EX-10.21 3 d264441dex1021.htm EX-10.21 First United Security Bank DIRECTOR RETIREMENT AGREEMENT FIRST UNITED SECURITY BANK DIRECTOR RETIREMENT AGREEMENT
Exhibit 10.21
First United Security Bank |
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FIRST UNITED SECURITY BANK
THIS DIRECTOR RETIREMENT AGREEMENT (“Agreement”) is made and entered into this 17th day of November, 2011, between First United Security Bank, a bank located in Thomasville, Alabama (“FUSB”), United Security Bancshares, Inc. (“USB”) (FUSB and USB are collectively referred to herein as the “Company”), and Xxxxxx X. Xxxxxxx, Xx. (“Director”).
Article 1
The following tables describe the benefits available to the Director, or the Director’s Beneficiary, upon the occurrence of certain events. Capitalized terms have the meanings given them in Article 3.
Table A: Retirement Benefit
Distribution Event | Amount of Benefit | Form of Benefit | Timing of Benefit Distribution | |||
Normal Retirement Date* | $13,911 annually at age 70 ($12,000 beginning benefit increasing by 3% each Plan Year thereafter until Director’s Separation from Service or age 75, whichever comes first) | 12 Equal monthly installments | Payments begin: first day of the month following the Normal Retirement Date
Duration: 120 consecutive months |
Table B: Benefit Available Prior to Retirement
Distribution Event | Amount of Benefit | Form of Benefit | Timing of Benefit Distribution | |||
Early Termination* | Early Termination Annual Benefit (set forth in Schedule A, attached hereto) | 12 Equal monthly installments | Payments begin: First day of the month following Normal Retirement Age
Duration: 120 consecutive months | |||
Disability* | Disability Annual Benefit (as set forth in Schedule A, attached hereto) | 12 Equal monthly installments | Payments begin: First day of the month following Normal Retirement Age
Duration: 120 consecutive months | |||
Separation from Service following a Change of Control* | Change of Control Annual Benefit (as set forth in Schedule A, attached hereto) | 12 Equal monthly installments | Payments begin: First day of the month following Normal Retirement Age
Duration: 120 consecutive months |
Table C: Death Benefit
Distribution Event | Amount of Benefit | Form of Benefit | Timing of Benefit Distribution | |||
Death during active service* | Pre-Retirement Death Benefit (as set forth in Schedule A, attached hereto) | 12 Equal monthly installments | Payments begin: First day of the month following Director’s death
Duration: 120 consecutive months | |||
Death during installment payout of benefit under Table A or Table B | Remainder of unpaid benefits under the applicable Table A or Table B benefit, as if Director had survived | 12 Equal monthly installments | Payments begin: on same schedule as if Director had survived
Duration: remainder of benefit period under applicable Table A or Table B | |||
Death after Separation from Service but before benefit payments commence | 100% of applicable benefit earned under either Table A or Table B prior to Director’s death | 12 Equal monthly installments | Payments begin: First day of the month following Director’s death
Duration: 120 consecutive months |
* | The benefit paid is in lieu of any other benefit under this Agreement. |
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Article 2
The purpose of this Agreement is to further the growth and development of the Company by providing the Director with supplemental retirement income, and thereby encourage the Director’s productive efforts on behalf of the Company and the Company’s stockholders, and to align the interests of the Director and those stockholders. The Company promises to make certain payments to the Director, or the Director’s Beneficiary, at retirement, death, or upon some other qualifying event pursuant to the terms of this Agreement.
Article 3
It is intended that this Agreement comply and be construed in accordance with Section 409A of the Code and any and all Treasury regulations and guidance promulgated thereunder. It is also intended that this Agreement be “unfunded” and maintained for a select group of management or highly compensated employees of the Company, for purposes of the Employee Retirement Income Security Act of 1974, as amended, and not be construed to provide income to the Director or Beneficiary under Code prior to actual receipt of benefits.
Where the following words and phrases appear in this Agreement, they shall have the respective meanings set forth below, unless their context clearly indicates to the contrary:
3.1 | “Beneficiary” shall mean the person(s) designated by the Director, including the estate of the Director, entitled to a benefit under this Agreement, as further described in Article 4. |
3.2 | “Board” shall mean the Board of Directors of USB. |
3.3 | “Cause” shall mean: |
(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 Director’s service and resulting in an adverse effect on the Company. |
3.4 | 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: |
(a) | 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 |
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(b) | 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 |
(c) | 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 of Control be deemed to have occurred, with respect to the Director, if the Director is part of a purchasing group which consummates the Change of Control transaction. The Director shall be deemed “part of a purchasing group” for purposes of the preceding sentence if the Director 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).
