Employment Agreement with R. Terry Phillips
First Amendment to Employment Agreement with R. Terry Phillips
Salary Continuation Agreement
Amendment to the Salary Continuation Agreement
 
 
                                                                   EXHIBIT 10(c)
                             EMPLOYMENT AGREEMENT
 
THIS EMPLOYMENT AGREEMENT is effective as of the 1st day of January, 2000 (the
"Effective Date"), and is made by and between United Security BancShares, Inc.,
a Delaware corporation ("USBC); First United Security Bank, an Alabama banking
corporation ("FUSB"; USB and FUSB are hereinafter collectively referred to as
the "Company"); and R. Terry Phillips (the "Executive").
 
WHEREAS, the Executive is presently employed by the Company in the capacity of
President and Chief Executive Officer of USB and FUSB; and
 
WHEREAS, the Executive possesses considerable experience and an intimate
knowledge of the business and affairs of the Company, its policies, methods,
personnel and operations; and
 
WHEREAS, the Company recognizes that the Executive's contributions have been
substantial and meritorious and, as such, the Executive has demonstrated unique
qualifications to act in an executive capacity for the Company; and
 
WHEREAS, the Company is desirous of assuring the continued employment of the
Executive in the above stated capacities, and the Executive is desirous of
having such assurance;
 
WHEREAS, the Executive and the Company previously entered into an employment
agreement effective as of the 1st day of January, 1999 (the "1999 Agreement"),
and the Executive and the Company now desire to amend and restate the 1999
Agreement hereby;
 
NOW THEREFORE, in consideration of the foregoing and of the mutual covenants and
agreements of the parties set forth in this Agreement, and of other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto, intending to be legally bound, agree as
follows:
 
ARTICLE 1
 
Term of Employment
 
(a)  The Company hereby agrees to employ the Executive and the Executive hereby
     agrees to continue to serve the Company, in accordance with the terms and
     conditions set forth herein, for an initial period of three (3) years,
     commencing as of the Effective Date; provided, however, immediately upon a
     Change in Control, the initial period shall automatically extend to five
     (5) years.
 
(b)  (i) Until a Change in Control occurs, upon each new day of the three (3)
     year period of employment from the Effective Date until the Executive's
     sixty-fourth (64th) birthday, the term of this Agreement automatically
     shall be extended for one (1) additional day, to be added to the end of the
     then-existing three (3) year term. Accordingly, at all times prior to (i)
     the Executive's attaining age 64 and (ii) a notice of employment
     termination (or an actual termination), the term of this Agreement shall be
     three (3) full years.
 
(ii) After a Change in Control occurs, upon each new day of the five (5) year
     period of employment from the date of such Change in Control until the
     Executive's sixty-second (62nd) birthday, the term of this Agreement
     automatically shall be extended for one (1) additional day, to be added to
     the end of the then-existing five (5) year term. Accordingly, at all times
     prior to (i) the Executive's attaining age 62 and (ii) a notice of
     employment termination (or an actual termination), the term of this
     Agreement shall be five (5) full years.
 
However, the automatic extensions of the term of this Agreement shall
immediately be suspended upon a termination of the Executive's employment in
accordance with the terms of this Agreement.
 
ARTICLE 2
 
Position and Responsibilities
 
During the term of this Agreement, the Executive agrees to serve as President
and Chief Executive Officer of USB and FUSB and as a member of the respective
Boards of Directors if so elected.  In his capacity as President and Chief
Executive Officer, he shall have responsibility for all operations of the
Company.  The Executive shall have the same status, privileges and
responsibilities normally inherent in such capacities in financial institutions
of similar size and character to the Company.
 
ARTICLE 3
 
Standard of Care
 
(a)  During the term of this Agreement, the Executive agrees to devote
substantially his full time, attention and energies to the Company's business
and shall not be engaged in any other business activity, whether or not such
business activity is pursued for gain, profit or other pecuniary advantage.
However, the Executive may serve as a director of other companies so long as
such service is not injurious to the Company, and provided that such service is
approved by the Board. The Executive covenants, warrants and represents that he
shall devote his full and best efforts to the fulfillment of his employment
obligations and exercise the highest degree of loyalty and the highest standards
of conduct in the performance of his duties.
 
(b)  This Article 3 shall not be construed as preventing the Executive from
investing assets in such form or manner as will not require his services in the
daily operations of the affairs of the companies in which such investments are
made.
 
ARTICLE 4
 
Compensation
 
As remuneration for all services to be rendered by the Executive during the term
of this Agreement, and as consideration for complying with the covenants herein,
the Company shall pay and provide to the Executive the following:
 
SECTION 1.1 Base Salary.
            ------------
(a)  The Company shall pay the Executive a base salary in an amount which shall
be established from time to time by the Board of Directors of the Company or the
Board's designee; provided, however, that such base salary shall not be less
than $192,500 per year and if subsequently increased shall not be less than such
increased amount ("Base" Salary"). Base Salary shall be paid to the Executive in
equal bi-weekly installments throughout the year, consistent with the normal
payroll practices of the Company.
 
(b)  Base Salary shall be reviewed at least annually during the term of this
Agreement to ascertain whether, in the judgment of the Board or the Board's
designee, such Base Salary should be increased, based primarily on the
performance of the Executive during the year.
 
SECTION 1.2 Annual Bonus.  In addition to Base Salary, in the discretion of the
            -------------
Board, the Executive shall be entitled to an opportunity to earn a cash bonus
(the "Bonus") under the Executive Incentive Plan or any similar plan that may be
adopted in the future.
 
SECTION 1.3 Long-Term Incentives.  During the term of this Agreement, the
            ---------------------
Executive shall be entitled to participate in any and all long-term incentive
programs at a level that is commensurate with his position with the Company.
Such programs include the United Security BancShares, Inc. Long Term Incentive
Compensation Plan, or any successors thereto, as amended from time to time.
 
SECTION 1.4 Retirement Benefits.  The Company shall provide to the Executive
            --------------------
participation in all Company qualified defined benefit and defined contribution
retirement plans, if any, subject to the eligibility and participation
requirements of such plans.
 
SECTION 1.5 Life Insurance.  The Company shall provide a policy of "term-life"
            ---------------
insurance (in addition to any insurance described in Section 4.6) on the
Executive's life in the face amount of Two Hundred Fifty Thousand Dollars
($250,000), of which the Executive will be the owner.  All of the premiums on
such policy shall be paid by the Employer during the Executive's employment
hereunder.
 
SECTION 1.6 Employee Benefits.  The Company shall provide to the Executive all
            ------------------
benefits to which other executives and employees of the Company are entitled to
receive, as are commensurate with the Executive's position, subject to the
eligibility requirements and other provisions of such plans or arrangements.
 
SECTION 1.7 Perquisites.  The Company shall provide to the Executive, at the
            ------------
Company cost, all perquisites to which other senior executives are entitled to
receive and such other perquisites which are suitable to the character of the
Executive's position with the Company and adequate for the performance of his
duties hereunder, including, but not limited to the use of a Chevrolet Tahoe
automobile, or its equivalent, plus an amount equal to the costs of maintenance,
repairs, insurance and all other costs incident thereto.
 
SECTION 1.8 Right to Change Plans.  By reason of Sections 4.6 and 4.7 herein,
            ----------------------
the Company shall not be obligated to institute, maintain or refrain from
changing, amending or discontinuing any benefit plan, program or perquisite, so
long as such changes are similarly applicable to executive employees generally.
 
ARTICLE 5
 
Expenses
 
The Company shall pay or reimburse the Executive for all ordinary and necessary
expenses, in a reasonable amount, which the Executive incurs in performing his
duties under this Agreement including, but not limited to, (a) travel, (b)
entertainment, (c) professional dues and subscriptions and (d) dues incurred by
the Executive for membership in all local private or civic clubs of which he may
become a member and which are deemed by the Executive to be beneficial to his
role with the Company.
 
ARTICLE 6
 
Employment Terminations
 
SECTION 1.9 Termination Due to Retirement or Death.  In the event the
            ---------------------------------------
Executive's employment is terminated while this Agreement is in force by reason
of Retirement or death, the following terms and conditions shall apply:
 
(a)  The Company's obligation under this Agreement to pay and provide to the
     Executive the elements of pay described in Sections 4.1, 4.2 and 4.3 shall
     immediately expire.
 
(b)  Upon the effective date of any such termination, the Executive's benefits
     including, without limitation, benefits under Section 4.4, 4.5, 4.6 and
     4.7, shall be determined in accordance with the Company's retirement,
     survirors'' benefits, insurance and other applicable programs of the
     Company then in effect; provided, however, that the Executive shall receive
     all rights and benefits that he is vested in, pursuant to plans and
     programs of the Company.
 
(c)  Subject to any conflicting terms of any short-term incentive program which
     would provide for greater benefits following such termination, the Company
     shall, within sixty (60) days of the effective date of employment
     termination, pay to the Executive (or the Executive's beneficiaries or
     estate, as the case may be) a Pro Rata share of the Bonus Opportunity.
 
(d)  All unvested stock awards (including, but not limited to, any stock options
     and restricted stock) will vest in full on the date of any such
     termination.
 
SECTION 1.10 Termination Due to Disability.  In the event that the Executive is
             ------------------------------
determined to have a Disability during the term of this Agreement, the Company
shall have the right to terminate the Executive's active employment as provided
in this Agreement.  However, the Board shall deliver written notice to the
Executive of the Company's intent to terminate the Executive's employment for
Disability at least thirty (30) calendar days prior to the effective date of
such termination and only after any period or process for determining the
Disability has been satisfied and completed.  Upon a termination of employment
for Disability, the following terms and conditions shall apply:
 
(a)  The Company's obligation to pay and provide to the Executive the element of
     pay described in Sections 4.1, 4.2 and 4.3 shall immediately expire;
     provided, however, that, during the period beginning on the effective date
     of such termination and ending six (6) months thereafter, the Company shall
     continue to make bi-weekly payments equal to one hundred percent (100%) of
     the Base Salary then in effect to the Executive pursuant to Section 4.1;
     provided, further, that each such bi-weekly payment during such period
     shall be reduced by a pro rata portion of the aggregate amount of any and
     all insurance benefits payable to the Executive during such period.
 
(b)  The Executive shall receive all rights and benefits that he is vested in,
     pursuant to plans and programs of the Company.
 
(c)  Subject to any conflicting terms of any short-term incentive program which
     would provide for greater benefits following such termination, the Company
     shall, within sixty (60) days of the effective date of employment
     termination, pay to the Executive a Pro Rata share of the Bonus
     Opportunity.
 
(d)  All unvested stock awards (including, but not limited to, any stock options
     and restricted stock) will vest in full on the date of any such
     termination.
 
SECTION 1.11 Voluntary Termination by the Executive.   The Executive may
             ---------------------------------------
terminate this Agreement at any time by giving the Board written notice of
intent to terminate, delivered at least ninety (90) calendar days prior to the
effective date of such termination.  This Section 6.3 shall not apply if the
Executive terminates employment (i) because of Retirement, (ii) for Good Reason
or (iii) during the Window Period.  In the event that the voluntary termination
is for Good Reason or during the Window Period, the terms of Section 6.6 or
Section 6.7, as the case may be, shall govern the parties' rights and
obligations hereunder.  Otherwise, upon a voluntary termination by the
Executive, the following terms and conditions shall apply:
 
(a)  The Company shall continue to pay the Executive's Base Salary, at the rate
     then in effect as provided in Section 4.1 herein, through the effective
     date of termination, plus all other benefits to which the Executive has a
     vested right at that time; provided, however, that the Executive shall not
     be paid any Bonus with respect to the fiscal year in which voluntary
     termination under this Section 6.3 occurs.
 
(b)  Other than as provided in this Section 6.3, a voluntary employment
     termination by the Executive shall result in the termination of the rights
     and obligations of the parties under this Agreement; provided, however,
     that the terms and provisions of Article 8 shall continue to apply prior to
     a Change in Control.
 
SECTION 1.12 Involuntary Termination by the Company Without Cause.
             -----------------------------------------------------
(a)  At any time during the term of this Agreement, the Board may terminate the
     Executive's employment, as provided under this Agreement, for reasons other
     than death, Disability, Retirement or for Cause, by notifying the Executive
     in writing of the Company's intent to terminate at least ninety (90)
     calendar days prior the effective date of such termination.
 
(b)  Following the expiration of the ninety (90) day notice period, the Company
     shall pay to the Executive a lump sum cash payment in an amount equal to
     three(3) times the Base Salary currently in effect; provided, however, that
     if (i) the notice of termination is provided on or after a Change in
     Control, (ii) the effective date of such termination occurs on or after a
     Change in Control or (iii) a Change in Control occurs within the period
     beginning on the effective date of such termination and ending six (6)
     months thereafter, the payment under this sub-section (b) shall be a lump
     sum cash payment in an amount equal to five (5) times the Base Salary
     currently in effect.
 
(c)  Upon a termination pursuant or subject to this Section 6.4, the Executive
     shall be entitled to a continuation of all benefits pursuant to any and all
     welfare benefit plans under which the Executive and/or the Executive's
     family is eligible to receive benefits and/or coverage as of the date of
     termination or as the same may be increased from time to time. Such
     benefits shall be provided to the Executive at the same premium cost to the
     Executive, if any, and at the same coverage level, as in effect as of the
     Executive's date of termination. The welfare benefits described in this
     Subsection 6.4(c) shall continue following the date of termination for
     three (3) years; provided, however, that such benefits shall be
     discontinued prior to the end of such period in the event the Executive
     receives substantially similar benefits from a subsequent employer.
 
(d)  All unvested stock awards (including, but not limited to, any stock options
     and restricted stock) will vest on the date of termination.
 
(e)  The Company shall transfer (or cause to be transferred) to the Executive
     title to the Executive's company car, without cost to the Executive, and
     shall pay to the Executive a lump sum cash payment in an amount necessary
     to fully gross-up the state and federal income tax effects of said
     transfer.
 
(f)  Subject to the provisions of this Section 6.4, a termination pursuant to
     this Section 6.4 shall result in the termination of all rights and
     obligations of the parties under this Agreement; provided, however, that
     the terms and provisions of Article 8 shall continue to apply. The payments
     described in this Section 6.4 (as well as in Section 6.6 and Section 6.7)
     shall be in part to compensate the Executive for being subject to the
     provisions of Article 8 (if applicable) thereafter, even though the
     Executive's employment has been terminated without Cause (or for Good
     Reason as provided in Section 6.6 or during the Window Period as provided
     in Section 6.7).
 
SECTION 1.13 Termination For Cause.
             ----------------------
(a)  Nothing in this Agreement shall be construed to prevent the Board from
     terminating the Executive's employment under this Agreement for Cause.
 
(b)  After providing the Executive with notice of the reasons the Board believes
     Cause may exist, and after giving the Executive the opportunity to respond
     to the allegation that Cause exists, the Board, by majority vote, shall
     make the determination of whether Cause exists.
 
(c)  In the event this Agreement is terminated by the Board for Cause, the
     Company shall continue to pay the Executive his Base Salary through the
     effective date of the employment termination, and the Executive shall
     immediately thereafter forfeit all rights and benefits (other than vested
     benefits) he would otherwise have been entitled to receive under this
     Agreement. The Company and the Executive thereafter shall have no further
     obligations under this Agreement; provided, however, that the provisions of
     Article 8 shall continue to apply.
 
(d)  A termination for Cause shall be permitted hereunder only if the Company
     provides the written notice of intent to terminate not later than six (6)
     months after the date the Company first knew or should have reasonably
     known of the act or omission to act or conviction giving rise to the
     termination for Cause. The six (6)-month period shall be tolled during any
     permitted period of correction or administrative procedure.
 
