Exhibit 10.2


 


AMENDED AND RESTATED EMPLOYMENT AGREEMENT


 


THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT
(this “Agreement”) dated as of March 21, 2017, is made by and between Horry County State Bank, a South Carolina
state-chartered commercial bank (the “Bank” and the “Employer”), which is a wholly owned subsidiary of
HCSB Financial Corporation, a South Carolina corporation (the “Company”), and J. Ricky Patterson, an
individual resident of South Carolina (the “Executive”). This Agreement amends and restates that certain existing employment
agreement between the parties dated March 13, 2016.


 


The Employer presently employs the Executive
as the Executive Vice President and Chief Operating Officer of the Bank. The Employer recognizes that the Executive’s leadership
and contribution to the well being of the Bank and the Company is substantial. The Employer desires to provide for the continued
employment of the Executive as the Executive Vice President and Chief Operating Officer of the Bank and make changes in the Executive’s
employment arrangement relating to severance to be paid to the Executive under certain conditions, each of which the Employer has
determined will reinforce and encourage the continued dedication of the Executive to the Employer and will promote the best interests
of the Bank, the Company, and the Company’s shareholders. The Executive is willing to terminate his interests and rights
under the existing employment agreement with the Employer and to continue to serve the Employer on the terms and conditions herein
provided. Certain terms used in this Agreement are defined in Section 20 hereof.


 


In consideration of the foregoing, the mutual
covenants contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties hereto, intending to be legally bound, hereby agree as follows:


 


1.       Employment.
The Employer shall continue to employ the Executive, and the Executive shall continue to serve the Employer, as the Executive Vice
President and Chief Operating Officer of the Bank upon the terms and conditions set forth herein. The Executive shall have such
authority and responsibilities consistent with his positions as are set forth in the Bank’s Bylaws or assigned by the Bank’s
Board of Directors (the “Board”) from time to time. The Executive shall report to the Board and shall devote his full
business time, attention, skill and efforts to the performance of his duties hereunder, except during (i) periods of illness or
periods of vacation and leaves of absence consistent with Employer policy and (ii) periods of service as a referee for the National
Football League. The parties acknowledge that the Executive currently serves and will continue to serve as a referee and agree
to use reasonable efforts to minimize any business disruptions for the Employer or Executive related to the Executive’s service
as a referee. Further, the Executive’s service on the boards of directors (or similar body) of other business or charitable
entities is subject to the prior approval of the Board. The Employer shall have the right to require the Executive to resign from
any board or similar body on which the Executive may then serve if the Board determines that such activity (i) interferes with
the effective discharge of the Executive’s duties and responsibilities to the Employer or that any business related to such
service is then in competition with any business of the Bank, its successors or assigns or (ii) could adversely affect the reputation
of the Bank.


 






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2.       Term.
Unless earlier terminated as provided herein, the Executive’s employment under this Agreement shall be for the period commencing
on the date hereof and ending on June 30, 2019 (the “Term”). On each June 30th during the term of this Agreement, the
term hereof shall automatically be extended for an additional one-year period beyond the then-effective expiration date unless
a written Notice of Termination from the Employer or the Executive is received 90 days prior to such anniversary advising the other
that this Agreement shall not be further extended. If either party provides timely notice of non-renewal of the Agreement, but
the Executive continues to provide services to the Employer as an employee, such post-expiration employment shall be deemed to
be performed on an “at-will” basis and either party may thereafter terminate such employment with or without notice
and for any or no reason and without any obligations determined by reference to this Agreement.


 


3.       Compensation
and Benefits.


 


(a)       As
of the date of this Agreement, the Employer shall pay the Executive an annual base salary rate of $220,000, which shall be paid
in accordance with the Employer’s standard payroll procedures. The Board (or an appropriate committee of the Board) shall
evaluate the Executive’s performance at least annually and make compensation adjustments as determined by the Board based
on its evaluation of the Executive’s performance.


 


(b)       The
Executive shall be eligible each year to receive a cash bonus equaling up to 25% of his annual base salary if the Employer achieves
certain performance levels established from time to time by the Board. Any bonus payment made pursuant to this Section 3(b) shall
be made the earlier of (i) 70 days after the previous year end for which the bonus was earned by the Executive and became a payable
of the Employer or (ii) the first pay period following the Company’s press release announcing its previous year’s financial
performance.


 


(c)       The
Executive shall be eligible to participate in the Company’s long-term equity incentive program and for the grant of stock
options, restricted stock, and other awards thereunder or under any similar plan adopted by the Company. Any options or similar
awards shall be issued to the Executive at an exercise price of not less than the stock’s current fair market value (as determined
in compliance with Treasury Regulation § 1.409A-1(b)(5)(iv)) as of the date of grant, and the number of shares subject to
such grant shall be fixed on the date of grant.


 


(d)       In
addition to the benefits specifically described in this Agreement, the Executive shall be eligible to participate in all retirement,
welfare, health or other benefits plans or programs of the Employer now or hereafter applicable generally to employees of the Employer
or to a class of employees that includes senior executives of the Employer. The parties agree that the benefits stated in this
Section 3(d) shall be subject to the terms of such plans or programs applicable generally to employees of the Employer or to a
class of employees that includes senior executives of the Employer.


