**Exhibit 10(e)**

 

**AGREEMENT**

 

THIS AGREEMENT is made effective as of April 17, 2003 by and between PROVIDENT COMMUNITY BANK (the”Bank”); UNION FINANCIAL BANCSHARES, INC. (the“Company”); and Lud W. Vaughn (“Executive”). 

 

WHEREAS, Executive serves in the position of Executive Vice President and Chief Credit Officer of the Bank, a position of substantial responsibility; and 

 

WHEREAS, the Bank recognizes the substantial contribution Executive has made to the Bank and wishes to protect her positiontherewith for the period provided for in this Agreement. 

 

NOW,THEREFORE, in consideration of the foregoing and upon the other terms and conditions hereinafter provided, the parties hereto agree as follows: 

 

1.**    Term of Agreement**

 

a.)  The term of this Agreement shall be (i) the period commencing on April 17, 2003 (the “Effective Date”) and continuing for aperiod of twelve months thereafter; plus (ii) any and all extensions of the term made pursuant to this Section 1. 

 

b.)  Commencing on the Effective Date and on each day thereafter, the term under this agreement shall be renewed automatically for an additionalone (1)day period beyond the then effective expiration date without action by any party, provided that neither the Company, on the one hand, nor Executive, on the other, shall have given at least sixty (60) days written notice of its or her desirethat the term not be renewed. In the case such notice is given by one party to the other, the term of this Agreement shall become fixed and shall end on the second anniversary of the date of written notice. 

 

2.**    Payments to Executive Upon a Change in Control.**

 

a.)  Upon the occurrence of a Change in Control (as hereindefined) followed within twenty-four (24) months of the effective date of a Change in Control by the voluntary or involuntary termination of Executive’s employment, other than Termination for Cause, as defined in Section 2(c) hereof, theprovisions of Section 3 shall apply. For purposes of this Agreement, “voluntary termination” shall be limited to the circumstances in which, during the term of this Agreement, Executive elects to voluntarily terminate her employment withintwelve (12) months of the effective date of a Change in Control following any demotion, loss of title, office of significant authority, reduction in her annual compensation or benefits (other than a reduction affecting the Bank’s personnelgenerally), or relocation of her principal place of employment by more than thirty-five (35)miles from its location immediately prior to the Change in Control. 

 

b.)  A “Change in Control” of the Company of the Bank shall be deemed to occur if and when (a) an offeror other than the Companypurchases shares of the common stock of the Company or the Bank pursuant to a tender or exchange offer for such shares, (b) any person (as such term is used in Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934) is or becomes thebeneficial owner, directly or indirectly, of securities of the Company or the Bank representing 25% or more of the combined voting power of the Company’s then outstanding securities, (c) the membership of the board of directors of 

the Company or the Bank changes as the result of a contested election, such that individuals who were directors at thebeginning of any twenty-four (24) month period (whether commencing before or after the date of adoption of this Agreement) do not constitute a majority of the Board at the end of such period, or (d) shareholders of the Company or the Bank approve amerger, consolidation, sale of disposition of all or substantially all of the Company’s or the Bank’s assets, or a plan of partial or complete liquidation. 

 

c.)  Executive shall not have the right to receive termination benefits pursuant to Section 3 hereof uponTermination for Cause. The term “Termination for Cause” shall mean termination because of Executive’s intentional failure to perform stated duties, personal dishonesty, incompetence, willful misconduct, any breach of fiduciary dutyinvolving personal profit, willful violation of any law, rule regulation (other than traffic violations or similar offenses) or final cease and desist order, or any material breach of any material provision of this Agreement. In determiningincompetence, the acts or omissions shall be measured against standards generally prevailing in the savings institution industry. Notwithstanding the foregoing, Executive shall not be deemed to have been Terminated for Cause unless and until thereshall have been delivered to him a copy of a resolution duly adopted by the affirmative vote of not less than three-fourths (3/4) of the members of the Board at a meeting of the Board called and held for that purpose (after reasonable notice toExecutive and an opportunity for him, together with counsel, to be heard before the Board), finding that in the good faith opinion of the Board, Executive was guilty of conduct justifying Termination for Cause and specifying the particulars thereofin detail. Executive shall not have the right to receive compensation or other benefits for any period after Termination for Cause. 