SECTION 1.14 Termination for Good Reason.
             ----------------------------
(a)  At any time during the term of this Agreement, the Executive may terminate
     this Agreement for Good Reason by giving the Board ninety (90) calendar
     days written notice of intent to terminate, which notice sets forth in
     reasonable detail the facts and circumstances claimed to provide a basis
     for such termination. The Executive's ability to terminate for Good Reason
     is contingent upon his agreement to allow the Company to remedy, within
     such ninety (90)-day period, the events constituting Good Reason.
 
(b)  Upon the failure of the Company to remedy the events constituting Good
     Reason prior to the expiration of the ninety (90)-day notice period, the
     Good Reason termination shall become effective, and the Company shall pay
     the Executive a lump sum cash payment in an amount equal to three (3) times
     the Base Salary currently in effect; provided, however, that if (i) the
     notice of termination is provided on or after a Change in Control, (ii) the
     effective date of such termination occurs on or after a Change in Control
     or (iii) a Change in Control occurs within the period beginning on the
     effective date of such termination and ending six (6) months thereafter,
     the payment under this sub-section (b) shall be a lump sum cash payment in
     an amount equal to five (5) times the Base Salary currently in effect.
 
(c)  Upon a termination for Good Reason, in addition to the payment provided for
     in sub-section (b) above, the Executive shall be entitled to the same
     payments (excluding those provided for in Section 6.4(b)), benefits and
     rights as he is entitled to receive following an involuntary termination of
     his employment by the Company without Cause, as specified in Section 6.4
     herein (as if the termination were an involuntary termination without
     Cause).
 
(d)  A termination for Good Reason shall be permitted hereunder only if the
     Executive provides the written notice to terminate not later than six (6)
     months after the date the Employee first knew or should have known of the
     act or omission to act giving rise to the termination for Good Reason. The
     six (6)-month period shall be tolled during any permitted period of
     correction or administrative procedure.
 
SECTION 6.7  Termination During Window Period After Change in Control.
             ---------------------------------------------------------
(a)  During the Window Period, the Executive may terminate his employment
     without any reason; provided, however, that a termination for Good Reason,
     whether during the Window Period or not, shall be governed by Section 6.6
     above and not this Section 6.7.
 
(b)  Upon the Executive's termination of employment during the Window Period
     pursuant to this Section 6.7, the Company shall pay the Executive a lump
     sum cash payment in an amount equal to three (3) times the Base Salary
     currently in effect. In addition, the Executive shall be entitled to the
     same payments (excluding those provided for in Section 6.4(b)), benefits
     and rights as he is entitled to receive following an involuntary
     termination of his employment by the Company without Cause, as specified in
     Section 6.4 herein (as if the termination were an involuntary termination
     without Cause).
 
ARTICLE 7
 
Excise Tax Gross-Up
 
SECTION 1.15 Equalization Payment.  Anything in this Agreement to the contrary
             ---------------------
notwithstanding, in the event it shall be determined that any payment or
distribution by the Company to or for the benefit of the Executive (whether paid
or payable or distributed or distributable pursuant to the terms of this
Agreement or otherwise, but determined without regard to any additional payments
required under this Article 7) (a "Payment") would be subject to the excise tax
imposed by Section 4999 of the Internal Revenue Code of 1986, as amended (the
"Code") or any interest or penalties are incurred by the Executive with respect
to such excise tax (such excise tax, together with any such interest and
penalties, are hereinafter collectively referred to as the "Excise tax"), the
Company shall make an additional payment to the Executive (a "Gross-Up Payment")
in an amount such that after payment by the Executive of all taxes (including
any interest or penalties imposed with respect to such taxes), including,
without limitation, any income taxes (and any interest and penalties imposed
with respect thereto) and the Excise Tax imposed upon the Gross-Up Payment, the
Executive retains an amount of the Gross-Up Payment equal to the Excise Tax
imposed upon the Payments.
 
SECTION 1.16 Tax Computation.
             ----------------
(a)  Subject to the provisions of Section 7.2(c), all determinations required to
     be made under this Article 7, including whether and when a Gross-Up Payment
     is required and the amount of such Gross-Up Payment and the assumptions to
     be utilized in arriving at such determination, shall be made by an
     accounting firm chosen by the Company in its sole discretion (the
     "Accounting Firm") which shall provide detailed supporting calculations
     both to the Company and the Executive within fifteen (15) business days of
     the receipt of notice from the Executive that there has been a Payment, or
     such earlier time as is requested by the Company. However, the Accounting
     Firm chosen may not be the firm that is serving as accountant or auditor
     for the individual, entity or group effecting a Change in Control. All fees
     and expenses of the Accounting Firm shall be borne solely by the Company.
     Any Gross-Up Payment, as determined pursuant to this Article 7, shall be
     paid by the Company to the Executive within thirty (30) days of the receipt
     of the Accounting Firm's determination. If the Accounting Firm determines
     that no Excise Tax is payable by the Executive, it shall furnish the
     Executive with a written opinion that failure to report the Excise Tax on
     the Executive's applicable federal income tax return would not result in
     the imposition of a negligence or similar penalty. Any determination by the
     Accounting Firm shall be binding upon the Company and the Executive. As a
     result of the uncertainty in the application of Section 4999 of the Code at
     the time of the initial determination by the Accounting Firm hereunder, it
     is possible that Gross-Up Payments which will not have been made by the
     Company should have been made ("Underpayment"), consistent with the
     calculations required to be made hereunder. In the event that the Company
     exhausts its remedies pursuant to Section 7.2(c) and the Executive
     thereafter is required to make a payment of any Excise Tax, the Accounting
     Firm shall determine the amount of the Underpayment that has occurred and
     any such Underpayment shall be promptly paid by the Company to or for the
     benefit of the Executive.
 
(b)  The Executive shall notify the Company in writing of any claim by the
     Internal Revenue Service that, if successful, would require the payment by
     the Company of the Gross-Up Payment. Such notification shall be given as
     soon as practicable but no later than ten (10) business days after the
     Executive is informed in writing of such claim and shall apprise the
     Company of the nature of such claim and the date on which such claim is
     requested to be paid. The Executive shall not pay such claim prior to the
     expiration of the 30-day period
     following the date on which it gives such notice to the Company (or such
     shorter period ending on the date that any payment of taxes with respect to
     such claim is due). If the Company notifies the Executive in writing prior
     to the expiration of such period that it desires to contest such claim, the
     Executive shall:
 
(i)   give the Company any information reasonably requested by the Company
      relating to such claim,
 
(ii)  take such action in connection with contesting such claim as the Company
      shall reasonably request in writing from time to time, including, without
      limitation, accepting legal representation with respect to such claim by
      an attorney selected by the Company,
 
(iii) cooperate with the Company in good faith in order effectively to contest
      such claim, and
 
(iv)  permit the Company to participate in any proceedings relating to such
      claim; provided, however, that the Company shall bear and pay directly all
      costs and expenses (including additional interest and penalties) incurred
      in connection with such contest and shall indemnify and hold the Executive
      harmless, on an after-tax basis, for any Excise Tax or income tax
      (including interest and penalties with respect thereto) imposed as a
      result of such representation and payment of costs and expenses. Without
      limitation on the foregoing provisions of this Section 7.2(b), the Company
      shall control all proceedings taken in connection with such contest and,
      at its sole option, may pursue or forgo any and all administrative
      appeals, proceedings, hearings and conferences with the taxing authority
      in respect of such claim and may, at its sole option, either direct the
      Executive to pay the tax claimed and sue for a refund or contest the claim
      in any permissible manner, and the Executive agrees to prosecute such
      contest to a determination before any administrative tribunal, in a court
      of initial jurisdiction and in one or more appellate courts, as the
      Company shall determine; provided, however, that if the Company directs
      the Executive to pay such claim and sue for a refund, the Company shall
      advance the amount of such payment to the Executive, on an interest-free
      basis and shall indemnify and hold the Executive harmless, on an after-tax
      basis, from any Excise Tax or income tax (including interest or penalties
      with respect thereto) imposed with respect to such advance or with respect
      to any imputed income with respect to such advance; and further provided
      that any extension of the statute of limitations relating to payment of
      taxes for the taxable year of the Executive with respect to which such
      contested amount is claimed to be due is limited solely to such contested
      amount. Furthermore, the Company's control of the contest shall be limited
      to issues with respect to which a Gross-Up Payment would be payable
      hereunder and the Executive shall be entitled to settle or contest, as the
      case may be, any other issue raised by the Internal Revenue Service or any
      other taxing authority.
 
(c)  If, after the receipt by the Executive of an amount advanced by the Company
     pursuant to Section 7.2(b), the Executive becomes entitled to receive any
     refund with respect to such claim, the Executive shall (subject to the
     Company's complying with the requirements of Section 7.2(b)) promptly pay
     to the Company the amount of such refund (together with any interest paid
     or credited thereon after taxes applicable thereto). If, after the receipt
     by the Executive of an amount advanced by the Company pursuant to Section
     7.2(b), a determination is made that the Executive shall not be entitled to
     any refund with respect to such claim and the Company does not notify the
     Executive in writing of its intent to contest such denial of refund prior
     to the expiration of thirty (30) days after such determination, then such
     advance shall be forgiven and shall not be required to be repaid and the
     amount of such advance shall offset, to the extent thereof, the amount of
     the Gross-Up Payment required to be paid.
 
ARTICLE 8
 
Noncompetition
 
SECTION 1.17 Prohibition on Competition.
             ---------------------------
(a)  Without the prior written consent of the Company, during the term of this
     Agreement, and for twelve (12) months following the expiration of this
     Agreement, the Executive shall not, as an employee or an officer, engage
     directly or indirectly in any business or enterprise which is "in
     competition" with the Company or its successors or assigns. For purposes of
     this Agreement, a business or enterprise will be deemed to be "in
     competition" if it is a banking institution, the headquarters of which is
     within two hundred (200) miles from the location of the Executive's
     principal job location or office at the time of termination of employment.
 
(b)  Notwithstanding this Article 8, the Executive shall be allowed to purchase
     and hold for investment less than three percent (3%) of the shares of any
     corporation whose shares are regularly traded on a national securities
     exchange or in the over-the-counter market.
 
SECTION 1.18 Disclosure of Information.  The Executive recognizes that he has
             --------------------------
access to and knowledge of certain confidential and proprietary information of
the Company which is essential to the performance of his duties under this
Agreement.  The Executive will not, during or for a period of three (3) years
after the term of his employment by the Company, in whole or in part, disclose
such information to any person, firm, corporation, association or other entity
for any reason or purpose whatsoever, nor shall he make use of any such
information for his own purposes.
 
SECTION 1.19 Specific Performance.  The parties recognize that the Company will
             ---------------------
have no adequate remedy at law for breach by the Executive of the requirements
of this Article 8 and, in the event of such breach, the Company and the
Executive hereby agree that, in addition to the right to seek monetary damages,
the Company will be entitled to a decree of specific performance, mandamus or
other appropriate remedy to enforce performance of such requirements.
 
SECTION 1.20 Limitation.  The provisions of this Article 8 shall be null and
             -----------
void and without any force or effect on and after the date of a Change in
Control.
 
ARTICLE 9
 
Indemnification
 
The Company hereby covenants and agrees to indemnify and hold harmless the
Executive in a manner consistent with the provisions of the Company's
Certificate of Incorporation, as in effect on the Effective Date.
 
ARTICLE 10
 
Assignment
 
SECTION 1.21 Assignment by Company.
             ----------------------
(a)  This Agreement may and shall be assigned or transferred to, and shall be
     binding upon and shall inure to the benefit of, any successor of the
     Company, and any such successor shall be deemed substituted for all
     purposes of the "Company" under the terms of this Agreement. As used in
     this Agreement, the term "successor" shall mean any person, firm,
     corporation or business entity which at any time, whether by merger,
     purchase or otherwise, acquires all or substantially all of the assets or
     the business of the Company. Notwithstanding such assignment, the Company
     shall remain, with such successor, jointly and severally liable for all its
     obligations hereunder.
 
(b)  Failure of the Company to obtain the agreement of any successor to be bound
     by the terms of this Agreement prior to the effectiveness of any such
     succession shall be a breach of this Agreement and shall immediately
     entitle the Executive to compensation from the Company in the same amount
     and on the same terms as the Executive would be entitled in the event of an
     termination of employment without Cause, as provided in Section 6.4 herein.
 
(c)  Except as herein provided, this Agreement may not otherwise be assigned by
     the Company (other than to a subsidiary or affiliate) without the prior
     written consent of the Executive.
 
SECTION 1.22 Assignment by Executive.  The services to be provided by the
             ------------------------
Executive to the Company hereunder are personal to the Executive, and the
Executive's duties may not be assigned by the Executive; provided, however that
this Agreement shall inure to the benefit of and be enforceable by the
Executive's personal or legal representatives, executors, and administrators,
successors, heirs, distributees, devisees and legatees.  If the Executive dies
while any amounts payable to the Executive hereunder remain outstanding, all
such amounts, unless otherwise provided herein, shall be paid in accordance with
the terms of this Agreement to the Executive's devisee, legatee or other
designee or, in the absence of such designee, to the Executive's estate.
 
ARTICLE 11
 
Dispute Resolution and Notice
 
SECTION 1.23 Dispute Resolution.
             -------------------
 
(a)  The parties hereto agree that the subject matter of this Agreement involves
     and affects interstate commerce within the meaning of the commerce clause
     of the United States Constitution. This Agreement shall be irrevocable and
     is binding upon the parties and is subject to being specifically enforced.
 
(b)  Any action, dispute, claim, counterclaim or controversy ("Dispute" or
     "Disputes"), between or among the parties, with respect to this Agreement,
     including, without limitation, any claim based on, or arising from, an
     alleged tort or contract, shall be resolved by arbitration as set forth
     below. As used herein, Disputes shall include all actions, disputes,
     claims, counterclaims or controversies arising in connection with any
     extension of or commitment set forth in this Agreement or in any other
     agreement entered by the parties in connection with this Agreement, and any
     action taken (or any omission to take any action) in connection with any of
     the foregoing. All Disputes shall be resolved by binding arbitration in
     accordance with Title 9 of the U.S. Code and the Commercial Arbitration
     Rules of the American Arbitration Association ("AAA"). Defenses based on
     statutes of limitation, estoppel, waiver, laches and similar doctrines,
     that would otherwise be applicable to an action brought by a party, shall
     be applicable in any such arbitration proceeding, and the commencement of
     an arbitration proceeding with respect to this Agreement shall be deemed
     the commencement of an action for such purposes.
 
(c)  Whenever an arbitration is required under subsection (b), the arbitrators
     shall be selected, except as otherwise provided, in accordance with the
     Commercial Arbitration rules of the AAA. The panel of arbitrators shall
     determine the resolution of the Dispute.
 
(d)  Whenever an arbitration is required under subsection (b), such arbitration
     shall be conducted in Montgomery, Alabama. The arbitrators shall apply the
     internal laws of the State of Alabama, without giving effect to any
     choice of law provision or rule that would cause the application of the
     laws of any other jurisdiction. Each party consents to the exclusive
     jurisdiction of the courts of the State of Alabama over any challenges to
     arbitration hereunder. The prevailing party may enforce an arbitration
     award in any court having jurisdiction over the matter and the parties
     hereto. For purposes of this Agreement, both parties expressly consent to
     the personal jurisdiction of the Alabama Circuit Court for the Fifteenth
     Judicial Circuit (Montgomery) and the United States District Court for the
     Middle District of Alabama and waive any defenses based on the lack of such
     jurisdiction.
 