 


(e)       The
Employer shall reimburse the Executive for reasonable and necessary travel, mobile cellular and data plan, and other business expenses
related to the Executive’s duties in accordance with the Employer’s business expense reimbursement policy; provided
however that the Executive shall, as a condition of any such reimbursement, submit verification of the nature and amount of such
expenses in accordance with such reimbursement policies and in sufficient detail to comply with rules and regulations promulgated
by the United States Treasury Department. In addition, the Employer shall reimburse the Executive for educational expenses related
to the Executive’s professional development and for membership in professional and civic organizations to the extent such
activities are consistent with the Employer’s strategic objectives.


 






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All expenses eligible for reimbursements described
in this Agreement must be incurred by the Executive during the Term of this Agreement to be eligible for reimbursement. All in-kind
benefits described in this Section 3 must be provided by the Employer during the Term of this Agreement. The amount of reimbursable
expenses incurred, and the amount of in-kind benefits provided, in one taxable year shall not affect the expenses eligible for
reimbursement, or in-kind benefits provided, in any other taxable year. Each category of reimbursement shall be paid as soon as
administratively practicable, but in no event shall any such reimbursement be paid after the last day of the calendar year following
the calendar year in which the expense was incurred. Neither rights to reimbursement nor in-kind benefits is subject to liquidation
or exchanges for other benefits.


 


(f)       The
Employer shall provide Executive with a $500 monthly automobile allowance, paid in accordance with Employer’s standard payroll
procedures, but in any case, no less frequently than monthly.


 


(g)       The
Employer shall provide the Executive with four weeks’ paid vacation per year, which shall be taken in accordance with (i)
any banking rules or regulations governing vacation and (ii) the Employer’s vacation or other paid time off policy. The parties
agree that reasonable periods of service as a referee for the National Football League during the business week shall not be deemed
vacation days under the Employer’s vacation or other paid time off policy. Any payments made by the Employer to the Executive
as compensation for paid vacation shall be paid in accordance with the Employer’s standard payroll procedures.


 


(h)       The
Executive agrees to repay any compensation previously paid or otherwise made available to the Executive under this Agreement that
is subject to recovery under any applicable law (including any rule of any exchange or service through which the securities of
the Company are then traded), including, but not limited to, the following circumstances:


 


(i)       where
such compensation was in excess of what should have been paid or made available because the determination of the amount due was
based, in whole or in part, on materially inaccurate financial information of the Company or the Bank, including but not limited
to, when the Company or the Bank shall have a restatement of financial results attributable to the Executive’s actions, whether
intentional or negligent;


 


(ii)       where
such compensation constitutes “excessive compensation” within the meaning of 12 C.F.R. Section 263;


 






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(iii)       where
the Executive has committed, is substantially responsible for, or has violated, the respective acts, omissions, conditions, or
offenses outlined under 12 C.F.R. Section 359.4(a)(4); and


 


(iv)       if,
while the Executive is also a senior executive officer of the Bank, the Bank becomes, and for so long as the Bank remains, subject
to the provisions of 12 U.S.C. Section 1831o(f), where such compensation exceeds the restrictions imposed on the senior executive
officers of such an institution.


 


The Executive agrees to return promptly any
such compensation identified by the Employer by written notice provided pursuant to Section 11. If the Executive fails to return
such compensation promptly, the Executive agrees that the amount of such compensation may be deducted from any and all other compensation
owed to the Executive by the Employer. If the Executive is then employed by the Employer, the Executive acknowledges that the Employer
may take appropriate disciplinary action (up to, and including, Termination of Employment) if the Executive fails to return such
compensation. The Executive acknowledges the Employer’s rights to engage in any legal or equitable action or proceeding in
order to enforce the provisions of this Section 3(h). The provisions of this Section 3(h) shall be modified to the extent, and
remain in effect for the period, required by applicable law.


 


4.       Termination.


 


(a)       The
Executive’s employment under this Agreement may be terminated prior to the end of the term of this Agreement, if applicable,
only as follows (each a “Terminating Event”):


 


(i)       upon
the death of the Executive. If the Executive’s employment is terminated because of the Executive’s death, the Employer
shall pay the Executive’s estate any sums due him as base salary or reimbursement of expenses through the end of the month
during which death occurred in accordance with the Employer’s standard payroll procedures. The Employer shall also pay the
Executive’s estate any bonus earned through the date of death. Any bonus for previous years which was not yet paid will be
paid pursuant to the terms as set forth in Section 3(b) of this Agreement. Any bonus that is earned in the year of death will be
paid on the earlier of (i) 70 days after the year end in which the Executive died or (ii) the first pay period following the Company’s
press release announcing its financial performance for the year in which the Executive died. To the extent that the bonus is performance-based,
the amount of the bonus will be calculated by taking into account the performance of the Company or the Bank for the entire year
and prorated through the date of the Executive’s death.


