Document:

Document

Exhibit 10.13

EXECUTIVE SALARY CONTINUATION AGREEMENT

This Executive Salary Continuation Agreement (this "Agreement") is entered into by and between United Security Bank, a California banking corporation (the "Employer") and Robert Oberg, an individual residing in the State of California  (the "Officer") as of October 27, 2020, with reference to the following: 

RECITALS

WHEREAS,  the Employer recognizes the valuable services the Officer has performed  for the Employer and wishes to encourage the Executive's continued employment and to provide the Officer with additional incentive to achieve corporate objectives;

WHEREAS, the Employer wishes to provide the terms and conditions upon which the Employer shall pay additional retirement benefits to the Officer;

WHEREAS, the Employer and the Officer intend this Agreement shall at all times be administered and interpreted in compliance with Code section 409A; and

WHEREAS, the Employer intends this Agreement shall at all times be administered and interpreted in such a manner as to constitute an unfunded nonqualified deferred compensation arrangement, maintained primarily to provide supplemental retirement benefits for the Officer, a member of a select group of management or highly compensated employees of the Employer;

NOW, THEREFORE, in consideration of the services to be performed in the future, as well as the mutual promises and covenants contained herein, the Officer and the Employer agree as follows:

AGREEMENT

1.Terms and Definitions.

1.1     Accrued  Liability. The term "Accrued Liability" means, as of any particular  date, the actuarial then net present value of the projected lifetime monthly benefit payments remaining payable pursuant to Section 3.1 or Section 3.2, calculated using a 4.75% discount rate.

1.2    Administrator. The Employer shall be the "Administrator" and, solely for the purposes of ERISA, the "fiduciary" of this Agreement where a fiduciary is required by ERISA.

1.3    Annual Benefit. The term "Annual Benefit" means an annual sum of seventy thousand dollars ($70,000) multiplied by the Applicable Percentage (defined below) and then reduced to the extent required: (i) under the other provisions of this Agreement; (ii) by reason of the lawful order of any regulatory agency or body having jurisdiction over the Employer; or (iii) in order for the Employer to properly comply with any and all applicable state and federal laws, including, but not limited to, income, employment and disability income tax laws (e.g., FICA, FUTA, SDI).

1.4     Applicable Percentage. The term "Applicable Percentage" means that percentage listed on Schedule "A" attached hereto which is adjacent to the number of complete years (with a "year" being the performance of personal services for or on behalf of the Employer as an employee for a period of 365 days) which have elapsed starting from   the Effective Date and ending on the date the Officer's employment is terminated for purposes of this Agreement. In the event the Officer's employment with the Employer is terminated other than by reason of death, disability, termination for cause or Retirement on the part of the Officer, the Officer shall be deemed for purposes of determining the number of complete years to have completed a year of service in its entirety for any partial year of service after the last anniversary date of the Effective Date during which the Officer's employment is terminated, provided that in no event shall the Officer be deemed to have completed a year of service for the partial year that occurs prior to the first anniversary date of this Agreement.

1.5    Beneficiary. The terms "Beneficiary" and "Designated Beneficiary" mean the person or persons whom the Officer shall designate in a valid beneficiary designation (the "Beneficiary Designation"), a copy of which is attached hereto as Exhibit "B," to receive the benefits provided hereunder. A Beneficiary Designation shall be valid only if it is in the form attached hereto and made a part hereof and is received by the Administrator prior to the Officer's death. The Officer's Beneficiary Designation shall be deemed automatically revoked if the Beneficiary predeceases the Officer or if the Officer names a spouse as Beneficiary and the marriage is subsequently dissolved. Upon the acceptance by the Administrator of a new Beneficiary Designation form, all Beneficiary Designations previously filed shall be cancelled. The Administrator shall be entitled to rely on the last Beneficiary Designation form filed by the Officer and accepted by the Administrator prior to the Officer's death.

1.6    The Code. The "Code" means the Internal Revenue Code of 1986, as amended.

1.7     Disability/Disabled. The terms "Disability" and "Disabled" mean disabled within the meaning of Code section 409A and regulations promulgated thereunder.

1.8    Effective Date. The term "Effective Date" means the date first above written.

1.9    ERISA. The term "ERISA" means the Employee Retirement Income Security Act of 1974, as amended.

1.10    Plan Year. The term "Plan Year" means the Employer's calendar year.

1.11    Retirement. The terms "Retirement" and "Retires" refer to the date on which the Officer: (i) attains the age of at least sixty-nine (69); and (ii) terminates full-time salaried employment with the Employer for any reason other than Termination for Cause and such termination constitutes a Separation from Service.

1.12    Separation from Service. The term "Separation from Service" means the Officer's service as an employee and/or independent contractor to the Employer and any member of a controlled group that includes Employer, as defined in Code section 414, terminates for any reason, other than because of a leave of absence approved by the Employer, Disability or the Officer's death. Whether a Separation from Service takes place is determined based on: (i) the facts and circumstances surrounding the termination of the Officer's employment; (ii) whether the Employer and the Officer intended for the Officer 

to provide significant services for the Employer following such termination; and (iii) the application of facts and circumstances in view of the presumptions contained in the regulations to Code section 409A. For purposes of this Agreement, if there is a dispute about the employment status of the Officer or the date of the Officer's Separation from Service, the Employer shall have the sole and absolute right to decide the dispute.