(e)  Any arbitration questions arising under this Agreement shall be governed in
     accordance with Title 9 of the U.S. Code. This Section constitutes the
     entire agreement of the parties with respect to its subject matter and
     supersedes all prior discussions, arrangements, negotiations and other
     communications on dispute resolutions. The provisions of this Section shall
     survive any termination, amendment or expiration of the Agreement in which
     this Section is contained, unless the parties otherwise expressly agree in
     writing. In the event of any Dispute governed by this Section, each of the
     parties shall pay all of its own expenses, and, subject to the award of the
     arbitrators, shall pay an equal share of the arbitrators' fees. The
     arbitrators shall have the power to award recovery of all costs and fees
     (including attorneys' fees, administrative fees, arbitrators' fees and
     court costs) to the prevailing party or that party which substantially
     prevails. This Section may be amended, changed or modified only by the
     express provisions of a writing which specifically refers to this Section
     and which is signed by all the parties hereto.
 
SECTION 1.24 Notice.  Any notices, requests, demands, or other communications
             -------
provided for by this Agreement shall be sufficient if in writing and if sent by
registered or certified mail to the Executive at the last address he has filed
in writing with the Company or, in the case of the Company, to an executive
officer of the Company, at the Company's principal offices.
 
ARTICLE 12
 
Miscellaneous
 
SECTION 1.25 Definitions.   For purposes of this Agreement, the following
             ------------
capitalized terms shall have the following respective meanings:
 
(a)   "Board" means the Board of Directors of USB.
 
(b)   "Bonus Opportunity" means the Bonus that the Executive would have earned
      under the Executive Incentive Plan for the fiscal year in which employment
      termination occurs. This amount shall be determined in good faith at the
      sole discretion of the Board. Wherever this Agreement provides for a
      payment based on the Bonus Opportunity, the Board, in setting the amount
      of the payment, shall presume that the Company's performance for such
      fiscal year will satisfy or exceed the minimum threshold target(s)
      contained in the Executive Incentive Plan.
 
(c)   "Cause" shall be determined by the Board in the exercise of good faith and
      reasonable judgment and shall be defined as:
 
      (i)   The conviction of the Executive for the commission of an act of
            fraud, embezzlement, theft or other criminal act constituting a
            felony under the generally enforceable laws of the State of Alabama;
 
      (ii)  The gross neglect of the Executive in the performance of any or all
            material covenants under this Agreement, for reasons other than the
            Executive's death, Disability or Retirement; or
 
      (iii) Abuse of or addiction to intoxicating drugs (including alcohol).
 
(d)   A "Change in Control" shall be deemed to have occurred as of the first day
      that any one or more of the following conditions have been satisfied:
 
      (i)  Any Person (other than those Persons in control of USB as of the
           Effective Date, or other than a trustee or other fiduciary holding
           securities under an employee benefit plan of the Company, or a
           corporation owned directly or indirectly by the stockholders of USB
           in substantially the same proportions as their ownership of stock of
           USB), who becomes the Beneficial Owner, directly or indirectly, of
           securities of USB or FUSB representing thirty percent (30%) or more
           of the combined voting power of USBOs or FUSBOs then outstanding
           securities; or
 
     (ii)  During any period of two (2) consecutive years (not including any
           period prior to the Effective Date), individuals who at the beginning
           of such period constitute the Board (and any new Director, whose
           election by USBOs stockholders was approved by a vote of at least
           two-thirds (2/3) of the Directors then still in office who either
           were Directors at the beginning of the period or whose election or
           nomination for election was so approved, but excluding, for this
           purpose, any such individual whose initial assumption of office
           occurs as a result of an actual or threatened election contest with
           respect to the election or removal of directors or other actual or
           threatened solicitation of proxies or consents by or on behalf of a
           Person other than the Board) cease for any reason to constitute at
           least sixty percent (60%) thereof; or
 
     (iii) The stockholders of USB and/or FUSB approve: (A) a plan of complete
           liquidation of USB or FUSB; or (B) an agreement for the sale or
           disposition of all or substantially all the assets of USB or FUSB; or
           (C) a merger, consolidation or reorganization of USB or FUSB with or
           involving any other corporation, other than a merger, consolidation
           or reorganization that would result in the voting securities of USB
           or FUSB, as the case may be, outstanding immediately prior thereto
           continuing to represent (either by remaining outstanding or by being
           converted into voting securities of the surviving entity) greater
           than 50% of the combined voting power of the voting securities of USB
           or FUSB, as the case may be (or the surviving entity, or an entity
           which as a result of such transaction owns USB or FUSB, as the case
           may be, or all or substantially all of such Company's assets either
           directly or through one or more subsidiaries) outstanding immediately
           after such merger, consolidation or reorganization.
 
Provided, however, that in no event shall a Change in Control be deemed to have
occurred, with respect to the Executive, if the Executive is part of a
purchasing group which consummates the Change in Control transaction.  The
Executive shall be deemed "part of a purchasing group" for purposes of the
preceding sentence if the Executive is an equity participant in the purchasing
company or group (except for: (i) passive ownership of less than three percent
(3%) of the stock of the purchasing company; or (ii) ownership of equity
participation in the purchasing company or group which is otherwise not
significant, as determined prior to the Change in Control by a majority of the
non-employee Directors who were Directors prior to the transaction, and who
continue as Directors following the transaction).
 
For purposes of this definition of Change in Control, the following terms have
the following meanings:
 
     "Beneficial Owner" shall have the meaning ascribed to such term in Rule
     13d-3 of the General Rules and Regulations under the Securities Exchange
     Act of 1934, as amended ("Exchange Act").
 
     "Person" shall have the meaning ascribed to such term in Section 3(a)(9) of
     the Exchange Act and used in Sections 13(d) and 14(d) thereof, including a
     "group" as defined in Section 13(d).
 
(e)  "Disability" means the total and permanent incapacity of the Executive, due
     to injury, illness, disease or bodily or mental infirmity, to engage in the
     performance of substantially all of the usual duties of employment with the
     Company as provided for in Article 2 hereof for more than six (6)
     consecutive calendar months, such Disability to be determined by the Board
     upon receipt and in reliance on competent medical advice from one or more
     individuals selected by the Executive who are qualified to provide such
     professional medical advice, and who are acceptable to the Board, which
     acceptance shall not be unreasonably withheld.
 
(f)  "Executive Incentive Plan" means the incentive compensation program adopted
     by the Board of Directors of FUSB and/or USB and in effect as of the
     Effective Date, including all subsequent modifications thereto.
 
(g)  "Good Reason" means, without the Executive's express prior written consent,
     the occurrence of any one or more of the following:
 
     (i)  The assignment of the Executive to duties materially inconsistent with
          the Executive's authorities, duties, responsibilities and status
          (including titles and reporting requirements) as an officer of the
          Company, or a material reduction or alteration in the nature or status
          of the Executive's authorities, duties or responsibilities from those
          in effect as of the Effective Date (or as subsequently increased),
          other than an insubstantial and inadvertent act that is remedied by
          the Company promptly after receipt of notice thereof given by the
          Executive; or
 
     (ii) A material breach of this Agreement by the Company, or any successor
          thereto, that has remained uncured for thirty (30) days after notice
          to the Company.
 
(h)  "Pro Rata" means the number of days elapsed prior to the Executive's
     termination date as a percentage of the number of days in the fiscal year.
 
(i)  "Retirement" means early or normal retirement, as defined under the then
     established rules of the Company's retirement plan.
 
(j)  "Window Period" means the 30 day period immediately following the first
     anniversary of a Change in Control.
 
SECTION 1.26 Entire Agreement.  This Agreement supersedes any prior agreements
             -----------------
or understandings, oral or written, between the parties hereto, or between the
Executive and the Company, with respect to the subject matter hereof, and
constitutes the entire agreement of the parties with respect thereto.  Without
limiting the generality of the foregoing sentence, this Agreement completely
replaces and supersedes the terms of the 1999 Agreement.
 
SECTION 1.27 Modification.  This Agreement shall not be varied, altered,
             -------------
modified, canceled, changed or in any way amended except by mutual agreement of
the parties in a written instrument executed by the parties hereto or their
legal representatives.
 
SECTION 1.28 Severability.  In the event that any provision or portion of this
             -------------
Agreement shall be determined to be invalid or unenforceable for any reason, the
remaining provisions of this Agreement shall be unaffected thereby and shall
remain in full force and effect.
 
SECTION 1.29 Counterparts.  This Agreement may be executed in one (1) or more
             -------------
counterparts, each of which shall be deemed to be an original, but all of which
together will constitute one and the same Agreement.
 
SECTION 1.30 Tax Withholding.  The Company may withhold from any benefits
             ----------------
payable under this Agreement all Federal, state, city or other taxes as may be
required pursuant to any law or governmental regulation or ruling.
 
SECTION 1.31 Beneficiaries. The Executive may designate one or more persons or
             --------------
entities as the primary and/or contingent beneficiaries of any amounts to be
received under this Agreement.  Such designation must be in the form of a signed
writing acceptable to the Board or the Board's designee.  The Executive may make
or change such designation at any time.
 
SECTION 1.32 Governing Law.  To the extent not preempted by Federal law
             --------------
(including Title 9 of the U.S. Code), the provisions of this Agreement shall be
construed and enforced in accordance with the laws of the State of Alabama.
 
IN WITNESS WHEREOF, the parties have executed this Agreement as of the Effective
Date:
 
                                       United Security BancShares, Inc.
 
 
                                       By: /s/ Hardie B. Kimbrough
                                           -----------------------------------
                                       Its: Chairman of the Board of Directors
 
 
                                       First United Security Bank
 
 
                                       By: /s/ Hardie B. Kimbrough
                                           -----------------------------------
                                       Its: Chairman of the Board of Directors
 
 
                                           /s/ R. Terry Phillips
                                           -----------------------------------
                                           R. Terry Phillips
 
Top of the Document
                          
 
                               FIRST UNITED SECURITY BANK
                              SALARY CONTINUATION AGREEMENT
 
     THIS AGREEMENT is made this 20th day of September, 2002, by and between
UNITED SECURITY BANCSHARES, INC., a Delaware corporation ("USB"), FIRST UNITED
SECURITY BANK, a state-chartered commercial bank located in Thomasville, Alabama
("FUSB") (USB and FUSB are collectively referred to herein as the "Company") and
TERRY PHILLIPS (the "Executive").
 
                                  INTRODUCTION
 
     To encourage the Executive to remain an employee of the Company, the
Company is willing to provide salary continuation benefits to the Executive. The
Company will pay the benefits from its general assets.
 
                                    AGREEMENT
 
     The Executive and the Company agree as follows:
 
                                    Article 1
                                   Definitions
 
     Whenever used in this Agreement, the following words and phrases shall have
the meanings specified:
 
     1.1 "Board" means the Board of Directors of USB.
 
     1.2 A "Change of Control" shall be deemed to have occurred as of the first
day that any one or more of the following conditions have been satisfied:
 
          (i) Any Person (other than those Persons in control of USB as of the
     Effective Date, or other than a trustee or other fiduciary holding
     securities under an employee benefit plan of the Company, or a corporation
     owned directly or indirectly by the stockholders of USB in substantially
     the same proportions as their ownership of stock of USB), who becomes the
     Beneficial Owner, directly or indirectly, of securities of USB or FUSB
     representing thirty percent (30%) or more of the combined voting power of
     USB or FUSB then outstanding securities; or
 
          (ii) During any period of two (2) consecutive years (not including any
     period prior to the Effective Date), individuals who at the beginning of
     such period constitute the Board (and any new Director, whose election by
     USB stockholders was approved by a vote of at least two-thirds (2/3) of the
     Directors then still in office who either were Directors at the beginning
     of the period or whose election or nomination for election was so approved,
     but excluding, for this purpose, any such individual whose initial
     assumption of office occurs as a result of an actual or threatened election
     contest with respect to the election or removal of directors or other
     actual or threatened solicitation of proxies or consents by or on behalf of
     a Person other than the Board) cease for any reason to constitute at least
     sixty percent (60%) thereof; or
 
          (iii) The stockholders of USB and/or FUSB approve: (A) a plan of
     complete liquidation of USB or FUSB; or (B) an agreement for the sale or
     disposition of all or substantially all the assets ofUSB or FUSB; or (C) a
     merger, consolidation or reorganization of USB or FUSB with or involving
     any other corporation, other than a merger, consolidation or reorganization
     that would result in the voting securities of USB or FUSB, as the case may
     be, outstanding immediately prior thereto continuing to represent (either
     by remaining outstanding or by being converted into voting securities of
     the surviving entity) greater than 50% of the combined voting power of the
     voting securities of USB or FUSB, as the case may be (or the surviving
     entity, or an entity which as a result of such transaction owns USB or
     FUSB, as the case may be, or all or substantially all of such Company's
     assets either directly or through one or more subsidiaries) outstanding
     immediately after such merger, consolidation or reorganization.
 
     Provided, however, that in no event shall a Change of Control be deemed to
     have occurred, with respect to the Executive, if the Executive is part of a
     purchasing group which consummates the Change of Control transaction. The
     Executive shall be deemed "part of a purchasing group" for purposes of the
     preceding sentence if the Executive is an equity participant in the
     purchasing company or group (except for: (i) passive ownership of less than
     three percent (3%) of the stock of the purchasing company; or (ii)
     ownership of equity participation in the purchasing company or group which
     is otherwise not significant, as determined prior to the Change of Control
     by a majority of the non-employee Directors who were Directors prior to the
     transaction, and who continue as Directors following the transaction).
 
     For purposes of this definition of Change of Control, the following terms
have the following meanings:
 
     "Beneficial Owner" shall have the meaning ascribed to such term in Rule
     13d-3 of the General Rules and Regulations under the Securities Exchange
     Act of 1934, as amended ("Exchange Act").
 
     "Person" shall have the meaning ascribed to such term in Section 3(a)(9) of
     the Exchange Act and used in Sections 13(d) and 14(d) thereof, including a
     "group" as defined in Section 13(d).
 
     1.3     "Code" means the Internal Revenue Code of 1986, as amended.
 
     1.4 "Disability" means the Executive's suffering a sickness, accident or
injury which has been determined by the carrier of any individual or group
disability insurance policy covering the Executive, or by the Social Security
Administration, to be a disability rendering the Executive totally and
permanently disabled. The Executive must submit proof to the Company of the
carrier's or Social Security Administration's determination upon the request of
the Company.
 
     1.5 "Early Termination" means the Termination of Employment before Normal
Retirement Age for reasons other than death, Disability, Termination for Cause
or Termination of Employment following a Change of Control.
 
     1.6 "Early Termination Date" means the month, day and year in which Early
Termination occurs.
 
     1.7 "Effective Date" means September 1, 2002.
 
     1.8 "Financial Hardship" shall mean (a) a severe financial hardship to the
Executive resulting from a sudden and unexpected illness or accident of the
Executive or of a dependent (as defined in Code Section 152(a)) of the
Executive, (b) loss of the Executive's property due to casualty, or (c) other
similar extraordinary and unforeseeable circumstances arising as a result of
events beyond the control of the Executive, each as determined to exist by the
Board of Directors of the Company.
 
     1.9 "Normal Retirement Age" means the Executive's Sixty-Fifth (65th)
birthday.
 
     1.10 "Normal Retirement Date" means the later of the Normal Retirement Age
or Termination of Employment.
 
     1.11 "Plan Year" means a twelve-month period commencing on September 1st
and ending on the following August 31st. The initial Plan Year shall commence on
the Effective Date.
 
