Document:

Exhibit 10.1

 

EMPLOYMENT AGREEMENT

 

THIS EMPLOYMENT AGREEMENT (this “Agreement”)
dated as of June 16, 2016, 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 W. Jack McElveen, Jr., an individual resident of South Carolina
(the “Executive”).

 

WHEREAS, the Executive presently serves as Executive
Vice President and Chief Credit Officer of the Bank and is willing to continue to do so on the terms and conditions herein provided;
and

 

WHEREAS, certain terms used in this Agreement
are defined in Section 18 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
employ the Executive, and the Executive shall serve the Employer, as Executive Vice President and Chief Credit 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 periods of illness or periods of vacation and leaves of absence consistent
with Employer policy. 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.

 

2.      Term. Unless earlier terminated
as provided herein, the Executive’s employment under this Agreement shall be for the period commencing upon the Effective
Date of this Agreement and ending on the third anniversary of the Effective Date of this Agreement. On each anniversary of the
effective date 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.

 

    	 	1	 

     

    
Exhibit 10.1

 

3.      Compensation and Benefits.

 

(a)      As of the Effective Date, the Employer
shall pay the Executive an annual base salary rate of $200,000 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)      In addition to the $25,000 signing bonus
previously paid, the Executive shall be eligible each year to receive a cash bonus equaling up to 20% 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. The Board anticipates adopting an appropriate equity incentive plan
in which the Company’s and the Bank’s employees will be eligible to participate. The Board anticipates granting to
Employee a material to-be-determined equity award(s) under such plan. The award agreements for such equity award(s) would vest
upon achievement of certain performance and time vesting metrics and would contain other customary terms and conditions. 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.

 

    	 	2	 

     

    
Exhibit 10.1

 

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 are subject to liquidation
or exchanges for other benefits.

 

(f)      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. 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.

 

(g)       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;

 

(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(g). The provisions of this Section 3(g) shall be modified to the extent, and
remain in effect for the period, required by applicable law.

 

    	 	3	 

     

    
Exhibit 10.1

 

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 his 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.

 

(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 his 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.

 

    	 	4	 

     

    
Exhibit 10.1

 

(iv)       by the Employer without Cause
upon delivery of a Notice of Termination. If the Executive’s employment is terminated without Cause 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.

 

(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.

 

(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)      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 (i)
      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 (ii) reinstate any such
obligations which were suspended.

 

    	 	5	 

     

    
Exhibit 10.1

 

(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.

 

(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)(f) 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.

 

(d)      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.

 

(e)      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.

 

(f)      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.

 

    	 	6	 

     

    
Exhibit 10.1

 

(g)      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(g) 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.

 

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.

 

    	 	7	 

     

    
Exhibit 10.1

 

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.

 

9.      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.

 

10.      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.

 

11.      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.

 

12.      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.

 

13.      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.

 

    	 	8	 

     

    
Exhibit 10.1

 

14.      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.

 

15.      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, if any, 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:

 

(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.

 

    	 	9	 

     

    
Exhibit 10.1

 

(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.

 

16.      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.

17.      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.  The Executive agrees that such restrictions include any restrictions applicable due to the Company’s
participation in the Treasury’s Troubled Asset Relief Program - Capital Purchase Program (the “CPP”).

 

18.      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)      “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.

 

    	 	10	 

     

    
Exhibit 10.1

 

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

 

(d)      “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.

 

(e)      “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.

 

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

 

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

 

19.      Entire Agreement. This Agreement
constitutes the entire agreement between the parties hereto and supersedes all prior agreements, if any understandings and arrangements,
oral or written, including the Consulting Agreement, between the parties hereto with respect the subject matter hereof.

 

20.      Survival. The obligations of the
parties pursuant to Sections 3(g), 5 through 8, 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.

 

[signatures appear on following page]

 

    	 	11	 

     

    
Exhibit 10.1

 

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

 

 

	 	 	 	HORRY COUNTY STATE BANK   
	ATTEST:	 	 	 	 
	 	 	 	 	 
	By:	 /s/ V. Denise Floyd	 	By:	/s/ Jan H. Hollar	 
	 	 	 	 	 	 
	Name:  	V. Denise Floyd	 	Name:  	Jan H. Hollar	 
	 	 	 	 	 	 
	 	 	 	Title:	Chief Executive Officer	 

 

 

	 	EXECUTIVE	 
	 	 	 
	 	  /s/ W. Jack McElveen, Jr.	 
	 	W. Jack McElveen, Jr.	 

