CHANGE IN CONTROL AGREEMENT
Exhibit
10.6
This
Agreement (“Agreement”) is made and entered into as of the 16th day of January,
2008 between United Security Bancshares (“Bancshares”), and Xxxxx Xxxxxxxxx, an
individual residing in the state of California (hereinafter referred to as
“Executive”).
WITNESSETH:
WHEREAS,
it is in the best interests of Bancshares and the Executive for Bancshares
to
provide Executive with severance compensation in the event there is a change
in
control of Bancshares or its wholly-owned subsidiary United Security Bank
(“Bank”).
NOW,
THEREFORE, in consideration of the premises and of the mutual covenants and
conditions herein contained, the parties hereto, intending to be legally bound,
do hereby agree as follows:
1. SEVERANCE
PAYMENT
In
the
event of a Change of Control as defined herein, Executive shall be paid a
severance amount (“Severance Payment”) equal to the sum of (i) twelve months of
Executive’s base salary that is in effect at the time immediately preceding the
Change in Control and (ii) the amount of the bonus paid to Executive by
Bancshares for the preceding calendar year. Such lump sum payment shall be
paid
to Executive within 10 days of the time of the consummation of the Change in
Control.
Bancshares
and the Executive acknowledge that there may limitations on the deductibility
by
Bancshares for the Severance Payment made to Executive for federal income tax
purposes under section 280G of the Internal Revenue Code of 1986, as amended
(“Code”), and regulations promulgated thereunder. Notwithstanding anything to
the contrary, the Severance Payment set forth in the prior paragraph of this
Section 1 shall be limited to such amount that results in the greatest amount
of
the Severance Payment that is deductible by Bancshares for federal income tax
purposes after taking into account all other compensation payments to or for
the
benefit of the Executive that are included in determining the deductibility
of
such payments under Section 280G of the Code and regulations promulgated
thereunder. In the event that prior to the application of the first paragraph
of
this Section 1, all other compensation payments to or for the benefit of
Employee results in the limitation of the deductibility of such payments under
Section 280G or any successor to Section 280G of the Code, then no payment
shall
be made pursuant this Agreement.
This
Agreement shall not be terminated by the voluntary or involuntary dissolution
of
Bancshares or the Bank, however in the event proceedings for liquidation of
Bank
are commenced by regulatory authorities, this Agreement and all rights and
benefits hereunder shall terminate.
For
purposes of this Agreement, a change in control (“Change in Control”) shall mean
the earliest occurrence of one of the following events:
A. A
Change In Ownership of Bancshares or the Bank.
A
change
in ownership of Bancshares or the Bank occurs on the date that any person (or
group of persons) acquires ownership of stock of Bancshares or the Bank that,
together with stock held by such person or group, constitutes more than fifty
percent (50%) of the total fair market value or total voting power of the stock
of Bancshares or the Bank, respectively.
B. A
Change in Effective Control of Bancshares or the Bank.
A
change
in effective control of Bancshares or the Bank occurs on the date that:
1. Any
person (or group of persons) acquires (or has acquired during the twelve (12)
month period ending on the date of the most recent acquisition by such person
or
persons) ownership of stock of Bancshares or the Bank possessing thirty-five
percent (35%) or more of the total voting power of the stock of Bancshares
or
the Bank, respectively; or
2. A
majority of members of Bancshares’ or Bank’s Board is replaced during any twelve
(12) month period by directors whose appointment or election is not endorsed
by
a majority of the members of Bancshares’ or the Bank’s Board, respectively prior
to the date of the appointment or election.
C. A
Change in Ownership of a Substantial Portion of Bancshares’ or the Bank’s
Assets.
A
change
in the ownership of a substantial portion of Bancshares' or the Bank’s assets
occurs on the date that any person (or group of persons) acquires (or has
acquired during the twelve (12) month period ending on the date of the most
recent acquisition by such person or persons) assets from Bancshares or the
Bank, respectively that have a total gross fair market value equal to, or more
than, forty percent (40%) of the total gross fair market value of all of the
assets of Bancshares or the Bank, respectively immediately prior to such
acquisition or acquisitions.
For
the
purpose of this Agreement, transfers of the outstanding voting securities of
Bancshares or the Bank made on account of deaths or gifts, transfers between
family members, former spouses or transfers to a qualified retirement plan
maintained by the Bancshares or the Bank shall not be considered in determining
whether there has been a Change in Control.
2. TERM
OF
AGREEMENT
This
Agreement shall be for a term of five (5) years from the date first above stated
("Termination Date"). Such Termination Date may be amended or extended by
written agreement of the parties. This Agreement shall apply to any Change
in
Control that is (i) consummated prior to the Termination Date provided that
Executive is employed by Bank at the date of public announcement of the Change
of Control or (ii) consummated at any time within one (1) year after the
Termination Date, in the event Executive's employment is terminated without
cause by Bancshares or the Bank prior to the Termination Date and such
termination is within twelve (12) months prior to the date of consummation
of a
Change in Control that was announced within six (6) months before or after
the
date of Executive's termination of employment with Bancshares or the
Bank.
3. APPLICABLE
LAW
This
Agreement is made and entered into in the State of California and the laws
of
the State of California shall govern the validity and interpretation hereof,
and
the performance of the parties hereto and their respective duties and
obligations hereunder, except to the extent that the provisions of federal
law
supersede California law.
4. ENTIRE
AGREEMENT
This
Agreement contains the entire agreement of the parties and it supersedes any
and
all other agreements, either oral or in writing, between Executive and
Bancshares or the Bank. Each party to this Agreement acknowledges that no
representations, inducements, promises, or agreements, oral or otherwise, have
been made by any party, or anyone acting on behalf of any party, which are
not
embodied herein, and that no other agreement, statement, or promise not
contained in this Agreement shall be valid or binding. This Agreement may not
be
modified or amended by oral agreement, but only by an agreement in writing
signed by Bancshares and Executive.
5. SECTION
409A OF THE CODE
This
Agreement shall at all times be administered in compliance with the requirements
of §409A of the Code and any and all regulations thereunder, including such
regulations as may be promulgated after the effective date of this Agreement.
6. UNFUNDED
AGREEMENT FOR ERISA PURPOSES. This Agreement shall be unfunded for tax purposes
and for purposes of Title I of the Employee Retirement Income Security Act
of
1974 (“ERISA”), as amended from time to time.
IN
WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day
and
year first above written.
| UNITED SECURITY BANCSHARES | ||
| |
|
|
| By: | /s/ Xxxxxx X. Xxxxx | |
|
Xxxxxx X. Xxxxx, Chairman |
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| EXECUTIVE | ||
| |
|
|
| /s/ Xxxxx X. Xxxxxxxxx | ||
|
Xxxxx Xxxxxxxxx |
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