     1.12 "Termination for Cause" See Section 5.1.
 
     1.13 "Termination of Employment" means that the Executive ceases to be
employed by the Company for any reason whatsoever other than by reason of a
leave of absence, which is approved by the Company.
 
                                    Article 2
                                Lifetime Benefits
 
     2.1 Normal Retirement Benefit. Subject to the limitations of Article 5,
upon Termination of Employment on or after the Normal Retirement Age for reasons
other than death, the Company shall pay to the Executive the annual benefit
described in this Section 2.1 in lieu of any other benefit under this Agreement.
 
          2.1.1 Amount of Benefit. The annual benefit under this Section 2.1 is
     Ninety Eight Thousand Five Hundred Sixty-eight Dollars ($98,568).
     Commencing at the end of the first Plan Year, and each Plan Year
     thereafter, the annual benefit shall be increased four percent (4.0%) from
     the previous Plan Year. Any additional increase in the annual benefit, as
     agreed to in writing by the parties hereto after the Effective Date, shall
     require the recalculation of Schedule A.
 
          2.1.2 Payment of Benefit. The Company shall pay the annual benefit
     described in Section 2.1.1 above to the Executive in twelve (12) equal
     monthly installments payable on the first day of each month commencing with
     the month following the Executive's Normal Retirement Date. Such annual
     benefit shall be paid to the Executive for fifteen (15) consecutive years.
 
     2.2 Early Termination Benefit. Subject to the limitations of Article 5,
upon Early Termination, the Company shall pay to the Executive the annual
benefit described in this Section 2.2 in lieu of any other benefit under this
Agreement.
 
          2.2.1 Amount of Benefit. The annual benefit under this Section 2.2 is
     the Early Termination Annual Benefit Payable at 65 set forth in Schedule A
     for the Plan Year ending immediately prior to the date of Termination of
     Employment. The Early Termination Benefit is calculated based on the vested
     portion of the attained benefit level for the Plan Year as described in
     Section 2.1.1. Vesting is 20% at the end of the first Plan Year and
     increases an additional 20% per Plan Year until it reaches 100% at the end
     of the fifth Plan Year.
 
          2.2.2 Payment of Benefit. The Company shall pay the annual benefit
     described in Section 2.2.1 above to the Executive in twelve (12) equal
     monthly installments payable on the first day of each month commencing with
     the month following the Normal Retirement Age. Such annual benefit shall be
     paid to the Executive for fifteen (15) consecutive years.
 
     2.3 Disability Benefit. Subject to the limitations of Article 5, if the
Executive terminates employmentdue to Disability prior to Normal Retirement Age,
the Company shall pay to the Executive the annual benefit described in this
Section 2.3 in lieu of any other benefit under this Agreement.
 
          2.3.1 Amount of Benefit. The annual benefit under this Section 2.3 is
     the Disability Annual Benefit Payable at 65 set forth in Schedule A for the
     Plan Year ending immediately prior to the date on which the Termination of
     Employment occurs.
 
          2.3.2 Payment of Benefit. The Company shall pay the annual benefit
     described in Section 2.3.1 above to the Executive in twelve (12) equal
     monthly installments payable on the first day of each month commencing with
     the month following the Normal Retirement Age. Such annual benefit shall be
     paid to the Executive for fifteen (15) consecutive years.
 
     2.4 Change of Control Benefit. Subject to the limitations of Article 5,
upon Termination of Employment following a Change of Control, the Company shall
pay to the Executive the annual benefit described in this Section 2.4 in lieu of
any other benefit under this Agreement.
 
          2.4.1 Amount of Benefit. The annual benefit under this Section 2.4 is
     the Change of Control Annual Benefit Payable at 65 set forth in Schedule A
     for the Plan Year ending immediately prior to the date in which Termination
     of Employment occurs.
 
          2.4.2 Payment of Benefit. The Company shall pay the annual benefit
     described in Section 2.4.1 above to the Executive in twelve (12) equal
     monthly installments payable on the first day of each month commencing with
     the month following the Normal Retirement Age. Such annual benefit shall be
     paid to the Executive for fifteen (15) consecutive years.
 
                                    Article 3
                                 Death Benefits
 
     3.1 Death During Active Service. If the Executive dies while in the active
service of the Company, the Company shall pay to the Executive's beneficiary the
benefit described in this Section 3.1. This benefit shall be paid in lieu of any
benefits described in Article 2.
 
          3.1.1 Amount of Benefit. The benefit under this Section 3.1 is the
     maximum Annual Benefit described in Section 2.1.1 as if the Executive's
     death had occurred at the Normal Retirement Age.
 
          3.1.2 Payment of Benefit. The Company shall pay the benefit described
     in Section 3.1.1 above to the Executive's beneficiary in twelve (12) equal
     monthly installments payable on the first day of each month commencing with
     the month following the Executive's death. Such annual benefit shall be
     paid to the Executive's beneficiary for fifteen (15) consecutive years.
 
     3.2 Death During Benefit Period. If the Executive dies after the benefit
payments have commenced under this Agreement but before receiving all such
payments, the Company shall pay the remaining benefits to the Executive's
beneficiary designated in accordance with Section 4.1 below at the same time and
in the same amounts as would have been paid to the Executive had the Executive
survived.
 
     3.3 Death After Termination of Employment But Before Benefit Payments
Commence. If the Executive is entitled to benefit payments under this Agreement,
but dies prior to the commencement of said benefit payments, the Company shall
pay to the Executive's beneficiary designated in accordance with Section 4.1
below the benefit payments that the Executive was entitled to prior to death
except that the benefit payments shall commence on the first day of the month
following the date of the Executive's death.
 
                                    Article 4
                                  Beneficiaries
 
     4.1 Beneficiary Designations. The Executive shall designate a beneficiary
by filing a written designation with the Company. The Executive may revoke or
modify the designation at any time by filing a new designation. However,
designations will only be effective if signed by the Executive and accepted by
the Company during the Executive's lifetime. The Executive's beneficiary
designation shall be deemed automatically revoked if the beneficiary predeceases
the Executive, or if the Executive names a spouse as beneficiary and the
marriage is subsequently dissolved. If the Executive dies with no beneficiary
designation or without a valid beneficiary designation, all payments shall be
made to the Executive's estate.
 
     4.2 Facility of Payment. If a benefit is payable to a minor, to a person
declared incapacitated, or to a person incapable of handling the disposition of
his or her property, the Company may pay such benefit to the guardian, legal
representative or person having the care or custody of such minor, incapacitated
person or incapable person. The Company may require proof of incapacity,
minority or guardianship as it may deem appropriate prior to distribution of the
benefit. Such distribution shall completely discharge the Company from all
liability with respect to such benefit.
 
                                    Article 5
                               General Limitations
 
     5.1 Termination for Cause. Notwithstanding any provision of this Agreement
to the contrary, the Company shall not pay any benefit under this Agreement if
the Company terminates the Executive's employment for:
 
          (a) Gross negligence, gross neglect or repeated failure of duties;
 
          (b) Commission of a gross misdemeanor involving moral turpitude or
     conviction of, or pleading guilty or nolo contendere to, a felony; or
 
          (c) Fraud, disloyalty, dishonesty or willful violation of any law or
     significant Company policy committed in connection with the Executive's
     employment and resulting in an adverse effect on the Company.
 
     5.2 Suicide or Misstatement. The Company shall not pay any benefit under
this Agreement if the Executive commits suicide within two (2) years after the
date of this Agreement, or if the Executive has
made any material misstatement of fact on any application for life insurance
purchased by the Company.
 
     5.3 Competition after Termination of Employment. The Company shall not pay
any benefit, or shall cease paying benefits, under this Agreement if the
Executive, without the prior written consent of the Company, engages in, becomes
interested in, directly or indirectly, as a sole proprietor, as a partner in a
partnership, or as a substantial shareholder in a corporation, or becomes
associated with, in the capacity of employee, director, officer, principal,
agent, trustee or in any other capacity whatsoever, any other federally insured
depository institution headquartered or having a physical presence within a
fifty (50) mile radius of the office of the Company or its affiliates in which
the Executive was most recently employed, which institution is, or may deemed to
be, competitive with any business carried on by the Company, within a period of
two (2) years following Termination of Employment. In the event the Company
determines that the Executive has violated the conditions of this Section 5.3
after receiving benefits under this Agreement, the Executive shall repay to the
Company an amount equal to the benefits paid hereunder, with interest computed
at an annual rate of eight percent (8%). In the event that the Company has a
right to recoup any benefits paid hereunder, the Company shall also have the
right to offset any other payments to be made to the Executive by the Company,
as allowed by law. This Section 5.3 shall not be applicable in the case of
Termination of Employment following a Change of Control nor shall it apply in
the event the Executive is terminated by the Company without cause (as defined
in Section 5.1 above).
 
                                    Article 6
                          Claims and Review Procedures
 
     6.1 Claims Procedure. An Executive or beneficiary ("claimant") who has not
received benefits under the Agreement that he or she believes should be paid
shall make a claim for such benefits as follows:
 
          6.1.1 Initiation - Written Claim. The claimant initiates a claim by
     submitting to the Company a written claim for the benefits.
 
          6.1.2 Timing of Company Response. The Company shall respond to such
     claimant within 90 days after receiving the claim. If the Company
     determines that special circumstances require additional time for
     processing the claim, the Company can extend the response period by an
     additional 90 days by notifying the claimant in writing, prior to the end
     of the initial 90-day period, that an additional period is required. The
     notice of extension must set forth the special circumstances and the date
     by which the Company expects to render its decision.
 
          6.1.3 Notice of Decision. If the Company denies part or all of the
     claim, the Company shall notify the claimant in writing of such denial. The
     Company shall write the notification in a manner calculated to be
     understood by the claimant. The notification shall set forth:
 
               6.1.3.1 The specific reasons for the denial,
 
               6.1.3.2 A reference to the specific provisions of the Agreement
          on which the denial is based,
 
               6.1.3.3 A description of any additional information or material
          necessary for the claimant to perfect the claim and an explanation of
          why it is needed,
 
               6.1.3.4 An explanation of the Agreement's review procedures and
          the time limits applicable to such procedures, and
 
               6.1.3.5 A statement of the claimant's right to bring a civil
          action under ERISA Section 502(a) following an adverse benefit
          determination on review.
 
          If the notice of denial of your claim is not furnished in accordance
     with the above within a reasonable period of time, the claim will be deemed
     denied and the Executive will then proceed to the review stage described
     below.
 
     6.2 Review Procedure. If the Company denies part or all of the claim, the
claimant shall have the opportunity for a full and fair review by the Company of
the denial (or deemed denial), as follows:
 
          6.2.1 Initiation - Written Request. To initiate the review, the
     claimant, within 60 days after receiving the Company's notice of denial (or
     deemed denial), must file with the Company a written request for review.
 
          6.2.2 Additional Submissions - Information Access. The claimant shall
     then have the opportunity to submit written comments, documents, records
     and other information relating to the claim. The Company shall also provide
     the claimant, upon request and free of charge, reasonable access to, and
     copies of, all documents, records and other information relevant (as
     defined in applicable ERISA regulations) to the claimant's claim for
     benefits.
 
          6.2.3 Considerations on Review. In considering the review, the Company
     shall take into account all materials and information the claimant submits
     relating to the claim, without regard to whether such information was
     submitted or considered in the initial benefit determination.
 
          6.2.4 Timing of Company Response. The Company shall respond in writing
     to such claimant within 60 days after receiving the request for review. If
     the Company determines that special circumstances require additional time
     for processing the claim, the Company can extend the response period by an
     additional 60 days by notifying the claimant in writing, prior to the end
     of the initial 60-day period, that an additional period is required. The
     notice of extension must set forth the special circumstances and the date
     by which the Company expects to render its decision.
 
          6.2.5 Notice of Decision. The Company shall notify the claimant in
     writing of its decision on review. The Company shall write the notification
     in a manner calculated to be understood by the claimant. The notification
     shall set forth:
 
               6.2.5.1 The specific reasons for the denial,
 
               6.2.5.2 A reference to the specific provisions of the Agreement
          on which the denial is based,
 
               6.2.5.3 A statement that the claimant is entitled to receive,
          upon request and free of charge, reasonable access to, and copies of,
          all documents, records and other information relevant (as defined in
          applicable ERISA regulations) to the claimant's claim for benefits,
          and
 
               6.2.5.4 A statement of the claimant's right to bring a civil
          action under ERISA Section 502(a).
 
          If the notice of denial of your claim upon review is not furnished in
     accordance with the above within a reasonable period of time, the claim
     will be deemed denied again.
 
                                    Article 7
                           Amendments and Termination
 
     This Agreement may be amended or terminated only by a written agreement
signed by the Company (and approved by its Board of Directors) and the
Executive.
 
                                    Article 8
                                  Miscellaneous
 
     8.1 Binding Effect. This Agreement shall bind the Executive and the
Company, and their beneficiaries, survivors, executors, successors,
administrators and transferees.
 
     8.2 No Guarantee of Employment. This Agreement is not an employment policy
or contract. It does not give the Executive the right to remain an employee of
the Company, nor does it interfere with the Company's right to discharge the
Executive. It also does not require the Executive to remain an employee nor
interfere with the Executive's right to terminate employment at any time.
 
     8.3 Non-Transferability. Neither the Executive, his or her beneficiary, nor
his or her legal representative shall have any rights to commute, sell, assign,
transfer, place a lien or other encumbrance upon, or otherwise convey the right
to receive any payments hereunder, which payments and the rights thereto are
expressly declared to be nonassignable and nontransferable. Any attempt to
assign, transfer or otherwise encumber the right to payments under this
Agreement shall be void and have no effect.
 
     8.4 Reorganization. The Company shall not merge or consolidate into or with
another company, or reorganize, or sell substantially all of its assets to
another company, firm, or person unless such succeeding or continuing company,
firm, or person agrees to assume and discharge the obligations of the Company
under this Agreement. Upon the occurrence of such event, the term "Company" as
used in this Agreement shall be deemed to refer to the successor or survivor
company.
 
     8.5 Tax Withholding. The Company shall withhold any taxes that are required
to be withheld from the benefits provided under this Agreement.
 
     8.6 Applicable Law. The Agreement and all rights hereunder shall be
governed by the laws of the State of Alabama, except to the extent preempted by
federal law.
 
     8.7 General Assets/Unfunded Arrangement. The Executive and beneficiary are
general unsecured creditors of the Company for the payment of benefits under
this Agreement. The benefits represent the mere promise by the Company to pay
such benefits. The assets from which Participant's benefits shall be paid shall
at all times be subject to the claims of the creditors of the Company; and the
Executive shall have no right, claim or interest in any assets as to which
account is deemed to be invested or credited under the Agreement. The Company
shall not be obligated to fund its liabilities under the Agreement.
Notwithstanding the foregoing, the Company may establish a grantor trust or
purchase securities to assist it
in meeting its obligations hereunder; provided, however, that in no event shall
any Executive have any interest in such trust or property other than as an
unsecured general creditor. Further, the Company may purchase a life insurance
policy on the life of the Executive, and such Executive shall cooperate with
such purchase by undergoing a medical examination or taking such other action as
may be necessary to put such insurance into effect.
 
     8.8 Entire Agreement. This Agreement constitutes the entire agreement
between the Company and the Executive as to the subject matter hereof. No rights
are granted to the Executive by virtue of this Agreement other than those
specifically set forth herein.
 
     8.9 Administration. The Company shall have powers which are necessary to
administer this Agreement, including but not limited to:
 
          (a) Interpreting the provisions of the Agreement;
 
          (b) Establishing and revising the method of accounting for the
     Agreement;
 
          (c) Maintaining a record of benefit payments; and
 
          (d) Establishing rules and prescribing any forms necessary or
     desirable to administer the Agreement.
 
