Document:

EXHIBIT
10.4

 

FORM OF
BEHRINGER HARVARD HOLDINGS

SERVICE MARK LICENSE AGREEMENT

 

THIS SERVICE MARK LICENSE
AGREEMENT (this “Agreement”) is made and entered
into this          day of                     ,
2008 (the “Effective Date”), by and between
BEHRINGER HARVARD HOLDINGS, LLC, a Delaware limited liability company (the “Licensor”), and BEHRINGER HARVARD REIT II, INC., a Maryland
corporation (the “Licensee”).

 

RECITALS

 

WHEREAS, Licensor is the owner
of valid and subsisting rights in and to the service marks “BEHRINGER HARVARD”
(U.S. Registration No. 2,947,624) ); and the “BEHRINGER HARVARD
MISCELLANEOUS CIRCULAR DESIGN LOGO” (U.S. Registration No. 3,200,214)
(referred to herein collectively as the “Licensed Mark”)
and similar marks in a variety of design and words-only formats, both in the
United States and in various foreign jursidictions; and

 

WHEREAS, of even date herewith, Behringer Advisors
II LP, a Texas limited partnership and an affiliate of Licensor (the “Advisor”), and Licensee have entered into an Advisory
Management Agreement, pursuant to the terms of which Advisor will provide
certain management and financial advisory services to Licensee in accordance
with the terms and conditions thereof (the “Advisory
Agreement”); and

 

WHEREAS, Licensor is a “sponsor” of Licensee, as
that term is defined in the charter of Licensee;

 

WHEREAS, for so long as Licensor desires to
sponsor Licensee, Licensor desires to permit Licensee to utilize the Licensed
Mark solely in connection with the operation and promotion of Licensee’s real
estate business as intended to be conducted as of the Effective Date (the “REIT Operations”).

 

NOW, THEREFORE, in consideration of the mutual
covenants and promises contained in this Agreement, the Advisory Agreement and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged and accepted by the parties to this Agreement, Licensor and
Licensee mutually agree as follows:

 

AGREEMENTS

 

1.     Grant of License; Territory.

 

a.             Upon
the terms and conditions hereinafter set forth, Licensor hereby grants to
Licensee, for the period specified in Section 5 hereof, a
non-exclusive, royalty-free, limited and nontransferable license to use the
Licensed Mark solely for the purpose of identifying and promoting the REIT
Operations worldwide.  In addition, each person
or entity directly or indirectly controlled by Licensee on or after the
Effective Date, either through the ownership of voting securities or otherwise
(each person or entity a “Licensee Subsidiary”),
shall have all of the rights granted to Licensee in this Section 1(a),
but only during the period that the person or entity is directly or indirectly controlled
by Licensee, either through the ownership of voting securities or otherwise.  Any reference in this Agreement to use of the
Licensed Mark by Licensee shall be deemed to include use of the Licensed Mark
by any Licensee Subsidiary during the period that the Licensee Subsidiary is
directly or indirectly controlled by Licensee, either through the ownership of
voting securities or otherwise.

 

 

b.             Licensor
expressly reserves all rights with respect to the Licensed Mark not expressly
granted herein.  Except as provided in Section 1(a) with
respect to a Licensee Subsidiary, Licensee shall have no right to sublicense
the use of the Licensed Mark to any other person or entity without the prior
written consent of Licensor, which may be withheld or granted in Licensor’s
sole and absolute discretion.

 

2.     Acknowledgement of Ownership.

 

a.             Licensee
acknowledges the great value of the goodwill associated with the Licensed Mark
and the ownership of the Licensed Mark by Licensor.  Licensee agrees that nothing in this
Agreement shall give Licensee any right, title, or interest in or to the
Licensed Mark other than the rights granted the Licensee in accordance with
this Agreement.  Licensee further
acknowledges that all goodwill arising from the ownership and use of the
Licensed Mark (as distinguished from any enhancement of value to Licensee’s
business arising from the license granted hereunder) shall inure exclusively to
the benefit of Licensor.  All artwork,
designs, stylized logotypes or other presentation materials whatsoever
including the Licensed Mark or any elements thereof, and all copies and
extracts thereof shall, notwithstanding their invention or use by Licensee, be
and remain the sole property of Licensor. 
Nothing in this Agreement shall be
construed to prevent Licensor from granting any other licenses for the use of
the Licensed Mark or from utilizing the Licensed Mark, or any variation
thereof, in any manner whatsoever.

 

b.             Licensee
agrees that it shall not attack the title of Licensor to the Licensed Mark, the
validity of the Licensed Mark, or the validity of this Agreement.  Licensee further agrees that it shall not at
any time commence any opposition or cancellation proceeding regarding the
Licensed Mark, or any other mark of Licensor, with the U.S. Patent and
Trademark Office or any other agency that registers trademarks, commence any
civil proceeding for damages or injunctive relief or make any other legal claim
that would, directly or indirectly, hinder the value of or the Licensor’s ownership
or use of the Licensed Mark or prevent the U.S. Patent and Trademark Office or
any other agency that registers trademarks from issuing a trademark
registration to Licensor for the Licensed Mark, or any variations thereof, or
from renewing any trademark registration for the Licensed Mark, or any
variations thereof.

 

c.             Licensee
shall not register or attempt to register the Licensed Mark alone or as part of
its own trademark, service mark, Internet domain name, copyright, assumed name
or trade name (except as may be otherwise required by applicable law in
connection with Licensee’s REIT Operations during the term of this Agreement),
nor shall Licensee use in such manner or attempt to register any name or
designation confusingly similar to the Licensed Mark as determined in Licensor’s
sole and absolute discretion.

 

d.             Licensee
may not use the Licensed Mark in any manner to disparage Licensor, its products
or services, or in any manner which, in Licensor’s reasonable judgment, may
diminish or otherwise damage Licensor’s goodwill in the Licensed Mark or
Licensor’s business reputation.

 

e.             The
provisions of this Section 2 shall survive the expiration or
termination of this Agreement for any reason.

 

3.     Quality Control.

 

a.             Licensee
shall use the Licensed Mark solely as permitted in Section 1(a) above
in a manner that will reasonably protect Licensor’s rights and goodwill therein,
and will comply with all reasonable and customary trademark usage guidelines
delivered to Licensee by Licensor from time to time, including those regarding
the use of notices, legends, or markings that may be required by Licensor in
order to give customary notice of ownership, including those provided in Section 4
hereof.

 

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b.             Licensee
shall, upon Licensor’s reasonable request: (i) permit Licensor to inspect
the manner in which the Licensee exercises the rights granted hereunder to use
the Licensed Mark, and (ii) make available for Licensor’s inspection, at
reasonable times and after reasonable notice from Licensor, all of Licensee’s
materials relating to or displaying the Licensed Mark or any elements thereof.

 

c.             Licensee
agrees that the products and services offered in connection with the Licensed
Mark shall be sold and distributed in accordance with all Federal, State and
local laws.

 

d.             If
at any time the Licensee’s promotional materials, documents or signage bearing
the Licensed Mark do not meet the quality standards described in this Section 3,
Licensor shall have the right to require the Licensee to discontinue any and
all nonconforming uses of the Licensed Mark immediately upon notice whereupon Licensee
agrees to use its best efforts to cease all nonconforming uses immediately.

 

4.             Protection of Licensed Mark.

 

a.             Each
time the Licensed Mark is used on any product, document, signage, exterior
display or other printed or tangible material or on the Internet, Licensee
shall legibly include either the trademark or service mark notice “TM” or “SM”,
as appropriate, or the Federal registration notice ®, if directed to do so by
Licensor, adjacent to the first prominent use of the Licensed Mark therein or
thereon.

 

b.             When
directed by Licensor to do so, Licensee shall include the following notice on
any packaging, product, advertising, or promotional materials incorporating the
Licensed Mark presented in any medium now known or hereafter created:

 

“BEHRINGER HARVARD” is a service mark of Behringer Harvard
Holdings, LLC.

 

c.             Licensee
agrees to provide Licensor with any assistance as Licensor may reasonably
require, at Licensor’s expense, in the procurement of any protection of
Licensor’s rights to the Licensed Mark, or any similar mark.