1.13    Surviving Spouse. The term "Surviving Spouse" means the person, if any, who shall be legally married to the Officer on the date of the Officer's death.

1.14    Termination for Cause. The term "Termination for Cause" means the termination of the Officer by the Employer upon the occurrence of any of the following events:

i.the Officer is convicted of illegal activity by a court of competent jurisdiction or pleads guilty to or nolo contendere to illegal activity, which activity materially adversely affects the Employer's reputation in the community or which evidences the lack of the Officer's fitness or ability to perform the Officer's duty as determined by the Board of Directors in good faith;

ii.     the Officer has committed any illegal or dishonest act which would cause termination of coverage under the Employer's Bankers' Blanket Bond as to the Officer, as distinguished from termination of coverage as to the Employer as a whole;

    iii.    the Officer materially fails to perform, or habitually neglects, the Officer's duties or commits a material act of malfeasance or misfeasance in connection therewith; or

    iv.    an action is commenced by any bank regulatory agency having jurisdiction, to remove or suspend the Officer from office, or a cease and desist order under 12 U.S.C. 181S(b) or any similar Federal or state statute is issued against the Officer or the Employer which calls for the Officer's suspension or removal from office.

2. Scope, Purpose and Effect.

2.1     Contract of Employment. Although this Agreement is intended to provide the Officer with an additional incentive to remain in the employ of the Employer, this Agreement shall not be deemed to constitute a contract of employment between the Officer and the Employer nor shall any provision of this Agreement restrict or expand the right of the Employer to terminate the Officer's employment. This Agreement shall have no impact or effect upon any separate written employment agreement which the Officer may have with the Employer, it being the parties' intention and agreement that unless this Agreement is specifically referenced in said employment agreement (or any modification thereto), this Agreement (and the Employer's obligations hereunder) shall stand separate and apart and shall have no effect upon, nor be affected by, the terms and provisions of said employment agreement.

2.2    Fringe Benefit. The benefits provided by this Agreement are granted by the Employer as a fringe benefit to the Officer and are not a part of any salary reduction plan 

or any arrangement deferring a bonus or a salary increase. The Officer has no option to take any current payments or bonus in lieu of the benefits provided by this Agreement.

3. Payments Upon or After Retirement.

3.1    Payments Upon Retirement at Age 69. If the Officer remains in the continuous employment of the Employer until Retirement and Retires on or within one (1) year of attaining age 69, then the Officer shall be entitled to be paid the Annual Benefit, with the Applicable Percent equal to 100%, for life, in equal monthly installments, with each installment to be paid on the first day of each month, beginning with the month following the month in which the Officer Retires, except that if the Officer is a "specified employee" as defined in Section 11.14, then the payment provided in this Section 3.1 shall be deferred as provided in Section 11.14.

3.2    Payments Upon Retirement After Age 69. If the Officer remains in the continuous employment of the Employer until Retirement and Retires on or after attaining age 70, then the Officer shall be entitled to be paid the Annual Benefit, as hereinafter adjusted, with the Applicable Percent equal to 100%, for life, in equal monthly installments, with each installment to be paid on the first day of each month, beginning with the month following the month in which the Officer Retires, except that if the Officer is a "specified employee" as defined in Section 11.14, then the payment provided in this Section 3.2 shall be deferred as provided in Section 11.14. For purposes of this Section 3.2, the Annual Benefit shall be adjusted depending on the year in which the Officer first Retires by increasing the Annual Benefit by two percent (2%), compounded, for each full year the Officer remains in the employment of the Employer after attaining age 69. Once the Officer Retires, the Annual Benefit shall be fixed at the then calculated amount and shall not thereafter be adjusted.

3.3    Payments in the Event of Death After Retirement. The Employer agrees that if the Officer Retires and is entitled to payments pursuant to either Section 3.1 or 3.2, but shall die before attaining age 86, then the Employer will pay the Accrued Liability in a lump sum to the Officer's designated beneficiary. If a valid Beneficiary Designation is not in effect, then the Accrued Liability shall be paid to the Officer's Surviving Spouse. If the Officer leaves no Surviving Spouse, the Accrued Liability shall be paid to the duly qualified personal representative, executor or administrator of the Officer's estate.

4. Payments in the Event Death or Disability Occurs Prior to Retirement.

4.1    Payments in the Event of Death Prior to Retirement. In the event the Officer should die while actively employed by the Employer at any time after the Effective Date, but prior to Retirement, the Employer agrees to pay the Accrued Liability to the Officer's Designated Beneficiary in a lump sum on the first day of the second month following the month of death. If a valid Beneficiary Designation is not in effect, then the amount due pursuant to this Section 4.1 shall be paid to the Officer's Surviving Spouse. If the Officer leaves no Surviving Spouse, the amount due pursuant to this Section 4.1 shall be paid to the duly qualified personal representative, executor or administrator of the Officer's estate.

4.2    Payments in the Event of Disability Prior to Retirement. In the event the Officer becomes Disabled while actively employed by the Employer at any time after the date of 

this Agreement but prior to Retirement, the Officer shall continue to be treated during such period of Disability as being actively and gainfully employed by the Employer but shall not add applicable years of service for the purpose of determining the Annual Benefit, and, subject to any applicable deferral period as set forth in Section 11.14 herein, the Officer shall be entitled to either of the following:

i.a lump sum payment equal to the Accrued Liability, payable on the first day of the month following the month in which the Officer is deemed permanently Disabled; or

ii.     the Annual Benefit, with the Applicable Percentage as set forth in Schedule A and as determined by the applicable years of service at the time of Disability, for life, in equal monthly installments, with each installment to be paid on the first day of each month, beginning with the month following the month in which the Officer is deemed permanently Disabled.