     8.10 Named Fiduciary. The Company shall be the named fiduciary and plan
administrator under the Agreement. The named fiduciary may delegate to others
certain aspects of the management and operation responsibilities of the
agreement including the employment of advisors and the delegation of ministerial
duties to qualified individuals.
 
     8.11 Financial Hardship Payments. In the event of Financial Hardship of the
Executive, the Executive may apply to the Company for the early distribution of
all or any part of the benefits the Executive is entitled to receive under this
Agreement. The Company shall present the circumstances of each such case to the
Board of Directors for consideration and the Board shall have the right, in its
sole discretion, if applicable, to allow such distribution, or, if applicable,
to direct a distribution of part of the amount requested or to refuse to allow
any distribution. In no event shall the aggregate amount of the distribution
exceed either the amount of benefits the Executive is entitled to under this
Agreement or the amount determined by the Board to be necessary to alleviate the
Executive's Financial Hardship (which Financial Hardship may be considered to
include any taxes due because of the distribution occurring because of this
Section), and that is not reasonably available from other resources of the
Executive.
 
     8.12 Notice. Any notice, consent or demand required or permitted to be
given under the provisions of this Agreement shall be in writing, and shall be
signed by the party giving or making the same. If such notice, consent or demand
is mailed, it shall be sent by United States certified mail, postage prepaid.
The date of such mailing shall be deemed the date of notice, consent or demand.
With respect to the Executive, any notice, consent or demand shall be addressed
to the Executive's last known address as shown on the records of the Company.
With respect to the Company or the Board, any notice, consent or demand shall be
addressed to the President / CEO. Any party may change the address to which
notice is to be sent by giving notice of the change of address in the manner
aforesaid.
 
     IN WITNESS WHEREOF, the Executive and a duly authorized Company officer
have signed this
Agreement.
 
EXECUTIVE:                                      COMPANY:
 
                                                FIRST UNITED SECURITY BANK
 
/s/ Terry Phillips                              By  /s/ Larry M. Sellers
TERRY PHILLIPS
 
                                                Title  Sr. Ex. V.P.
 
                                                UNITED SECURITY BANCSHARES, INC.
 
                                                By /s/ Larry M. Sellers
 
                                                Title Vice President
 
 
                                    EXHIBIT A
 
                             BENEFICIARY DESIGNATION
 
                           FIRST UNITED SECURITY BANK
                          SALARY CONTINUATION AGREEMENT
 
                                 TERRY PHILLIPS
 
I designate the following as beneficiary of any death benefits under this Salary
Continuation Agreement: [If you name more than one primary or contingent
beneficiary, clearly state the percentage of the death benefit each beneficiary
is to receive.]
 
Primary:
        -----------------------------------------------------------------------
 
-------------------------------------------------------------------------------
 
Contingent:
           --------------------------------------------------------------------
 
-------------------------------------------------------------------------------
 
Note: To name a trust as beneficiary, please provide the name of the trustee(s)
      and the exact name and date of the trust agreement.
              -----
 
I understand that I may change these beneficiary designations by filing a new
written designation with the Company. I further understand that the designations
will be automatically revoked if the beneficiary predeceases me, or, if I have
named my spouse as beneficiary and our marriage is subsequently dissolved. I
also understand that this beneficiary designation revokes any prior beneficiary
designation(s) with respect to this Agreement.
 
Signature
           ------------------------------
 
Date
           ------------------------------
 
 
Accepted by the Company this ______ day of _________________, 200___.
 
By
    ------------------------------------
 
Title
       ---------------------------------
 
 
 
 
Clark/Bardes Consulting                                      Plan Year Reporting
-----------------------
 
                      First United Security Bank
                      Salary Continuation Plan - Schedule A
                      ----------------------------------------------------------
 
<TABLE>
<CAPTION>
Richard T. Phillips
----------------------------------------------------------------------------------------------------------------
DOB: 2/13/1954                                   Early Retirement        Disability          Change of Control
Plan Anniv Date: 9/1/2003
Retirement Age: 65                                 Installment            Installment            Installment
Payments: Monthly Installments                    Payable at 65          Payable at 65          Payable at 65
----------------------------------------------------------------------------------------------------------------
                     Benefit      Accrual                Based on             Based on                  Based On
                     Level/2/     Balance      Vesting   Benefit    Vesting   Benefit      Vesting      Benefit
Period         -------------------------------------------------------------------------------------------------
Ending      Age        (1)         (2)            (3)      (4)          (5)      (6)          (7)           (8)
 
<S>         <C>     <C>        <C>             <C>     <C>           <C>      <C>           <C>          <C>
Aug 2003/1/  49      102,511       27,388        20%     20,502       100%    102,511       100%         192,001
Aug 2004     50      106,611       58,272        40%     42,644       100%    106,611       100%         192,001
Aug 2005     51      110,876       93,147        60%     66,525       100%    110,876       100%         192,001
Aug 2006     52      115,311      132,587        80%     92,248       100%    115,311       100%         192,001
Aug 2007     53      119,923      177,266       100%    119,923       100%    119,923       100%         192,001
----------------------------------------------------------------------------------------------------------------
Aug 2008     54      124,720      227,981       100%    124,720       100%    124,720       100%         192,001
Aug 2009     55      129,709      285,681       100%    129,709       100%    129,709       100%         192,001
Aug 2010     56      134,897      351,506       100%    134,897       100%    134,897       100%         192,001
Aug 2011     57      140,293      426,850       100%    140,293       100%    140,293       100%         192,001
Aug 2012     58      145,905      513,443       100%    145,905       100%    145,905       100%         192,001
----------------------------------------------------------------------------------------------------------------
Aug 2013     59      151,741      613,484       100%    151,741       100%    151,741       100%         192,001
Aug 2014     60      157,811      729,862       100%    157,811       100%    157,811       100%         192,001
Aug 2015     61      164,123      866,555       100%    164,123       100%    164,123       100%         192,001
Aug 2016     62      170,688    1,029,453       100%    170,688       100%    170,688       100%         192,001
Aug 2017     63      177,515    1,228,422       100%    177,515       100%    177,515       100%         192,001
----------------------------------------------------------------------------------------------------------------
Aug 2018     64      184,616    1,484,624       100%    184,616       100%    184,616       100%         192,001
Feb 2019     65      192,001    1,685,417       100%    192,001       100%    192,001       100%         192,001
 
                           February 2019 Retirement, 3/1/2019 First Payment Date
----------------------------------------------------------------------------------------------------------------
</TABLE>
/1/ The first line reflects 12 months of data, September 2002 to August 2003.
 
/2/ Benefit amount based on a beginning compensation of $98,568 inflating at
    4.00% each year to $192,001 at retirement.  Annual Benefit payment of
    $192,001 is 100% of projected final compensation.
 
 
 

 

 

 

EXHIBIT 10.1

AMENDMENT ONE

TO R. TERRY PHILLIPS

EMPLOYMENT AGREEMENT

This Amendment One (this “Amendment”) is made and entered into as of the 18th day of December, 2008, by and among United Security Bancshares, Inc. (“USB”), First United Security Bank (“FUSB”) (“USB” and “FUSB” are hereinafter collectively referred to as the “Company”), and R. Terry Phillips (the “Executive”).

WHEREAS, the Company and the Executive previously entered into the Employment Agreement (the “Agreement”), effective as of January 1, 2000, attached hereto as Exhibit A;

WHEREAS, the American Jobs Creation Act of 2004 created new Internal Revenue Code Section 409A (“Code Section 409A”), which imposes documentary and operational requirements on non-qualified deferred compensation arrangements, such as the Agreement; and

WHEREAS, the Company desires to amend the Agreement as set forth herein to ensure that it and the amounts paid thereunder satisfy the requirements of Code Section 409A and any and all Treasury regulations and guidance promulgated thereunder.

NOW, THEREFORE, in consideration of the foregoing and of the mutual covenants and agreements of the parties set forth in this Agreement, and of other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound, agree as follows, effective January 1, 2009:

 

 

1.

Amend Section 6.4(b) by deleting the introductory provision “Following the expiration of the ninety (90) day notice period” and substituting in lieu thereof “Within thirty (30) days following the effective date of the Executive’s termination of employment.”

Further amend Section 6.4(b) by adding the following as the last sentence therein:

“In the event that payment is made pursuant to (iii) above, the payment of three (3) times Base Salary shall be made within the thirty (30) day period noted above; payment of the remaining two (2) times Base Salary shall be made within ten (10) days following the Change in Control.”

 

 

2.

Amend Section 6.4(c) by adding the following as the end thereof:

“Notwithstanding the foregoing, with respect to any self-insured welfare plan benefits wherein adverse tax consequences to the Executive could apply due to the application of Section 105(h) and/or Section 409A of the Internal Revenue Code (the “Code”) to such benefits, then in lieu of the Company’s waiver of any insurance “premiums” associated with such benefits (“Self-Insured Premiums”), the parties immediately shall retain a mutually-agreeable actuary to calculate a lump sum payment to be made to the Executive in an amount generally equal to the present value of the anticipated Self-Insured Premiums for the 3-year period, and Executive shall then be solely responsible for the payment of the Self-Insured Premiums. Such lump sum payment shall be paid to Executive within sixty (60) days following the Executive’s termination of employment. In the event that Executive receives substantially similar benefits from a subsequent employer within the 3-year period, the Executive shall, within sixty (60) days of gaining coverage for such benefits, repay to the Company an amount equal to the lump sum payment the Executive received under this Section 6.4(c) times a fraction, the numerator of which is the number of days remaining in the 3-year period and the denominator of which is 1095.”

 

Page 1 of 4


 

3.

Amend Section 6.4(e) by adding the following as the beginning of the sole sentence therein:

“Within thirty (30) days following the effective date of the Executive’s termination of employment,”

 

 

4.

Amend Section 6.6(a) by deleting its content and substituting in lieu thereof the following:

“(a) At any time during the term of this Agreement, the Executive may terminate this Agreement for Good Reason by giving the Board written notice of the Good Reason condition and the Executive’s intent to terminate within ninety (90) days of the initial existence of the Good Reason condition. Such notice shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for such termination. The Executive’s ability to terminate for Good Reason is contingent upon his agreement to allow the Company to remedy, within such ninety (90)-day period, the events constituting Good Reason. Additionally, the Executive’s termination of employment due to Good Reason must occur within six (6) months of the initial existence of the Good Reason condition in order to be entitled to any payments or benefits due to a Good Reason termination.”

 

 

5.

Amend Section 6.6(b) by deleting its content and substituting in lieu thereof the following:

“(b) Upon the failure of the Company to remedy the events constituting Good Reason prior to the expiration of the ninety (90)-day notice period, the Good Reason termination shall become effective, and, within thirty (30) days following the effective date of the Executive’s termination of employment, the Company shall pay the Executive a lump sum cash payment in an amount equal to three (3) times the Base Salary currently in effect; provided, however, that if (i) the notice of termination is provided on or after a Change in Control, (ii) the effective date of such termination occurs on or after a Change in Control or (iii) a Change in Control occurs within the period beginning on the effective date of such termination and ending six (6) months thereafter, the payment under this sub-section (b) shall be a lump sum cash payment in an amount equal to five (5) times the Base Salary currently in effect. In the event that payment is made pursuant to (iii) above, the payment of three (3) times Base Salary shall be made within the thirty (30) day period noted above; payment of the remaining two (2) times Base Salary shall be made within ten (10) days following the Change in Control.”

 

 

6.

Amend 6.6(d) by deleting said subsection in its entirety.

 

 

7.

Amend Section 6.7(b) by deleting the introductory provision “Upon the Executive’s termination of employment during the Window Period” and substituting in lieu thereof “Within thirty (30) days following the effective date of the Executive’s termination of employment during the Window Period.”

 

 

8.

Amend Section 7.1 by adding the following as the last sentence therein:

“All payments made pursuant to this Article 7 shall be made in accordance with Section 12.9(c) below.”

 

Page 2 of 4


 

9.

Amend Section 12.1(d) by deleting the content of said subsection and substituting in lieu thereof the following:

“(d) A “Change in Control” means a “change in the ownership” of USB or FUSB, a “change in the effective control” of USB, or a “change in the ownership of a substantial portion of the assets” of USB or FUSB, as each is defined in Code Section 409A and the regulations and guidance issued thereunder (collectively, “Section 409A”).”

 

 

10.

Amend Section 12.1(g)(i) by deleting the content of said subsection and substituting in lieu thereof the following:

“(i) The assignment of the Executive to duties materially inconsistent with the Executive’s authorities, duties, or responsibilities (including a material change in to whom the Executive must report) as an officer of the Company, or a material reduction or alteration of the Executive’s authorities, duties or responsibilities from those in effect as of the Effective Date (or as subsequently increased), other than an insubstantial and inadvertent act that is remedied by the Company promptly after receipt of notice thereof given by the Executive; or”

 

 

11.

Insert the following as a new Section 12.9:

“12.9 Internal Revenue Code Section 409A Compliance. This Agreement is intended in good faith to comply with Section 409A with respect to certain payments, and to be exempt from Section 409A with respect to other payments.

(a) Termination of Employment. With respect to payments made, or to be made, hereunder upon a termination of employment that are subject to Section 409A, a termination of employment must constitute a “separation from service” under Treas. Reg. Section 1.409A-1(h) in order for such payment to be made.

(b) Modification of Time or Form of Payments. Payments made hereunder that are subject to Section 409A may not be accelerated or delayed, except as specifically allowed under Section 409A.

(c) Reimbursements and Equalization Payments. Notwithstanding any other provisions herein to the contrary or any policy of the Company to the contrary, all reimbursements, Payments and Underpayments (as defined in Article 7) to be made hereunder shall be made within sixty (60) days of the date that the Executive incurs the reimbursable expense or remits the taxes to the applicable taxing authority, as applicable. Additionally, any amount payable to Section 7.2(b) must be made by the end of the Executive’s taxable year following the Executive’s taxable year in which the taxes that are subject to the audit or litigation are remitted to the taxing authority, or where as a result of such audit or litigation no taxes are remitted, the end of the Executive’s taxable year following the Executive’s taxable year in which the audit is completed or there is a final and non-appealable settlement or other resolution of the litigation. The amount of expenses eligible for reimbursement during the Executive’s taxable year may not affect the amount of expenses eligible for reimbursement in any other taxable year of the Executive, and the right to a reimbursement may not be liquidated or exchanged for any other benefit.

(d) Restriction on Timing of Distribution. Notwithstanding any provision of this Agreement to the contrary, if the Executive is considered a “Specified Employee” at the

 

Page 3 of 4


time of his termination of employment under such procedures as established by USB in accordance with Section 409A, distributions that are made upon termination of employment (for reasons other than death) may not commence earlier than six (6) months after the date of such termination of employment. Therefore, in the event this Section 12.9(d) is applicable to the Executive, any distribution which would otherwise be paid to the Executive within the first six (6) months following the termination of employment shall be accumulated and paid to the Executive in a lump sum during the seventh month following the termination of employment. Any subsequent distributions shall be paid in the manner otherwise specified herein.”

 

 

12.

All other terms, conditions and provisions of the Agreement not herein modified shall remain in full force and effect.

IN WITNESS WHEREOF, the Company and the Executive have caused this Amendment One to the Employment Agreement to be executed as of the date first written above.

 

 

“USB”

 

United Security Bancshares, Inc.