 

d.             Licensee
agrees that at all times during the term of this Agreement it will diligently
and continuously cause to be promoted and rendered the REIT Operations as set
forth in Section 1 hereof. 
Licensor shall not be under any obligation whatsoever to utilize the
Licensed Mark or any variation thereof.

 

5.             Term.

 

This Agreement shall continue in force and effect from
the Effective Date and shall be coterminous with the Licensor’s sponsorship of
Licensee, unless terminated earlier as provided for herein.  For purposes of the preceding sentence,
Licensor’s sponsorship shall be deemed to continue until the time that no
Affiliate (as that term is defined in the Advisory Agreement) of Licensor
serves as an officer or director of Licensee.

 

6.             Termination.

 

a.             If
Licensee breaches or otherwise fails to perform any of its obligations
hereunder, Licensor shall have the right to terminate this Agreement
upon thirty (30) days’ prior written notice to Licensee, but only in the event
the failure of performance is not cured to Licensor’s satisfaction within the
thirty (30) day period.  Termination of this Agreement shall be
without prejudice to any rights or remedies 

 

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that Licensor may otherwise have against Licensee,
which rights and remedies shall survive any termination.

 

b.             If
at any time during the term of this Agreement Licensee ceases to conduct the
REIT Operations under the Licensed Mark, Licensor in addition to all other
remedies available to it hereunder, may immediately terminate this Agreement by
giving written notice of termination to Licensee.

 

c.             If
Licensee files a petition in bankruptcy or is adjudicated bankrupt or if a
petition in bankruptcy is filed against Licensee or if it becomes insolvent, or
makes an assignment for the benefit of its creditors or an arrangement pursuant
to any bankruptcy law, or if Licensee liquidates or discontinues its business
or if a receiver is appointed for it or its business, the license hereby granted
and this Agreement shall automatically terminate forthwith without any notice
whatsoever being necessary.  In the event
this Agreement is so terminated, Licensee, its receivers, representatives,
trustees, agents, administrators, successors or assigns shall have no right to
sublicense, sell, exploit or in any way deal with or in or use the Licensed
Mark or any variation thereof, except with and under the special consent and
instructions of Licensor in writing, which they shall be obligated to follow.

 

d.             Upon
termination of this Agreement for any reason, Licensee agrees:  (i) to, within a reasonable time but not
to exceed ninety (90) days, discontinue all use of the Licensed Mark and any
name confusingly similar thereto; (ii) to, within a reasonable time but
not to exceed ninety (90) days, delete, remove or cover-over all references to
the Licensed Mark, or any confusingly similar variation thereof, in all of
Licensee’s printed materials, signage or other exterior displays, and on the
Internet; (iii) to not thereafter, directly or indirectly, identify itself
in any manner as a licensee of Licensor or publicly identify itself as a former
licensee of Licensor; (iv) to cooperate generally with Licensor to ensure
that all rights in the Licensed Mark and the related goodwill remain the
property of Licensor and to execute any instruments requested by Licensor to
accomplish or confirm the foregoing;  (v) that
all rights granted to Licensee hereunder
shall forthwith revert to Licensor without consideration other than the mutual
covenants and considerations of this Agreement, and without notice; (vi) to
cease to conduct any business, including, without limitation, the REIT
Operations, under or to otherwise use the names “HARVARD” or “BEHRINGER” or any
confusingly similar terms and to use its best efforts to change the corporate
name of Licensee to a name that does not contain the terms “HARVARD” or “BEHRINGER”
or any confusingly similar terms which may, directly or indirectly in the sole
discretion of Licensor, indicate a continuing relationship between, or
sponsorship of, Licensee by Licensor or any of Licensor’s Affiliates; and (vii) to
deliver to Licensor within fifteen days from the date of termination any and all
artwork, designs, stylized logotypes or other electronic or intangible
presentation materials whatsoever including the Licensed Mark or any elements
thereof prepared by or for Licensee, and all copies and extracts thereof.

 

e.             Licensee
acknowledges that its failure to cease the use and display of the Licensed
Mark, or any variation thereof, upon the termination or expiration of this
Agreement will result in immediate and irremediable damage to Licensor and to
the rights of any current or subsequent licensee.  Licensee acknowledges and admits that there is
no adequate remedy at law for the failure to cease the use, and Licensee agrees
that in the event of the failure Licensor shall be entitled to equitable relief
by way of temporary and permanent injunction and temporary restraining order
and any other further relief as any court with jurisdiction may deem just and
proper.  Resort to any remedies referred
to herein shall not be construed as a waiver of any other rights and remedies
to which Licensor is entitled under this Agreement or otherwise.

 

7.             Third-Party Infringement
Proceedings.

 

Licensee agrees to promptly notify Licensor of any
unauthorized use of the Licensed Mark or any confusingly similar variation
thereof by third parties of which Licensee becomes aware.  Licensor shall 

 

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have the sole right to pursue through negotiations,
litigation, or other dispute resolution procedure (“Litigation
Rights”) any and all of its rights in the Licensed Mark against any
third party.  Licensor’s exercise of the
Litigation Rights shall be in its sole discretion and shall be at its sole
cost.  Licensor shall have no duty to
defend Licensee or itself or pursue any actual infringement arising out of any
actions by a third party.  All recoveries
received by Licensor in pursuing its Litigation Rights, if any, shall be the
sole property of Licensor.

 

8.             Representations and Warranties.

 

a.             Licensor represents and warrants that this Agreement
will not violate any prior licenses or rights to use the Licensed Mark granted
by Licensor to any third party.

 

b.             Each
party hereto hereby represents and warrants to the other that the party has the
corporate, company or partnership power and authority to execute and deliver
this Agreement and to perform its obligations hereunder, and that the
execution, delivery and performance of this Agreement by it have been duly
authorized by all necessary corporate, company or partnership action.

 

9.             Indemnification.

 

                Licensee hereby agrees to
indemnify and hold Licensor harmless from and against any and all claims,
suits, liabilities, judgments, and expenses, arising at law or in equity,
attributable, in whole or in part, to: (i) the Licensee’s use of the
Licensed Mark in violation of this Agreement or of any trademark usage
guidelines provided to Licensee by Licensor; or (ii) the marketing,
promotion, advertisement, distribution, or sale by Licensee of any product or
service under the Licensed Mark. 
Moreover, Licensee hereby further agrees to tender to Licensor the
defense of any and all claims, actions and lawsuits that may be brought against
Licensor arising out of, or related to, the wrongful use of the Licensed Marks
by the Licensee and the Licensee shall pay all fees and expenses (including all
reasonable attorneys’ and expert witnesses’ fees and costs of suit) incurred in
connection with defending all of these claims, actions and lawsuits; provided,
that Licensee shall have no obligation to pay any fees or expenses for claims,
actions and lawsuits brought by a third party against the Licensor claming that
the Licensed Mark violates or infringes upon the rights of the third party.  Licensor shall control the defense with
counsel of its choice, however, Licensee shall have the right to participate in
the defense at its own cost and expense and Licensee shall provide reasonable
cooperation to Licensor and its counsel with respect thereto; provided that in
no event may Licensor settle any claim, action or lawsuit in which the Licensee
is a named defendant without the consent of the Licensee.  Licensor shall also have the independent
right to take any action it may deem necessary, in its sole discretion, to
protect and defend itself against any threatened action arising out of the
business of Licensee or any actions or activity by Licensee, including Licensee’s
use of the Licensed Mark or any goods or services distributed or sold under the
Licensed Mark.  Notwithstanding the
foregoing, Licensee’s exculpation and indemnification obligations hereunder as
well as Licensee’s obligations with respect to the advancement of expenses,
shall be limited as provided in its charter.

 

10.          Limitation of Liability

 

Licensor shall not be liable to Licensee for lost
profits, lost business opportunities, or any other indirect, special, punitive,
incidental or consequential damages arising out of or related to this
Agreement, even if Licensor has been advised of the possibility of
damages.  The provisions of this Section 10
shall survive the termination of this Agreement for any reason.