The Officer or his duly authorized representative may make an election of which benefit to receive at any time prior to or upon being deemed permanently Disabled. Absent a timely election, the Officer shall be paid the benefit pursuant to clause (i) above.

Notwithstanding the foregoing, in the event the Officer should die while actively or gainfully employed by the Employer at any time after the Effective Date and prior to (i) Retirement and (ii) the commencement of any payments under this Section 4.2, the payments provided in Section 4.1 herein shall be paid in lieu of the payments provided in this Section 4.2.

5. Payments in the Event Employment is Terminated Other Than by Death, Disability, Termination for Cause or Retirement.

As indicated in Section 2 above, the Employer reserves the right to terminate the Officer's employment with or without cause but subject to any written employment agreement which may then exist, at any time prior to the Officer's Retirement. In the event that the employment of the Officer shall be terminated for any reason, including voluntary termination by the Officer, but other than by reason of (i) Disability, (ii) death, (iii) Termination for Cause, or (iv) Retirement, the Officer or his legal representative shall be entitled to be paid the Annual Benefit, with the Applicable Percentage as set forth in Schedule A and as determined by the applicable years of service at the time of termination of employment with the Employer, for life, in equal monthly installments, with each installment to be paid on the first day of each month, beginning with the month following the month in which the Officer attains Retirement age, except that if Officer is a "specified employee" as defined in Section 11.14, then the payment provided in this Section 5 shall be deferred as provided in Section 11.14.

In addition, in the event the Officer dies after such termination as set forth in the second sentence of this Section 5, but prior to Retirement age, then the Officer's Designated Beneficiary shall be paid the Accrued Liability in a lump sum. If a valid Beneficiary Designation is not in effect, then such benefits due the Officer under this paragraph shall be paid to the Officer's Surviving Spouse, and if the Officer leaves no Surviving Spouse, then such benefits shall be paid to the duly qualified personal representative, executor or administrator of the Officer's estate for the benefit of the Officer's estate.

The Officer agrees that the payment of benefits pursuant to this Section 5 to the extent Officer is entitled to such benefits is in lieu of any other benefits under this Agreement.

6. Termination for Cause.

Notwithstanding anything to the contrary, in the event the termination of employment of the Officer is Termination for Cause, as defined in Section 1.14, the Officer shall not be entitledto any benefits pursuant to this Agreement.

7. No Ownership Rights to the Employer's Assets.

The Employer reserves the right to determine, in its sole and absolute discretion, whether, to what extent and by what method, if any, to provide for the payment of the amounts which may be payable to the Officer, the Officer's spouse or the Officer's Designated Beneficiary under the terms of this Agreement (the "Benefits"). The rights of the Officer or any beneficiary of the Officer under this Agreement shall be solely those of an unsecured creditor of the Employer.

In the event that the Employer, in its sole and absolute discretion, elects to acquire an insurance policy, an annuity or any other asset to recoup the costs or any portion thereof of the Benefits, then such insurance policy, annuity or other asset shall not be deemed to be held under any trust for the benefit of the Officer or his beneficiaries or to be security for the performance of the obligations of the Employer under this Agreement, but shall be, and remain, a general unpledged, unrestricted asset of the Employer. The Officer and his beneficiaries shall have no rights whatsoever with respect to, or any claim against, any such insurance policy, annuity or other asset. In connection with the Employer electing to acquire any such insurance policy or annuity, the Officer agrees to cooperate to facilitate such acquisition, and pursuant thereto shall execute such documents and undergo such medical examinations or tests as the Employer may reasonably request.

8. Claims Procedure.

The Employer shall, but only to the extent necessary to comply with ERISA, be designated as the named fiduciary under this Agreement and shall have authority to control and manage the operation and administration of this Agreement. Consistent therewith, the Employer shall make all determinations as to the rights to benefits under this Agreement. Any decision by the Employer denying a claim by the Officer, the Officer's spouse, or the Officer's beneficiary for Benefits under this Agreement shall be stated in writing and delivered or mailed, via registered or certified mail, to the Officer, the Officer's spouse or the Officer's beneficiary, as the case may be. Such decision shall set forth the specific reasons for the denial of a claim. In addition, the Employer shall provide the Officer, the Officer's spouse or the Officer's beneficiary with a reasonable opportunity for a full and fair review of the decision denying such claim.

9. Status of an Unsecured General Creditor.

Notwithstanding anything contained herein to the contrary: (i) neither the Officer, the Officer's spouse nor the Officer's beneficiary shall have any legal or equitable rights, interests or claims in or to any specific property or assets of the Employer; (ii) none of the Employer's assets shall be held in or under any trust for the benefit of the Officer, the Officer's spouse or the Officer's beneficiary or held in any way as security for the fulfillment of the obligations of the Employer under this Agreement; (iii) all of the Employer's assets shall be and remain the general unpledged and unrestricted assets of the Employer; (iv) the Employer's obligation under this Agreement shall be that of an unfunded and unsecured promise by the Employer to pay money in the future; 

and (v) the Officer, the Officer's spouse and the Officer's beneficiary shall be unsecured general creditors with respect to any benefits which may be payable under the terms of this Agreement.

