exv10w12



 








Exhibit 10.12




FIRST AMENDMENT


TO


SUPPLEMENTAL COMPENSATION AND AMENDMENT AGREEMENT





     THIS FIRST AMENDMENT is adopted this 12th day of December, 2007, effective as of January 1,
2008, by and between United Bancorporation of Alabama, Inc., located in Atmore, Alabama (the
“Bank”), and Robert R. Jones, III (“Jones”).



     The Bank and Jones executed the Supplemental Compensation and Amendment Agreement effective as
of January 1, 2001 (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:



     Section 3.1.1 of the Agreement shall be deleted in its entirety and replaced by the following:




	3.1.1	 	“Change of Control” means a change in the ownership or effective control of the Bank, or in
the ownership of a substantial portion of the assets of the Bank, as such change is defined in
Code Section 409A and regulations thereunder.





     The following Sections 3.1.3a and 3.1.3b shall be added to the Agreement immediately following
Section 3.1.3:




			
	3.1.3a	 	“Early Retirement” means Jones’ Termination of Employment after Early Retirement Age and
before Normal Retirement Age.






			
	3.1.3b	 	“Early Retirement Age” means Jones attaining age sixty (60).





     Section 3.1.8 of the Agreement shall be deleted in its entirety and replaced by the following:




	3.1.8	 	“Normal Retirement Age” means Jones attaining age sixty (65).





     The following Section 3.1.11a shall be added to the Agreement immediately following Section
3.1.11:




			
	3.1.11a	 	“Specified Employee” means a key employee (as defined in Section 416(i) of the Code without
regard to paragraph 5 thereof) of the Bank if any stock of the Bank is publicly traded on an
established securities market or otherwise, as determined by the plan administrator based on
the twelve (12) month period ending each December 31 (the “identification period”). If Jones
is determined to be a Specified Employee for an





 









 









	 	 	identification period, Jones shall be treated as a Specified Employee for purposes of this
Agreement during the twelve (12) month period that begins on the first day of the fourth
month following the close of the identification period.





     Section 3.1.12 of the Agreement shall be deleted in its entirety and replaced by the
following:




	3.1.12	 	Termination of Employment means termination of the Jones’s employment with the Bank
for reasons other than death. Whether a Termination of Employment has occurred is determined
in accordance with the requirements of Code Section 409A based on whether the facts and
circumstances indicate that the Bank and Jones reasonably anticipated that no further services
would be performed after a certain date or that the level of bona fide services the Jones
would perform after such date (whether as an employee or as an independent contractor) would
permanently decrease to no more than twenty percent (20%) of the average level of bona fide
services performed (whether as an employee or an independent contractor) over the immediately
preceding thirty-six (36) month period (or the full period of services to the Bank if the
Jones has been providing services to the Bank less than thirty-six (36) months).





     Section 3.2.1.2 of the Agreement shall be deleted in its entirety and replaced by the
following:




	3.2.1.2	 	Payment of Benefit. The Bank shall pay the Normal Retirement Benefit to Jones in twelve
(12) equal monthly installments payable on the first day of each month commencing with the
month following Normal Retirement Age. The Normal Retirement Benefit each year shall be paid
to Jones each year for twenty (20) years.





     Sections 3.2.4, 3.2.4.1 and 3.2.4.2 of the Agreement shall be deleted in their entirety and
replaced by the following:




	3.2.4	 	Change of Control Benefit . If a Change of Control occurs, followed within
twenty-four (24) months by Jones’s Termination of Employment, the Bank shall pay to Jones the
benefit described in this Section 3.2.4 in lieu of any other benefit under this Agreement.






	 	3.2.4.1	 	Amount of Benefit. The Change of Control Benefit shall be the present value of the
twenty (20) year stream of payments of the Normal Retirement Benefit discounted back to
the date Termination of Employment occurs using a five percent (5%) discount factor.
	 
	 	3.2.4.2	 	Payment of Benefit. The Bank shall pay the Change of Control Benefit amount to Jones
in a lump sum within sixty (60) days following Termination of Employment.





     The following Sections 3.2.5, 3.2.5.1 and 3.2.5.2 shall be added to the Agreement immediately
following Section 3.2.4.2:



2









 









	3.2.5	 	Early Retirement Benefit . Upon Termination of Employment after attaining Early
Retirement Age, the Bank shall pay to Jones the benefit described in this Section 3.2.5 in
lieu of any other benefit under this Agreement.






	 	3.2.5.1	 	Amount of Benefit. The benefit under this Section 3.2.5 is one hundred percent
(100%) of the Normal Retirement Benefit amount described in Section 3.2.1
	 
	 	3.2.5.2	 	Payment of Benefit. The Bank shall pay the annual benefit to Jones in twelve (12)
equal monthly installments commencing on the first day of the month following Normal
Retirement Age. The annual benefit shall be distributed to Jones for twenty (20)
years.





