the following factors:

•	Compensation decisions for our CEO and other named executive officers are made by a committee composed of non-management directors, a majority of whom are independent.

•	The vesting of equity awards granted to our CEO and other named executive officers under the Restricted Stock Plan during 2016 was wholly dependent on the attainment of performance measures and goals set by the compensation committee.

•	Based on a review of executive compensation at comparable companies performed in 2016, the total annual cash compensation of our CEO and Chief Operating Officer is below the median or 50th percentile.

Because your vote is advisory, it will not be binding upon the board of directors, it will not overrule any decision by the board of directors and it will not create or imply any additional fiduciary duties on the board of directors or any of its members. However, the compensation committee will take into account the outcome of the vote when considering future executive compensation arrangements.

Vote Requirement

Assuming the presence of a quorum, approval of the proposal requires that the votes cast in favor of the proposal exceed the votes cast opposing the proposal. Under North Carolina law, abstentions are treated as non-votes in determining whether shareholders have approved a proposal. Abstentions and broker non-votes will not count as votes cast and will have no effect on the outcome of this proposal.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THE ADVISORY (NONBINDING) APPROVAL OF EXECUTIVE COMPENSATION.

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AUDIT FIRM FEE SUMMARY

The following table presents fees paid to Cherry Bekaert LLP (“CB”) for the fiscal years ended December 31, 2016 and 2015:

		Fiscal 2016		Fiscal 2015
Audit Fees (1)		$140,500		$140,200
Audit-Related Fees (2)		$5,500		$40,050
Tax Fees (3)		$0		$14,450
All Other Fees (4)		$250		$0
TOTAL		$146,250		$194,700

(1)	“Audit Fees” are fees for professional services billed by CB for the audit of our annual financial statements, for the reviews of financial statements included in our quarterly reports on Form 10-Q and for services provided in connection with statutory and regulatory filings or engagements.

(2)

“Audit-Related Fees” are fees billed for assurance and related services performed by CB that are reasonably related to the performance of the audit or review of our financial statements, and are not reported above under “Audit Fees.” In 2016, these services included support with filing a registration statement with the SEC. In 2015, these services included accounting and reporting consultations, a restricted stock issuance engagement & consent, and the deferred tax valuation allowance release consultation & consent.

(3)	“Tax Fees” are fees billed for professional services performed by CB with respect to tax compliance, tax advice, and tax planning. In 2015, these services included preparation of income tax returns and quarterly estimated tax payments.

(4)	“All Other Fees” are fees billed for other products and services provided by CB that do not meet the above category descriptions.

Our audit and risk committee has considered the compatibility of the non-audit services performed by and fees paid to CB in fiscal year 2016 and fiscal year 2015 and determined that such services and fees were compatible with the independence of the public accountants. During fiscal year 2016, CB did not utilize any personnel in connection with the audit other than its full-time, permanent employees.

 

Policy for Approval of Audit and Non-Audit Services. Before we engage an accountant for any audit or permissible non-audit service, we are required to obtain the approval of our audit and risk committee. In determining whether to approve a particular audit or permitted non-audit service, our audit and risk committee considers, among other things, whether such service is consistent with maintaining the independence of the independent public accountant. Our audit and risk committee also considers whether the independent auditor is best positioned to provide the most effective and efficient services to us and whether the service might be expected to enhance our ability to manage or control risk or improve audit quality. All audit fees, audit-related fees, tax fees, and all other fees for 2016 and 2015 were pre-approved by the audit and risk committee.

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Proposal No. 3

RATIFICATION OF APPOINTMENT OF

INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The audit and risk committee of the board of directors has appointed CB as our independent registered public accounting firm for the fiscal year ending December 31, 2016. A representative of CB is expected to be present at the Annual Meeting and will be available to respond to appropriate questions and afforded an opportunity to make a statement.

Although shareholder ratification of the appointment is not required by law, our company desires to solicit such ratification as a matter of good corporate governance. If the appointment of CB is not ratified by a majority of the shares cast at the Annual Meeting, the audit and risk committee will consider the appointment of another independent registered public accounting firm for subsequent fiscal years.

Vote Requirement

Assuming the presence of a quorum, approval of the proposal requires that the votes cast in favor of the proposal exceed the votes cast opposing the proposal. Under North Carolina law, abstentions are treated as non-votes in determining whether shareholders have approved a proposal. Abstentions will not count as votes cast and will have no effect on the outcome of this proposal.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THE RATIFICATION OF THE APPOINTMENT OF CHERRY BEKAERT LLP AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE FISCAL YEAR ENDING DECEMBER 31, 2017 AS DESCRIBED IN THIS PROPOSAL NO. 3.