3.5 | “Code” shall mean the Internal Revenue Code of 1986, as amended. |
3.6 | “Disability” shall mean, if Director is covered by a Company-sponsored disability policy, total disability as defined in such policy without regard to any waiting period. If the Director is not covered by such a policy, Disability means the Director suffering a sickness, accident or injury which, in the judgment of a physician who is satisfactory to the Company, prevents the |
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Director from performing substantially all of the Director’s normal duties for the Company. As a condition to receiving any Disability benefits, the Company may require the Director to submit to such physical or mental evaluations and tests as the Board deems appropriate. |
3.7 | “Early Termination” shall mean Separation from Service before Normal Retirement Age for reasons other than death, Disability, termination for Cause or Separation from Service following a Change of Control. |
3.8 | “Early Termination Date” shall mean the month, day and year in which Early Termination occurs. |
3.9 | “Effective Date” shall mean September 1, 2011. |
3.10 | “Normal Retirement Age” shall mean the Director’s Seventieth (70th) birthday. |
3.11 | “Normal Retirement Date” shall mean the later of Normal Retirement Age or Separation from Service. |
3.12 | “Plan Year” shall mean a twelve-month period commencing on September 1st and ending on the following August 31. The initial Plan Year shall commence on the Effective Date. |
3.13 | “Separation from Service” shall mean that the Director has retired or otherwise has a termination of service from the Company, which complies with the definition of “Separation from Service” under Section 409A of the Code and any and all Treasury regulations and guidance promulgated thereunder. |
3.14 | “Unforeseeable Emergency” shall mean, as defined under Section 409A of the Code and any and all Treasury regulations and guidance promulgated thereunder, a severe financial hardship to the Director resulting from an illness or accident of the Director, the Director’s spouse, the Director’s beneficiary, or the Director’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 Director’s property due to casualty (including the need to rebuild a home following damage to a home not otherwise covered by insurance, for example, not as a result of a natural disaster); or other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Director. |
Article 4
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Article 5
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 Director’s service is terminated for Cause. |
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Article 6
6.2 | Administration. The Company shall have powers which are necessary to administer this Agreement, including but not limited to: |
(a) | Interpreting the provisions of this Agreement; |
(b) | Establishing and revising the method of accounting for this Agreement; |
(c) | Maintaining a record of benefit payments; |
(d) | Establishing rules and prescribing any forms necessary or desirable to administer this Agreement; and |
(e) | performing any and all administrative duties under this Agreement. |
Article 7
7.1 | Claims Procedure. A Director or Beneficiary (“claimant”) who has not received benefits under this Agreement that he or she believes should be paid shall make a claim for such benefits as follows: |
7.1.1 | Initiation – Written Claim. The claimant initiates a claim by submitting to the Company a written claim for the benefits. |
(a) | The specific reasons for the denial; |
(b) | A reference to the specific provisions of this Agreement on which the denial is based; |
(c) | A description of any additional information or material necessary for the claimant to perfect the claim and an explanation of why it is needed; and |
(d) | An explanation of this Agreement’s review procedures and the time limits applicable to such procedures. |
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7.2 | 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, as follows: |
7.2.1 | Initiation – Written Request. To initiate the review, the claimant, within 60 days after receiving the Company’s notice of denial, must file with the Company a written request for review. |
(a) | The specific reasons for the denial; |
(b) | A reference to the specific provisions of this Agreement on which the denial is based; and |
(c) | 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 to the claimant’s claim for benefits. |
Article 8
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(1) | the subsequent deferral election may not take effect until at least twelve (12) months after the date on which the election is made; |
(2) | the payment (except in the case of death, disability, or unforeseeable emergency) upon which the subsequent deferral election is made is deferred for a period of not less than five (5) years from the date such payment would otherwise have been paid; and |
(3) | in the case of a payment made at a specified time, the election must be made not less than twelve (12) months before the date the payment is scheduled to be paid. |
Article 9
9.1 | Binding Effect. This Agreement shall bind the Director and the Company, and their beneficiaries, survivors, executors, successors, administrators and transferees. |
9.4 | Tax Withholding. The Company shall withhold any taxes that are required to be withheld from the benefits provided under this Agreement. |
9.5 | 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 the laws of the United States of America. |
9.6 |
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First United Security Bank DIRECTOR RETIREMENT AGREEMENT |
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Company may purchase a life insurance policy on the life of the Director, and such Director 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. Any life insurance on the Director’s life or other informal funding asset is a general asset of the Company to which the Director has no preferred or secured claim. |
9.9 | Headings. Article and section headings are for convenient reference only and shall not control or affect the meaning or construction of any of its provisions. |
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First United Security Bank DIRECTOR RETIREMENT AGREEMENT |
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9.13.2 | Plan Terminations Under Section 409A of the Code. Notwithstanding anything to the contrary in Section 8.2, 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 this Agreement, to the Director in a lump sum subject to the above terms: |
(a) | The Company terminates and liquidates this Agreement within twelve (12) months of the Company’s dissolution or with the approval of a bankruptcy court, provided that the amounts deferred under this Agreement are included in the Director’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 this 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; |
(b) | The Company terminates and liquidates this 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) are terminated and liquidated with respect to each participant who experienced a change in control event, so the Director 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 this Agreement, all arrangements sponsored by the Company that would be aggregated with this Agreement (as determined in accordance with Section 409A of the Code) if the Director had deferrals of compensation under all of the arrangements, no payments in liquidation of this 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 this Agreement under Section 409A of the Code if the Director 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. |
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DIRECTOR: | Company: | |||
First United Security Bank | ||||
/s/ Xxxxxx X. Xxxxxxx, Xx. | By | /s/ Xxxxxx X. Xxxxxxxxx | ||
Xxxxxx X. Xxxxxxx, Xx. | Title | Chairperson | ||
United Security Bancshares, Inc. | ||||
By | /s/ Xxxxxx X. Xxxxxxxxx | |||
Title | Chairperson |
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First United Security Bank DIRECTOR RETIREMENT AGREEMENT |
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BENEFICIARY DESIGNATION FORM
( ) | New Designation |
( ) | Change in Designation |
I, , designate the following as Beneficiary under the Agreement:
Primary:
| % | |
Name Relationship
| % | |
Name Relationship
| ||
Contingent:
| % | |
Name Relationship
| % | |
Name Relationship |
Notes:
• | Please PRINT CLEARLY or TYPE the names of the beneficiaries. |
• | To name a trust as Beneficiary, please provide the name of the trustee(s) and the exact name and date of the trust agreement. |
• | To name your estate as Beneficiary, please write “Estate of [your name]_”. |
• | Be aware that none of the contingent beneficiaries will receive anything unless ALL of the primary beneficiaries predecease you. |
I understand that I may change these beneficiary designations by delivering a new written designation to the Plan Administrator, which shall be effective only upon receipt and acknowledgment by the Plan Administrator prior to my death.