     The following Sections 3.2.6, 3.2.7 and 3.2.8 shall be added to the Agreement immediately
following Section 3.2.5.2:




	3.2.6	 	Restriction on Timing of Distributions . Notwithstanding any provision of this
Agreement to the contrary, if Jones is considered a Specified Employee at Termination of
Employment, the provisions of this Section 3.2.6 shall govern all distributions hereunder.
Benefit distributions that are made due to a Termination of Employment occurring while Jones
is a Specified Employee shall not be made during the first six (6) months following
Termination of Employment. Rather, any distribution which would otherwise be paid to Jones
during such period shall be accumulated and paid to Jones 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.
	 
	3.2.7	 	Distributions Upon Income Inclusion Under Section 409A of the Code . If any amount
is required to be included in income by Jones prior to receipt due to a failure of this
Agreement to meet the requirements of Code Section 409A, Jones may petition the plan
administrator for a distribution of that portion of the amount the Bank has accrued with
respect to the Bank’s obligations hereunder that is required to be included in Jones’ income.
Upon the grant of such a petition, which grant shall not be unreasonably withheld, the Bank
shall distribute to Jones immediately available funds in an amount equal to the portion of the
amount the Bank has accrued with respect to the Bank’s obligations hereunder required to be
included in income as a result of the failure of this Agreement to meet the requirements of
Code Section 409A, within ninety (90) days of the date when Jones’ petition is granted. Such
a distribution shall affect and reduce Jones’ benefits to be paid under this Agreement.
	 
	3.2.8	 	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 Code Section 409A and the regulations thereunder;
	 
	 	(b)	 	must, for benefits distributable under Sections 3.2.1, 3.2.2,
3.2.3 and 3.2.5, be made at least twelve (12) months prior to the first
scheduled distribution;
	 
	 	(c)	 	must, for benefits distributable under Sections 3.2.1, 3.2.2,
3.2.3, 3.2.4 and





3









 









	 	 	 	3.2.5, 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.





     Section 3.7.1 of the Agreement shall be deleted in its entirety and replaced by the following:




	3.7.1	 	Amendments. This Agreement may be amended only by a written agreement signed by the
Bank and Jones. However, the Bank may unilaterally amend this Agreement to conform with
written directives to the Bank 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.





     The following Sections 3.7.4 and 3.7.5 shall be added to the Agreement immediately following
Section 3.7.3:




	3.7.4	 	Plan Termination Generally. This Agreement may be terminated only by a written
agreement signed by the Bank and Jones. The benefit hereunder shall be the amount the Bank
has accrued with respect to the Bank’s obligations hereunder as of the date the Agreement is
terminated. Except as provided in Section 3.7.5, 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.






	3.7.5	 	Plan Terminations Under Section 409A. Notwithstanding anything to the contrary in
Section 3.7.4, if this Agreement terminates in the following circumstances:






	 	(a)	 	Within thirty (30) days before or twelve (12) months after a Change of Control,
provided that all distributions are made no later than twelve (12) months following
such termination of the Agreement and further provided that all the Bank’s arrangements
which are substantially similar to the Agreement are terminated so Jones and all
participants in the similar arrangements are required to receive all amounts of
compensation deferred under the terminated arrangements within twelve (12) months of
the such terminations;
	 
	 	(b)	 	Upon the Bank’s dissolution or with the approval of a bankruptcy court provided
that the amounts deferred under the Agreement are included in Jones’ gross income in
the latest of (i) the calendar year in which the Agreement terminates; (ii) the
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 practical; or
	 
	 	(c)	 	Upon the Bank’s termination of this and all other arrangements that would be
aggregated with this Agreement pursuant to Treasury Regulations Section 1.409A-1(c) if
Jones participated in such arrangements (“Similar Arrangements”), provided that (i) the
termination and liquidation does not occur proximate to a downturn in the financial
health of the Bank, (ii) all termination distributions are





4









 









	 	 	 	made no earlier than twelve (12) months and no later than twenty-four (24) months
following such termination, and (iii) the Bank does not adopt any new arrangement
that would be a Similar Arrangement for a minimum of three (3) years following the
date the Bank takes all necessary action to irrevocably terminate and liquidate the
Agreement;






	 	 	the Bank may distribute the amount the Bank has accrued with respect to the Bank’s
obligations hereunder, determined as of the date of the termination of the Agreement, to
Jones in a lump sum subject to the above terms.





     The following Section 3.8.11 shall be added to the Agreement immediately following Section
3.8.10:




	3.8.11	 	Compliance with Code Section 409A . This Agreement shall be interpreted and
administered consistent with Code Section 409A.





     IN WITNESS OF THE ABOVE, the Bank and Jones hereby consent to this First Amendment.



	 	 	 	 	 
	 	United Bancorporation of Alabama, Inc.

 	 
	 	By:  	                 /s/ William J. Justice
 	 
	 	 	Name:  	Print William J. Justice 	 
	 	 	As Its:            Chairman 	 
	 



	 	 	 	 	 
	 	Executive

 	 
	 	/s/ Robert R. Jones, III
 	 
	 	Robert R. Jones, III 	 
	 	 	 
	 




5