Document:

Exhibit 10.2

 

UNITED STATES
DEPARTMENT OF THE TREASURY

1500 Pennsylvania
Avenue, NW

Washington, D.C.
20220

 

March 6, 2009

 

Ladies and Gentlemen:

 

Reference
is made to that certain Letter Agreement incorporating the Securities Purchase
Agreement — Standard Terms dated of as of the date of this letter agreement
(the “Securities Purchase Agreement”) between
United States Department of Treasury (“Investor”) and
the company named on the signature page hereto (the “Company”).  Capitalized terms used but not defined herein
shall have the meanings assigned to them in the Securities Purchase Agreement.

 

The
American Recovery and Reinvestment Act of 2009, as it may be amended from time
to time (the “Act”), includes
provisions relating to executive compensation and other matters that may be
inconsistent with the Securities Purchase Agreement, the Warrant and the
Certificate of Designation (the “Transaction
Documents”).  Accordingly,
Investor and the Company desire to confirm their understanding as follows:

 

1.                                       Notwithstanding
anything in the Transaction Documents to the contrary, in the event that the
Act or any rules or regulations promulgated thereunder are inconsistent
with any of the terms of the Transaction Documents, the Act and such rules and
regulations shall control.

 

2.                                       For
the avoidance of doubt (and without limiting the generality of Paragraph 1):

 

(a)                                  the
provisions of Section 111 of the Emergency Economic Stabilization Act of
2008, as amended by the Act or otherwise from time to time (“EESA”), shall apply to the Company;

 

(b)                                 the
waiver to be delivered by each of the Company’s Senior Executive Officers
pursuant to Section 1.2(d)(v) of the Securities Purchase Agreement
shall, in addition, be delivered by any additional highly compensated employees
required by applicable rules or regulations under EESA;

 

(c)                                  the
Company’s chief executive officer and chief financial officer shall provide the
written certification of compliance by the Company with the requirements of Section 111
of EESA in the manner specified by Section 111(b)(4) thereunder or in
any rules or regulations under EESA; and

 

(d)                                 the
Company shall be permitted to repay preferred shares, and when such preferred
shares are repaid, the Investor shall liquidate warrants associated with such
preferred shares, all in accordance with the Act and any rules and
regulations thereunder.

 

UST Sequence No. 328

 

 

From
and after the date hereof, each reference in the Securities Purchase Agreement
to “this Agreement” or “this Securities Purchase Agreement” or words of like
import shall mean and be a reference to the Agreement (as defined in the
Securities Purchase Agreement) as amended by this letter agreement.

 

This letter agreement will be governed by and
construed in accordance with the federal law of the United States if and to the
extent such law is applicable, and otherwise in accordance with the laws of the
State of New York applicable to contracts made and to be performed entirely
within such State.

 

This letter agreement, the Securities Purchase
Agreement, the Warrant, the Certificate of Designation and any other documents
executed by the parties at the Closing constitute the entire agreement of the
parties with respect to the subject matter hereof.

 

Nothing in this letter
agreement shall be deemed an admission by Investor as to the necessity of
obtaining the consent of the Company in order to effect the changes to the
Transaction Documents contemplated by this letter agreement, nor shall anything
in this letter agreement be deemed to require Investor to obtain the consent of
any other TARP recipient (as defined in the Act) participating in the Capital
Purchase Program (the “CPP”) in
order to effect changes to their documentation under the CPP.

 

This
letter agreement may be executed in any number of separate counterparts, each
such counterpart being deemed to be an original instrument, and all such
counterparts will together constitute the same agreement.  Executed signature pages to this letter
agreement may be delivered by facsimile and such facsimiles will be deemed
sufficient as if actual signature pages had been delivered.

 

[Remainder of this page intentionally
left blank]

 

2

 

In
witness whereof, the parties have duly executed this letter agreement as of the
date first written above.

 

	
   

  	
  UNITED STATES DEPARTMENT OF

  	
   

  
	
   

  	
   

  	
  THE TREASURY

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ Neel Kashkari

  
	
   

  	
   

  	
  Name: Neel Kashkari

  
	
   

  	
   

  	
  Title: Interim
  Assistant Secretary for

  
	
   

  	
   

  	
  Financial Stability

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  HCSB FINANCIAL
  CORPORATION

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ James R. Clarkson

  
	
   

  	
   

  	
  Name: James R. Clarkson

  
	
   

  	
   

  	
  Title: Chief Executive
  Officer

  
							

 

Signature Page to Letter AgreementExhibit 10.3

 

WAIVER

 

In consideration for the benefits I will receive as a result of my
employer’s participation in the United States Department of the Treasury’s TARP
Capital Purchase Program, I hereby voluntarily waive any claim against the
United States or any state or territory thereof or my employer or any of its
directors, officers, employees and agents for any changes to my compensation or
benefits that are required in order to comply with Section 111 of the
Emergency Economic Stabilization Act of 2008, as amended (“EESA”), and rules, regulations, guidance
or other requirements issued thereunder (collectively, the “EESA Restrictions”).

 

I acknowledge that the EESA Restrictions may require modification of
the employment, compensation, bonus, incentive, severance, retention and other
benefit plans, arrangements, policies and agreements (including so-called “golden
parachute” agreements), whether or not in writing, that I have with my employer
or in which I participate as they relate to the period the United States holds
any equity or debt securities of my employer acquired through the TARP Capital
Purchase Program and I hereby consent to all such modifications.  I further acknowledge and agree that if my
employer notifies me in writing that I have received payments in violation of
the EESA Restrictions, I shall repay the aggregate amount of such payments to
my employer no later than fifteen business days following my receipt of such
notice.

 

This waiver includes all claims I may have under the laws of the United
States or any other jurisdiction related to the requirements imposed by the
EESA Restrictions (including without limitation, any claim for any compensation
or other payments or benefits I would otherwise receive absent the EESA
Restrictions, any challenge to the process by which the EESA Restrictions were
adopted and any tort or constitutional claim about the effect of the foregoing
on my employment relationship) and I hereby agree that I will not at any time
initiate, or cause or permit to be initiated on my behalf, any such claim
against the United States, my employer or its directors, officers, employees or
agents in or before any local, state, federal or other agency, court or body.

 

In witness whereof, I execute this waiver on my own behalf, thereby
communicating my acceptance and acknowledgement to the provisions herein.

 

	
   

  	
  Respectfully,

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
  Date: March 6, 2009

  

 

UST Sequence No. 328Exhibit 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

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