 

5

 

11.          Miscellaneous

 

a.             Assignment.  Licensee shall neither assign any of its
rights under this Agreement nor delegate any of its duties hereunder to another
person or legal entity without the prior written consent of Licensor, which may
be withheld in Licensor’s sole discretion. 
Any attempt to assign or delegate this Agreement, or any of the rights,
licenses or duties set forth herein, shall be void ab initio and convey no
rights or interests in the Licensed Mark. 
Licensor shall have the right, in its sole discretion, to assign any of
its rights or duties under this Agreement and all of its right, title, and
interest in the Licensed Mark to another person or legal entity.  Notwithstanding anything to the contrary
herein, this Section 11(a) shall not limit the rights granted
in Section 1(a) with respect to a Licensee Subsidiary.

 

b.             Notices.  All notices or other communications required
or permitted to be given by either party hereto to the other party under this
Agreement shall be in writing and shall be sent by United States Mail,
certified or registered, postage prepaid, return receipt requested or by
an internationally recognized overnight carrier, in each case addressed to the
party to be notified as follows:

 

(i) to
Licensee at the address set forth in the Advisory Agreement, as the same may be
modified as provided therein; and

 

	
   

  	
  (ii) to
  Licensor:

  	
  Behringer
  Harvard Holdings, LLC

  
	
   

  	
   

  	
  15601
  Dallas Parkway

  	
   

  
	
   

  	
   

  	
  Suite 600

  	
   

  
	
   

  	
   

  	
  Addison,
  Texas 75001

  	
   

  
	
   

  	
   

  	
  Attention:
  Gerald J. Reihsen III

  
	
   

  	
   

  	
   

  	
  Executive
  Vice President Corporate

  
	
   

  	
   

  	
   

  	
  Development
  and Legal

  
	
   

  	
   

  	
   

  
	
   

  	
  With
  a copy to (which shall not constitute notice):

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Stephen
  L. Sapp, Esq.

  
	
   

  	
   

  	
  Locke
  Lord Bissell & Liddell LLP

  
	
   

  	
   

  	
  2200
  Ross Avenue, Suite 2200

  
	
   

  	
   

  	
  Dallas,
  Texas 75201

  
					

 

Notice
delivered by mail shall be deemed given on the third Business Day after being
deposited in a post office or other depository under the care or custody of the
United States Postal Service, enclosed in a wrapper with proper postage
affixed.  Notice given by overnight
courier shall be deemed given upon receipt by the recipient of notice.  Licensor may change the address for notice
specified herein by providing written notice to Licensee as set forth herein.

 

c.             Independent
Contractors.  The parties acknowledge
and agree that they are dealing with each other hereunder as independent
contractors.  Nothing contained in this
Agreement shall be interpreted as constituting either party the joint venturer
or partner of the other party or as conferring upon either party the power or authority
to bind the other party in any transaction with third parties.

 

d.             Attorneys’
Fees.  In the event of any action,
suit, or proceeding brought by either party to enforce the terms of this
Agreement, the prevailing party shall be entitled to receive its costs, expert
witness fees, and reasonable attorneys’ fees and expenses, including costs and
fees on appeal.

 

e.             Waivers,
Cumulative Remedies and Amendments. 
This Agreement may be amended, modified, superseded, or canceled, and
the terms and conditions hereof may be waived only by a written 

 

6

 

instrument signed by each of the parties hereto or, in
the case of a waiver, by the party waiving compliance.  No delay on the part of any party in
exercising any right, power or privilege hereunder shall operate as a waiver
thereof, nor shall any waiver on the part of any party of any right hereunder,
nor any single or partial exercise of any rights hereunder, preclude any other
or further exercise thereof or the exercise of any other right hereunder.  Unless expressly set forth herein to the
contrary, either party’s election of any remedies provided for in this
Agreement shall not be exclusive of any other remedies available hereunder or
otherwise and all remedies shall be deemed to be cumulative.

 

f.              Approval.  Any approval given by Licensor to Licensee
under the terms of this Agreement shall not constitute a waiver of any of
Licensor’s rights or Licensee’s duties under any provision of this Agreement,
other than with respect to the provision for which the specific approval was
provided, subject to the other provisions hereof.

 

g.             Survival.  Upon the termination of this Agreement for
any reason, those Sections that by their express terms or which by their nature
should be deemed to survive the termination of this Agreement shall survive the
termination of this Agreement.

 

h.             Governing
Law and Validity.  The parties agree
that the laws of the State of Texas shall govern the interpretation and
enforcement of this Agreement, without giving effect to choice of law
rules.  If any provision of this
Agreement is held to be void, invalid or inoperative, the event shall not
affect any other provisions herein, which shall continue and remain in full
force and effect as though the void, invalid or inoperative provision had not
been a part hereof.

 

i.              Entire
Agreement.  This Agreement
constitutes the entire agreement between the parties hereto with respect to the
Licensed Mark and related subject matter and supersedes all prior agreements
and understandings, oral and written, between the parties hereto with respect
to those matters.

 

[Signature Page Follows]

 

7

 

IN WITNESS WHEREOF, the parties hereto have caused
this Agreement to be duly executed as of the Effective Date.

 

	
   

  	
  LICENSOR:

  
	
   

  	
   

  
	
   

  	
  BEHRINGER
  HARVARD HOLDINGS, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  LICENSEE:

  
	
   

  	
   

  
	
   

  	
  BEHRINGER
  HARVARD REIT II, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

8Exhibit 10.1

 

HORRY COUNTY STATE BANK

SALARY CONTINUATION AGREEMENT

 

THIS
SALARY CONTINUATION AGREEMENT (this “Agreement”) is adopted this
         day of                   ,
2008, by and between Horry County State Bank, a state-chartered commercial bank
located in Loris, South Carolina (the “Bank”), and
          
           (the “Executive”).

 

The
purpose of this Agreement is to provide specified benefits to the Executive, a
member of a select group of management or highly compensated employees who
contribute materially to the continued growth, development and future business
success of the Bank.  This Agreement
shall be unfunded for tax purposes and for purposes of Title I of the Employee
Retirement Income Security Act of 1974 (“ERISA”), as amended from time to time.

 

Article 1

Definitions

 

Whenever used in this Agreement, the following
words and phrases shall have the meanings specified:

 

1.1           “Accrual Balance” means the liability that
should be accrued by the Bank, under Generally Accepted Accounting Principles (“GAAP”),
for the Bank’s obligation to the Executive under Section 2.1 of this
Agreement, by applying Accounting Principles Board Opinion Number 12 (“APB 12”)
as amended by Statement of Financial Accounting Standards Number 106 (“FAS 106”)
and the Discount Rate.  Any one of a
variety of amortization methods may be used to determine the Accrual
Balance.  However, once chosen, the
method must be consistently applied.

 

1.2           “Base Salary” means the
annual cash compensation relating to services performed during any calendar
year, excluding distributions from nonqualified deferred compensation plans,
bonuses, commissions, overtime, fringe benefits, stock options, relocation
expenses, incentive payments, non-monetary awards, and other fees, and
automobile and other allowances paid to the Executive for employment rendered
(whether or not such allowances are included in the Executive’s gross
income).  Base Salary shall be calculated
before reduction for compensation voluntarily deferred or contributed by the
Executive pursuant to all qualified or non-qualified plans of the Bank and
shall be calculated to include amounts not otherwise included in the Executive’s
gross income under Code Sections 125, 402(e)(3), 402(h), or 403(b) pursuant
to plans established by the Bank; provided, however, that all such amounts will
be included in compensation only to the extent that had there been no such
plan, the amount would have been payable in cash to the Executive.

 

1.3           “Beneficiary” means each designated
person or entity, or the estate of the deceased Executive, entitled to any
benefits upon the death of the Executive pursuant to Article 4.

 

 

1.4           “Beneficiary
Designation Form” means the form established from time to time by the Plan
Administrator that the Executive completes, signs and returns to the Plan
Administrator to designate one or more Beneficiaries.

 

1.5           “Board”
means the Board of Directors of the Bank as from time to time constituted.