 


(ii)       upon
the Disability of the Executive for a period of 90 days, which includes any period of payment under the Employer’s accident
and health plan. During the period of any Disability leading up to the termination of the Executive’s employment under this
provision, the Employer shall continue to pay the Executive his full base salary at the rate then in effect and all perquisites
and other benefits (other than any bonus) in accordance with the Employer’s standard payroll procedures until the Executive
becomes eligible for benefits under any long-term disability plan or insurance program maintained by the Employer; provided, however
that, the amount of any such payments to the Executive shall be reduced by the sum of the amounts, if any, payable to the Executive
for the same period under any other disability benefit or pension plan covering the Executive. Furthermore, the Employer shall
pay the Executive any bonus earned through the date of onset of the physical or mental impairment that led to the Disability. Any
bonus for previous years which was not yet paid will be paid pursuant to the terms as set forth in Section 3(b) of this Agreement.
Any bonus that is earned in the year which includes the date of onset of the physical or mental impairment that led to the Disability
will be paid on the earlier of (i) 70 days after the year end in which the Executive became Disabled or (ii) the first pay period
following the Company’s press release announcing its financial performance for the year in which the Executive became Disabled.


 






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(iii)       by
the Employer for Cause upon delivery of a Notice of Termination to the Executive. If the Executive’s employment is terminated
for Cause under this provision, the Executive shall receive only any sums due him as base salary and reimbursement of expenses
through the date of such termination, which shall be paid in accordance with the Employer’s standard payroll procedures.


 


(iv)        by
the Employer without Cause prior to a Change in Control or more than 12 months following a Change in Control upon delivery of a
Notice of Termination. If the Executive’s employment is terminated without Cause under this provision, subject to the possibility
of a six-month delay described below in Section 17, beginning on the first day of the month following date of the Executive’s
termination, and continuing on the first day of the month for the next 11 months, the Employer shall pay to the Executive severance
compensation in an amount equal to 100% of his then current monthly base salary. The Employer shall also pay the Executive any
bonus earned or accrued through the date of termination (including any amounts awarded for previous years but which were not yet
vested). Any bonus for previous years which was not yet paid will be paid pursuant to the terms as set forth in Section 3(b) of
this Agreement. Any bonus that is earned in the year of the Executive’s termination will be paid on the earlier of (i) 70
days after the year end in which the Executive’s employment was terminated or (ii) the first pay period following the Company’s
press release announcing its financial performance for the year in which the Executive’s employment was terminated. To the
extent that the bonus is performance-based, the amount of the bonus will be calculated by taking into account the performance of
the Bank for the entire year and prorated through the date of the Executive’s termination of employment. In addition, the
restrictions on any outstanding time-vested incentive awards (including restricted stock) granted to the Executive under the Bank’s
long-term equity incentive program or any other incentive plan or arrangement that would have lapsed within the 12-month period
following the date of the Executive’s termination of employment shall lapse upon the date of the Executive’s termination
of employment and such awards shall become 100% vested.


 


(v)       by
the Executive effective upon the 30th day after delivery of a Notice of Termination. If the Executive resigns under this provision,
the Executive shall receive any sums due him as base salary or reimbursement of expenses through the date of such termination,
which shall be paid in accordance with the Employer’s standard payroll procedures.


 






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(vi)       by
the Employer without Cause within 12 months following a Change in Control upon delivery of a Notice of Termination to the Executive
or by the Executive for Good Reason within 12 months following a Change in Control. If the Executive desires to terminate this
Agreement for Good Reason, he must deliver a Notice of Termination within a 90-day period beginning on the Good Reason event and
the Employer shall have not less than 30 days to remedy this condition. If the Employer does not remedy this condition, the Executive’s
employment shall be terminated on the 30th day following the Executive’s delivery of his Notice of Termination. If the Executive’s
employment is terminated pursuant to this provision, in addition to other rights and remedies available in law or equity, the Executive
shall be entitled to the following:


 


(1)       the
Employer shall pay the Executive in a single lump sum cash payment within 60 days of the date of termination severance compensation
in an amount equal to his then current annual base salary multiplied by 2.99, plus any bonus earned or accrued through the date
of termination (including any amounts awarded for previous years but which were not yet vested);


 


(2)       the
Executive may continue participation, in accordance with the terms of the applicable benefits plans, in the Employer’s group
health plan pursuant to plan continuation rules under the Consolidated Omnibus Budget Reconciliation Act (“COBRA”).
In accordance with COBRA, assuming the Executive is covered under the Employer’s group health plan as of his date of termination,
the Executive will be entitled to elect COBRA continuation coverage for the legally required COBRA period (the “Continuation
Period”). If the Executive elects COBRA coverage for group health coverage, he will be obligated to pay the portion of the
full COBRA cost of the coverage equal to an active employee’s share of premiums for coverage for the respective plan year
and the Employer’s share of such premiums shall be treated as taxable income to the Executive. In addition, if the Employer’s
insurance carriers’ consent to extend to the Executive life, disability, and accidental death insurance benefits that are
comparable to the benefits the Executive would have received if his employment had continued and if such benefit extension does
not result in adverse legal consequences to the group health plan or the Employer, then the Employer agrees to extend such coverage
through the earlier of the date that the Employer’s insurance carrier terminates such consent or through the Continuation
Period. Notwithstanding the above, the Employer’s obligations hereunder with respect to the foregoing benefits provided in
this subsection (2) shall be limited to the extent that if the Executive obtains any coverage pursuant to a subsequent employer’s
benefit plans which duplicates the Employer’s coverage, the duplicative coverage may be terminated by the Employer. This
subsection (2) shall not be interpreted so as to limit any benefits to which the Executive, the Executive’s spouse, dependents
or beneficiaries may be entitled under any of the Employer’s employee benefit plans, programs, or practices following the
Executive’s termination of employment, including, without limitation, retiree medical and life insurance benefits, provided
that there shall be no duplication of benefits; and


 






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(3)       the
restrictions on any outstanding incentive awards (including restricted stock) granted to the Executive under the Bank’s long-term
equity incentive program or any other incentive plan or arrangement shall lapse and such awards shall become 100% vested, all stock
options and stock appreciation rights granted to the Executive shall become immediately exercisable and shall become 100% vested,
and all performance units granted to the Executive shall become 100% vested.