10. Covenant Not to Interfere.

The Officer agrees not to take any action which prevents the Employer from collecting the proceeds of any life insurance policy which the Employer may happen to own at the time of the Officer's death and of which the Employer is the designated beneficiary.

11. Miscellaneous.

11.1     Opportunity to Consult with Independent Counsel. The Officer acknowledges that he has been afforded the opportunity to consult with independent counsel of his choosing regarding both the benefits granted to him under the terms of this Agreement and the terms and conditions which may affect the Officer's right to these benefits. The Officer further acknowledges that he has read, understands and consents to all of the terms and conditions of this Agreement, and that he enters into this Agreement with a full understanding of its terms and conditions.

11.2    Arbitration of Disputes. All claims, disputes and other matters in question arising out of or relating to this Agreement or the breach or interpretation thereof, other than those matters which are to be determined by the Employer in its sole and absolute discretion, shall be resolved by binding arbitration before a representative member, selected by the mutual agreement of the parties, of the Judicial Arbitration and Mediation Services, Inc. ("JAMS"), located in Fresno, California. In the event JAMS is unable or unwilling to conduct the arbitration provided for under the terms of this Section 11.2, or has discontinued its business, the parties agree that a representative member, selected by the mutual agreement of the parties, of the American Arbitration Association ("AAA"), located in or nearest to Fresno, California, shall conduct the binding arbitration referred to in this Section 11.2. Notice of the demand for arbitration shall be filed in writing with the other party to this Agreement and with JAMS (or AAA, if necessary).   In no event shall the demand for arbitration be made after the date when institution of legal or equitable proceedings based on such claim, dispute or other matter in question would be barred by the applicable statute of limitations. The arbitration shall be subject to such rules of procedure used or established by JAMS, or if there are none, the rules of procedure used or established by AAA. Any award rendered by JAMS or AAA shall be final and binding upon the parties, and as applicable, their respective heirs, beneficiaries, legal representatives, agents, successors and assigns, and may be entered in any court having jurisdiction thereof. The obligation of the parties to arbitrate pursuant to this clause shall be specifically enforceable in accordance with, and shall be conducted consistently with, the provisions of Title 9 of Part 3 of the California Code of Civil Procedure. Any arbitration hereunder shall be conducted in Fresno, California, unless otherwise agreed to by the parties.

11.3    Attorneys' Fees. In the event of any arbitration or litigation concerning any controversy, claim or dispute between the parties hereto, arising out of or relating to this Agreement or the breach hereof, or the interpretation hereof, the prevailing party shall be entitled to recover from the losing party reasonable expenses, attorneys' fees and costs incurred in connection therewith or in the enforcement or collection of any judgment or award rendered therein. The "prevailing party" means the party determined by the arbitrator(s) or court, as the case may be, to have most nearly prevailed, even if such 

party did not prevail in all matters, not necessarily the one in whose favor a judgment is rendered.

11.4    Notice. Any notice required or permitted of either the Officer or the Employer under this Agreement shall be deemed to have been duly given, if  by personal delivery,  upon the date received by the party or its authorized representative; if by facsimile, upon transmission to a telephone number previously provided by the party to whom the facsimile is transmitted as reflected in the records of the party transmitting the facsimile and upon reasonable confirmation of such transmission; and if by mail, on the third day after mailing via U.S. first class mail, registered or certified, postage prepaid and return receipt requested, and addressed to the party at the address given below for the receipt of notices, or such changed address as may be requested in writing by a party.

If to the Employer:
United Security Bank 
2126 Inyo Street
Fresno, California 93721 Attention: Dennis R. Woods Chairman of the Board

If to the Officer:
Robert Oberg

                    , California 9                  

11.5    Assignment. Neither the Officer, the Officer's spouse, nor any other beneficiary under this Agreement shall have any power or right to transfer, assign, hypothecate, modify or otherwise encumber any part or all of the amounts payable hereunder, nor, prior to payment in accordance with the terms of this Agreement, shall any portion of such amounts be: (i) subject to seizure by any creditor of any such beneficiary, by a proceeding at law or in equity, for the payment of any debts, judgments, alimony or separate maintenance obligations which may be owed by the Officer, the Officer's spouse, or any designated beneficiary; or (ii) transferable by operation of law in the event of bankruptcy, insolvency or otherwise. Any such attempted assignment or transfer shall be void and shall terminate this Agreement, and the Employer shall thereupon have no further liability hereunder.

11.6    Binding Effect/Merger or Reorganization. This Agreement shall be binding upon and inure to the benefit of the Officer and the Employer and, as applicable, their respective heirs, beneficiaries, legal representatives, agents, successors and assigns. Accordingly, the Employer shall not merge or consolidate into or with another corporation, or reorganize or sell substantially all of its assets to another corporation, firm or person, unless and until such succeeding or continuing corporation, firm or person agrees to assume and discharge the obligations of the Employer  under this Agreement.  Upon the occurrence of such event, the term "Employer"  as used in this Agreement shall be deemed to refer to such surviving or successor firm, person, entity or corporation.

11.7    Nonwaiver. The failure of either party to enforce at any time or for any period of time any one or more of the terms or conditions of this Agreement shall not be a waiver of such term(s) or condition(s) or of that party's right thereafter to enforce each and every term and condition of this Agreement.

11.8    Partial Invalidity.   If any term, provision, covenant or condition   of this Agreement is determined by an arbitrator or a court, as the case may be, to be invalid, void, or unenforceable, such determination shall not render any other term, provision, covenant or condition invalid, void or unenforceable, and the Agreement shall remain in full force and effect notwithstanding such partial invalidity.