 

1.6           “Change in
Control” means a change in the ownership or effective control of the Bank,
or in the ownership of a substantial portion of the assets of the Bank, as such
change is defined in Code Section 409A and regulations thereunder.  As used in this Agreement, a Change in
Control shall also include a Change in Control of the Corporation.

 

1.7           “Code” means the Internal Revenue
Code of 1986, as amended, and all regulations and guidance thereunder,
including such regulations and guidance as may be promulgated after the
Effective Date.

 

1.8           “Corporation”
means HCSB Financial Corporation, a South Carolina corporation, and holding
company of the Bank.

 

1.9           “Disability”
means the Executive (i) is unable to engage in any substantial gainful
activity by reason of any medically determinable physical or mental impairment
which can be expected to result in death or can be expected to last for a
continuous period of not less than twelve (12) months, or (ii) is, by
reason of any medically determinable physical or mental impairment which can be
expected to result in death or can be expected to last for a continuous period
of not less than twelve (12) months, receiving income replacement benefits for
a period of not less than three (3) months under an accident and health
plan covering employees of the Bank. 
Medical determination of Disability may be made by either the Social
Security Administration or by the provider of an accident or health plan
covering employees of the Bank.  Upon the
request of the Plan Administrator, the Executive must submit proof to the Plan
Administrator of the Social Security Administration’s or provider’s
determination.

 

1.10         “Discount Rate” means the rate used by the Plan Administrator
for determining the Accrual Balance.  The
initial Discount Rate is six percent (6%). 
However, the Plan Administrator, in its discretion, may adjust the
Discount Rate to maintain the rate within reasonable standards according to
GAAP and/or applicable bank regulatory guidance.

 

1.11         “Early Termination” means the Executive’s
Separation from Service before attainment of Normal Retirement Age except when
such Separation from Service following a Change in Control or due to death or
Termination for Cause.

 

1.12         “Effective Date” means March 1,
2008.

 

1.13         Final Pay” means the
Executive’s highest annualized Base Salary from the three (3) years prior
to Separation from Service, including the year such Separation from Service
occurs.

 

1.14         “Normal Retirement Age” means the
Executive’s age sixty-five (65).

 

 

1.15         “Normal
Retirement Date” means the later of Normal Retirement Age or Separation
from Service.

 

1.16         “Plan
Administrator” means the Board or such committee or person as the Board
shall appoint.

 

1.17         “Plan Year” means each twelve (12)
month period commencing on January 1 and ending on December 31 of
each year.

 

1.18         “Projected
Benefit” means twenty percent (20%) of Projected Final Pay.

 

1.19         “Projected
Final Pay” means Final Pay increased four percent (4%) annually until
Normal Retirement Age.

 

1.20         “Separation
from Service” means the termination of the Executive’s employment with the
Bank or the Corporation for reasons other than death or Disability.  Whether a Separation from Service takes place
is determined based on the facts and circumstances surrounding the termination
of the Executive’s employment and whether the Bank or the Corporation and the
Executive intended for the Executive to provide significant services for the
Bank or the Corporation following such termination.  A termination of employment will not be
considered a Separation from Service if the Executive continues to provide
services as an employee or independent contractor of the Bank or any affiliated
entity at an annual rate that is twenty percent (20%) or more of the services
rendered, on average, during the immediately proceeding three full calendar
years of employment (or, if employed less than three years, such lesser
period).

 

1.21         “Specified
Employee” means a key employee (as defined in Section 416(i) of
the Code without regard to paragraph 5 thereof) at any time during the 12-month
period ending on a Separation from Service of the Bank or any affiliated entity
if any stock of the Bank or the Corporation is publicly traded on an
established securities market or otherwise.

 

1.22         “Termination for Cause” means Separation from
Service for:

 

(i)            with respect to
the Bank or any subsidiary which employs the recipient of any rights under the
Agreement (the “recipient”) or for which such recipient primarily performs
services, the commission by the recipient of an act of fraud, embezzlement,
theft or proven dishonesty, or any other illegal act or practice (whether or
not resulting in criminal prosecution or conviction) or any act or practice
which the Board shall, in good faith, deem to have resulted in the recipient’s
becoming unbondable under the Bank’s or the subsidiary’s fidelity bond

 

(ii)           the willing
engaging by the recipient in misconduct which is deemed by the Board, in good
faith, to be materially injurious to the Bank or any subsidiary, monetarily or
otherwise, including, but not limited to, improperly disclosing trade secrets
or other confidential or sensitive business information and data about the Bank
or any subsidiaries and competing with the Bank or its subsidiaries, or
soliciting employees, 

 

 

consultants or customers of the Bank in violation of law or any
employment or other agreement to which the recipient is a party; or

 

(iii)          the willful and
contained failure or habitual neglect by the recipient to perform his or her
duties with the Bank or the subsidiary substantially in accordance with the
operating and personnel policies and procedures of the Bank or the subsidiary
generally applicable to their employees. 
For purposes of this Agreement, no act or failure to act by the
recipient shall be deemed “willful” unless done or omitted to be done by the
recipient not in good faith and without reasonable belief that the recipient’s
action or omission was in the best interest of the Bank and/or the
subsidiary.  Notwithstanding the
foregoing, if the recipient has entered into an employment agreement that is
binding as of the date of employment termination, and if such employment
agreement defines “Cause” the definition of “cause” in such agreement shall
apply to the recipient in this Agreement. 
Cause under this Section shall be determined by the Board.

 

Article 2

Distributions During Lifetime

 

2.1           Normal Retirement Benefit.  Upon Separation from Service after attaining
Normal Retirement Age, the Bank shall distribute to the Executive the benefit
described in this Section 2.1 in lieu of any other benefit under this
Article.

 

2.1.1        Amount
of Benefit.  The annual
benefit under this Section 2.1 is twenty percent (20%) of Final Pay.

 

2.1.2        Distribution of Benefit.  The Bank shall distribute the annual benefit
to the Executive in twelve (12) equal monthly installments commencing on the first
day of the month following the Normal Retirement Date.  The annual benefit shall be distributed to
the Executive for fifteen (15) years.

 

2.2           Early Termination Benefit.  If Early Termination occurs, the Bank shall
distribute to the Executive the benefit described in this Section 2.2 in
lieu of any other benefit under this Article.

 

2.2.1        Amount of
Benefit.  The benefit under this Section 2.2
is the vested Accrual Balance determined as of the end of the Plan Year
preceding Separation from Service subject to the vesting schedule below.  Interest shall be credited to the Accrual Balance from
Separation from Service to Normal Retirement Age at a rate equal to the
Discount Rate in effect at the time of Separation from Service.

 

 

	
  Date on which Separation from

  Service occurs

  	
   

  	
  Vesting Percentage

  	
   

  
	
  03/01/2008 – 12/31/2008

  	
   

  	
  10

  	
  %

  
	
  01/01/2009 – 12/31/2009

  	
   

  	
  20

  	
  %

  
	
  01/01/2010 – 12/31/2010

  	
   

  	
  30

  	
  %

  
	
  01/01/2011 – 12/31/2011

  	
   

  	
  40

  	
  %

  
	
  01/01/2012 – 12/31/2012

  	
   

  	
  50

  	
  %

  
	
  01/01/2013 – 12/31/2013

  	
   

  	
  60

  	
  %

  
	
  01/01/2014 – 12/31/2014

  	
   

  	
  70

  	
  %

  
	
  01/01/2015 – 12/31/2015

  	
   

  	
  80

  	
  %

  
	
  01/01/2016 – 12/31/2016

  	
   

  	
  90

  	
  %

  
	
  After 12/31/2016

  	
   

  	
  100

  	
  %

  

 

2.2.2        Distribution of Benefit.  The Bank shall distribute the benefit to the
Executive in one hundred eighty (180) equal monthly installments commencing on
the first day of the month following Normal Retirement Age.  Interest shall be credited to the Accrual
Balance during the applicable installment period at a rate equal to the
Discount Rate in effect at the time of Separation from Service.