 


(b)       With
the exceptions of the provisions of this Section 4, and the express terms of any benefit plan under which the Executive is a participant,
it is agreed that, upon termination of the Executive’s employment, the Employer shall have no obligation to the Executive
for, and the Executive waives and relinquishes, any further compensation or benefits (exclusive of COBRA benefits). Unless otherwise
stated in this Section 4, the effect of termination on any outstanding incentive awards, stock options, stock appreciation rights,
performance units, or other incentives shall be governed by the terms of the applicable benefit or incentive plan and/or the agreements
governing such incentives. Within 60 days of termination of the Executive’s employment, and as a condition to the Employer’s
obligation to pay any severance hereunder, the Employer and the Executive shall enter into a release in the form provided by the
Employer, and Executive may not revoke such release within the revocation period stated in such release, which shall acknowledge
such remaining obligations and discharge the Employer and its officers, directors and employees with respect to their actions for
or on behalf of the Employer, from any other claims or obligations arising out of or in connection with the Executive’s employment
by the Employer, including the circumstances of such termination. In addition, if such severance payment is made by the Employer,
and if the 60-day period spans two calendar years, regardless of when such release is executed by the Executive, such severance
payment must be made in the subsequent calendar year, regardless of when the release is executed by the Executive.


 


(c)       The
parties intend that the severance payments and other compensation provided for herein are reasonable compensation for Executive’s
services to the Employer and shall not constitute “excess parachute payments” within the meaning of Section 280G of
the Code (the “Code”). If the Employer’s independent accounting firm or independent tax counsel appointed by
the Employer (“Tax Counsel”) determine that any or the aggregate value (as determined pursuant to Section 280G of the
Code) of all payments, distributions, accelerations of vesting, awards and provisions of benefits by the Employer to or for the
benefit of Executive (whether paid or payable, distributed or distributable, accelerated, awarded or provided pursuant to the terms
of this Agreement or otherwise), (a “Payment”) would constitute an excess parachute payment and be subject to the excise
tax imposed by Section 4999 of the Code (the “Excise Tax”), such Payment shall be reduced to the least extent necessary
so that no portion of the Payment shall be subject to the Excise Tax, but only if, by reason of such reduction, the net after-tax
benefit received by the Executive as a result of such reduction will exceed the net after-tax benefit that would have been received
by the Executive if no such reduction were made. The Payment shall be reduced by the Employer pursuant to the foregoing sentence
in a manner that Tax Counsel determines maximizes the Executive’s economic position. In applying this principle, the reduction
shall be made in a manner consistent with the requirements of Section 409A of the Code, and where Tax Counsel determines that two
economically equivalent amounts are subject to reduction but payable at different times, such amounts shall be reduced on a pro
rata basis but not below zero. If, however, such Payment is not reduced as described above, then such Payment shall be paid in
full to the Executive and the Executive shall be responsible for payment of any Excise Taxes relating to the Payment.


 






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All calculations and determinations under this
Section 4 shall be made by Tax Counsel whose determinations shall be conclusive and binding on the Employer and the Executive for
all purposes. For purposes of making the calculations and determinations required by this Section 4, the Tax Counsel may rely on
reasonable, good faith assumptions and approximations concerning the application of Section 280G and Section 4999 of the Code.
The Employer and the Executive shall furnish Tax Counsel with such information and documents as Tax Counsel may reasonable request
in order to make its determinations under this Section. The Employer shall bear all costs the Tax Counsel may reasonably incur
in connection with its services. In connection with making determinations under this Section, the Tax Counsel shall take into account
the value of any reasonable compensation for services to be rendered by the Executive before or after the Change in Control, including
without limitation, the Executive’s agreeing to refrain from performing services pursuant to a covenant not to compete or
similar covenant, and the Employer shall cooperate in good faith in connection with any such valuations and reasonable compensation
positions.


 


(d)       Notwithstanding
anything contained in this Agreement to the contrary,


 


(i)        if
the Executive is suspended or temporarily prohibited from participating, in any way or to any degree, in the conduct of the Company’s
or the Bank’s affairs by (1) a notice served under Section 8(e) or (g) of Federal Deposit Insurance Act (“FDIA”)
(12 U.S.C. Section 1818 (e) or (g)) or (2) as a result of any other regulatory or legal action directed at the Executive by any
regulatory or law enforcement agency having jurisdiction over the Executive (each of the foregoing referred to herein as a “Suspension
Action”), and if this Agreement is not terminated, the Employer’s obligations under this Agreement shall be suspended
as of the earlier of the effective date of such Suspension Action or the date on which the Executive was provided notice of the
Suspension Action, unless stayed by appropriate proceedings. If the charges underlying the Suspension Action are dismissed, the
Employer shall (1) pay on the first day of the first month following such dismissal of charges (or as provided elsewhere in this
Agreement) the Executive all of the compensation withheld while the obligations under this Agreement were suspended; and (2) reinstate
any such obligations which were suspended.