 

    	 	12Exhibit

                                                

Exhibit 10.1

VERIFONE SYSTEMS, INC. 
EXECUTIVE SEVERANCE PLAN 
(Effective September 19, 2016) 
1.Purpose. The purpose of the Verifone Systems, Inc. Executive Severance Plan (the “Plan”) is to retain certain senior executives of the Company by providing appropriate severance benefits and to ensure their continued dedication to their duties in connection with certain types of termination of employment after a Change in Control (as defined in Section 24(d) below).
2.Eligible Participants.  Employees participating in the Plan (each, a “Participant”) will be any executive of the Company who is selected by the Compensation Committee in its sole discretion for coverage by the Plan; provided that the Chief Executive Officer of the Company shall only be eligible to receive benefits under Section 4(a).
3.Non-Change in Control Severance Benefits. If, during a period of time which is not a CIC Termination Period under the Plan, the employment of a Participant is terminated pursuant to a Qualifying Termination, then, subject to the Participant’s execution of a Release, which shall be provided to the Participant no later than five (5) days after the Date of Termination and must be executed by the Participant, become effective and not be revoked by the Participant by the sixtieth (60th) day following his or her Date of Termination, the Company shall provide to the Participant: 
(a)a lump-sum cash payment equal to the Participant’s Base Salary; and
(b)for one (1) year after Participant’s Date of Termination, Participant, his or her spouse and his or her dependents will continue to be entitled to participate in the Company’s group health and life insurance plans in which the Participant participates immediately prior to his or her Date of Termination at the same rate as paid by similarly situated employees from time to time (“Benefits Coverage”); provided that the Participant timely elects continuation coverage under Section 4980B(f) of the Code; provided, further, that the Participant, his or her spouse and his or her dependents shall cease to be entitled to Benefits Coverage if and when the Participant obtains alternative employment and becomes eligible for insurance coverage that is substantially similar to the Benefits Coverage, in which case, the Participant must notify the Company within ten (10) days of the commencement of such alternative employment; and provided, further, that to the extent the applicable health and life insurance plans do not permit continuation of the Participant’s or his or her spouse’s or dependents’ participation throughout such period, the Company shall provide the Participant, on the first business day of each calendar quarter, in advance, with an amount which is equal to the Company’s cost of providing such benefits, less the applicable employee rate of participation.

The cash payment specified in Section 3(a) shall be paid on the sixtieth (60th) day (or the next following business day if the sixtieth (60th) day is not a business day) following the Participant’s Date of Termination.

4.Change in Control Severance Benefits.
(a)Effect of a Change in Control on Performance-Based Equity Awards. In the event of a Change in Control, each outstanding Performance-Based Equity Award held by a Participant that was granted after the Effective Date will be deemed earned at the actual performance level as of the date of the Change in Control (taking into account, as applicable, the price per share of Company common stock paid or implied in the transaction giving rise to the Change in Control) with respect to all open performance periods (the “Earned Performance Award”) and will cease to be subject to any further performance conditions.  A portion of each Earned Performance Award equal to the product of (i) the Earned 

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Performance Award and (ii) a fraction, the numerator of which is the number of days that have elapsed since the beginning of the original performance period through the date on which the Change in Control occurs, and the denominator of which is the total number of days in such performance period, will become immediately payable upon the Change in Control (in shares or cash, as determined by the Compensation Committee in its discretion), and the remainder of the Earned Performance Award will continue to be subject to time-based vesting following the Change in Control in accordance with the original performance period.
(b)Change in Control Severance Benefits.  If, during a CIC Termination Period, the employment of a Participant is terminated pursuant to a Qualifying Termination, then, subject to the Participant’s execution of a Release, which shall be provided to the Participant no later than five (5) days after his or her Date of Termination and must be executed by the Participant, become effective and not be revoked by the Participant by the sixtieth (60th) day following his or her Date of Termination, the Company shall provide to the Participant: 
(i)a lump sum cash payment equal to the Participant’s Base Salary; 
(ii)a lump sum cash payment equal to the Participant’s target annual cash bonus for the year in which his or her Date of Termination occurs; 
(iii)for one (1) year after Participant’s Date of Termination, Participant, his or her spouse and his or her dependents will continue to be entitled to Benefits Coverage; provided that the Participant timely elects continuation coverage under Section 4980B(f) of the Code; provided, further, that the Participant, his or her spouse and his or her dependents shall cease to be entitled to Benefits Coverage if and when the Participant obtains alternative employment and becomes eligible for insurance coverage that is substantially similar to the Benefits Coverage, in which case, the Participant must notify the Company within ten (10) days of the commencement of such alternative employment; and provided, further, that to the extent that the applicable health and life insurance plans do not permit continuation of the Participant’s or his or her spouse’s or dependents’ participation throughout such period, the Company shall provide the Participant, on the first business day of each calendar quarter, in advance, with an amount which is equal to the Company’s cost of providing such benefits, less the applicable employee rate of participation; and  
(iv)effective as of the later of the Participant’s Date of Termination and the Change of Control, any unvested equity-based awards held by the Participant shall vest in full.
The cash payments specified in paragraphs (i) and, if applicable, (ii) of this Section 4(b) shall be paid on the sixtieth (60th) day (or the next following business day if the sixtieth (60th) day is not a business day) following the Participant’s Date of Termination.