 

2.3           Disability Benefit.  If the Executive experiences a Disability
which results in a Separation from Service prior to Normal Retirement Age, the
Bank shall distribute to the Executive the benefit described in this Section 2.3
in lieu of any other benefit under this Article.

 

2.3.1        Amount of Benefit.  The benefit under this Section 2.3 is
one hundred percent (100%) of the Accrual Balance determined as of the end of
the Plan Year preceding Separation from Service. Interest shall be credited to
the Accrual Balance from Separation from Service to Normal Retirement Age at a
rate equal to the Discount Rate in effect at the time of Separation from
Service.

 

2.3.2        Distribution of Benefit.  The Bank shall distribute the benefit to the
Executive in one hundred eighty (180) equal monthly installments commencing on
the first day of the month following Normal Retirement Age. Interest shall be
credited to the Accrual Balance during the applicable installment period at a
rate equal to the Discount Rate in effect at the time of Separation from Service.

 

2.4           Change
in Control Benefit.  If a Change
in Control occurs followed by the Executive’s Separation from Service prior to
the Executive’s Normal Retirement Age, the Bank shall distribute to the
Executive the benefit described in this Section 2.4 in lieu of any other
benefit under this Article.

 

2.4.1        Amount of Benefit.  The annual benefit under this Section 2.4
is one hundred percent (100%) of the Projected Benefit.

 

2.4.2        Distribution
of Benefit.   The Bank shall distribute the annual benefit
to the Executive in twelve (12) equal monthly installments commencing on the
first day of the month following Normal Retirement Age.  The annual benefit shall be distributed to
the Executive for fifteen (15) years.

 

2.5           Restriction on
Commencement of Distributions.  Notwithstanding any
provision of this Agreement to the contrary, if the Executive is considered a
Specified Employee at 

 

 

Separation
from Service, or at any time during the 12-month period ending on a Separation
from Service, under such procedures as established by the Bank in accordance
with Section 409A of the Code, benefit distributions that are made upon
Separation from Service may not commence earlier than six (6) months after
the date of such Separation from Service. 
Therefore, in the event this Section 2.5 is applicable to the
Executive, any distribution which would otherwise be paid to the Executive
within the first six months following the Separation from Service shall be
accumulated and paid to the Executive in a lump sum on the first day of the
seventh month following the Separation from Service.  All subsequent distributions shall be paid in
the manner specified.

 

2.6           Distributions
Upon Taxation of Amounts Deferred. If, pursuant to Code Section 409A,
the Federal Insurance Contributions Act or other state, local or foreign tax,
the Executive becomes subject to tax on the amounts deferred hereunder, then,
to the extent such tax liability can be paid by the amount that may be
currently distributed to the Executive under Sections 2.1-2.4 of this Agreement
without the imposition of additional tax liability under Section 409A of
the Code, the Bank may make a limited distribution to the Executive as soon as
is administratively practicable following the discovery of the tax liability of
an amount not exceed the amount that becomes subject to tax, in accordance with
the provisions of Regulations §1.409A-3(j)(vi), (vii), and (xi).  Any such distribution will decrease the
Executive’s benefits distributable under Sections 2.1-2.4 of this Agreement.

 

2.7           Change in Form or
Timing of Distributions.  For distribution of benefits under
this Article 2, the Executive and the Bank may, subject to the terms of Section 8.1,
amend this Agreement to delay the timing or change the form of
distributions.  Any such amendment:

 

	
  (a)

  	
   

  	
  may not accelerate the time or schedule of any distribution, except
  as provided in Code Section 409A;

  
	
  (b)

  	
   

  	
  must, for benefits distributable under Sections 2.2, 2.3 and 2.4, be
  made at least twelve (12) months prior to the first scheduled distribution;

  
	
  (c)

  	
   

  	
  must, for benefits distributable under Sections 2.1, 2.2, 2.3 and
  2.4, delay the commencement of distributions for a minimum of five
  (5) years from the date the first distribution was originally scheduled
  to be made; and

  
	
  (d)

  	
   

  	
  must take effect not less than twelve (12) months after the amendment
  is made.

  

 

Article 3

Distribution at Death

 

3.1           Death During Active Service.  If the Executive dies prior to Separation
from Service, the Bank shall distribute to the Beneficiary the benefit
described in this Section 3.1.  This
benefit shall be distributed in lieu of any benefit under Article 2.

 

3.1.1        Amount
of Benefit.  The benefit under this Section 3.1
is one hundred percent (100%) of the Accrual Balance for the Plan Year prior to
the Executive’s death.

 

 

3.1.2        Distribution
of Benefit.  The Bank shall distribute
the benefit to the Beneficiary in a lump sum on the first day of the fourth
month following the Executive’s death. 
The Beneficiary shall be required to provide to the Bank the Executive’s
death certificate.

 

3.2           Death
During Distribution of a Benefit.  If the Executive dies after any benefit
distributions have commenced under this Agreement but before receiving all such
distributions, the Bank shall distribute to the Beneficiary the present value,
using the Discount Rate in effect at Separation from Service, of the remaining
benefits in a lump sum on the first day of the fourth month following the
Executive’s death.

 

3.3           Death
Before Benefit Distributions Commence.  If the Executive is entitled
to benefit distributions under this Agreement but dies prior to the date that
commencement of said benefit distributions are scheduled to be made under this
Agreement, the Bank shall distribute to the Beneficiary the present value,
using the Discount Rate in effect at Separation from Service, of the remaining
benefits in a lump sum on the first day of the fourth month following the
Executive’s death.

 

Article 4

Beneficiaries

 

4.1           In General.  The
Executive shall have the right, at any time, to designate a Beneficiary to
receive any benefit distributions under this Agreement upon the death of the
Executive.  The Beneficiary designated
under this Agreement may be the same as or different from the beneficiary
designated under any other plan of the Bank in which the Executive
participates.

 

4.2           Designation.  The Executive shall designate a Beneficiary
by completing and signing the Beneficiary Designation Form and delivering
it to the Plan Administrator or its designated agent.  If the Executive names someone other than the
Executive’s spouse as a Beneficiary, the Plan Administrator may, in its sole
discretion, determine that spousal consent is required to be provided in a form
designated by the Plan Administrator, executed by the Executive’s spouse and
returned to the Plan Administrator.  The
Executive’s beneficiary designation shall be deemed automatically revoked if
the Beneficiary predeceases the Executive or if the Executive names a spouse as
Beneficiary and the marriage is subsequently dissolved.  The Executive shall have the right to change
a Beneficiary by completing, signing and otherwise complying with the terms of
the Beneficiary Designation Form and the Plan Administrator’s rules and
procedures.  Upon the acceptance by the
Plan Administrator of a new Beneficiary Designation Form, all Beneficiary
designations previously filed shall be cancelled.  The Plan Administrator shall be entitled to
rely on the last Beneficiary Designation Form filed by the Executive and
accepted by the Plan Administrator prior to the Executive’s death.

 

4.3           Acknowledgment.  No designation or change in designation of a
Beneficiary shall be effective until received, accepted and acknowledged in
writing by the Plan Administrator or its designated agent.

 

 

4.4           No Beneficiary
Designation.  If the
Executive dies without a valid beneficiary designation, or if all designated
Beneficiaries predecease the Executive, then the Executive’s spouse shall be
the designated Beneficiary.  If the
Executive has no surviving spouse, any benefit shall be paid to the Executive’s
estate.

 

4.5           Facility of Distribution.  If the Plan Administrator determines in its
discretion that a benefit is to be distributed to a minor, to a person declared
incompetent or to a person incapable of handling the disposition of that person’s
property, the Plan Administrator may direct distribution of such benefit to the
guardian, legal representative or person having the care or custody of such
minor, incompetent person or incapable person. 
The Plan Administrator may require proof of incompetence, minority or
guardianship as it may deem appropriate prior to distribution of the
benefit.  Any distribution of a benefit
shall be a distribution for the account of the Executive and the Beneficiary,
as the case may be, and shall completely discharge any liability under this
Agreement for such distribution amount.