 


(ii)       if
the Executive is removed or permanently prohibited from participating, in any way or to any degree, in the conduct of the Company’s
or the Bank’s affairs by (1) an order issued under Section 8(e)(4) or (g)(1) of the FDIA (12 U.S.C. Section 1818 (e)(4) or
(g)(1)) or (2) any other legal or law enforcement action (each of the foregoing referred to herein as a “Removal Action”),
all obligations of the Executive under this Agreement shall terminate as of the effective date of the Removal Action, but any vested
rights of the parties hereto shall not be affected.


 






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(iii)       if
the Company or the Bank is in default (as defined in Section 3(x)(1) of the FDIA, 12 U.S.C. Section 1813(x)(1)), all obligations
under this Agreement shall terminate as of the date of default, but this Section (4)(e) shall not affect any vested rights of the
parties hereto.


 


(iv)       if
the FDIC is appointed receiver or conservator under Section 11(c) of the FDIA (12 U.S.C. Section 1821(c)) of the Bank, the Company
shall have the right to terminate all obligations of the Company under this Agreement as of the date of such receivership or conservatorship,
other than any rights of the Executive that vested prior to such appointment. Any vested rights of the Executive may be subject
to such modifications that are consistent with the authority of the FDIC.


 


(e)       If the FDIC
provides open bank assistance under Section 13(c) of the FDIA (12


U.S.C. 1823(c)) to the Company or the Bank, but excluding any such
assistance provided to the industry generally, the Employer shall have the right to terminate all obligations of the Employer under
this Agreement as of the date of such assistance, other than any rights of the Executive that vested prior to the FDIC action.
Any vested rights of the Executive may be subject to such modifications that are consistent with the authority of the FDIC.


 


(f)       If
the FDIC requires a transaction under Section 13(f) or 13(k) of the FDIA (12 U.S.C. 1823(f) and (k)) by the Company or the Bank,
the Employer shall have the right to terminate all obligations of the Employer under this Agreement as of the date of such transaction,
other than any rights of the Executive that vested prior to the transaction. Any vested rights of the Executive may be subject
to such modifications that are consistent with the authority of the FDIC.


 


(g)       Notwithstanding
anything contained in this Agreement to the contrary, any payments made to the Executive pursuant to this Agreement, or otherwise,
are subject to and conditioned upon their compliance with 12 U.S.C. Section 1828(k) and any regulations promulgated thereunder.
In addition, all obligations under this Agreement are further subject to such conditions, restrictions, limitations and forfeiture
provisions as may separately apply pursuant to any applicable state banking laws.


 


(h)       In
the event that the Company or the Bank is subject to Part 359 of the FDIC Rules and Regulations (12 C.F.R. Section 359, et seq.),
then notwithstanding the timing for the payment of any severance amounts described in this Section 4, no such payments shall be
made or commence, as applicable, that require the concurrence or consent of the appropriate federal banking agency of the Company
or the Bank pursuant to Part 359 prior to the receipt of such concurrence or consent. Any payments suspended by operation of this
Section 4(h) shall be paid as a lump sum within 30 days following receipt of the concurrence or consent of the appropriate federal
banking agency of the Company or the Bank or as otherwise directed by such federal banking agency.


 






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5.       Ownership
of Work Product. The Employer shall own all Work Product arising during the course of the Executive’s employment (prior,
present or future). For purposes hereof, “Work Product” shall mean all intellectual property rights, including all
Trade Secrets, U.S. and international copyrights, patentable inventions, and other intellectual property rights in any programming,
documentation, technology or other work product that relates to the Company or any Affiliates, their business or customers and
that the Executive conceives, develops, or delivers to the Employer at any time during his employment, during or outside normal
working hours, in or away from the facilities of the Employer, and whether or not requested by the Employer. If the Work Product
contains any materials, programming or intellectual property rights that the Executive conceived or developed prior to, and independent
of, the Executive’s work for the Employer, the Executive agrees to point out the pre-existing items to the Employer and the
Executive grants the Employer a worldwide, unrestricted, royalty-free right, including the right to sublicense such items. The
Executive agrees to take such actions and execute such further acknowledgments and assignments as the Employer may reasonably request
to give effect to this provision.


 


6.       Protection
of Trade Secrets. The Executive agrees to maintain in strict confidence and, except as necessary to perform his duties for
the Employer, the Executive agrees not to use or disclose any Trade Secrets of the Company or any Affiliates during or after his
employment. “Trade Secret” means information, including a formula, pattern, compilation, program, device, method, technique,
process, drawing, cost data or customer list, that (i) derives economic value, actual or potential, from not being generally known
to, and not being readily ascertainable by proper means by other persons who can obtain economic value from its disclosure or use;
and (ii) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.


 


7.       Protection
of Other Confidential Information. In addition, the Executive agrees to maintain in strict confidence and, except as necessary
to perform his duties for the Employer, not to use or disclose any Confidential Business Information of the Company or any Affiliates
during his employment and for a period of 24 months following termination of the Executive’s employment. “Confidential
Business Information” shall mean any internal, non-public information (other than Trade Secrets already addressed above)
concerning the Company’s or its Affiliate’s financial position and results of operations (including revenues, assets,
net income, etc.); annual and long-range business plans, product or service plans; marketing plans and methods; training, education
and administrative manuals; customer and supplier information and purchase histories; and employee lists. The provisions of Sections
6 and 7 shall also apply to protect Trade Secrets and Confidential Business Information of third parties provided to the Employer
under an obligation of secrecy.