5.No Duplication of Benefits. Except as otherwise expressly provided pursuant to the Plan, the Plan shall be construed and administered in a manner which avoids duplication of compensation and benefits which may be provided under any other plan, program, policy, or other arrangement or individual contract or under any statute, rule or regulation. In the event a Participant is covered by any other plan, program, policy, individually negotiated agreement or other arrangement, in effect as of his or her Date of Termination, that may duplicate the payments and benefits provided for in Section 3 or Section 4, the Compensation Committee is specifically empowered to reduce or eliminate the duplicative benefits provided for under the Plan, such that the Participant receives the treatment provided for by the more favorable provision. 
6.Withholding Taxes. The Company shall withhold from all payments due to the Participant (or his beneficiary or estate) hereunder all taxes which, by applicable federal, state, local or other law, the Company is required to withhold therefrom. 

                                                2

                                                

7.Expenses. If any contest or dispute shall arise under the Plan involving termination of a Participant’s employment with the Company or involving the failure or refusal of the Company to perform fully in accordance with the terms hereof, each party shall be responsible for its own legal fees and related expenses, if any, incurred in connection with such contest or dispute; provided, however, that with respect to any contest or dispute arising after a Change in Control, in the event the Participant substantially prevails with respect to such contest or dispute, the Company shall reimburse the Participant on a current basis for all reasonable legal fees and related expenses incurred by the Participant in connection with such contest or dispute, which reimbursement shall be made within thirty (30) days after the date the Company receives the Participant’s statement for such fees and expenses.
8.No Guarantee of Continued Employment. Nothing in the Plan shall be deemed to entitle the Participant to continued employment with the Company or any Related Entity. 
9.Restrictive Covenants. 
(a)Noncompetition.  If a Participant’s employment is terminated in accordance with Section 3 or Section 4 of the Plan, then during the twelve (12) month period immediately following the Participant’s Date of Termination (the “Restricted Period”), the Participant shall not, directly or indirectly, manage, control, participate in, consult with, render services for, or in any manner engage in a Competitive Enterprise. 
(b)Nonsolicitation.  During the Restricted Period, the Participant shall not, directly or indirectly through another entity:
(i)induce or attempt to induce any employee of the Company to leave the employ of the Company, or in any way interfere with the relationship between the Company and any employee, 
(ii)hire any person who was an employee of the Company within 180 days prior to the date of hire, or 
(iii)solicit or attempt to solicit or induce or attempt to induce any customer, supplier, licensee or other business relation of the Company to transact business with a Competitive Enterprise or to cease doing business with the Company or in any way interfere with the relationship between any such customer, supplier, licensee or business relation and the Company. 
(c)Non-Disparagement.  In the event a Participant’s employment is terminated in accordance with Section 3 or Section 4 of the Plan, after the Participant’s Date of Termination, (i) the Participant shall not make any statement that would libel, slander or disparage the Company or its past or present officers, directors, employees or agents and (ii) the Company and its directors and officers shall not make any statement that would libel, slander or disparage the Participant.  Either the Participant or the Company may respond accurately to any question, inquiry or request for information from any regulator or investor, or when required by legal process or legal and regulatory requirements, including disclosure requirements under applicable laws. 
(d)Confidentiality.  No Participant shall disclose to any unauthorized person, firm, corporation or other entity or use for his or her own account any information, observations and data obtained by the Participant during the course of his or her employment concerning the business and affairs of the Company or any Related Entities, including any information concerning acquisition opportunities in or reasonably related to the Company’s business or industry of which the Participant become aware during the Participant’s employment, without the Board’s written consent, unless and to the extent that the aforementioned matters: 
(i)become generally known to and available for use by the public other than as a result of the Participant’s acts or omissions, 
(ii)were known to the Participant prior to the Participant’s employment with the Company, or 
(iii)are required to be disclosed pursuant to any applicable law or court order.