 

Article 5

General Limitations

 

5.1           Termination
for Cause. 
Notwithstanding any provision of this Agreement to the contrary, the
Bank shall not distribute any benefit under this Agreement if the Executive’s
employment with the Bank is terminated by the Bank or an applicable regulator
due to a Termination for Cause.

 

5.2           Suicide or Misstatement.  No benefit shall be distributed if the
Executive commits suicide within two (2) years after the Effective Date,
or if an insurance company which issued a life insurance policy covering the
Executive and owned by the Bank denies coverage (i) for material
misstatements of fact made by the Executive on an application for such life
insurance, or (ii) for any other reason.

 

5.3           Removal.  Notwithstanding any
provision of this Agreement to the contrary, the Bank shall not distribute any
benefit under this Agreement if the Executive is subject to a final removal or
prohibition order issued by an appropriate federal banking agency pursuant to Section 8(e) of
the Federal Deposit Insurance Act. 
Notwithstanding anything herein to the contrary, any payments made to
the Executive pursuant to this Agreement, or otherwise, shall be subject to and
conditioned upon compliance with 12 U.S.C. 1828 and FDIC Regulation 12 CFR Part 359,
Golden Parachute Indemnification Payments and any other regulations or guidance
promulgated thereunder.

 

5.4           Forfeiture Provision.  The
Executive shall forfeit any non-distributed benefits under this Agreement if
during the term of this Agreement and within twelve (12) months following a
Separation from Service, the Executive, directly or indirectly, either as an
individual or as a proprietor, stockholder, partner, officer, director,
employee, agent, consultant or independent contractor of any individual,
partnership, corporation or other entity 

 

 

(excluding an ownership interest of three percent (3%) or less in the
stock of a publicly-traded company):

 

(i)            becomes employed by,
participates in, or becomes connected in any manner with the ownership,
management, operation or control of any bank, savings and loan or other similar
financial institution if the Executive’s responsibilities will include
providing banking or other financial services within twenty-five (25) miles of
any office maintained by the Bank as of the date of the termination of the
Executive’s employment;

 

(ii)           participates in any
way in hiring or otherwise engaging, or assisting any other person or entity in
hiring or otherwise engaging, on a temporary, part-time or permanent basis, any
individual who was employed by the Bank as of the date of termination of the
Executive’s employment;

 

(iii)          assists, advises,
or serves in any capacity, representative or otherwise, any third party in any
action against the Bank or transaction involving the Bank;

 

(iv)          sells, offers to
sell, provides banking or other financial services, assists any other person in
selling or providing banking or other financial services, or solicits or
otherwise competes for, either directly or indirectly, any orders, contract, or
accounts for services of a kind or nature like or substantially similar to the
financial services performed or financial products sold by the Bank (the
preceding hereinafter referred to as “Services”), to or from any person or
entity from whom the Executive or the Bank, to the knowledge of the Executive
provided banking or other financial services, sold, offered to sell or
solicited orders, contracts or accounts for Services during the one (1) year
period immediately prior to the termination of the Executive’s employment;

 

(v)           divulges, discloses,
or communicates to others in any manner whatsoever, any confidential
information of the Bank, to the knowledge of the Executive, including, but not
limited to, the names and addresses of customers or prospective customers, of
the Bank, as they may have existed from time to time, of work performed or
services rendered for any customer, any method and/or procedures relating to
projects or other work developed for the Bank, earnings or other information
concerning the Bank. The restrictions contained in this subparagraph (v) apply
to all information regarding the Bank, regardless of the source that provided
or compiled such information. 
Notwithstanding anything to the contrary, all information referred to
herein shall not be disclosed unless and until it becomes known to the general
public from sources other than the Executive.

 

5.5           Change in Control.  The
forfeiture provision detailed in Section 5.4 hereof shall not be
enforceable following a Change in Control.

 

Article 6

Administration of Agreement

 

6.1           Plan Administrator Duties.  The Plan Administrator shall administer this
Agreement 

 

 

according to its express terms and shall also have the
discretion and authority to (i) make, amend, interpret and enforce all
appropriate rules and regulations for the administration of this Agreement
and (ii) decide or resolve any and all questions, including
interpretations of this Agreement, as may arise in connection with this
Agreement to the extent the exercise of such discretion and authority does not
conflict with Code Section 409A.

 

6.2           Agents.  In the administration of this Agreement, the
Plan Administrator may employ agents and delegate to them such administrative
duties as the Plan Administrator sees fit, including acting through a duly
appointed representative, and may from time to time consult with counsel who
may be counsel to the Bank.

 

6.3           Binding Effect of
Decisions.  Any decision or action
of the Plan Administrator with respect to any question arising out of or in
connection with the administration, interpretation or application of this
Agreement and the rules and regulations promulgated hereunder shall be
final and conclusive and binding upon all persons having any interest in this
Agreement.

 

6.4           Indemnity of Plan
Administrator.  The Bank shall
indemnify and hold harmless the Plan Administrator against any and all claims,
losses, damages, expenses or liabilities arising from any action or failure to
act with respect to this Agreement, except in the case of willful misconduct by
the Plan Administrator.

 

6.5           Bank Information.  To enable the Plan Administrator to perform
its functions, the Bank shall supply full and timely information to the Plan
Administrator on all matters relating to the date and circumstances of the
Executive’s death, Disability or Separation from Service, and such other
pertinent information as the Plan Administrator may reasonably require.

 

6.6           Annual Statement. The Plan Administrator
shall provide to the Executive, within one hundred twenty (120) days after the
end of each Plan Year, a statement setting forth the benefits to be distributed
under this Agreement.

 

Article 7

Claims and Review Procedures

 

7.1       For all claims other than
disability benefits:

 

7.1.1        Claims
Procedure.  Any
individual (“Claimant”) who has not received benefits under this Agreement that
he or she believes should be paid shall make a claim for such benefits as
follows:

 

7.1.1.1        Initiation –
Written Claim.  The
Claimant initiates a claim by submitting to the Bank a written claim for the
benefits.  If such a claim relates to the
contents of a notice received by the claimant, the claim must be made within
sixty

 

 

(60) days
after such notice was received by the claimant. 
All other claims must be made within one hundred eighty (180) days
of the date on which the event that caused the claim to arise occurred.  The claim must state with particularity the
determination desired by the claimant.

 

7.1.1.2     Timing
of Bank Response.  The Bank
shall respond to such Claimant within ninety (90) days after receiving the
claim.  If the Bank determines that
special circumstances require additional time for processing the claim, the
Bank can extend the response period by an additional ninety (90) days by
notifying the Claimant in writing, prior to the end of the initial ninety (90)
day period that an additional period is required.  The notice of extension must set forth the
special circumstances and the date by which the Bank expects to render its
decision.

 

7.1.1.3     Notice
of Decision.  If the Bank
denies part or the entire claim, the Bank shall notify the Claimant in writing
of such denial.  The Bank shall write the
notification in a manner calculated to be understood by the Claimant.  The notification shall set forth:

 

(a)   The specific reasons for the
denial,

 

(b)   A reference to the specific
provisions of this Agreement, on which the denial is based,

 

(c)   A description of any additional
information or material necessary for the Claimant to perfect the claim and an
explanation of why it is needed,

 

(d)   An explanation of this
Agreement’s review procedures and the time limits applicable to such
procedures, and

 

(e)   A statement of the Claimant’s
right to bring a civil action under ERISA Section 502(a) following an
adverse benefit determination on review.

 

7.1.2        Review Procedure.  If the Bank denies part or all of the claim,
the Claimant shall have the opportunity for a full and fair review by the Bank
of the denial, as follows:

 

7.1.2.1     Initiation
– Written Request.  To initiate
the review, the Claimant, within sixty (60) days after receiving the Bank’s
notice of denial, must file with the Bank a written request for review.

 

7.1.2.2     Additional
Submissions – Information Access.  The Claimant shall then have the opportunity
to submit written comments, documents, records and other information relating
to the claim.  The Bank shall also
provide the Claimant, upon request and free of charge, reasonable access to,
and copies of, all documents, records and other information relevant (as
defined in applicable ERISA regulations) to the Claimant’s claim for benefits.