 

3.**    Termination**

 

a.)  Upon the occurrence of a Change in Control, followed within twelve (12) months of the effective date of a Change in Control by thevoluntary or involuntary termination of Executive’s employment other than for Termination for Cause, the Bank shall be obligated to pay Executive, or in the event of her subsequent death, her beneficiary or beneficiaries, or her estate, as thecase may be, as severance pay, a sum equal to one (1) times Executive’s base salary as in effect on the effective date of a Change in Control. Such amount shall be paid to Executive in a lump sum no later than thirty (30) days after the date ofher termination. 

 

b.)  Upon the occurrence of aChange in Control of the Bank followed within twelve (12) months of the effective date of a Change in Control by Executive’s voluntary or involuntary termination of employment, other than for Termination for Cause, the Bank shall cause to becontinued life, medical, dental and disability coverage substantially identical to the coverage maintained by the Bank for Executive prior to her severance. Such coverage and payments shall cease upon expiration of twelve (12) months from the dateof Executive’s termination. 

 

c.)  Notwithstanding the preceding paragraphs of this Section 3, in the event that the aggregate payments or benefits to be made or afforded to Executive under this Section would be deemed to include an “excess parachutepayment” under Section 280G of the Code, such payments or benefits shall be payable or provided to Executive in equal monthly installments over the minimum period necessary to reduce the present value of 

 

 

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such payments or benefits to an amount which is one dollar ($1.00) less than three (3) times Executive’s “baseamount” as defined under Section 280G of the Code. 

 

d.)  Any payments made to Executive pursuant to this Agreement, or otherwise, are subject to and conditioned upon compliance with 12 U.S.C. §1828(k) and any regulations promulgated thereunder. 

 

4.    **Effect on Prior Agreements and Existing Benefit Plans**

 

This Agreement contains the entire understanding between theparties hereto and supersedes any prior agreement between the Bank and Executive, except that this Agreement shall not affect or operate to reduce any benefit or compensation inuring to Executive of a kind elsewhere provided. No provision of thisAgreement shall be interpreted to mean that Executive is subject to receiving fewer benefits than those available to him without reference to this Agreement. 

 

5.    **No Attachment**

 

a.)  Except required by law, no right to receive payments under this Agreement shall be subject to anticipation, commutation, alienation, sale,assignment, encumbrance, charge, pledge, or hypothecation, or to execution, attachment, levy, or similar process or assignment by operation of law, and any attempt, voluntary or involuntary, to affect any such action shall be null, void and of noeffect. 

 

b.)  This Agreement shall be binding upon,and inure to the benefit of, Executive, the Company, the Bank and their respective successors and assigns. 

 

6.    **Modification and Waiver**

 

a.)  This Agreement may not be modified or amended except by an instrument in writing signed by the parties hereto. 

 

b.)  No term or condition of this Agreement shall be deemed to have been waived, nor shall there be an estoppel against the enforcement of anyprovision of this Agreement, except by written instrument of the party charged with such waiver or estoppel. No such written waiver shall be deemed a continuing waiver unless specifically stated therein, and each such waiver shall operate only as tothe specific term or condition waived and shall not constitute a waiver of such term or condition for the future or as to any act other than that specifically waived. 

 

7.    **Required Provisions**

 

a.)  The Bank may terminate Executive’s employment at any time, but any termination by the Bank, other thanTermination for Cause, shall not prejudice Executive’s right to compensation or other benefits under this Agreement. Executive shall not have the right to receive compensation or other benefits for any period after Termination for Cause asdefined in Section 2(c) herein. 

 

b.)  If Executive issuspended and/or temporarily prohibited from participating in the conduct of the Bank’s affairs by a notice served under Section 8(e)(3) or (g)(1) of the 

 

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Federal Deposit Insurance Act (“FDIA”) (12 U.S.C. 1818(e)(3) and (g)(1)), the Bank’sobligations under the Agreement shall be suspended as of the date of service, unless stayed by appropriate proceedings. If the charges in the notice are dismissed, the Bank may, in its discretion, (i) pay Executive all or part of the compensationwithheld while its contract obligations were suspended and (ii) reinstate (in whole or in part) any of its obligations that were suspended. 