                                                3

                                                

The Participant shall deliver to the Company upon the termination of the Participant’s employment, or at any other time the Company may request in writing, all memoranda, notes, plans, records, reports and other documents (and copies thereof) relating to the business of the Company or any of its subsidiaries (including, without limitation, all acquisition prospects, lists and contact information) that the Participant may then possess or have under his or her control.  For the avoidance of doubt, nothing in the Plan or any agreement with, or policy of, the Company restricts or impedes a Participant from providing truthful information to governmental or regulatory bodies, including a Participant’s right to make disclosures under the whistleblower provisions of applicable law or regulations. 
(e)Enforcement.  If, at the time of enforcement of this Section 9, a court holds that the restrictions stated herein are unreasonable under circumstances then existing, the maximum duration, scope or geographical area reasonable under such circumstances shall be substituted for the stated period, scope or area, and the court shall be allowed to revise the restrictions contained herein to cover the maximum duration, scope and area permitted by law. Because each Participant’s services are unique, the parties hereto agree that monetary damages would be an inadequate remedy for any breach of this Section 9.  Therefore, in the event of a breach or threatened breach of this Section 9, the Company may, in addition to other rights and remedies existing in its favor, apply to any court of competent jurisdiction for specific performance and/or injunctive or other relief in order to enforce, or prevent any violations of, the provisions hereof (without posting a bond or other security).
(f)Recoupment; Cessation of Obligations. In the event that the Participant breaches Section 9(a), 9(b), 9(c) or 9(d) hereof or materially breaches another provision of the Release, the Company shall have the right to recoup from the Participant all payments and benefits (or the value thereof as determined by the Compensation Committee in its sole discretion) provided to such Participant under the Plan and any obligation of the Company to make or provide any payments or benefits under the Plan will cease.
10.Section 280G of the Code.  
(a)In the event that any payments or benefits (whether under the Plan or otherwise) payable to a Participant (i) constitute “parachute payments” within the meaning of Section 280G of the Code, and (ii) but for this Section 10, would be subject to the excise tax imposed by Section 4999 of the Code, then such payments and benefits will be either (x) delivered in full, or (y) delivered as to such lesser extent that would result in no portion of such payments and benefits being subject to excise tax under Section 4999 of the Code, whichever of the foregoing amounts, taking into account the applicable federal, state and local income and employment taxes and the excise tax imposed by Section 4999 of the Code (and any equivalent state or local excise taxes), results in the receipt by the Participant, on an after-tax basis, of the greatest amount of benefits, notwithstanding that all or some portion of such payments and benefits may be taxable under Section 4999 of the Code.  Any reduction in payments and/or benefits required by this provision will occur in the following order: (1) reduction of vesting acceleration of equity awards; (2) reduction of Benefits Coverage; and (3) reduction of cash payments. In the event that acceleration of vesting of equity awards is to be reduced, such acceleration of vesting will be cancelled in the reverse order of the date of grant for equity awards. If two or more equity awards were granted on the same date, each award will be reduced on a pro-rata basis.
(b)All determinations required to be made under this Section 10, including the reduction payments hereunder and the assumptions to be utilized in arriving at such determinations, will be made by a public accounting firm that is retained by the Company as of the date immediately prior to the Change in Control (the “Accounting Firm”), which will provide detailed supporting calculations both to the Company and the Participant within fifteen (15) business days of the receipt of notice from the Company or the Participant that there has been a payment that may be subject to Section 4999 of the Code, or such earlier time as is requested by the Company, and whose determination will be conclusive and binding upon the Participant and the Company for all purposes.  For purposes of making the 

