Exhibit 10.4


 


July 24, 2009


 


[Executive]


Yadkin
Valley Financial Corporation


209
North Bridge Street


Elkin,
North Carolina 28621


 


Dear
[Executive],


 


Yadkin
Valley Financial Corporation (the “Company”) anticipates entering into a
Securities Purchase Agreement (the “Participation Agreement”) with the United
States Department of Treasury (the “Treasury”) that provides, among other
things, for the purchase by the Treasury of securities issued by the Company.
This purchase is anticipated to occur as part of the Company’s participation in
the Treasury’s Troubled Asset Relief Program - Capital Purchase Program (the “CPP”).


 


As
a condition to the closing of the investment contemplated by the Participation
Agreement, the Company is required to take certain actions with respect to
compensation arrangements of its senior executive officers, including senior
executive officers of its wholly owned subsidiary, Yadkin Valley Bank and Trust
Company. The Company has determined that you are or may be a senior executive
officer for purposes of the CPP. To comply with the requirements of the CPP,
and in consideration of the benefits that you will receive as a result of the
Company’s participation in the CPP and for other good and valuable
consideration, the sufficiency of which you hereby acknowledge, you agree as
follows:


 


(1)           No Golden Parachute Payments. You will not be
entitled to receive from the Company any golden parachute payment (as defined
below) during any period in which the Treasury holds an equity or debt position
acquired from the Company in the CPP, as defined by Section 111(a)(5) of
EESA (as defined below) (the “CPP Covered Period”) (or during the year
following any acquisition of the Company, to the extent required by the CPP
Limitations (as defined below)).


 


(2)           No Bonus, Retention Award, or Incentive
Compensation.  You will not be entitled
to receive from the Company any bonus, retention award, or incentive
compensation during the CPP Covered Period, except for certain long term
restricted stock payments and previously determined bonus payments to the
extent permitted by Section 111(b)(3)(D) of EESA (as defined below).


 


(3)           No Tax Gross-Up Payments.  You will not be entitled to receive from the
Company any tax gross-up (as defined below), including a right to a payment of
such gross-up at a date following the CPP Covered Period, or other
reimbursements for the payment of taxes during the CPP Covered Period.


 


(4)           Recovery of Bonus and Incentive Compensation. You
will be required to and shall return to the Company any bonus or incentive
compensation paid to you by the Company during the CPP Covered Period if such
bonus or incentive compensation is paid to you based on materially inaccurate
financial statements or any other materially inaccurate performance metric criteria.


 


UST Sequence No. 701


 

















 


(5)           Compensation Program Amendments. Each of the Company’s
compensation, bonus, incentive and other benefit plans, arrangements and
agreements, including your Employment Agreement (all such plans, arrangements
and agreements, the “Benefit Plans”) are hereby amended to the extent necessary
to give effect to provisions (1)-(4) of this letter.


 


The
Company is also required as a condition to participation in the CPP to review
the Benefit Plans to ensure that the Benefit Plans do not encourage its senior
executive officers to take unnecessary and excessive risks that threaten the
value of the Company. To the extent that the Company determines that the
Benefit Plans must be revised as a result of such review, or determines that the
Benefit Plans must otherwise be revised to comply with Section 111(b) of
the EESA (as defined below) as implemented by any guidance or regulation
thereunder that has been issued and is in effect as of the closing date of the
Company’s issuance of preferred stock and warrants to acquire common stock to
the Treasury pursuant to the CPP (the “CPP Limitations”), you and the Company
agree to negotiate and effect such changes promptly and in good faith.


 


(6)           Definitions and
Interpretation. This letter shall be interpreted as follows:


 


·      “Senior executive officer” means the Company’s “senior
executive officers” as defined under Q&A 1 of the Interim Final Rule issued
by the Treasury at 31 CFR Part 30, effective on June 15, 2009 (the “Interim
Final Rule”).


 


·      “Golden parachute payment” shall have the meaning
set forth under Q&A 1 of the Interim Final Rule.


 


·      “Gross-up” shall have the meaning set forth under
Q&A 1 of the Interim Final Rule.


 


·      The term “Company” includes any entities treated as
a single employer with the Company under Q&A 1 of the Interim Final Rule.


 


·      This letter is intended to, and shall be
interpreted, administered and construed to comply with Section 111 of the
Emergency Economic Stabilization Act of 2008 (the “EESA”), as amended by the
American Recovery and Reinvestment Act of 2009 and the regulations and guidance
promulgated thereunder (and, to the maximum extent consistent with the
preceding, to permit operation of the Benefit Plans in accordance with their
terms before giving effect to this letter).


 


(7)           Miscellaneous. To the extent not subject to federal
law, this letter will be governed by and construed in accordance with the laws
of the State of South Carolina. This letter may be executed in two or more
counterparts, each of which will be deemed to be an original. A signature
transmitted by facsimile will be deemed an original signature.


 


(8)           In addition, upon such time as the Treasury no
longer holds securities or debt of the Company acquired under the CPP, this
letter shall be of no further force or effect, except to the extent required by
the CPP Limitations. If you cease to be a senior executive officer of the
Company for purposes of the CPP, you shall be released from the restrictions
and obligations set forth in this letter to the extent permissible under the CPP.
If it is determined that you are not a senior executive officer of the Company
as of the date hereof, this letter shall be of no force or effect.


 

















 


The
Company appreciates the concessions you are making and looks forward to your
continued leadership during these financially turbulent times.


 


[Signature page follows]


 

















 


	
   

  	
  Sincerely,

  
	
   

  	
   

  
	
   

  	
  YADKIN
  VALLEY FINANCIAL CORPORATION

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:
   [Executive]

  	
   

  
	
   

  	
  Title:  [Executive’s
  Title]

  
	
   

  	
   

  
	
   

  	
   

  
	
  Intending
  to be legally bound, I agree with and accept the foregoing terms on the date
  set forth below.

  
	
   

  
	
  By:

  	
   

  	
   

  
	
   

  
	
  Name:
  [Executive]

  
	
  Title:[Executive’s
  Title]

  
	
  Date:
  July 24, 2009