 


8.       Return
of Materials. The Executive shall surrender to the Employer, promptly upon its request and in any event upon termination of
the Executive’s employment, all media, documents, notebooks, computer programs, handbooks, data files, models, samples, price
lists, drawings, customer lists, prospect data, or other material of any nature whatsoever (in tangible or electronic form) in
the Executive’s possession or control, including all copies thereof, relating to the Company or its Affiliates, their businesses
or customers. Upon the request of the Employer, the Executive shall certify in writing compliance with the foregoing requirement.


 






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9.       Restrictive
Covenants.


 


(a)       No
Solicitation of Customers. During the Executive’s employment with the Employer and for a period of 12 months thereafter,
the Executive shall not (except on behalf of or with the prior written consent of the Employer), either directly or indirectly,
on the Executive’s own behalf or in the service or on behalf of others, (i) solicit, divert, or appropriate to or for a Competing
Business, or (ii) attempt to solicit, divert, or appropriate to or for a Competing Business any person or entity that is or was
a customer of the Company or any of its Affiliates on the date of termination and with whom the Executive has had material contact.


 


(b)       No
Recruitment of Personnel. During the Executive’s employment with the Employer and for a period of 12 months thereafter,
the Executive shall not, either directly or indirectly, on the Executive’s own behalf or in the service or on behalf of others,
(i) solicit, divert or hire away; or (ii) attempt to solicit, divert, or hire away to any Competing Business, any employee of or
consultant to the Company or any of its Affiliates engaged or experienced in the Business, regardless of whether the employee or
consultant is full-time or temporary, the employment or engagement is pursuant to written agreement, or the employment is for a
determined period or is at will.


 


(c)       Non-Competition
Agreement. During the Executive’s employment with the Employer and for a period of 12 months thereafter, the Executive shall
not (without the prior written consent of the Employer) compete with the Company or any of its Affiliates by, directly or indirectly,
forming, serving as an organizer, director or officer of, or consultant to, or acquiring or maintaining more than a 1% passive
investment in, a depository financial institution or holding company therefor if such depository institution or holding company
has one or more offices or branches located in the Territory. Notwithstanding the foregoing, the Executive may serve as an officer
of or consultant to a depository institution or holding company therefor even though such institution operates one or more offices
or branches in the Territory, if the Executive’s employment does not directly involve, in whole or in part, the depository financial
institution’s or holding company’s operations in the Territory.


 


10.       Independent
Provisions. The provisions in each of the above Sections 9(a), 9(b), and 9(c) are independent, and the unenforceability of
any one provision shall not affect the enforceability of any other provision.


 


11.       Withholding.
The Employer may deduct from each payment of compensation hereunder all amounts required to be deducted and withheld in accordance
with applicable federal and state income, FICA and other withholding requirements.


 


12.       Successors;
Binding Agreement. The rights and obligations of this Agreement shall bind and inure to the benefit of the surviving entity
in any merger or consolidation in which the Company or the Bank is a party, or any assignee of all or substantially all of the
Company’s or the Bank’s business and properties. The Executive’s rights and obligations under this Agreement
may not be assigned by him, except that his right to receive accrued but unpaid compensation, unreimbursed expenses and other rights,
if any, provided under this Agreement, which survive termination of this Agreement shall pass after death to the personal representatives
of his estate.


 






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13.       Notice.
For the purposes of this Agreement, notices and all other communications provided for in this Agreement shall be in writing and
shall be deemed to have been duly given when personally delivered or sent by certified mail, return receipt requested, postage
prepaid, addressed to the respective addresses last given by each party to the other; provided, however, that all notices to the
Employer shall be directed to the attention of the Employer with a copy to the Chief Executive Officer. All notices and communications
shall be deemed to have been received on the date of delivery thereof.


 


14.       Governing
Law. This Agreement and all rights hereunder shall be governed by the laws of the State of South Carolina, except to the extent
governed by the laws of the United States of America in which case federal laws shall govern. The parties agree that any appropriate
state court located in Horry County, South Carolina or federal court for the District of South Carolina shall have exclusive jurisdiction
of any case or controversy arising under or in connection with this Agreement shall be a proper forum in which to adjudicate such
case or controversy. The parties consent and waive any objection to the jurisdiction or venue of such courts.


 


15.       Non-Waiver.
Failure of the Employer to enforce any of the provisions of this Agreement or any rights with respect thereto shall in no way be
considered to be a waiver of such provisions or rights, or in any way affect the validity of this Agreement.