                                                4

                                                

calculations required by this Section 10, the Accounting Firm may make reasonable assumptions and approximations concerning applicable taxes and may rely on reasonable, good-faith interpretations concerning the application of Sections 280G and 4999 of the Code.  The Company and Participant agree to furnish to the Accountants such information and documents as the Accountants may reasonably request in order to make a determination under this provision. The Company shall bear all costs the Accountants may reasonably incur in connection with any calculations contemplated by this provision.  Any determinations by the Accounting Firm with respect to whether any payments or benefits are subject to reduction under this Section 10 shall be binding upon the Company and the Participant.
11.Successors; Binding Agreement. This Plan shall survive any Change in Control, and the provisions of this Plan shall be binding upon the surviving corporation, which shall be treated as the Company hereunder.  The benefits provided under this Plan shall inure to the benefit of and be enforceable by the Participant’s personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees.  If the Participant dies while any amounts would be payable to the Participant hereunder had the Participant continued to live, all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this Plan to such person or persons appointed in writing by the Participant to receive such amounts or, if no person is so appointed, to the Participant’s estate. 
12.Notice. 
(a)For purposes of the Plan, all notices and other communications required or permitted hereunder shall be in writing and shall be deemed to have been duly given when delivered or five (5) days after deposit in the United States mail, certified and return receipt requested, postage prepaid and addressed as follows: 
If to the Participant: 
The address listed as the Participant’s address in the Company’s personnel files. 
If to the Company: 

Verifone Systems, Inc.
Attention: General Counsel 
88 West Plumeria Drive
San Jose, CA 95134.
or to such other address as either party may have furnished to the other in writing in accordance herewith, except that notices of change of address shall be effective only upon receipt. 
(b)A written notice of the Participant’s Date of Termination by the Company or the Participant, as the case may be, to the other, shall (i) indicate the specific termination provision in the Plan relied upon, (ii) to the extent applicable, set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Participant’s employment under the provision so indicated and (iii) specify the Date of Termination (which date shall be not less than thirty (30) nor more than ninety (90) days after the giving of such notice). The failure by the Participant or the Company to set forth in such notice any fact or circumstance which contributes to a showing of Good Reason or Cause shall not waive any right of the Participant or the Company hereunder or preclude the Participant or the Company from asserting such fact or circumstance in enforcing the Participant’s or the Company’s rights hereunder. 

13.Full Settlement; Resolution of Disputes and Costs.
(a)In no event shall the Participant be obligated to seek other employment or take other action by way of mitigation of the amounts payable to the Participant under any of the provisions of 

                                                5

                                                

the Plan and, except as provided in the Release, such amounts shall not be reduced whether or not the Participant obtains other employment; provided that the Participant’s entitlement to Benefits Coverage may terminate in connection with the Participant’s commencement of alternative employment as set forth in Section 3(c) or Section 4(b)(iii).
(b)Any dispute or controversy arising under or in connection with the Plan shall be settled exclusively by arbitration in San Jose, California by three arbitrators in accordance with the commercial arbitration rules of the American Arbitration Association (“AAA”) then in effect. One arbitrator shall be selected by the Company, the other by the Participant and the third jointly by these arbitrators (or if they are unable to agree within thirty (30) days of the commencement of arbitration, the third arbitrator will be appointed by the AAA). Judgment may be entered on the arbitrators’ award in any court having jurisdiction. Notwithstanding anything in the Plan to the contrary, any arbitration panel that adjudicates any dispute, controversy or claim arising between a Participant and the Company, or any of their delegates or successors, in respect of a Participant’s Qualifying Termination that occurs during a CIC Termination Period, will apply a de novo standard of review to any determinations made by such person. Such de novo standard shall apply notwithstanding the grant of full discretion hereunder to any such person or characterization of any such decision by such person as final, binding or conclusive on any party. 
14.Employment with Subsidiaries. Employment with the Company for purposes of the Plan shall include employment with any Related Entity. 
15.Survival. The respective obligations and benefits afforded to the Company and the Participant as provided in Sections 3, 4 (to the extent that payments or benefits are owed as a result of a termination of employment that occurs during the term of the Plan), 6, 7, 9, 11 and 13 shall survive the termination of the Plan.  
16.GOVERNING LAW; VALIDITY. EXCEPT TO THE EXTENT THE PLAN IS SUBJECT TO THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED (“ERISA”), ALL RIGHTS AND OBLIGATIONS UNDER THE PLAN SHALL BE CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT GIVING EFFECT TO PRINCIPLES OF CONFLICT OF LAWS. THE INVALIDITY OR UNENFORCEABILITY OF ANY PROVISION OF THE PLAN SHALL NOT AFFECT THE VALIDITY OR ENFORCEABILITY OF ANY OTHER PROVISION OF THE PLAN, WHICH OTHER PROVISIONS SHALL REMAIN IN FULL FORCE AND EFFECT. 
17.Amendment and Termination. The Compensation Committee may amend or terminate the Plan at any time without the consent of the Participants and may remove a Participant from the Plan for any reason; provided that no such removal will take effect until the first day of the Fiscal Year immediately following the Fiscal Year in which the removal action is taken by the Committee.  Notwithstanding the foregoing, during a CIC Termination Period, the Plan may not be amended in a manner that is adverse to the interests of the Participants or terminated by the Compensation Committee (or any successor committee thereto) and any Participant’s participation hereunder may not be terminated, in each case without the prior written consent of such Participant.
18.Interpretation and Administration. The Plan shall be administered by the Compensation Committee (or any successor committee). The Compensation Committee (or any successor committee) shall have the authority (a) to exercise all of the powers granted to it under the Plan, (b) to construe, interpret and implement the Plan, (c) to prescribe, amend and rescind rules and regulations relating to the Plan, (d) to make all determinations necessary or advisable with respect to the administration of the Plan, (e) to correct any defect, supply any omission and reconcile any inconsistency in the Plan, and (f) to delegate its responsibilities and authority hereunder to a subcommittee of the Compensation Committee.  All determinations by the Compensation Committee (or any successor committee) shall be made in the committee’s reasonable discretion and be final and binding on Participants; provided that a de novo standard of review will apply to any such determinations made following a Change in Control.