Name: |
| |||||||
Signature: |
| Date: |
Received by the Plan Administrator [Company] this day of , 2
By: |
| |
Title: |
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Director Retirement Plan | Plan Year Reporting | |||||||||||||||||||||||||||||||||||||||
Schedule A | ||||||||||||||||||||||||||||||||||||||||
Xxxxxx X. Xxxxxxx, Xx. | ||||||||||||||||||||||||||||||||||||||||
Birth Date: 11/20/1946 Plan Effective Date: 9/1/2011 Normal Retirement: 11/20/2016, Age 70 Normal Retirement Payment: Monthly for 10 Years | Early Termination Annual Benefit 3 Amount Payable at Normal Retirement Age | Disability Annual Benefit 3 Amount Payable at Normal Retirement Age | Change in Control Annual Benefit 3 Amount Payable at Normal Retirement Age | Pre-retire. Death Benefit Annual 3 Benefit | ||||||||||||||||||||||||||||||||||||
Discount | Benefit | Accrual | Based on | Based on | Based on | Based on | ||||||||||||||||||||||||||||||||||
Values | Rate | Level 2 | Balance | Vesting | Accrual | Vesting | Benefit | Vesting | Benefit | Benefit | ||||||||||||||||||||||||||||||
as of | (1) | (2) | (3) | (4) | (5) | (6) | (7) | (8) | (9) | (10) | ||||||||||||||||||||||||||||||
Aug 2012 1 | 6.00 | % | 12,360 | 16,240 | 100.00 | % | 2,776 | 100 | % | 12,360 | 100 | % | 13,911 | 13,911 | ||||||||||||||||||||||||||
Aug 2013 | 6.00 | % | 12,731 | 34,110 | 100.00 | % | 5,493 | 100 | % | 12,731 | 100 | % | 13,911 | 13,911 | ||||||||||||||||||||||||||
Aug 2014 | 6.00 | % | 13,113 | 53,973 | 100.00 | % | 8,186 | 100 | % | 13,113 | 100 | % | 13,911 | 13,911 | ||||||||||||||||||||||||||
Aug 2015 | 6.00 | % | 13,506 | 76,479 | 100.00 | % | 10,926 | 100 | % | 13,506 | 100 | % | 13,911 | 13,911 | ||||||||||||||||||||||||||
Aug 2016 | 6.00 | % | 13,911 | 103,383 | 100.00 | % | 13,911 | 100 | % | 13,911 | 100 | % | 13,911 | 13,911 | ||||||||||||||||||||||||||
Starting September 1, 2016, only interest is accrued | ||||||||||||||||||||||||||||||||||||||||
Nov 2016 | 6.00 | % | 13,911 | 104,942 | 100.00 | % | 13,911 | 100 | % | 13,911 | 100 | % | 13,911 | 13,911 |
November 20, 2016 Retirement; December 1, 2016 First Payment Date
1 | The first line reflects 12 months of data, September 2011 to August 2012. |
2 | The benefit amount is based on a $12,000 beginning benefit, inflating at 3% each year to $13,911 at normal retirement. |
3 | The annual benefit amount will be distributed in 12 equal monthly payments for a total of 120 monthly payments. |
* | IF THERE IS A CONFLICT IN ANY TERMS OR PROVISIONS BETWEEN THIS SCHEDULE A AND THE AGREEMENT, THE TERMS AND PROVISIONS OF THE AGREEMENT SHALL PREVAIL. IF A TRIGGERING EVENT OCCURS, REFER TO THE AGREEMENT TO DETERMINE THE ACTUAL BENEFIT AMOUNT BASED ON THE DATE OF THE EVENT. |