11.9    Entire Agreement. This Agreement supersedes any and all other agreements, either oral or in writing, between the parties with respect to the subject matter of this Agreement and contains all of the covenants and agreements between the parties with respect thereto. Each party to this Agreement acknowledges that no other 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 set forth herein, and that no other agreement, statement or promise not contained in this Agreement shall be valid or binding on either party.

11.10    Modifications. Any modification of this Agreement shall be effective only if it is in writing and signed by each party's or such party's authorized representative.

11.11    Section Head.in gs. The section headings used in this Agreement are included solely for the convenience of the parties and shall not affect or be used in connection with the interpretation of this Agreement.

11.12    No Strict Construction. The language used in this Agreement shall be deemed to be the language chosen by the parties hereto to express their mutual intent, and no rule of strict construction will be applied against any person.

11.13    Governing Law. The laws of the State of California, other than those laws denominated choice of law rules, and, where applicable, the rules and regulations of the Federal Deposit Insurance Corporation or any other regulatory agency or governmental authority having jurisdiction over the Employer, shall govern the validity, interpretation, construction  and effect of this Agreement.

11.14    Delayed Payments for Specified Employees. Notwithstanding anything to the contrary, in the event that Code section 409A applies to any compensation with respect to a Separation from Service, payment of that compensation shall be delayed if the Officer is a "specified employee," as defined in Code section 409A(a)(2)(B)(i), and such delayed payment is required by Code section 409A. Such delay shall last six months from the date of Separation from Service. On the day following the end of the six-month period, the Employer shall make a catch up payment to the Officer equal to the total amount of such payments that would have been made during the six-month period but for this Section 11.14.

11.15    Compliance with Code Section 409A. This Agreement shall at all times be administered in compliance with the requirements of Code section 409A and any and all regulations thereunder, including such regulations as may be promulgated after the effective date of this Agreement.

11.16    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.

11.17    FDIC Open-Bank Assistance. All obligations under this Agreement shall terminate, except to the extent determined that continuation of the contract is necessary for the continued operation of the Employer, when the Federal Deposit Insurance Corporation enters into an agreement to provide assistance to or on behalf of the Employer under the authority contained in Federal Deposit Insurance Act, section 13(c), 12 U.S.C. § 1823(c). Rights of the parties that have already vested shall not be affected by such action, however.

11.18    FDIC Troubled Condition Designation. In the event that the Employer is deemed by the Federal Deposit Insurance Corporation to be in "troubled condition," as defined in 12 C.F.R. section 303.l0l(c), any payment to be paid to the Officer pursuant to this Agreement will be made only as permitted by applicable federal regulations.

11.19    Suicide or Misstatement. No benefit shall be distributed hereunder if the Officer commits suicide within two (2) years after the Effective Date, or if an insurance company which issued a life insurance policy covering the Officer and owned by the Employer denies coverage (i) for material misstatements of fact made by the Officer on an application for life insurance, or (ii) for any other reason.

[Signatures Appear on following page]

IN WITNESS WHEREOF, the Employer and the Officer have executed this Agreement on the date first above-written in the City of Fresno, Fresno County, California.

UNITED SECURITY BANK
“Employer”                                                               “Officer”

____________________________                            __________________________________
Dennis R. Woods                                                        Robert Oberg
Chairman of the Board

									
		Schedule A
	
	Number of Complete Years of Service		Applicable
Percentage
	1		11.111%

	2
		22.222%

	3
		33.333%

	4
		44.444%

	5
		55.556%

	6
		66.667%

	7
		77.778%

	8
		88.889%

	9
		100.000%

SCHEDULE B

BENEFICIARY DESIGNATION

TO:     The Administrator of United Security Bank’s Executive Salary Continuation Agreement

Pursuant to the provisions of my Executive Salary Continuation Agreement (the “Agreement”) with United Security Bank, permitting the designation of a beneficiary or beneficiaries by a participant, I hereby designate the following persons and entities as primary and secondary beneficiaries of any benefit under the Agreement payable by reason of my death:

[NOTE: To name a trust as beneficiary, please provide the name of the trustee and the exact date of the trust agreement.  In the event the primary beneficiary is not the spouse of the Officer, the spouse of the Officer will need to sign the Spousal Consent to this designation and such signature must be notarized.]

Primary Beneficiary:

         Name                           Address                                                           Relationship

Secondary (Contingent) Beneficiary:

         Name                           Address                                                            Relationship

         Name                           Address                                                            Relationship

THE RIGHT TO REVOKE OR CHANGE ANY BENEFICIARY DESIGNATION IS HEREBY RESERVED.  ANY PRIOR DESIGNATION OF PRIMARY BENEFICIARIES AND SECONDARY BENEFICIARIES IS HEREBY REVOKED.

The Administrator shall pay all sums payable under the Agreement by reason of my death to the Primary Beneficiary, if he or she survives me, and if no Primary Beneficiary shall survive me, then to the Secondary Beneficiary, and if no named beneficiary survives me, then the Administrator shall pay all amounts in accordance with the terms of the Agreement.  In the event that a named beneficiary survives me and dies prior to receiving the entire benefit payable under said Agreement then and in that event, the remaining unpaid benefit payable according to the terms of the Agreement shall be payable to the personal representatives of the estate of said beneficiary who survived me but died prior to receiving the total benefit provided by the Agreement.