 

By:

 

/s/ Hardie B. Kimbrough

 

Its:

 

Chairman

 

“FUSB”

 

First United Security Bank

 

By:

 

/s/ Hardie B. Kimbrough

 

Its:

 

Chairman

 

“Executive”

 

/s/ R. Terry Phillips

 

R. Terry Phillips

 

Page 4 of 4


EXHIBIT A

EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT is effective as of the 1st day of January, 2000 (the “Effective Date”), and is made by and between UNITED SECURITY BANCSHARES, INC., a Delaware corporation (“USB”); FIRST UNITED SECURITY BANK, an Alabama banking corporation (“FUSB”; USB and FUSB are hereinafter collectively referred to as the “Company”); and R. TERRY PHILLIPS (the “Executive”).

WHEREAS, the Executive is presently employed by the Company in the capacity of President and Chief Executive Officer of USB and FUSB; and

WHEREAS, the Executive possesses considerable experience and an intimate knowledge of the business and affairs of the Company, its policies, methods, personnel and operations; and

WHEREAS, the Company recognizes that the Executive’s contributions have been substantial and meritorious and, as such, the Executive has demonstrated unique qualifications to act in an executive capacity for the Company; and

WHEREAS, the Company is desirous of assuring the continued employment of the Executive in the above stated capacities, and the Executive is desirous of having such assurance;

WHEREAS, the Executive and the Company previously entered into an employment agreement effective as of the 1st day of January, 1999 (the “1999 Agreement”), and the Executive and the Company now desire to amend and restate the 1999 Agreement hereby;

NOW THEREFORE, in consideration of the foregoing and of the mutual covenants and agreements of the parties set forth in this Agreement, and of other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound, agree as follows:

ARTICLE 1

Term of Employment

(a) The Company hereby agrees to employ the Executive and the Executive hereby agrees to continue to serve the Company, in accordance with the terms and conditions set forth herein, for an initial period of three (3) years, commencing as of the Effective Date; provided, however, immediately upon a Change in Control, the initial period shall automatically extend to five (5) years.


(b) (i) Until a Change in Control occurs, upon each new day of the three (3) year period of employment from the Effective Date until the Executive’s sixty-fourth (64th) birthday, the term of this Agreement automatically shall be extended for one (1) additional day, to be added to the end of the then-existing three (3) year term. Accordingly, at all times prior to (i) the Executive’s attaining age 64 and (ii) a notice of employment termination (or an actual termination), the term of this Agreement shall be three (3) full years.

(ii) After a Change in Control occurs, upon each new day of the five (5) year period of employment from the date of such Change in Control until the Executive’s sixty-second (62nd) birthday, the term of this Agreement automatically shall be extended for one (1) additional day, to be added to the end of the then-existing five (5) year term. Accordingly, at all times prior to (i) the Executive’s attaining age 62 and (ii) a notice of employment termination (or an actual termination), the term of this Agreement shall be five (5) full years.

However, the automatic extensions of the term of this Agreement shall immediately be suspended upon a termination of the Executive’s employment in accordance with the terms of this Agreement.

ARTICLE 2

Position and Responsibilities

During the term of this Agreement, the Executive agrees to serve as President and Chief Executive Officer of USB and FUSB and as a member of the respective Boards of Directors if so elected. In his capacity as President and Chief Executive Officer, he shall have responsibility for all operations of the Company. The Executive shall have the same status, privileges and responsibilities normally inherent in such capacities in financial institutions of similar size and character to the Company.

ARTICLE 3

Standard of Care

(a) During the term of this Agreement, the Executive agrees to devote substantially his full time, attention and energies to the Company’s business and shall not be engaged in any other business activity, whether or not such business activity is pursued for gain, profit or other pecuniary advantage. However, the Executive may serve as a director of other companies so long as such service is not injurious to the Company, and provided that such service is approved by the Board. The Executive covenants, warrants and represents that he shall devote his full and best efforts to the fulfillment of his employment obligations and exercise the highest degree of loyalty and the highest standards of conduct in the performance of his duties.

 

–2–


(b) This Article 3 shall not be construed as preventing the Executive from investing assets in such form or manner as will not require his services in the daily operations of the affairs of the companies in which such investments are made.

ARTICLE 4

Compensation

As remuneration for all services to be rendered by the Executive during the term of this Agreement, and as consideration for complying with the covenants herein, the Company shall pay and provide to the Executive the following:

4.1 Base Salary.

(a) The Company shall pay the Executive a base salary in an amount which shall be established from time to time by the Board of Directors of the Company or the Board’s designee; provided, however, that such base salary shall not be less than $192,500 per year and if subsequently increased shall not be less than such increased amount (“Base Salary”). Base Salary shall be paid to the Executive in equal bi-weekly installments throughout the year, consistent with the normal payroll practices of the Company.

(b) Base Salary shall be reviewed at least annually during the term of this Agreement to ascertain whether, in the judgment of the Board or the Board’s designee, such Base Salary should be increased, based primarily on the performance of the Executive during the year.

4.2 Annual Bonus. In addition to Base Salary, in the discretion of the Board, the Executive shall be entitled to an opportunity to earn a cash bonus (the “Bonus”) under the Executive Incentive Plan or any similar plan that may be adopted in the future.

4.3 Long-Term Incentives. During the term of this Agreement, the Executive shall be entitled to participate in any and all long-term incentive programs at a level that is commensurate with his position with the Company. Such programs include the United Security BancShares, Inc. Long Term Incentive Compensation Plan, or any successors thereto, as amended from time to time.

4.4 Retirement Benefits. The Company shall provide to the Executive participation in all Company qualified defined benefit and defined contribution retirement plans, if any, subject to the eligibility and participation requirements of such plans.

4.5 Life Insurance. The Company shall provide a policy of “term-life” insurance (in addition to any insurance described in Section 4.6) on the Executive’s life in the face amount of Two Hundred Fifty Thousand Dollars ($250,000), of which the Executive will be the owner. All of the premiums on such policy shall be paid by the Employer during the Executive?s employment hereunder.

 

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4.6 Employee Benefits. The Company shall provide to the Executive all benefits to which other executives and employees of the Company are entitled to receive, as are commensurate with the Executive’s position, subject to the eligibility requirements and other provisions of such plans or arrangements.

4.7 Perquisites. The Company shall provide to the Executive, at the Company’s cost, all perquisites to which other senior executives are entitled to receive and such other perquisites which are suitable to the character of the Executive’s position with the Company and adequate for the performance of his duties hereunder, including, but not limited to the use of a Chevrolet Tahoe automobile, or its equivalent, plus an amount equal to the costs of maintenance, repairs, insurance and all other costs incident thereto.

4.8 Right to Change Plans. By reason of Sections 4.6 and 4.7 herein, the Company shall not be obligated to institute, maintain or refrain from changing, amending or discontinuing any benefit plan, program or perquisite, so long as such changes are similarly applicable to executive employees generally.

ARTICLE 5

Expenses

The Company shall pay or reimburse the Executive for all ordinary and necessary expenses, in a reasonable amount, which the Executive incurs in performing his duties under this Agreement including, but not limited to, (a) travel, (b) entertainment, (c) professional dues and subscriptions and (d) dues incurred by the Executive for membership in all local private or civic clubs of which he may become a member and which are deemed by the Executive to be beneficial to his role with the Company.

ARTICLE 6

Employment Terminations

6.1 Termination Due to Retirement or Death. In the event the Executive’s employment is terminated while this Agreement is in force by reason of Retirement or death, the following terms and conditions shall apply:

(a) The Company’s obligation under this Agreement to pay and provide to the Executive the elements of pay described in Sections 4.1, 4.2 and 4.3 shall immediately expire.

 

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(b) Upon the effective date of any such termination, the Executive’s benefits including, without limitation, benefits under Section 4.4, 4.5, 4.6 and 4.7, shall be determined in accordance with the Company’s retirement, survivors’ benefits, insurance and other applicable programs of the Company then in effect; provided, however, that the Executive shall receive all rights and benefits that he is vested in, pursuant to plans and programs of the Company.

(c) Subject to any conflicting terms of any short-term incentive program which would provide for greater benefits following such termination, the Company shall, within sixty (60) days of the effective date of employment termination, pay to the Executive (or the Executive’s beneficiaries or estate, as the case may be) a Pro Rata share of the Bonus Opportunity.

(d) All unvested stock awards (including, but not limited to, any stock options and restricted stock) will vest in full on the date of any such termination.

6.2 Termination Due to Disability. In the event that the Executive is determined to have a Disability during the term of this Agreement, the Company shall have the right to terminate the Executive’s active employment as provided in this Agreement. However, the Board shall deliver written notice to the Executive of the Company’s intent to terminate the Executive’s employment for Disability at least thirty (30) calendar days prior to the effective date of such termination and only after any period or process for determining the Disability has been satisfied and completed. Upon a termination of employment for Disability, the following terms and conditions shall apply:

(a) The Company’s obligation to pay and provide to the Executive the element of pay described in Sections 4.1, 4.2 and 4.3 shall immediately expire; provided, however, that, during the period beginning on the effective date of such termination and ending six (6) months thereafter, the Company shall continue to make bi-weekly payments equal to one hundred percent (100%) of the Base Salary then in effect to the Executive pursuant to Section 4.1; provided, further, that each such bi-weekly payment during such period shall be reduced by a pro rata portion of the aggregate amount of any and all insurance benefits payable to the Executive during such period.

(b) The Executive shall receive all rights and benefits that he is vested in, pursuant to plans and programs of the Company.

(c) Subject to any conflicting terms of any short-term incentive program which would provide for greater benefits following such termination, the Company shall, within sixty (60) days of the effective date of employment termination, pay to the Executive a Pro Rata share of the Bonus Opportunity.

(d) All unvested stock awards (including, but not limited to, any stock options and restricted stock) will vest in full on the date of any such termination.

 

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6.3 Voluntary Termination by the Executive. The Executive may terminate this Agreement at any time by giving the Board written notice of intent to terminate, delivered at least ninety (90) calendar days prior to the effective date of such termination. This Section 6.3 shall not apply if the Executive terminates employment (i) because of Retirement, (ii) for Good Reason or (iii) during the Window Period. In the event that the voluntary termination is for Good Reason or during the Window Period, the terms of Section 6.6 or Section 6.7, as the case may be, shall govern the parties’ rights and obligations hereunder. Otherwise, upon a voluntary termination by the Executive, the following terms and conditions shall apply:

(a) The Company shall continue to pay the Executive’s Base Salary, at the rate then in effect as provided in Section 4.1 herein, through the effective date of termination, plus all other benefits to which the Executive has a vested right at that time; provided, however, that the Executive shall not be paid any Bonus with respect to the fiscal year in which voluntary termination under this Section 6.3 occurs.

(b) Other than as provided in this Section 6.3, a voluntary employment termination by the Executive shall result in the termination of the rights and obligations of the parties under this Agreement; provided, however, that the terms and provisions of Article 8 shall continue to apply prior to a Change in Control.

6.4 Involuntary Termination by the Company Without Cause.

(a) At any time during the term of this Agreement, the Board may terminate the Executive’s employment, as provided under this Agreement, for reasons other than death, Disability, Retirement or for Cause, by notifying the Executive in writing of the Company’s intent to terminate at least ninety (90) calendar days prior the effective date of such termination.

(b) Following the expiration of the ninety (90) day notice period, the Company shall pay to the Executive a lump sum cash payment in an amount equal to three (3) times the Base Salary currently in effect; provided, however, that if (i) the notice of termination is provided on or after a Change in Control, (ii) the effective date of such termination occurs on or after a Change in Control or (iii) a Change in Control occurs within the period beginning on the effective date of such termination and ending six (6) months thereafter, the payment under this sub-section (b) shall be a lump sum cash payment in an amount equal to five (5) times the Base Salary currently in effect.

(c) Upon a termination pursuant or subject to this Section 6.4, the Executive shall be entitled to a continuation of all benefits pursuant to any and all welfare benefit plans under which the Executive and/or the Executive’s family is eligible to receive benefits and/or coverage as of the date of termination or as the same may be increased from time to time. Such benefits shall be provided to the Executive at the same premium cost to the Executive, if any, and at the same coverage level, as in effect as of the Executive’s date of termination. The welfare benefits described in this Subsection 6.4(c) shall continue following the date of termination for three (3) years; provided, however, that such benefits shall be discontinued prior to the end of such period in the event the Executive receives substantially similar benefits from a subsequent employer.

 

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(d) All unvested stock awards (including, but not limited to, any stock options and restricted stock) will vest on the date of termination.

(e) The Company shall transfer (or cause to be transferred) to the Executive title to the Executive’s company car, without cost to the Executive, and shall pay to the Executive a lump sum cash payment in an amount necessary to fully gross-up the state and federal income tax effects of said transfer.

(f) Subject to the provisions of this Section 6.4, a termination pursuant to this Section 6.4 shall result in the termination of all rights and obligations of the parties under this Agreement; provided, however, that the terms and provisions of Article 8 shall continue to apply. The payments described in this Section 6.4 (as well as in Section 6.6 and Section 6.7) shall be in part to compensate the Executive for being subject to the provisions of Article 8 (if applicable) thereafter, even though the Executive’s employment has been terminated without Cause (or for Good Reason as provided in Section 6.6 or during the Window Period as provided in Section 6.7).

6.5 Termination For Cause.

(a) Nothing in this Agreement shall be construed to prevent the Board from terminating the Executive’s employment under this Agreement for Cause.

(b) After providing the Executive with notice of the reasons the Board believes Cause may exist, and after giving the Executive the opportunity to respond to the allegation that Cause exists, the Board, by majority vote, shall make the determination of whether Cause exists.

(c) In the event this Agreement is terminated by the Board for Cause, the Company shall continue to pay the Executive his Base Salary through the effective date of the employment termination, and the Executive shall immediately thereafter forfeit all rights and benefits (other than vested benefits) he would otherwise have been entitled to receive under this Agreement. The Company and the Executive thereafter shall have no further obligations under this Agreement; provided, however, that the provisions of Article 8 shall continue to apply.

(d) A termination for Cause shall be permitted hereunder only if the Company provides the written notice of intent to terminate not later than six (6) months after the date the Company first knew or should have reasonably known of the act or omission to act or conviction giving rise to the termination for Cause. The six (6)-month period shall be tolled during any permitted period of correction or administrative procedure.

 

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6.6 Termination for Good Reason.

(a) At any time during the term of this Agreement, the Executive may terminate this Agreement for Good Reason by giving the Board ninety (90) calendar days written notice of intent to terminate, which notice sets forth in reasonable detail the facts and circumstances claimed to provide a basis for such termination. The Executive’s ability to terminate for Good Reason is contingent upon his agreement to allow the Company to remedy, within such ninety (90)-day period, the events constituting Good Reason.

(b) Upon the failure of the Company to remedy the events constituting Good Reason prior to the expiration of the ninety (90)-day notice period, the Good Reason termination shall become effective, and the Company shall pay the Executive a lump sum cash payment in an amount equal to three (3) times the Base Salary currently in effect; provided, however, that if (i) the notice of termination is provided on or after a Change in Control, (ii) the effective date of such termination occurs on or after a Change in Control or (iii) a Change in Control occurs within the period beginning on the effective date of such termination and ending six (6) months thereafter, the payment under this sub-section (b) shall be a lump sum cash payment in an amount equal to five (5) times the Base Salary currently in effect.

(c) Upon a termination for Good Reason, in addition to the payment provided for in sub-section (b) above, the Executive shall be entitled to the same payments (excluding those provided for in Section 6.4(b)), benefits and rights as he is entitled to receive following an involuntary termination of his employment by the Company without Cause, as specified in Section 6.4 herein (as if the termination were an involuntary termination without Cause).