 

c.)  If Executive is removed and/or permanently prohibited from participating in the conduct of the Bank’s affairs by an order issued underSection 8(e)(4) or (g)(1) of the FDIA (12 U.S.C. 1818(e)(4) or (g)(1)), all obligations of the Bank under the Agreement shall terminate as of the effective date of the order, but vested rights of the contracting parties shall not be affected.

 

d.)  If the Bank is in default (as defined inSection 3(x)(1) of the FDIA), all obligations under this Agreement shall terminate as of the date of default, but this paragraph shall not affect any vested rights of the parties. 

 

e.)  All obligations under this Agreement may be terminated:, (I)by the Director of the Office of ThriftSupervision (the”Director”) or his or her designee at the time the Federal Deposit Insurance Corporation or the Resolution Trust Corporation enters into an agreement to provide assistance to or on behalf of the Bank under the authoritycontained in Section 13(c) of the FDIA and (ii) by the Directors, or his or her designee at the time the Director or such designee approves a supervisory merger to resolve problems related to operation of the Bank or when the Bank is determined bythe Director to be in an unsafe or unsound condition. Any rights of the parties that have already vested, however, shall not ve affected by such action. 

 

8.    **Severability**

 

If, for any reason, any provision of this Agreement, or any part of any provision, is held invalid, such invalidity shall not affect any other provisionof this Agreement or any part of such provision not held so invalid, and each such other provision and part thereof shall to the full extent consistent with law continue in full force and effect. 

 

9.    **Headings for Reference Only**

 

The headings of sections and paragraphs herein are included solely forconvenience of reference and shall not control the meaning or interpretation of any of the provisions of this Agreement. 

 

10.    **Governing Law**

 

The validity, interpretation, performance, and enforcement of this Agreement shall be governed by the laws of the State of South Carolina, unlesspreempted by Federal law as now or hereafter in effect. 

 

Anydispute or controversy arising under or in connection with this Agreement shall be settled exclusively by arbitration, conducted before a panel of three arbitrators sitting in a location selected by the employee within fifty (50) miles from thelocation of the Bank, in accordance with the rules of the American Arbitration Association then in effect. 

 

 

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11.    **Source of Payments**

 

All payments provided in this Agreement shall be timely paid in cash or check from the general funds of the Bank. TheCompany, however, guarantees all payments and the provision of all amounts and benefits due hereunder to Executive and, if such payments are not timely paid or provided by the Bank, such amounts and benefits shall be paid or provided by the Company.

 

12.    **Payment of Legal Fees**

 

All reasonable legal fees paid or incurred by Executive pursuant to anydispute or question of interpretation of this Agreement shall be paid or reimbursed by the Bank if Executive is successful on the merits pursuant to a legal judgement, arbitration or settlement. 

 

13.    **Successor to the Bank or the Company**

 

The Bank and the Company shall require any successor or assignee, whetherdirect or indirect, by purchase, merger, consolidation or otherwise, to all or substantially all of the business or assets of the Bank or the Company, expressly and unconditionally to assume and agree to perform the Bank’s or the Company’sobligations under this Agreement, in the same manner and to the same extent that the Bank or the Company would be required to perform if no such succession or assignment had taken place. 

 

14.    **Signatures**

 

IN WITNESS WHEREOF, the Bank and the Company have caused this Agreement to be executed by a duly authorized officer, and Executive has signed thisAgreement, all on the day and date first above written. 

 

ATTEST:
   
PROVIDENT COMMUNITY BANK

 

/s/ Wanda J. Wells
   
By:
 
 

/s/ Dwight V. Neese
        Dwight V. Neese
ATTEST:
   UNION FINANCIAL BANCSHARES, INC.
 

/s/ Wanda J. Wells
   
By:
 
 

/s/ Dwight V. Neese
        Dwight V. Neese
WITNESS:
     EXECUTIVE
 

/s/ Helaine M. Cody
   
By:
 
 

/s/ Lud W. Vaughn
        Lud W. Vaughn
 

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