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ADDITIONAL INFORMATION

A copy of our Annual Report on Form 10-K for the fiscal year ended December 31, 2016, including the financial statements and schedules thereto, as filed with the SEC (without exhibits) will be furnished, without charge, upon written request to any of our shareholders. Such requests should be addressed to Wanda J. Blow, Corporate Secretary, Four Oaks Fincorp, Inc., P.O. Box 309, Four Oaks, North Carolina 27524 ((919) 963-2177).

SUBMISSION OF SHAREHOLDER PROPOSALS FOR 2017 ANNUAL MEETING

Any proposals that shareholders intend to present for a vote of shareholders at the 2017 Annual Meeting of Shareholders, and that such shareholders desire to have included in our proxy statement and form of proxy relating to that meeting, must be sent to our principal executive office, marked to the attention of Wanda J. Blow, and received at such office on or before December 18, 2017 (120 calendar days prior to the anniversary of the date of this proxy statement). Proposals received after December 18, 2017 will not be considered for inclusion in our proxy materials for our 2018 Annual Meeting. A determination as to whether we will oppose inclusion of any proposal in our proxy statement and form of proxy will be made on a case-by-case basis in accordance with our judgment and the rules and regulations promulgated by the SEC.

In addition, if a shareholder intends to present a matter for a vote at the 2018 Annual Meeting, other than by submitting a proposal for inclusion in our proxy statement for that meeting, the shareholder must give timely notice in accordance with SEC rules. To be timely, a shareholder’s notice must be sent to our principal executive office, marked to the attention of Wanda J. Blow, and received at such office on or before March 2, 2018 (the first preceding business day of the date that is 45 calendar days prior to the anniversary of the mailing date of this proxy statement). Such notice should set forth: (i) as to each matter the shareholder proposes to bring before the meeting, a brief description of the business desired to be brought before the meeting and the reasons for conducting such business at the meeting; and (ii) the name and record address of the shareholder, the class and number of shares of our capital stock that is beneficially owned by the shareholder, and any material interest of the shareholder in such business. For notices that are not timely filed, we retain discretion to vote proxies we receive. For notices that are timely filed, we retain discretion to vote proxies we receive provided: (a) we include in our proxy statement advice on the nature of the proposal and how we intend to exercise our voting discretion; and (b) the proponent fails to (x) provide us with a written statement, on or before March 2, 2018, that the proponent intends to deliver a proxy statement and form of proxy to holders of at least the percentage of our voting shares required under applicable law to carry the proposal, (y) include the same statement in its proxy materials filed with the SEC, and (z) immediately after soliciting the percentage of shareholders required to carry the proposal, provide us with a statement from any solicitor, or other person with knowledge, that the necessary steps have been taken to deliver a proxy statement and form of proxy to holders of such percentage of shares.

OTHER MATTERS; DISCRETIONARY AUTHORITY

As of the date of this proxy statement, we know of no business that will be presented for consideration at the Annual Meeting other than the items referred to above. The enclosed proxy confers discretionary authority to vote with respect to any and all of the following matters that may come before the Annual Meeting: (i) matters for which we did not receive timely notice; (ii) approval of the minutes of a prior meeting of shareholders, if such approval does not amount to ratification of the action taken at the meeting; (iii) the election of any person to any office for which a bona fide nominee is named in this proxy statement and such nominee is unable to serve or for good cause will not serve; (iv) any proposal omitted from this proxy statement and the form of proxy pursuant to Rule 14a-8 or Rule 14a-9 under the Exchange Act; and (v) matters incidental to the conduct of the Annual Meeting. If any such matters come before the Annual Meeting, the proxies named in the accompanying proxy card will vote in accordance with their judgment.

All shareholders are encouraged to sign, date, and return their proxy submitted with this proxy statement as soon as possible in the envelope provided. If a shareholder attends the Annual Meeting, then he or she may revoke his or her proxy and vote in person.

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REQUESTS FOR DIRECTIONS TO OUR ANNUAL MEETING

The 2017 Annual Meeting of Shareholders will be held in the cafeteria of Four Oaks Elementary School, located at 180 West Hatcher Street, Four Oaks, North Carolina, on Monday, May 22, 2017, at 7:00 p.m., local time. Requests for directions to the meeting location may be directed to Wanda J. Blow, Corporate Secretary, Four Oaks Fincorp, Inc., P.O. Box 309, Four Oaks, North Carolina 27524 ((919) 963-2177).

By Order of the Board of Directors

April 17, 2017

Ayden R. Lee, Jr.