(d) A termination for Good Reason shall be permitted hereunder only if the Executive provides the written notice to terminate not later than six (6) months after the date the Employee first knew or should have known of the act or omission to act giving rise to the termination for Good Reason. The six (6)-month period shall be tolled during any permitted period of correction or administrative procedure.

SECTION 6.7 Termination During Window Period After Change in Control.

(a) During the Window Period, the Executive may terminate his employment without any reason; provided, however, that a termination for Good Reason, whether during the Window Period or not, shall be governed by Section 6.6 above and not this Section 6.7.

(b) Upon the Executive’s termination of employment during the Window Period pursuant to this Section 6.7, the Company shall pay the Executive a lump sum cash payment in an amount equal to three (3) times the Base Salary currently in effect. In addition, the Executive shall be entitled to the same payments (excluding those provided for in Section 6.4(b)), benefits and rights as he is entitled to receive following an involuntary termination of his employment by the Company without Cause, as specified in Section 6.4 herein (as if the termination were an involuntary termination without Cause).

 

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ARTICLE 7

Excise Tax Gross-Up

7.1 Equalization Payment. Anything in this Agreement to the contrary notwithstanding, in the event it shall be determined that any payment or distribution by the Company to or for the benefit of the Executive (whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise, but determined without regard to any additional payments required under this Article 7) (a “Payment”) would be subject to the excise tax imposed by Section 4999 of the Internal Revenue Code of 1986, as amended (the “Code”) or any interest or penalties are incurred by the Executive with respect to such excise tax (such excise tax, together with any such interest and penalties, are hereinafter collectively referred to as the “Excise Tax”), the Company shall make an additional payment to the Executive (a “Gross-Up Payment”) in an amount such that after payment by the Executive of all taxes (including any interest or penalties imposed with respect to such taxes), including, without limitation, any income taxes (and any interest and penalties imposed with respect thereto) and the Excise Tax imposed upon the Gross-Up Payment, the Executive retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon the Payments.

7.2 Tax Computation.

(a) Subject to the provisions of Section 7.2(c), all determinations required to be made under this Article 7, including whether and when a Gross-Up Payment is required and the amount of such Gross-Up Payment and the assumptions to be utilized in arriving at such determination, shall be made by an accounting firm chosen by the Company in its sole discretion (the “Accounting Firm”) which shall provide detailed supporting calculations both to the Company and the Executive within fifteen (15) business days of the receipt of notice from the Executive that there has been a Payment, or such earlier time as is requested by the Company. However, the Accounting Firm chosen may not be the firm that is serving as accountant or auditor for the individual, entity or group effecting a Change in Control. All fees and expenses of the Accounting Firm shall be borne solely by the Company. Any Gross-Up Payment, as determined pursuant to this Article 7, shall be paid by the Company to the Executive within thirty (30) days of the receipt of the Accounting Firm’s determination. If the Accounting Firm determines that no Excise Tax is payable by the Executive, it shall furnish the Executive with a written opinion that failure to report the Excise Tax on the Executive’s applicable federal income tax return would not result in the imposition of a negligence or similar penalty. Any determination by the Accounting Firm shall be binding upon the Company and the Executive. As a result of the uncertainty in the application of Section 4999 of the Code at the time of the initial determination by the Accounting Firm hereunder, it is possible that Gross-Up Payments which will not have been made by the Company should have been made (“Underpayment”), consistent with the calculations required to be made hereunder. In the event that the Company exhausts its remedies pursuant to Section 7.2(c) and the Executive thereafter is required to make a payment of any Excise Tax, the Accounting Firm shall determine the amount of the Underpayment that has occurred and any such Underpayment shall be promptly paid by the Company to or for the benefit of the Executive.

 

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(b) The Executive shall notify the Company in writing of any claim by the Internal Revenue Service that, if successful, would require the payment by the Company of the Gross-Up Payment. Such notification shall be given as soon as practicable but no later than ten (10) business days after the Executive is informed in writing of such claim and shall apprise the Company of the nature of such claim and the date on which such claim is requested to be paid. The Executive shall not pay such claim prior to the expiration of the 30-day period following the date on which it gives such notice to the Company (or such shorter period ending on the date that any payment of taxes with respect to such claim is due). If the Company notifies the Executive in writing prior to the expiration of such period that it desires to contest such claim, the Executive shall:

(i) give the Company any information reasonably requested by the Company relating to such claim,

(ii) take such action in connection with contesting such claim as the Company shall reasonably request in writing from time to time, including, without limitation, accepting legal representation with respect to such claim by an attorney selected by the Company,

(iii) cooperate with the Company in good faith in order effectively to contest such claim, and

(iv) permit the Company to participate in any proceedings relating to such claim;

provided, however, that the Company shall bear and pay directly all costs and expenses (including additional interest and penalties) incurred in connection with such contest and shall indemnify and hold the Executive harmless, on an after-tax basis, for any Excise Tax or income tax (including interest and penalties with respect thereto) imposed as a result of such representation and payment of costs and expenses. Without limitation on the foregoing provisions of this Section 7.2(b), the Company shall control all proceedings taken in connection with such contest and, at its sole option, may pursue or forgo any and all administrative appeals, proceedings, hearings and conferences with the taxing authority in respect of such claim and may, at its sole option, either direct the Executive to pay the tax claimed and sue for a refund or contest the claim in any permissible manner, and the Executive agrees to prosecute such contest to a determination before any administrative tribunal, in a court of initial jurisdiction and in one or more appellate courts, as the Company shall determine; provided, however, that if the Company directs the Executive to pay such claim and sue for a refund, the Company shall advance the amount of such payment to the Executive, on an interest-free basis and shall indemnify and hold the Executive harmless, on an after-tax basis, from any Excise Tax or income tax (including interest or penalties with respect thereto) imposed with respect to such advance or with respect to any imputed income with respect to such advance; and further provided that any extension of the statute of limitations relating to payment of taxes for the taxable year of the Executive with respect to which such contested amount is claimed to be due is limited solely to such

 

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contested amount. Furthermore, the Company’s control of the contest shall be limited to issues with respect to which a Gross-Up Payment would be payable hereunder and the Executive shall be entitled to settle or contest, as the case may be, any other issue raised by the Internal Revenue Service or any other taxing authority.

(c) If, after the receipt by the Executive of an amount advanced by the Company pursuant to Section 7.2(b), the Executive becomes entitled to receive any refund with respect to such claim, the Executive shall (subject to the Company’s complying with the requirements of Section 7.2(b)) promptly pay to the Company the amount of such refund (together with any interest paid or credited thereon after taxes applicable thereto). If, after the receipt by the Executive of an amount advanced by the Company pursuant to Section 7.2(b), a determination is made that the Executive shall not be entitled to any refund with respect to such claim and the Company does not notify the Executive in writing of its intent to contest such denial of refund prior to the expiration of thirty (30) days after such determination, then such advance shall be forgiven and shall not be required to be repaid and the amount of such advance shall offset, to the extent thereof, the amount of the Gross-Up Payment required to be paid.

ARTICLE 8

Noncompetition

8.1 Prohibition on Competition.

(a) Without the prior written consent of the Company, during the term of this Agreement, and for twelve (12) months following the expiration of this Agreement, the Executive shall not, as an employee or an officer, engage directly or indirectly in any business or enterprise which is “in competition” with the Company or its successors or assigns. For purposes of this Agreement, a business or enterprise will be deemed to be “in competition” if it is a banking institution, the headquarters of which is within two hundred (200) miles from the location of the Executive’s principal job location or office at the time of termination of employment.

(b) Notwithstanding this Article 8, the Executive shall be allowed to purchase and hold for investment less than three percent (3%) of the shares of any corporation whose shares are regularly traded on a national securities exchange or in the over-the-counter market.

8.2 Disclosure of Information. The Executive recognizes that he has access to and knowledge of certain confidential and proprietary information of the Company which is essential to the performance of his duties under this Agreement. The Executive will not, during or for a period of three (3) years after the term of his employment by the Company, in whole or in part, disclose such information to any person, firm, corporation, association or other entity for any reason or purpose whatsoever, nor shall he make use of any such information for his own purposes.

 

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8.3 Specific Performance. The parties recognize that the Company will have no adequate remedy at law for breach by the Executive of the requirements of this Article 8 and, in the event of such breach, the Company and the Executive hereby agree that, in addition to the right to seek monetary damages, the Company will be entitled to a decree of specific performance, mandamus or other appropriate remedy to enforce performance of such requirements.

8.4 Limitation. The provisions of this Article 8 shall be null and void and without any force or effect on and after the date of a Change in Control.

ARTICLE 9

Indemnification

The Company hereby covenants and agrees to indemnify and hold harmless the Executive in a manner consistent with the provisions of the Company’s Certificate of Incorporation, as in effect on the Effective Date.

ARTICLE 10

Assignment

10.1 Assignment by Company.

(a) This Agreement may and shall be assigned or transferred to, and shall be binding upon and shall inure to the benefit of, any successor of the Company, and any such successor shall be deemed substituted for all purposes of the “Company” under the terms of this Agreement. As used in this Agreement, the term “successor” shall mean any person, firm, corporation or business entity which at any time, whether by merger, purchase or otherwise, acquires all or substantially all of the assets or the business of the Company. Notwithstanding such assignment, the Company shall remain, with such successor, jointly and severally liable for all its obligations hereunder.

(b) Failure of the Company to obtain the agreement of any successor to be bound by the terms of this Agreement prior to the effectiveness of any such succession shall be a breach of this Agreement and shall immediately entitle the Executive to compensation from the Company in the same amount and on the same terms as the Executive would be entitled in the event of an termination of employment without Cause, as provided in Section 6.4 herein.

(c) Except as herein provided, this Agreement may not otherwise be assigned by the Company (other than to a subsidiary or affiliate) without the prior written consent of the Executive.

10.2 Assignment by Executive. The services to be provided by the Executive to the Company hereunder are personal to the Executive, and the Executive’s duties may not be assigned by

 

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the Executive; provided, however that this Agreement shall inure to the benefit of and be enforceable by the Executive’s personal or legal representatives, executors, and administrators, successors, heirs, distributees, devisees and legatees. If the Executive dies while any amounts payable to the Executive hereunder remain outstanding, all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this Agreement to the Executive’s devisee, legatee or other designee or, in the absence of such designee, to the Executive’s estate.

ARTICLE 11

Dispute Resolution and Notice

11.1 Dispute Resolution.

(a) The parties hereto agree that the subject matter of this Agreement involves and affects interstate commerce within the meaning of the commerce clause of the United States Constitution. This Agreement shall be irrevocable and is binding upon the parties and is subject to being specifically enforced.

(b) Any action, dispute, claim, counterclaim or controversy (“Dispute” or “Disputes”), between or among the parties, with respect to this Agreement, including, without limitation, any claim based on, or arising from, an alleged tort or contract, shall be resolved by arbitration as set forth below. As used herein, Disputes shall include all actions, disputes, claims, counterclaims or controversies arising in connection with any extension of or commitment set forth in this Agreement or in any other agreement entered by the parties in connection with this Agreement, and any action taken (or any omission to take any action) in connection with any of the foregoing. All Disputes shall be resolved by binding arbitration in accordance with Title 9 of the U.S. Code and the Commercial Arbitration Rules of the American Arbitration Association (“AAA”). Defenses based on statutes of limitation, estoppel, waiver, laches and similar doctrines, that would otherwise be applicable to an action brought by a party, shall be applicable in any such arbitration proceeding, and the commencement of an arbitration proceeding with respect to this Agreement shall be deemed the commencement of an action for such purposes.

(c) Whenever an arbitration is required under subsection (b), the arbitrators shall be selected, except as otherwise provided, in accordance with the Commercial Arbitration rules of the AAA. The panel of arbitrators shall determine the resolution of the Dispute.

(d) Whenever an arbitration is required under subsection (b), such arbitration shall be conducted in Montgomery, Alabama. The arbitrators shall apply the internal laws of the State of Alabama, without giving effect to any choice of law provision or rule that would cause the application of the laws of any other jurisdiction. Each party consents to the exclusive jurisdiction of the courts of the State of Alabama over any challenges to arbitration hereunder. The prevailing party may enforce an arbitration award in any court having jurisdiction over the matter and the parties hereto. For purposes of this Agreement, both parties expressly consent to the personal jurisdiction of

 

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the Alabama Circuit Court for the Fifteenth Judicial Circuit (Montgomery) and the United States District Court for the Middle District of Alabama and waive any defenses based on the lack of such jurisdiction.

(e) Any arbitration questions arising under this Agreement shall be governed in accordance with Title 9 of the U.S. Code. This Section constitutes the entire agreement of the parties with respect to its subject matter and supersedes all prior discussions, arrangements, negotiations and other communications on dispute resolutions. The provisions of this Section shall survive any termination, amendment or expiration of the Agreement in which this Section is contained, unless the parties otherwise expressly agree in writing. In the event of any Dispute governed by this Section, each of the parties shall pay all of its own expenses, and, subject to the award of the arbitrators, shall pay an equal share of the arbitrators’ fees. The arbitrators shall have the power to award recovery of all costs and fees (including attorneys’ fees, administrative fees, arbitrators’ fees and court costs) to the prevailing party or that party which substantially prevails. This Section may be amended, changed or modified only by the express provisions of a writing which specifically refers to this Section and which is signed by all the parties hereto.

11.2 Notice. Any notices, requests, demands, or other communications provided for by this Agreement shall be sufficient if in writing and if sent by registered or certified mail to the Executive at the last address he has filed in writing with the Company or, in the case of the Company, to an executive officer of the Company, at the Company’s principal offices.

ARTICLE 12

Miscellaneous

12.1 Definitions. For purposes of this Agreement, the following capitalized terms shall have the following respective meanings:

(a) “Board” means the Board of Directors of USB.

(b) “Bonus Opportunity” means the Bonus that the Executive would have earned under the Executive Incentive Plan for the fiscal year in which employment termination occurs. This amount shall be determined in good faith at the sole discretion of the Board. Wherever this Agreement provides for a payment based on the Bonus Opportunity, the Board, in setting the amount of the payment, shall presume that the Company’s performance for such fiscal year will satisfy or exceed the minimum threshold target(s) contained in the Executive Incentive Plan.

(c) “Cause” shall be determined by the Board in the exercise of good faith and reasonable judgment and shall be defined as:

(i) The conviction of the Executive for the commission of an act of fraud, embezzlement, theft or other criminal act constituting a felony under the generally enforceable laws of the State of Alabama;

 

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(ii) The gross neglect of the Executive in the performance of any or all material covenants under this Agreement, for reasons other than the Executive’s death, Disability or Retirement; or

(iii) Abuse of or addiction to intoxicating drugs (including alcohol).

(d) A “Change in Control” shall be deemed to have occurred as of the first day that any one or more of the following conditions have been satisfied:

(i) Any Person (other than those Persons in control of USB as of the Effective Date, or other than a trustee or other fiduciary holding securities under an employee benefit plan of the Company, or a corporation owned directly or indirectly by the stockholders of USB in substantially the same proportions as their ownership of stock of USB), who becomes the Beneficial Owner, directly or indirectly, of securities of USB or FUSB representing thirty percent (30%) or more of the combined voting power of USB’s or FUSB’s then outstanding securities; or

(ii) During any period of two (2) consecutive years (not including any period prior to the Effective Date), individuals who at the beginning of such period constitute the Board (and any new Director, whose election by USB’s stockholders was approved by a vote of at least two-thirds (2/3) of the Directors then still in office who either were Directors at the beginning of the period or whose election or nomination for election was so approved, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board) cease for any reason to constitute at least sixty percent (60%) thereof; or

(iii) The stockholders of USB and/or FUSB approve: (A) a plan of complete liquidation of USB or FUSB; or (B) an agreement for the sale or disposition of all or substantially all the assets of USB or FUSB; or (C) a merger, consolidation or reorganization of USB or FUSB with or involving any other corporation, other than a merger, consolidation or reorganization that would result in the voting securities of USB or FUSB, as the case may be, outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) greater than 50% of the combined voting power of the voting securities of USB or FUSB, as the case may be (or the surviving entity, or an entity which as a result of such transaction owns USB or FUSB, as the case may be, or all or substantially all of such Company’s assets either directly or through one or more subsidiaries) outstanding immediately after such merger, consolidation or reorganization.