 


16.       Saving
Clause. The provisions of this Agreement shall be deemed severable and the invalidity or unenforceability of any provision
shall not affect the validity or enforceability of the other provisions hereof. If any provision or clause of this Agreement, or
portion thereof, shall be held by any court or other tribunal of competent jurisdiction to be illegal, void, or unenforceable in
such jurisdiction, the remainder of such provision shall not be thereby affected and shall be given full effect, without regard
to the invalid portion. It is the intention of the parties that, if any court construes any provision or clause of this Agreement,
or any portion thereof, to be illegal, void, or unenforceable because of the duration of such provision or the area or matter covered
thereby, such court shall reduce the duration, area, or matter of such provision, and, in its reduced form, such provision shall
then be enforceable and shall be enforced. The Executive and the Employer hereby agree that they will negotiate in good faith to
amend this Agreement from time to time to modify the terms of Sections 9(a), 9(b) or 9(c), the definition of the term “Territory,”
and the definition of the term “Business,” to reflect changes in the Employer’s business and affairs so that
the scope of the limitations placed on the Executive’s activities by Section 9 accomplishes the parties’ intent in
relation to the then current facts and circumstances. Any such amendment shall be effective only when completed in writing and
signed by the Executive and the Employer.


 


17.       Compliance with Internal Revenue Code
Section 409A. All payments that may be made and benefits that may be provided pursuant to this Agreement are intended to qualify
for an exclusion from Section 409A of the Code and any related regulations or other pronouncements thereunder and, to the extent
not excluded, to meet the requirements of Section 409A of the Code. Any payments made under Sections 3 and 4 of this Agreement
which are paid on or before the last day of the applicable period for the short-term deferral exclusion under Treasury Regulation
§ 1.409A-1(b)(4) are intended to be excluded under such short-term deferral exclusion. Any remaining payments under Sections
3 and 4 are intended to qualify for the exclusion for separation pay plans under Treasury Regulation § 1.409A-1(b)(9). Each
payment made under Sections 3 and 4 shall be treated as a “separate payment”, as defined in Treasury Regulation §
1.409A-2(b)(2), for purposes of Code Section 409A. Further, notwithstanding anything to the contrary, all severance payments payable
under the provisions of Section 4 shall be paid to the Executive no later than the last day of the second calendar year following
the calendar year in which occurs the date of Executive’s termination of employment. None of the payments under this Agreement
are intended to result in the inclusion in Executive’s federal gross income on account of a failure under Section 409A(a)(1) of
the Code. The parties intend to administer and interpret this Agreement to carry out such intentions. However, the Employer does
not represent, warrant or guarantee that any payments that may be made pursuant to this Agreement will not result in inclusion
in the Executive’s gross income, or any penalty, pursuant to Section 409A(a)(1) of the Code or any similar state statute or regulation.
Notwithstanding any other provision of this Agreement, to the extent that the right to any payment (including the provision of
benefits) hereunder provides for the “deferral of compensation” within the meaning of Section 409A(d)(1) of the Code,
the payment shall be paid (or provided) in accordance with the following:


 






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(a)       If the Executive is a “Specified Employee”
within the meaning of Section 409A(a)(2)(B)(i) of the Code on the date of the Executive’s termination (the “Separation
Date”), and if an exemption from the six month delay requirement of Code Section 409A(a)(2)(B)(i) is not available, then
no such payment that is payable on account of the Executive’s termination shall be made or commence during the period beginning
on the Separation Date and ending on the date that is six months following the Separation Date or, if earlier, on the date of the
Executive’s death. The amount of any payment that would otherwise be paid to the Executive during this period shall instead
be paid to the Executive on the first day of the first calendar month following the end of the period.


 


(b)       Payments with respect to reimbursements
of expenses or benefits or provision of fringe or other in-kind benefits shall be made on or before the last day of the calendar
year following the calendar year in which the relevant expense or benefit is incurred. The amount of expenses or benefits eligible
for reimbursement, payment or provision during a calendar year shall not affect the expenses or benefits eligible for reimbursement,
payment or provision in any other calendar year.


 


18.       Compliance
with the Dodd–Frank Wall Street Reform and Consumer Protection Act. Notwithstanding anything to the contrary herein,
any incentive payments to the Executive shall be limited to the extent required under the Dodd-Frank Wall Street Reform and Consumer
Protection Act (the “Dodd-Frank Act”), including, but not limited to, clawbacks for such incentive payments as required
by the Dodd-Frank Act and Section 10D of the Securities Exchange Act of 1934. The Executive agrees to such amendments, agreements,
or waivers that are required by the Dodd-Frank Act or requested by the Employer to comply with the terms of the Dodd-Frank Act.


19.       Compliance
with Regulatory Restrictions. Notwithstanding anything to the contrary herein, and in addition to any restrictions stated above,
any compensation or other benefits paid to the Executive shall be limited to the extent required by any federal or state regulatory
agency having authority over the Bank or, if applicable, the Company. The Executive agrees that compliance by the Bank or the Company
with such regulatory restrictions, even to the extent that compensation or other benefits paid to the Executive are limited, shall
not be a breach of this Agreement by such entity.


 






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20.       Certain
Definitions.


 


(a)       “Affiliate”
shall mean any business entity controlled by, controlling or under common control with the Company, including but not limited to
the Bank.


 


(b)       “Business”
shall mean the operation of a depository financial institution, including, without limitation, the solicitation and acceptance
of deposits of money and commercial paper, the solicitation and funding of loans and the provision of other banking services, and
any other related business engaged in by the Bank or any of its Affiliates as of the date of termination.