ROBERT OBERG
“Officer”

Dated:__________                                           ___________________________________________

CONSENT OF THE OFFICER'S SPOUSE

[required if the primary beneficiary is not the Officer’s spouse]

TO THE ABOVE BENEFICIARY DESIGNATION:

I, _____________, being the spouse of Robert Oberg, after being afforded the opportunity to consult with independent counsel of my choosing, do hereby acknowledge that I have read, agree and consent to the foregoing Beneficiary Designation which relates to the Executive Salary Continuation Agreement entered into by my spouse on ______________, 2020.  I understand that the above Beneficiary Designation adversely affects my community property interest in the benefits provided for under the terms of the Executive Salary Continuation Agreement.  I understand that I have been advised to consult with an attorney of my choice prior to executing this consent, so that such attorney can explain the effects of this consent.

Dated:  _____________, 2020                       ____________________________________
                                                                        ______________, Spouse

[Notarization of the spousal consent is required if the primary beneficiary is not the spouse of the Officer.]EXHIBIT A

Exhibit 10.12
UNSECURED REVOLVING
DEMAND PROMISSORY NOTE
$30,000,000.00‌December 31, 2021
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Section 1.  Promise to Pay.  For and in consideration of value received, the undersigned, Valhi, Inc., a corporation duly organized under the laws of the state of Delaware (“Borrower”), promises to pay, in lawful money of the United States of America, to the order of Kronos Worldwide, Inc., a corporation duly organized under the laws of the state of Delaware (“Kronos Worldwide”), or the holder hereof (as applicable, Kronos Worldwide or such holder shall be referred to as the “Noteholder”), the principal sum of THIRTY MILLION and NO/100ths United States Dollars ($30,000,000.00) or such lesser amount as shall equal the unpaid principal amount of the loan made by the Noteholder to Borrower together with accrued and unpaid interest on the unpaid principal balance from time to time pursuant to the terms of this Unsecured Revolving Demand Promissory Note, as it may be amended from time to time (this “Note”).  This Note shall be unsecured and will bear interest on the terms set forth in Section 7 below. Capitalized terms not otherwise defined shall have the meanings given to such terms in Section 19 of this Note.
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Section 2.2.  Amendment and Restatement.  This Note renews, replaces, amends and restates in its entirety the Unsecured Revolving Demand Promissory Note dated December 31, 2020 in the original principal amount of $40,000,000.00 payable to the order of the Noteholder and executed by the Borrower (the “Prior Note”).  As of the close of business on December 31, 2021, the unpaid principal balance of the Prior Note was nil, the accrued and unpaid interest thereon was nil and the accrued and unpaid commitment fee thereon was nil, which is the unpaid principal, accrued and unpaid interest and accrued and unpaid commitment fee owed under this Note as of the close of business on the date of this Note.  This Note contains the entire understanding between the Noteholder and the Borrower with respect to the transactions contemplated hereby and supersedes all other instruments, agreements and understandings between the Noteholder and the Borrower with respect to the subject matter of this Note.
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Section 3.2.  Place of Payment.  All payments will be made at Noteholder’s address at Three Lincoln Centre, 5430 LBJ Freeway, Suite 1700, Dallas, Texas 75240-2620, Attention:  Treasurer, or such other place as the Noteholder may from time to time appoint in writing.
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Section 4.3.  Payments.  The unpaid principal balance of this Note and any accrued and unpaid interest thereon shall be due and payable on the Final Payment Date.  Prior to the Final Payment Date, any accrued and unpaid interest on an unpaid principal balance shall be paid in arrears quarterly on the last day of each March, June, September and December, commencing March 31, 2022.  All payments on this Note shall be applied first to accrued and unpaid interest, next to accrued interest not yet payable and then to principal.  If any payment of principal or interest on this Note shall become due on a day that is not a Business Day, such payment shall be made on the next succeeding Business Day and the payment shall be the amount owed on the original payment date.
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Section 5.3.  Prepayments.  This Note may be prepaid in part or in full at any time without penalty.
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Section 6.3.  Borrowings.  Prior to the Final Payment Date, Noteholder expressly authorizes Borrower to borrow, repay and re-borrow principal under this Note in increments of $100,000 on a daily basis so long as:
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		●	the aggregate outstanding principal balance does not exceed $30,000,000.00; and

		●	no Event of Default has occurred and is continuing.

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Notwithstanding anything else in this Note, in no event will Noteholder be required to lend money to Borrower under this Note and loans under this Note shall be at the sole and absolute discretion of Noteholder.
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Section 7.5.  Interest.  The unpaid principal balance of this Note shall bear interest at the rate per annum of the Prime Rate plus one percent (1.00%).  In the event that an Event of Default occurs and is continuing, the unpaid principal amount shall bear interest from the Event of Default at the rate per annum of the Prime Rate plus four percent (4.00%) until such time as the Event of Default is cured.  Accrued interest on the unpaid principal of this Note shall be computed on the basis of a 365- or 366-day year for actual days (including the first, but excluding the last day) elapsed, but in no event shall such computation result in an amount of accrued interest that would exceed accrued interest on the unpaid principal balance during the same period at the Maximum Rate. Notwithstanding anything to the contrary, this Note is expressly limited so that in no contingency or event whatsoever shall the amount paid or agreed to be paid to the Noteholder exceed the Maximum Rate.  If, from any circumstances whatsoever, the Noteholder shall ever receive as interest an amount that would exceed the Maximum Rate, such amount that would be excessive interest shall be applied to the reduction of the unpaid principal balance and not to the payment of interest, and if the 