                                                6

                                                

19.Claims and Appeals. Participants may submit claims for benefits by giving notice to the Company pursuant to Section 12 of the Plan. If a Participant believes that he or she has not received coverage or benefits to which he or she is entitled under the Plan, the Participant may notify the Compensation Committee in writing of a claim for coverage or benefits. If the claim for coverage or benefits is denied in whole or in part, the Compensation Committee shall notify the applicant in writing of such denial within thirty (30) days (which may be extended to sixty (60) days under special circumstances), with such notice setting forth: (i) the specific reasons for the denial; (ii) the Plan provisions upon which the denial is based; (iii) any additional material or information necessary for the applicant to perfect his or her claim; and (iv) the procedures for requesting a review of the denial. Upon a denial of a claim by the Compensation Committee, the Participant may: (i) request a review of the denial by the Compensation Committee or, where review authority has been so delegated, by such other person or entity as may be designated by the Compensation Committee for this purpose; (ii) review any Plan documents relevant to his or her claim; and (iii) submit issues and comments to the Compensation Committee or its delegate that are relevant to the review. Any request for review must be made in writing and received by the Compensation Committee or its delegate within sixty (60) days of the date the applicant received notice of the initial denial, unless special circumstances require an extension of time for processing. The Compensation Committee or its delegate will make a written ruling on the applicant’s request for review setting forth the reasons for the decision and the Plan provisions upon which the denial, if appropriate, is based. This written ruling shall be made within thirty (30) days of the date the Compensation Committee or its delegate receives the applicant’s request for review unless special circumstances require an extension of time for processing, in which case a decision will be rendered as soon as possible, but not later than sixty (60) days after receipt of the request for review. All extensions of time permitted by this Section 19 will be permitted at the sole discretion of the Compensation Committee or its delegate. If the Compensation Committee does not provide the Participant with written notice of the denial of his or her appeal, the Participant’s claim shall be deemed denied.
20.Type of Plan. The Plan is intended to be, and shall be interpreted as an unfunded employee welfare plan under Section 3(1) of ERISA and Section 2520.104-24 of the Department of Labor Regulations, maintained primarily for the purpose of providing employee welfare benefits, to the extent that it provides welfare benefits, and under Sections 201, 301 and 401 of ERISA, as a plan that is unfunded and maintained primarily for the purpose of providing deferred compensation, to the extent that it provides such compensation, in each case for a select group of management or highly compensated employees (i.e., a “top hat” plan).
21.Nonassignability. Benefits under the Plan may not be assigned by the Participant. The terms and conditions of the Plan shall be binding on the successors and assigns of the Company. 
22.Section 409A. 
(a)To the extent a Participant would otherwise be entitled to any payment or benefit that under the Plan, or any plan or arrangement of the Company or its affiliates, constitutes “deferred compensation” subject to Section 409A and that if paid or provided during the six (6) months beginning on the date of termination of a Participant’s employment would be subject to the Section 409A additional tax because the Participant is a “specified employee” (within the meaning of Section 409A and as determined by the Company), the payment or benefit will be paid or provided (or will commence being paid or provided, as applicable) to the Participant on the earlier of the six (6) month anniversary of the Participant’s Date of Termination or the Participant’s death. In addition, any payment or benefit due upon a termination of the Participant’s employment that represents a “deferral of compensation” within the meaning of Section 409A shall be paid or provided to the Participant only upon a “separation from service” as defined in Treasury Regulation Section 1.409A-1(h). Each severance payment made under the Plan shall be deemed to be separate payments, and amounts payable under Section 3 or Section 4 of the Plan shall be deemed not to be a “deferral of compensation” subject to Section 409A to the extent provided in the exceptions in Treasury Regulation Sections 1.409A-1(b)(4) (“short-term deferrals”) and 