 


(c)       “Cause”
shall consist of any of (i) the commission by the Executive of a willful act (including, without limitation, a dishonest or fraudulent
act) or a grossly negligent act, or the willful or grossly negligent omission to act by the Executive, which is intended to cause,
does cause or is reasonably likely to cause material harm to the Company or any Affiliate (including harm to its business reputation);
(ii) the indictment of the Executive for the commission or perpetration by the Executive of any felony or any crime involving dishonesty,
moral turpitude or fraud; (iii) the material breach by the Executive of this Agreement that, if susceptible of cure, remains uncured
10 days following written notice to the Executive of such breach; (iv) the receipt of any formal written notice that any regulatory
agency having jurisdiction over the Company or the Bank intends to institute any form of formal regulatory action against the Executive,
the Company or the Bank (provided that the Board determines in good faith, with the Executive abstaining from participating in
the consideration of and vote on the matter, that the subject matter of such action involves acts or omissions by the Executive
and further provided that, the parties acknowledge that any regulatory action currently issued to the Company or the Bank shall
not constitute the basis for a determination of cause by the Board); (v) the exhibition by the Executive of a standard of behavior
within the scope of his employment that is materially disruptive to the orderly conduct of the Employer’s business operations
(including, without limitation, substance abuse or sexual misconduct) to a level which, in the Board’s good faith and reasonable
judgment, with the Executive abstaining from participating in the consideration of and vote on the matter, is materially detrimental
to the Employer’s best interest, that, if susceptible of cure remains uncured 10 days following written notice to the Executive
of such specific inappropriate behavior; or (vi) the failure of the Executive to devote his full business time and attention to
his employment as provided under this Agreement that, if susceptible of cure, remains uncured 30 days following written notice
to the Executive of such failure. In order for the Board of Directors to make a determination that termination shall be for Cause,
the Board must provide the Executive with notice of the grounds providing the purported basis for termination and provide the Executive
an opportunity to meet with the Board in person to address the proposed grounds.


 


(d)       “Change
in Control” shall mean as defined by Treasury Regulation § 1.409A-3(i)(5).


 






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(e)       “Code”
shall mean the Internal Revenue Code of 1986.


 


(f)       “Competing
Business” shall mean any business that, in whole or in part, is the same or substantially the same as the Business.


 


(g)       “Disability”
or “Disabled” shall mean as defined by Treasury Regulation § 1.409A-3(i)(4); provided however that, for
purposes of this definition, the accident and health plan covering the Executive shall only be the long term disability plan and
not any other the accident and health plan.


 


(h)       “Good
Reason” shall mean as defined by Treasury Regulation § 1.409A-1(n)(2)(ii).


 


(i)       “Notice
of Termination” shall mean a written notice of termination from the Employer or the Executive which specifies an effective
date of termination (not less than 30 days from the date of the notice), indicates the specific termination provision in this Agreement
relied upon and sets forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Executive’s
employment under the provision so indicated.


 


(j)       “Standard
payroll procedures” shall mean payment no less frequently than monthly.


 


(k)       “Terminate,”
“terminated,” “termination,” or “termination of the Executive’s employment”
shall mean separation from service as defined by Treasury Regulation § 1.409A-1(h).


 


(l)       “Territory”
shall mean a radius of 30 miles from (i) the main office of the Bank or (ii) any branch or loan production office of the Bank.


 


21.       Entire
Agreement; Waiver and Release. This Agreement supersedes and replaces in their entirety any and all previous agreements between
the Executive and the Employer regarding compensation or terms of employment of the Executive, including, without limitation, that
certain employment agreement between the parties dated March 13, 2016 and any other agreements regarding change in control payments
or severance payments and benefits (collectively, the “Prior Agreements”). The Executive hereby waives any right or
entitlement to any severance payments, compensation, monies, or benefits under the Prior Agreements. The Executive expressly waives
and releases the Employer from any and all claims or obligations arising out of the Prior Agreements.


 


22.       Survival.
The obligations of the parties pursuant to Sections 3(h), 5 through 9, and 12, as applicable, shall survive the Executive’s
Termination of Employment hereunder for the period designated under each of those respective sections.


 


23. Counterparts. This Agreement
may be executed in one or more counterparts, each of which shall be deemed an original but all of which together shall constitute
one and the same instrument.


 






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IN WITNESS WHEREOF, the Company and the Bank
each have caused this Agreement to be executed and its seal to be affixed hereunto by its respective officers thereunto duly authorized
and the Executive has signed and sealed this Agreement, effective as of the date described above.


 


	 	 	 	HCSB FINANCIAL CORPORATION 
	ATTEST:	 	 	 	 
	 	 	 	 	 
	By:	/s/ Jan H. Hollar	 	By:	 /s/ Michael S. Addy
	 	 	 	 	 
	Name:	Jan H. Hollar	 	Name:	Michael S. Addy
	 	 	 	 	 
	 	 	 	Title:	Chairman, Board of Directors
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	HORRY COUNTY STATE BANK   
	ATTEST:	 	 	 	 
	 	 	 	 	 
	By:	/s/ Michael S. Addy	 	By:	/s/ Jan. H. Hollar
	 	 	 	 	 
	Name:	Michael S. Addy	 	Name:  	Jan H. Hollar
	 	 	 	 	 
	 	 	 	Title:	Chief Executive Officer



 


 


	 	EXECUTIVE	 
	 	 	 
	 	  /s/ J. Ricky Patterson	 
	 	J. Ricky Patterson	 




 






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