Exhibit 10.4


 


March 6, 2009


 


[Name
of Senior Executive Officer]


HCSB
Financial Corporation


5201
Broad Street


Loris,
South Carolina 29569


 


Dear
[Name of Officer],


 


HCSB 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. 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)           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.


 


(4)           Compensation
Program Amendments. Each of the Company’s compensation, bonus, incentive and
other benefit plans, arrangements and agreements , including your Employment
Security Agreement (all such plans, arrangements and agreements, the “Benefit
Plans”) are hereby amended to the extent necessary to give effect to provisions
(1), (2), and (3) of this letter.


 


UST Sequence No. 328


 

















 


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.


 


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


 


·      “Senior executive officer” means the Company’s
“senior executive officers” as defined in Q&A 2 of the Interim Final Rule issued
by the Treasury at 31 CFR Part 30, effective on October 20, 2008 (the
“Interim Final Rule”).


 


·      “Golden parachute payment” shall have the
meaning set forth in Section 111(a)(2) of EESA (as defined below).


 


·      The term “Company” includes any entities
treated as a single employer with the Company under Q&A 1 and Q&A 11 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).


 


(6)           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.


 


(7)           If
the Treasury does not purchase the securities contemplated by the Participation
Agreement, then this letter shall be of no force or effect. 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,

  
	
   

  	
   

  
	
   

  	
  HCSB
  FINANCIAL CORPORATION

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  



 


 


Intending
to be legally bound, I agree with and accept the

foregoing terms on the date set forth below.


 


	
  By:

  	
   

  	
   

  
	
   

  	
   

  
	
  Name:

  	
   

  
	
  Title:

  	
   

  
	
  Date:

  	
  March 6,
  2009