                                                7

                                                

(b)(9) (“separation pay plans,” including the exception under subparagraph (iii)) and other applicable provisions of Treasury Regulation Sections 1.409A-1 through A-6.
(b)Any payment due upon a Change in Control will be paid only if such Change in Control constitutes a “change in ownership” or “change in effective control” within the meaning of Section 409A, and in the event that such Change in Control does not constitute a “change in the ownership” or “change in the effective control” within the meaning of Section 409A, such award will vest upon the Change in Control and any payment will be delayed until the first compliant date under Section 409A.
(c)Notwithstanding anything to the contrary in the Plan or elsewhere, any payment or benefit under the Plan or otherwise that is exempt from Section 409A pursuant to final Treasury Regulation Sections 1.409A-1(b)(9)(v)(A) or (C) shall be paid or provided to the Participant only to the extent that the expenses are not incurred, or the benefits are not provided, beyond the last day of the Participant’s second taxable year following the Participant’s taxable year in which the “separation from service” occurs; and provided, further, that such expenses are reimbursed no later than the last day of the Participant’s third taxable year following the taxable year in which the Participant’s “separation from service” occurs. Except as otherwise expressly provided herein, to the extent any expense reimbursement or the provision of any in-kind benefit under the Plan is determined to be subject to Section 409A, the amount of any such expenses eligible for reimbursement, or the provision of any in-kind benefit, in one (1) calendar year shall not affect the expenses eligible for reimbursement in any other taxable year (except for any lifetime or other aggregate limitation applicable to medical expenses), in no event shall any expenses be reimbursed after the last day of the calendar year following the calendar year in which the Participant incurred such expenses, and in no event shall any right to reimbursement or the provision of any in-kind benefit be subject to liquidation or exchange for another benefit. Notwithstanding anything to the contrary in the Plan or elsewhere, in the event that a Participant waives the provisions of another severance or change in control agreement or arrangement to participate in the Plan and such participation in the Plan is later determined to be a “substitution” (within the meaning of Section 409A) for the benefits under such agreement or arrangement, then any payment or benefit under the Plan that such Participant becomes entitled to receive during the remainder of the waived term of such agreement or arrangement shall be payable in accordance with the time and form of payment provisions of such agreement or arrangement.
23.Effective Date and Term. The Plan shall be effective as of September 19, 2016 (the “Effective Date”) and terminate on October 31, 2020; provided that, if a Change in Control occurs less than one (1) year prior to the end of the term of the Plan, the term shall be extended such that it terminates one (1) year after the date of the Change in Control.
24.Definitions. As used in the Plan, the following terms shall have the respective meanings set forth below. Capitalized terms not defined herein shall have the same meaning as under the Verifone Systems, Inc. (formerly, Verifone Holdings, Inc.) 2006 Equity Incentive Plan, as may be amended from time to time, or any successor plan thereto (the “2006 Plan”).
(a)“Base Salary” means the Participant’s annual rate of base salary as in effect on the Participant’s termination date (or, if greater, the highest annual rate of base salary during the twelve-month period immediately prior to the Participant’s termination date). 
(b)“Board” means the Board of Directors of the Company. 
(c)“Cause” means any of the following with respect to a Participant: 
(i)the Participant’s conviction of a felony or any crime or offense lesser than a felony involving dishonesty, disloyalty or fraud with respect to the Company or any Related Entity or any of their respective properties or assets; 
(ii)the Participant’s gross negligence or willful misconduct that has caused demonstrable and serious injury to the Company or a Related Entity, monetary or otherwise; 

                                                8

                                                

(iii)the Participant’s willful refusal to perform or substantial disregard of duties properly assigned, as determined by the Company or a Related Entity, as the case may be;
(iv)the Participant’s breach of their duty of loyalty to the Company or a Related Entity or any act of fraud or dishonesty with respect to the Company or a Related Entity;
(v)the Participant’s engagement in insider trading; 
(vi)the Participant’s breach of the Company’s ethics policy, as in effect from time to time; 
(vii)the Participant’s engagement in accounting improprieties as determined by the Board in its discretion; 
(viii)the Participant’s failure or refusal to cooperate with governmental investigations involving the Company; or 
(ix)the Participant’s disqualification or bar by any governmental or self-regulatory authority from serving as an officer of the Company or any Related Entity.
Notwithstanding the foregoing, if a Participant is party to an effective employment agreement with the Company that provides a definition for “Cause”, “Cause” shall have the same meaning as under such agreement. 