 

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Provided, however, that in no event shall a Change in Control be deemed to have occurred, with respect to the Executive, if the Executive is part of a purchasing group which consummates the Change in Control transaction. The Executive shall be deemed “part of a purchasing group” for purposes of the preceding sentence if the Executive is an equity participant in the purchasing company or group (except for: (i) passive ownership of less than three percent (3%) of the stock of the purchasing company; or (ii) ownership of equity participation in the purchasing company or group which is otherwise not significant, as determined prior to the Change in Control by a majority of the non-employee Directors who were Directors prior to the transaction, and who continue as Directors following the transaction).

For purposes of this definition of Change in Control, the following terms have the following meanings:

“Beneficial Owner” shall have the meaning ascribed to such term in Rule 13d-3 of the General Rules and Regulations under the Securities Exchange Act of 1934, as amended (“Exchange Act”).

“Person” shall have the meaning ascribed to such term in Section 3(a)(9) of the Exchange Act and used in Sections 13(d) and 14(d) thereof, including a “group” as defined in Section 13(d).

(e) “Disability” means the total and permanent incapacity of the Executive, due to injury, illness, disease or bodily or mental infirmity, to engage in the performance of substantially all of the usual duties of employment with the Company as provided for in Article 2 hereof for more than six (6) consecutive calendar months, such Disability to be determined by the Board upon receipt and in reliance on competent medical advice from one or more individuals selected by the Executive who are qualified to provide such professional medical advice, and who are acceptable to the Board, which acceptance shall not be unreasonably withheld.

(f) “Executive Incentive Plan” means the incentive compensation program adopted by the Board of Directors of FUSB and/or USB and in effect as of the Effective Date, including all subsequent modifications thereto.

(g) “Good Reason” means, without the Executive’s express prior written consent, the occurrence of any one or more of the following:

(i) The assignment of the Executive to duties materially inconsistent with the Executive’s authorities, duties, responsibilities and status (including titles and reporting requirements) as an officer of the Company, or a material reduction or alteration in the nature

 

–16–


or status of the Executive’s authorities, duties or responsibilities from those in effect as of the Effective Date (or as subsequently increased), other than an insubstantial and inadvertent act that is remedied by the Company promptly after receipt of notice thereof given by the Executive; or

(ii) A material breach of this Agreement by the Company, or any successor thereto, that has remained uncured for thirty (30) days after notice to the Company.

(h) “Pro Rata” means the number of days elapsed prior to the Executive’s termination date as a percentage of the number of days in the fiscal year.

(i) “Retirement” means early or normal retirement, as defined under the then established rules of the Company’s retirement plan.

(j) “Window Period” means the 30 day period immediately following the first anniversary of a Change in Control.

12.2 Entire Agreement. This Agreement supersedes any prior agreements or understandings, oral or written, between the parties hereto, or between the Executive and the Company, with respect to the subject matter hereof, and constitutes the entire agreement of the parties with respect thereto. Without limiting the generality of the foregoing sentence, this Agreement completely replaces and supersedes the terms of the 1999 Agreement.

12.3 Modification. This Agreement shall not be varied, altered, modified, canceled, changed or in any way amended except by mutual agreement of the parties in a written instrument executed by the parties hereto or their legal representatives.

12.4 Severability. In the event that any provision or portion of this Agreement shall be determined to be invalid or unenforceable for any reason, the remaining provisions of this Agreement shall be unaffected thereby and shall remain in full force and effect.

12.5 Counterparts. This Agreement may be executed in one (1) or more counterparts, each of which shall be deemed to be an original, but all of which together will constitute one and the same Agreement.

12.6 Tax Withholding. The Company may withhold from any benefits payable under this Agreement all Federal, state, city or other taxes as may be required pursuant to any law or governmental regulation or ruling.

12.7 Beneficiaries. The Executive may designate one or more persons or entities as the primary and/or contingent beneficiaries of any amounts to be received under this Agreement. Such designation must be in the form of a signed writing acceptable to the Board or the Board’s designee. The Executive may make or change such designation at any time.

 

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12.8 Governing Law. To the extent not preempted by Federal law (including Title 9 of the U.S. Code), the provisions of this Agreement shall be construed and enforced in accordance with the laws of the State of Alabama.

IN WITNESS WHEREOF, the parties have executed this Agreement as of the Effective Date:

 

UNITED SECURITY BANCSHARES, INC.

By:

 

/s/ Hardie B. Kimbrough

Its:

 

Chairman of the Board of Directors

FIRST UNITED SECURITY BANK

By:

 

Hardie B. Kimbrough

Its:

 

Chairman of the Board of Directors

 

/s/ R. Terry Phillips

 

R. TERRY PHILLIPS

 

–18–

 

 

 

 

 

Exhibit 10.6A

FIRST AMENDMENT

TO THE

FIRST UNITED SECURITY BANK

SALARY CONTINUATION AGREEMENT

DATED SEPTEMBER 20, 2002

FOR

TERRY PHILLIPS

THIS FIRST AMENDMENT is adopted this 20th day of November, 2008, effective as of January 1, 2005, by and among United Security Bancshares, Inc., a Delaware corporation (“USB”), First United Security Bank, a state-chartered commercial bank located in Thomasville, Alabama (“FUSB”) (USB and FUSB collectively are referred to herein as the “Company”), and TERRY PHILLIPS (the “Executive”).

The Company and the Executive executed the First United Security Bank Salary Continuation Agreement on September 20, 2002, effective as of September 1, 2002 (the “Agreement”).

The undersigned hereby amend the Agreement for the purpose of bringing the Agreement into compliance with Section 409A of the Internal Revenue Code. Therefore, the following changes shall be made:

1. Section 1.8 of the Agreement shall be deleted in its entirety.

2. The following Section 1.11a shall be added to the Agreement immediately following Section 1.11:

 

 

1.11a

Specified Employee” means a key employee (as defined in Section 416(i) of the Code without regard to paragraph 5 thereof) of USB if any stock of USB is publicly traded on an established securities market or otherwise. A Specified Employee shall be specifically defined and determined in accordance with Section 409A of the Code and any and all Treasury regulations and guidance promulgated thereunder.

3. Section 1.13 of the Agreement shall be deleted in its entirety and replaced by the following:

1.13 “Termination of Employment” means the termination of the Executive’s employment with the Company for reasons other than death. Whether a Termination of Employment takes place is determined based on the facts and circumstances surrounding the termination of the Executive’s employment and whether the Company and the Executive reasonably anticipated that no further services would be performed after a certain date or that the level of bona fide services the Executive would perform after such date would permanently decrease to no more than twenty percent (20%) of the average level of bona fide services performed over the immediately preceding 36-month period (or the full period of services if the Executive has been providing services less than 36 months).

 

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Notwithstanding the foregoing, a determination of whether a Termination of Employment has occurred shall be made in accordance with Section 409A of the Code any and all Treasury regulations and guidance promulgated thereunder.

4. The following Section 1.13a shall be added to the Agreement immediately following Section 1.13:

 

 

1.13a

Unforeseeable Emergency” means a severe financial hardship to the Executive resulting from an illness or accident of the Executive, the Executive’s spouse, the Executive’s beneficiary, or the Executive’s dependent (as defined in Section 152 of the Code without regard to Section 152(b)(1), (b)(2) and (d)(1)(B)), loss of the Executive’s property due to casualty, or other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Executive as defined in Section 409A of the Code and any and all Treasury regulations and guidance promulgated thereunder.

5. The following Sections 2.5, 2.6 and 2.7 shall be added to the Agreement immediately following Section 2.4.2:

 

 

2.5

Restriction on Timing of Distributions. Notwithstanding any provision of the Agreement to the contrary, if the Executive is considered a Specified Employee at Termination of Employment under such procedures as established by USB in accordance with Section 409A of the Code, benefit distributions that are made upon Termination of Employment may not commence earlier than six (6) months after the date of such Termination of Employment. Therefore, in the event this Section 2.5 is applicable to the Executive, any distribution which would otherwise be paid to the Executive within the first six (6) months following the Termination of Employment shall be accumulated and paid to the Executive in a lump sum on the first day of the seventh month following the Termination of Employment. All subsequent distributions shall be paid in the manner specified.

 

 

2.6

Distributions Upon Income Inclusion Under Section 409A of the Code. Upon the inclusion of any amount in the Executive’s income as a result of the failure of the Agreement to comply with the requirements of Section 409A of the Code, to the extent such tax liability can be covered by the amount the Company has accrued with respect to the Company’s obligations hereunder, a distribution shall be made as soon as is administratively practicable following the discovery of such failure.

 

 

2.7

Change in Form or Timing of Distributions. All changes in the form or timing of distributions hereunder must comply with the following requirements. The changes:

 

 

(a)

may not accelerate the time or schedule of any distribution, except as provided in Section 409A of the Code and any and all Treasury regulations and guidance promulgated thereunder;

 

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(b)

must, for benefits distributable under Sections 2.2, 2.3 and 2.4, be made at least twelve (12) months prior to the first scheduled distribution;

 

 

(c)

must, for benefits distributable under Sections 2.1, 2.2, 2.3 and 2.4, delay the commencement of distributions for a minimum of five (5) years from the date the first distribution was originally scheduled to be made; and

 

 

(d)

must take effect not less than twelve (12) months after the election is made.

6. Article 7 of the Agreement shall be deleted in its entirety and replaced by the following:

Article 7

Amendments and Termination

 

 

7.1

Amendments. This Agreement may be amended only by a written agreement signed by the Company (and approved by the Board) and the Executive. However, the Company may amend this Agreement to conform with written directives to the Company from its auditors or banking regulators or to comply with legislative changes or tax law, including without limitation Section 409A of the Code and any and all Treasury regulations and guidance promulgated thereunder.

 

 

7.2

Plan Termination Generally. The Company and Executive may terminate this Agreement at any time. The benefits hereunder shall be the amount the Company has accrued with respect to the Company’s obligations hereunder, as of the date the Agreement is terminated. Except as provided in Section 7.3, the termination of this Agreement shall not cause a distribution of benefits under this Agreement. Rather, after such termination, benefit distributions will be made at the earliest distribution event permitted under Article 2 or Article 3.

 

 

7.3

Plan Terminations Under Section 409A of the Code. Notwithstanding anything to the contrary in Section 7.2, if this Agreement terminates and liquidates in the following circumstances, the Company will distribute the amount the Company has accrued with respect to the Company’s obligations hereunder, determined as of the date of the termination of the Agreement, to the Executive in a lump sum subject to the above terms:

 

 

(a)

The Company terminates and liquidates the Agreement within twelve (12) months of the Company’s dissolution or with the approval of a bankruptcy court provided that the amounts deferred under the Agreement are included in the Executive’s gross income in the latest of the following years (or, if earlier, the taxable year in which the amount is actually or constructively received): (i) the calendar year in which the Agreement terminates and liquidates; (ii) the first calendar year in which the amount is no longer subject to a substantial risk of forfeiture; or (iii) the first calendar year in which the distribution is administratively practicable;

 

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(b)

The Company terminates and liquidates the Agreement within thirty (30) days before or twelve (12) months after a change in the ownership or effective control of the Company, or in the ownership of a substantial portion of the assets of the Company as described in Section 409A(a)(2)(A)(v) of the Code, provided that all arrangements sponsored by the Company after the change in control event that are treated as having been deferred under a single plan (as determined in accordance with Section 409A of the Code and any and all Treasury regulations and guidance promulgated thereunder) are terminated and liquidated with respect to each participant who experienced a change in control event, so the Executive and all participants in such arrangements are required to receive all amounts of compensation deferred under the terminated arrangements within twelve (12) months of the termination and liquidation of the arrangements; or

 

 

(c)

The Company terminates and liquidates, in addition to the Agreement, all arrangements sponsored by the Company that would be aggregated with the Agreement (as determined in accordance with Section 409A of the Code and any and all Treasury regulations and guidance promulgated thereunder) if the Executive had deferrals of compensation under all of the arrangements, no payments in liquidation of the Agreement are made within twelve (12) months of the termination and liquidation but all payments are made within twenty-four (24) months of the termination and liquidation, the Company does not adopt any new arrangements that would be aggregated with the Agreement under Section 409A of the Code and any and all Treasury regulations and guidance promulgated thereunder if the Executive participated in such arrangements at any time within three (3) years following the date of such termination and liquidation, and the termination and liquidation does not occur proximate to a downturn in the financial health of the Company.

7. Section 8.11 of the Agreement shall be deleted in its entirety and replaced by the following:

 

 

8.11

Hardship Distribution. The Company may make a hardship distribution under the circumstances described in Section 8.11.1 below. Any such distribution shall require the adjustment described in Section 8.11.2 to any amounts to be paid under Sections 2.1, 2.2, 2.3 or 2.4 or Article 3.

 

 

8.11.1

Application for and Amount of Hardship Distribution. If an Unforeseeable Emergency occurs, the Executive may petition the Board to receive a distribution from the Agreement (a “Hardship Distribution”). The Board in its sole discretion may grant such petition. If granted, the Executive shall receive, within sixty (60) days, a Hardship Distribution

 

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from the Agreement only to the extent deemed reasonably necessary by the Board to remedy the Unforeseeable Emergency, plus an amount necessary to pay taxes or penalties reasonably anticipated to result from the distribution after taking into account the extent to which such Unforeseeable Emergency is or may be relieved through reimbursement or compensation from insurance or otherwise or by liquidation of the Executive’s assets (to the extent the liquidation would not itself cause severe financial hardship). In any event, the maximum amount which may be paid out pursuant to this Section 8.11 is the amount the Company has accrued with respect to the Company’s obligations hereunder, as of the day that the Executive petitioned the Board to receive a Hardship Distribution under this Section 8.11.

 

 

8.11.2

Benefit Adjustment. At the time of any Hardship Distribution, the amount the Company has accrued with respect to the Company’s obligations hereunder shall be reduced by the amount of the Hardship Distribution and the benefits to be paid under Sections 2.1, 2.2, 2.3 or 2.4 or Article 3 hereof shall reflect such reduced amount.

8. The following Section 8.13 shall be added to the Agreement immediately following Section 8.12.

 

 

8.13

Compliance with Section 409A. This Agreement shall at all times be administered and the provisions of this Agreement shall be interpreted consistent with the requirements of Section 409A of the Code and any and all Treasury regulations and guidance promulgated thereunder, including such regulations as may be promulgated after the Effective Date of this Agreement.

IN WITNESS OF THE ABOVE, the Company and the Executive hereby consent to this First Amendment.

 

Executive:

 

 

First United Security Bank

/s/ R. Terry Phillips

 

 

By:

 

/s/ Robert Steen

Terry Phillips

 

 

 

 

 

Title:

 

Executive Vice President

 

 

United Security Bancshares, Inc.

 

 

By:

 

/s/ Larry M. Sellers

 

 

 

 

 

Title:

 

Vice President

 

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