 

7.1.2.3     Considerations
on Review.  In
considering the review, the Bank shall take into account all materials and
information the Claimant submits relating to the claim, without regard to
whether such information was submitted or considered in the initial benefit
determination.

 

 

7.1.2.4     Timing of Bank Response.  The Bank shall respond in writing to such
Claimant within sixty (60) days after receiving the request for review.  If the Bank determines that special
circumstances require additional time for processing the claim, the Bank can
extend the response period by an additional sixty (60) days by notifying the
Claimant in writing, prior to the end of the initial sixty (60) day period that
an additional period is required.  The
notice of extension must set forth the special circumstances and the date by
which the Bank expects to render its decision.

 

7.1.2.5     Notice of Decision.  The Bank shall notify the Claimant in writing
of its decision on review.  The Bank
shall write the notification in a manner calculated to be understood by the
Claimant.  The notification shall set
forth:

 

(a)   The specific reasons for the
denial,

 

(b)   A reference to the specific
provisions of this Agreement, on which the denial is based,

 

(c)   A statement that the
Claimant is entitled to receive, upon request and free of charge, reasonable
access to, and copies of, all documents, records and other information relevant
(as defined in applicable ERISA regulations) to the Claimant’s claim for
benefits, and

 

(d)   A statement of the Claimant’s
right to bring a civil action under ERISA Section 502(a) following an
adverse benefit determination on review.

 

7.2       For disability
claims:

 

7.2.1        Claims
Procedures.  Any Claimant who has not received
benefits under this Agreement that he or she believes should be paid shall make
a claim for such benefits as follows:

 

7.2.1.1     Initiation – Written Claim.  The Claimant initiates a claim by submitting to the Bank a
written claim for the benefits. If such a claim relates to the contents of a
notice received by the claimant, the claim must be made within sixty
(60) days after such notice was received by the claimant.  All other claims must be made within one
hundred eighty (180) days of the date on which the event that caused the
claim to arise occurred.  The claim must
state with particularity the determination desired by the claimant.

 

7.2.1.2     Timing of Bank Response.  The Bank shall notify the Claimant in writing
or electronically of any adverse determination as set out in this Section.

 

7.2.1.3     Notice of Decision.  If the Bank denies part or the entire claim,
the Bank shall notify the Claimant in writing of such denial.  The Bank shall write the notification in a
manner calculated to be understood by the Claimant.  The notification shall set forth:

 

(a)   The specific reasons for the
denial,

 

(b)   A reference to the specific
provisions of this Agreement, on which the denial is based,

 

 

(c)       A description of any
additional information or material necessary for the Claimant to perfect the
claim and an explanation of why it is needed,

 

(d)      An explanation of the
Agreement’s review procedures and the time limits applicable to such
procedures,

 

(e)       A statement of the Claimant’s
right to bring a civil action under ERISA Section 502(a) following an
adverse benefit determination on review,

 

(f)       Any internal rule,
guideline, protocol, or other similar criterion relied upon in making the
adverse determination, or a statement that such a rule, guideline, protocol, or
other similar criterion was relied upon in making the adverse determination and
that the Claimant can request and receive free of charge a copy of such rule,
guideline, protocol or other criterion from the Bank, and

 

(g)      If the adverse benefit
determination is based on a medical necessity or experimental treatment or
similar exclusion or limit, either an explanation of the scientific or clinical
judgment for the determination, applying the terms of this Agreement to the
Claimant’s medical circumstances, or a statement that such explanation will be
provided free of charge upon request.

 

7.2.1.4     Timing of
Notice of Denial/Extensions. 
The Bank shall notify the
Claimant of denial of benefits in writing or electronically not later than
forty-five (45) days after receipt of the claim by the Bank.  The Bank may elect to extend notification by
two thirty (30) day periods subject to the following requirements:

 

(a)       For the first thirty (30)
day extension, the Bank shall notify the Claimant (1) of the necessity of
the extension and the factors beyond the Bank’s control requiring an extension;
(2) prior to the end of the initial forty-five (45) day period; and (3) of
the date by which the Bank expects to render a decision.

 

(b)      If the Bank determines that
a second thirty (30) day extension is necessary based on factors beyond the
Bank’s control, the Bank shall follow the same procedure in (a) above,
with the exception that the notification must be provided to the Claimant
before the end of the first thirty (30) day extension period.

 

(c)       For any extension provided
under this section, the Notice of Extension shall specifically explain the
standards upon which entitlement to a benefit is based, the unresolved issues
that prevent a decision on the claim, and the additional information needed to
resolve those issues.  The Claimant shall
be afforded forty-five (45) days within which to provide the specified
information.

 

7.2.2        Review
Procedures – Denial of Benefits. 
If the Bank denies part or the entire claim, the Claimant shall have
the opportunity for a full and fair review by the Bank of the denial, as
follows:

 

7.2.2.1     Initiation of Appeal.  Within one hundred eighty
(180) days following notice of denial of benefits, the Claimant shall initiate
an appeal by submitting a written notice of appeal to Bank.

 

7.2.2.2     Submissions on Appeal – Information Access.  The
Claimant shall be allowed to provide written comments, documents,
records, and other information relating to the claim for benefits.  The Bank shall provide to the Claimant, upon 

 

 

request and free of charge,
reasonable access to, and copies of, all documents, records, and other
information relevant (as defined in applicable ERISA regulations) to the
Claimant’s claim for benefits.

 

7.2.2.3         Additional Bank
Responsibilities on Appeal.  On appeal, the
Bank shall:

 

(a)     Take into account all materials and
information the Claimant submits relating to the claim, without regard to
whether such information was submitted or considered in the initial benefit
determination;

 

(b)     Provide for a review that does not afford
deference to the initial adverse benefit determination and that is conducted by
an appropriate named fiduciary of the Bank who is neither the individual who
made the adverse benefit determination that is the subject of the appeal, nor
the subordinate of such individual;

 

(c)     In deciding an appeal of any adverse
benefit determination that is based in whole or in part on a medical judgment,
including determinations with regard to whether a particular treatment, drug,
or other item is experimental, investigational, or not medically necessary or
appropriate, consult with a health care professional who has appropriate
training and experience in the field of medicine involved in the medical
judgment;

 

(d)     Identify medical or vocational experts
whose advise was obtained on behalf of the Bank in connection with a Claimant’s
adverse benefit determination, without regard to whether the advice was relied
upon in making the benefit 
determination; and

 

(e)     Ensure that the health care professional
engaged for purposes of a consultation under subsection (c) above
shall be an individual who was neither an individual who was consulted in
connection with the adverse benefit determination that is the subject of the
appeal, nor the subordinate of any such individual.

 

7.2.2.4         Timing of Notification of
Benefit Denial – Appeal Denial. 
The Bank shall notify the
Claimant not later than forty-five (45) days after receipt of the Claimant’s
request for review by the Bank, unless the Bank determines that special
circumstances require an extension of time for processing the claim.  If the Bank determines that an extension is
required, written notice of such shall be furnished to the Claimant prior to
the termination of the initial forty-five (45) day period, and such extension
shall not exceed forty-five (45) days. 
The Bank shall indicate the special circumstances requiring an extension
of time and the date by which the Bank expects to render the determination on
review.

 

7.2.2.5         Content of
Notification of Benefit Denial. 
The Bank shall provide the
Claimant with a notice calculated to be understood by the Claimant, which shall
contain:

 

(a)     The specific reason or
reasons for the adverse determination;

 

(b)     Reference to the specific plan provisions
on which the benefit determination is based;

 

 

(c)     A statement that the Claimant is entitled
to receive, upon request and free of charge, reasonable access to, and copies
of all documents, records, and other 
relevant information (as defined in applicable ERISA regulations);

 

(d)     A statement of the Claimant’s right to
bring an action under ERISA Section 502(a);

 

(e)     Any internal rule, guideline, protocol,
or other similar criterion relied upon in making the adverse determination, or
a statement that such a rule, guideline, protocol, or other similar criterion
was relied upon in making the adverse determination and that the Claimant can
request and receive free of charge a copy of such rule, guideline, protocol or
other criterion from the Bank;

 

(f)      If the adverse benefit determination is
based on a medical necessity or experimental treatment or similar exclusion or
limit, either an explanation of the scientific or clinical judgment for the
determination, applying the terms of this Agreement to the Claimant’s medical
circumstances, or a statement that such explanation will be provided free of
charge upon request; and

 

(g)     The following statement: “You and your
Bank may have other voluntary alternative dispute resolution options such as
mediation.  One way to find out what may
be available is to contact your local U.S. Department of Labor Office and your
state insurance regulatory agency.”