(d)“Change in Control” has the meaning set forth in the 2006 Plan.
(e)“CIC Termination Period” means the period of time beginning three months prior to a Change in Control and ending twelve (12) months following such Change in Control; provided that the period of time three months prior to such Change in Control shall only be considered part of the CIC Termination Period if the Participant’s employment is terminated by the Company without Cause or by the Participant for Good Reason at the request of a third party purchaser in connection with a Change in Control, as determined in good faith by the Compensation Committee. 
(f)“Code” means the Internal Revenue Code of 1986, as amended. 
(g)“Compensation Committee” means the Compensation Committee of the Board.
(h)“Competitive Enterprise” means: 
(i)any business competing with the businesses of the Company as of a Participant’s Date of Termination, or 
(ii)any business in which the Company has entertained discussions or has requested and received information relating to the acquisition of such business by the Company during the six-month period immediately preceding the Participant’s Date of Termination; 
provided that the Participant may hold up to a 1% passive equity interest in a public company that may be a Competitive Enterprise.
(i)“Company” means Verifone Systems, Inc., together with its subsidiaries. 
(j)“Date of Termination” means the effective date on which the Participant’s employment by the Company terminates as specified in a prior written notice by the Company or the Participant, as the case may be, to the other, delivered pursuant to Section 12.
(k)“Disability” means a disability that would entitle a Participant to payment of regular disability payments under any Company disability plan or as otherwise determined by the Compensation Committee.
(l)“Fiscal Year” means the period beginning on November 1 of a calendar year and ending on October 31 of the following calendar year or such other period as shall be designated by the Board as the Company’s fiscal year.
(m)“Good Reason” means the occurrence of one or more of the following circumstances, without the Participant’s express written consent: 

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(i)the assignment to the Participant, without the Participant’s written consent, of substantial duties that are materially inconsistent with the Participant’s title, position, authority, duties, work location or responsibilities prior to such assignment, or any other action by the Company which results in a material diminution or material adverse change in the Participant’s title, position, authority, duties, work location or responsibilities;
(ii)a material reduction by the Company in the Participant’s aggregate rate of base salary or target annual bonus opportunity (including any material and adverse change in the formula for such targets); or
(iii)the failure of the Company to obtain the assumption of the Company’s obligations hereunder from any successor.
Notwithstanding the foregoing, a termination for Good Reason shall not have occurred unless (x) the Participant gives written notice to the Company describing in reasonable detail the Good Reason event that has occurred within ninety (90) days of the Participant’s obtaining knowledge of the event, (y) the Company has failed within thirty (30) days of receipt of such written notice to remedy the circumstances constituting Good Reason and (z) the Participant’s termination of employment occurs no later than 150 days following the initial existence of the circumstances constituting Good Reason.
Notwithstanding the foregoing, if a Participant is party to an effective employment agreement with the Company that provides a definition for “Good Reason”, “Good Reason” shall have the same meaning as under such agreement. 

(n) “Performance-Based Equity Award” means any equity-based award that is subject to pre-established performance criteria and is intended to constitute performance-based compensation.
(o)“Qualifying Termination” means a termination of the Participant’s employment with the Company (i) by the Company other than for Cause or (ii) by the Participant for Good Reason after a Change in Control. Termination of the Participant’s employment on account of death, Disability, by the Company for Cause or by the Participant other than for Good Reason shall not be treated as a Qualifying Termination. Notwithstanding the preceding sentence, the death of the Participant after notice of termination for Good Reason or without Cause has been validly provided shall be deemed to be a Qualifying Termination. 
(p)“Related Entity” means any subsidiary or entity in which the Company holds at least a 25% ownership interest, and any other entity designated by the Board.
(q)“Release” means a final and non-revocable general release in a form determined by the Company.
(r)“Section 409A” means Section 409A of the Internal Revenue Code of 1986, as amended, and the final Treasury regulations issued thereunder. 

 

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