Chairman

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REVOCABLE PROXY – FOUR OAKS FINCORP, INC.

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF

FOUR OAKS FINCORP, INC.

FOR THE 2017 ANNUAL MEETING OF SHAREHOLDERS.

The undersigned hereby appoints Ayden R. Lee, Jr. and David H. Rupp as proxies, each with the full power of substitution to represent the undersigned and to vote all of the shares of stock in Four Oaks Fincorp, Inc. which the undersigned is entitled to vote at the Annual Meeting of Shareholders of said Company to be held in the cafeteria of Four Oaks Elementary School, located at 180 W. Hatcher Street, Four Oaks, North Carolina on Monday, May 22, 2017 at 7:00 p.m., and any adjournments thereof (1) as hereinafter specified upon the proposals listed below as more particularly described in the Company's proxy statement, receipt of which is hereby acknowledged; and (2) in their discretion upon such other matters as may properly come before the meeting and any adjournments thereof. In order to vote for the proposals, place an X in the appropriate box provided on the reverse side.

THE BOARD OF DIRECTORS FAVORS A VOTE “FOR” EACH OF THE NOMINEES IN PROPOSAL #1 AND A VOTE “FOR” PROPOSALS #2 and #3, AND UNLESS INSTRUCTIONS TO THE CONTRARY ARE INDICATED IN THE SPACE PROVIDED, THIS PROXY WILL BE SO VOTED.

PLEASE PROVIDE YOUR INSTRUCTIONS TO VOTE BY TELEPHONE OR THE INTERNET OR COMPLETE, DATE, SIGN, AND MAIL THIS PROXY CARD PROMPTLY IN THE ENCLOSED POSTAGE-PAID ENVELOPE.

Annual Meeting Materials are available at: www.investorvote.com/FOFN.

IMPORTANT ANNUAL MEETING INFORMATION

Electronic voting instructions

Available 24 hour a day, 7 days a week

Instead of mailing your proxy, you may choose one of the voting methods outlined below to vote your proxy.

VALIDATION DETAILS ARE LOCATED BELOW IN THE TITLE BAR.

Proxies submitted by the Internet or telephone must be received by 3:00 a.m., EDT, on May 22, 2017.

Vote by Internet:

•	Go to www.investorvote.com/FOFN

•	Or scan the QR code with your smartphone

•	Follow the steps outlined on the secure website

Vote by telephone:

•	Call toll free 1-800-652-VOTE (8683) within the USA, US territories & Canada on a touch tone telephone

•	Follow the instructions provided by the recorded message

   

Using a black ink pen, mark your votes with an X as shown in this example. Please do not write outside the designated areas. [X]

Annual Meeting Proxy Card                         Control number

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IF YOU HAVE NOT VOTED VIA THE INTERNET OR TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE.

                

A. Proposals – The Board of Directors recommends a vote FOR all the nominees listed and FOR Proposals 2 and 3.

1. Election of directors:

(01) Ayden R. Lee, Jr.	[ ] For	[ ] Withhold
(02) David H. Rupp	[ ] For	[ ] Withhold
(03) Warren L. Grimes	[ ] For	[ ] Withhold
(04) Kenneth R. Lehman	[ ] For	[ ] Withhold
(05) Robert G. Rabon	[ ] For	[ ] Withhold
(06) Dr. R. Max Raynor, Jr.	[ ] For	[ ] Withhold
(07) Michael A. Weeks	[ ] For	[ ] Withhold

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2. To vote, on an advisory (nonbinding) basis, to approve executive compensation.

[ ]      FOR         [ ]      AGAINST         [ ]      ABSTAIN

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3.	To ratify the appointment of Cherry Bekaert LLP as Four Oaks Fincorp, Inc.'s independent registered public accounting firm for the fiscal year ending December 31, 2017.

[ ]      FOR         [ ]      AGAINST        [ ]      ABSTAIN

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B. Non-Voting Items

Change of Address – Please print your new address below:

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Comments – Please print your comments below:

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Meeting Attendance: Mark the box to the right if you plan to attend the Annual Meeting    [ ]

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C. Authorized Signatures – This section must be completed for your vote to be counted. Date and Sign Below

NOTE: Please sign your name exactly as it appears on this card. When signing for a corporation or partnership, or as agent, attorney, trustee, executor, administrator, or guardian, please indicate the capacity in which you are signing. In the case of joint tenants, each joint owner must sign.

Date (mm/dd/yyyy) – Please print date below        

________________________

Signature 1 – Please keep signature within the box.      ________________________

Signature 2 – Please keep signature within the box.     ________________________

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