principal amount of this Note is paid in full, any remaining excess shall be paid to Borrower, and in such event, the Noteholder shall not be subject to any penalties provided by any laws for contracting for, charging, taking, reserving or receiving interest in excess of the highest lawful rate permissible under applicable law.  All sums paid or agreed to be paid to Noteholder for the use, forbearance or detention of the indebtedness of the Borrower to Noteholder shall, to the extent permitted by applicable law, be amortized, prorated, allocated and spread throughout the full term of such indebtedness until payment in full of the principal (including the period of any renewal or extension thereof) so that the interest on account of such indebtedness shall not exceed the Maximum Rate.  If at any time the Contract Rate is limited to the Maximum Rate, any subsequent reductions in the Contract Rate shall not reduce the rate of interest on this Note below the Maximum Rate until the total amount of interest accrued equals the amount of interest that would have accrued if the Contract Rate had not been limited by the Maximum Rate.  In the event that, upon the Final Payment Date, the total amount of interest paid or accrued on this Note is less than the amount of interest that would have accrued if the Contract Rate had not been limited by the Maximum Rate, then at such time, to the extent permitted by law, in addition to the principal and any other amounts Borrower owes to the Noteholder, the Borrower shall pay to the Noteholder an amount equal to the difference between:  (i) the lesser of the amount of interest that would have accrued if the Contract Rate had not been limited by the Maximum Rate or the amount of interest that would have accrued if the Maximum Rate had at all times been in effect; and (ii) the amount of interest actually paid on this Note.
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Section 8.5.  Fees and Expenses. On the last day of each March, June, September and December, commencing March 31, 2022, and on the Final Payment Date, Borrower shall pay to Noteholder the Unused Commitment Fee for such period, provided, however, Borrower will not owe any Unused Commitment Fee for any part of such period (prorated as applicable) that the Noteholder is a net borrower of money from the Borrower.  In addition, Borrower and any guarantor jointly and severally agree to pay on the Final Payment Date to Noteholder any other cost or expense reasonably incurred by Noteholder in connection with Noteholder’s commitment to Borrower pursuant to the terms of this Note, including without limitation any other cost reasonably incurred by Noteholder pursuant to the terms of any credit facility of Noteholder.
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Section 9.6.  Remedy.  Upon the occurrence and during the continuation of an Event of Default, the Noteholder shall have all of the rights and remedies provided in the applicable Uniform Commercial Code, this Note or any other agreement among Borrower and in favor of the Noteholder, as well as those rights and remedies provided by any other applicable law, rule or regulation.  In conjunction with and in addition to the foregoing rights and remedies of the Noteholder, the Noteholder may declare all indebtedness due under this Note, although otherwise unmatured, to be due and payable immediately without notice or demand whatsoever.  All rights and remedies of the Noteholder are cumulative and may be exercised singly or concurrently.  The failure to exercise any right or remedy will not be a waiver of such right or remedy.
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Section 10.7.  Right of Offset.  The Noteholder shall have the right of offset against amounts that may be due by the Noteholder now or in the future to Borrower against amounts due under this Note.
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Section 11.8.  Record of Outstanding Indebtedness.  The date and amount of each repayment of principal outstanding under this Note or interest thereon shall be recorded by Noteholder in its records.  The principal balance outstanding and all accrued or accruing interest owed under this Note as recorded by Noteholder in its records shall be the best evidence of the principal balance outstanding and all accrued or accruing interest owed under this Note; provided that the failure of Noteholder to so record or any error in so recording or computing any such amount owed shall not limit or otherwise affect the obligations of the Borrower under this Note to repay the principal balance outstanding and all accrued or accruing interest.
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Section 12.9.  Waiver.  Borrower and each surety, endorser, guarantor, and other party now or subsequently liable for payment of this Note, severally waive demand, presentment for payment, notice of nonpayment, notice of dishonor, protest, notice of protest, notice of the intention to accelerate, notice of acceleration, diligence in collecting or bringing suit against any party liable on this Note, and further agree to any and all extensions, renewals, modifications, partial payments, substitutions of evidence of indebtedness, and the taking or release of any collateral with or without notice before or after demand by the Noteholder for payment under this Note.
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Section 13.10.  Costs and Attorneys’ Fees.  In addition to any other amounts payable to Noteholder pursuant to the terms of this Note, in the event the Noteholder incurs costs in collecting on this Note, this Note is placed in the hands of any attorney for collection, suit is filed on this Note or if proceedings are had in bankruptcy, receivership, reorganization, or other legal or judicial proceedings for the collection of this Note, Borrower and any guarantor jointly 

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and severally agree to pay on demand to the Noteholder all expenses and costs of collection, including, but not limited to, reasonable attorneys’ fees incurred in connection with any such collection, suit, or proceeding, in addition to the principal and interest then due.
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Section 14.11.  Time of Essence.  Time is of the essence with respect to all of Borrower’s obligations and agreements under this Note.
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Section 15.12.  Jurisdiction and Venue.  THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE DOMESTIC LAWS OF THE STATE OF TEXAS, WITHOUT GIVING EFFECT TO ANY CHOICE OF LAW OR CONFLICT OF LAW PROVISION OR RULE (WHETHER OF THE STATE OF TEXAS OR ANY OTHER JURISDICTION) THAT WOULD CAUSE THE APPLICATION OF THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF TEXAS.  BORROWER CONSENTS TO JURISDICTION IN THE COURTS LOCATED IN DALLAS, TEXAS.
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Section 16.13.  Notice.  Any notice or demand required by this Note shall be deemed to have been given and received on the earlier of (i) when the notice or demand is actually received by the recipient or (ii) 72 hours after the notice is deposited in the United States mail, certified or registered, with postage prepaid, and addressed to the recipient.  The address for giving notice or demand under this Note (i) to the Noteholder shall be the place of payment specified in Section 3 or such other place as the Noteholder may specify in writing to the Borrower and (ii) to Borrower shall be the address below the Borrower’s signature or such other place as the Borrower may specify in writing to the Noteholder.
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Section 17.14.  Amendment or Waiver of Provisions of this Note.  No amendment or waiver of any provision of this Note shall in any event be effective unless the same shall be in a writing referring to this Note and signed by the Borrower and the Noteholder.  Such amendment or waiver shall be effective only in the specific instance and for the specific purpose for which given.  No waiver of any of the provisions of this Note shall be deemed or shall constitute a waiver of any other provisions, whether or not similar, nor shall any waiver constitute a continuing waiver.
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Section 18.14.  Successors and Assigns.  All of the covenants, obligations, promises and agreements contained in this Note made by Borrower shall be binding upon its successors and permitted assigns, as applicable.  Notwithstanding the foregoing, Borrower shall not assign this Note or its performance under this Note without the prior written consent of the Noteholder.  Noteholder at any time may assign this Note without the consent of Borrower.
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Section 19  Definitions.  For purposes of this Note, the following terms shall have the following meanings:
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(a)“Basis Point” shall mean 1/100th of 1 percent.
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(b)“Business Day” shall mean any day banks are open in the state of Texas.
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(c)(a)“Contract Rate” means the amount of any interest (including fees, charges or expenses or any other amounts that, under applicable law, are deemed interest) contracted for, charged or received by or for the account of Noteholder.
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(d)(b)“Event of Default” wherever used herein, means any one of the following events:
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(i)(i)the Borrower fails to pay any amount due on this Note and/or any fees or sums due under or in connection with this Note after any such payment otherwise becomes due and payable and three Business Days after demand for such payment;
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(ii)(ii)the Borrower otherwise fails to perform or observe any other provision contained in this Note and such breach or failure to perform shall continue for a period of thirty days after notice thereof shall have been given to the Borrower by the Noteholder;
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(iii)(iii)a case shall be commenced against Borrower, or Borrower shall file a petition commencing a case, under any provision of the Federal Bankruptcy Code of 1978, as amended, or shall seek relief under any provision of any other bankruptcy, reorganization, arrangement, insolvency, readjustment of debt, dissolution or liquidation law of any jurisdiction, whether now or 

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hereafter in effect, or shall consent to the filing of any petition against it under such law, or Borrower shall make an assignment for the benefit of its creditors, or shall admit in writing its inability to pay its debts generally as they become due, or shall consent to the appointment of a receiver, trustee or liquidator of Borrower or all or any part of its property; or
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(iv)(iv)an event occurs that, with notice or lapse of time, or both, would become any of the foregoing Events of Default.
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(e)(d)“Final Payment Date” shall mean the earlier of:
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		●	written demand by the Noteholder for payment of all or part of the unpaid principal, the accrued and unpaid interest thereon and the accrued and unpaid commitment fee thereon, but in any event no earlier than December 31, 2023; or

		●	acceleration as provided herein.

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(f)(c)“Maximum Rate” shall mean the highest lawful rate permissible under applicable law for the use, forbearance or detention of money.
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(g)“Prime Rate” shall mean the fluctuating interest rate per annum in effect from time to time equal to the base rate on corporate loans as reported as the Prime Rate in the Money Rates column of The Wall Street Journal or other reliable source.
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(h)“Unused Commitment Amount” for any period on after the date of this Note shall mean the average on each day of such period of the difference between (A) $30,000,000.00 and (B) the amount of the unpaid principal balance of this Note.
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(i)“Unused Commitment Fee” shall mean the product of (A) 50 Basis Points per annum (pro rated to take into account that the fee is payable quarterly, or such shorter period if applicable) and (B) the Unused Commitment Amount.
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BORROWER:
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Valhi, Inc.
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		By:
	/s/ Amy A. Samford​ ​

Amy A. Samford
Senior Vice President and Chief Financial Officer
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Address:
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5430 LBJ Freeway, Suite 1700
Dallas, Texas   75240-2620
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‌Page 4 of 5.

As of the date hereof, Kronos Worldwide, Inc., as the Noteholder, hereby agrees that this Note renews, replaces, amends and restates in its entirety the Prior Note, and that the unpaid principal of nil, the accrued and unpaid interest thereon of nil and the accrued and unpaid commitment fee thereon of nil that was owed under the Prior Note as of the close of business on December 31, 2021 are the unpaid principal, the accrued and unpaid interest thereon and the accrued and unpaid commitment fee thereon, respectively, owed under this Note as of the close of business on the date of this Note.
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KRONOS WORLDWIDE, INC.
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		By:
	/s/ Tim C. Hafer​ ​

Tim C. Hafer
Senior Vice President and Chief Financial Officer

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‌Page 5 of 5.

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