 

Article 8

Amendments and Termination

 

8.1                                 Amendments.  This Agreement may be amended by the Bank
with written notice to the Executive. 
However, the Bank may unilaterally amend this Agreement to conform with
written directives to the Bank from its auditors or banking regulators or to
comply with legislative changes or tax law, including without limitation Code Section 409A.

 

8.2                                 Plan Termination Generally.  This Agreement may be terminated by the Bank
with written notice to the Executive. 
The benefit shall be the Accrual Balance as of the date this Agreement
is terminated.  Except as provided in Section 8.3,
the termination of this Agreement shall not cause a distribution of benefits
under this Agreement.  Rather, upon such
termination benefit distributions will be made at the earliest distribution
event permitted under Article 2 or Article 3.

 

8.3                                 Plan Terminations Under Code
Section 409A. 
Notwithstanding anything to the contrary in Section 8.2, if the
Bank terminates this Agreement in the following circumstances:

 

                                                                                                (a)           Within thirty (30) days
before, or twelve (12) months after a Change in Control, provided that all
distributions are made no later than twelve (12) months following such
termination of this Agreement and provided that all agreements, methods,
programs, and other arrangements sponsored by the Bank or the Corporation
immediately after the Change in Control with respect to which deferrals of
compensation are treated as having been deferred under a single plan under
Regulation §1.409A-1(c)(2) (“Similar Arrangements”) are terminated and
liquidated with respect to each participant that experienced the Change in
Control 

 

 

and
all participants receive all amounts of compensation deferred under this
Agreement and all Similar Arrangements within twelve (12) months of the date
the Bank or Corporation irrevocably takes all necessary action to terminate and
liquidate this Agreement and all Similar Arrangements;

 

(b)                                 Upon the Bank’s dissolution
or with the approval of a bankruptcy court provided that the amounts deferred
under this Agreement are included in the Executive’s gross income in the latest
of (i) the calendar year in which this Agreement terminates; (ii) the
calendar year in which the amount is no longer subject to a substantial risk of
forfeiture; or (iii) the first calendar year in which the distribution is
administratively practical; or

 

(c)                                  Upon the Bank’s termination
of this Agreement and all Similar Arrangements, provided that (i) the
termination and liquidation does not occur proximate to a downturn in the
financial health of the Bank, (ii) all termination distributions are made
no earlier than twelve (12) months and no later than twenty-four (24) months
following such termination, and (iii) the Bank does not adopt any new
arrangement that would be a Similar Arrangement for a minimum of three (3) years
following the date the Bank takes all necessary action to irrevocably terminate
and liquidate the Agreement;

 

the
Bank may distribute the Accrual Balance, determined as of the date of the
termination of this Agreement, to the Executive in a lump sum subject to the
above terms.

 

Article 9

Miscellaneous

 

9.1           Binding Effect.  This
Agreement shall bind the Executive and the Bank and their beneficiaries,
survivors, executors, administrators and transferees.

 

9.2           No Guarantee of Employment.  This Agreement is not a contract for
employment.  It does not give the
Executive the right to remain as an employee of the Bank nor interfere with the
Bank’s right to discharge the Executive. 
It does not require the Executive to remain an employee nor interfere
with the Executive’s right to terminate employment at any time.

 

9.3           Non-Transferability.  Benefits under this Agreement cannot be sold,
transferred, assigned, pledged, attached or encumbered in any manner.

 

9.4           Tax Withholding and
Reporting.  The Bank
shall withhold any taxes that are required to be withheld, including but not
limited to taxes owed under Code Section 409A from the benefits provided
under this Agreement.  The Executive
acknowledges that the Bank’s sole liability regarding taxes is to forward any
amounts withheld to the appropriate taxing authorities.  The Bank shall satisfy all applicable
reporting requirements, including those under Code Section 409A.

 

 

9.5           Applicable
Law.  This Agreement and all rights
hereunder shall be governed by the laws of the State of South Carolina, except
to the extent preempted by the laws of the United States of America.

 

9.6           Unfunded
Arrangement.  The
Executive and the Beneficiary are general unsecured creditors of the Bank for
the distribution of benefits under this Agreement.  The benefits represent the mere promise by
the Bank to distribute such benefits. 
The rights to benefits are not subject in any manner to anticipation,
alienation, sale, transfer, assignment, pledge, encumbrance, attachment or
garnishment by creditors.  Any insurance
on the Executive’s life or other informal funding asset is a general asset of
the Bank to which the Executive and Beneficiary have no preferred or secured
claim.

 

9.7           Reorganization.  The Bank shall not
merge or consolidate into or with another bank, or reorganize, or sell
substantially all of its assets to another bank, firm or person unless such
succeeding or continuing bank, firm or person agrees to assume and discharge
the obligations of the Bank under this Agreement.  Upon the occurrence of such an event, the
term “Bank” as used in this Agreement shall be deemed to refer to the successor
or survivor entity.

 

9.8           Entire
Agreement.  This Agreement constitutes
the entire agreement between the Bank and the Executive as to the subject
matter hereof.  No rights are granted to
the Executive by virtue of this Agreement other than those specifically set
forth herein.

 

9.9           Interpretation.  Wherever the fulfillment of
the intent and purpose of this Agreement requires and the context will permit,
the use of the masculine gender includes the feminine and use of the singular
includes the plural.

 

9.10         Alternative
Action.  In the event it shall become
impossible for the Bank or the Plan Administrator to perform any act required
by this Agreement due to regulatory or other constraints, the Bank or Plan
Administrator may perform such alternative act as most nearly carries out the
intent and purpose of this Agreement and is in the best interests of the Bank,
provided that such alternative act does not violate Code Section 409A.

 

9.11         Headings.  Article and section
headings are for convenient reference only and shall not control or affect the
meaning or construction of any provision herein.

 

9.12         Validity.  If any provision of this Agreement shall be
illegal or invalid for any reason, said illegality or invalidity shall not
affect the remaining parts hereof, but this Agreement shall be construed and
enforced as if such illegal or invalid provision had never been included
herein.

 

9.13         Notice.  Any
notice or filing required or permitted to be given to the Bank or Plan
Administrator under this Agreement shall be sufficient if in writing and
hand-delivered or sent by registered or certified mail to the address below:

 

 

	
   

  	
  5009 Broad Street

  
	
   

  	
  Loris, South Carolina 29569

  
	
   

  	
  Attn: James R. Clarkson

  

 

Such notice shall be deemed given as of
the date of delivery or, if delivery is made by mail, as of the date shown on
the postmark on the receipt for registration or certification.

 

Any
notice or filing required or permitted to be given to the Executive under this
Agreement shall be sufficient if in writing and hand-delivered or sent by mail
to the last known address of the Executive.

 

9.14                           Compliance with Section 409A.  This Agreement shall be interpreted and
administered consistent with Code Section 409A.

 

IN
WITNESS WHEREOF, the Executive and a duly authorized representative of the Bank
have signed this Agreement.

 

	
  EXECUTIVE

  	
  BANK

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  
					

 

 

o            New Designation

o            Change in Designation

 

I,
          
          , designate the
following as Beneficiary under this Agreement:

 

	
  Primary:

  	
   

  	
   

  
	
   

  	
   

  	
             %

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
             %

  
	
   

  	
   

  	
   

  
	
  Contingent:

  	
   

  	
   

  
	
   

  	
   

  	
             %

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
             %

  

 

Notes:

 

·                  Please PRINT CLEARLY or TYPE the names of the
beneficiaries.

·                  To name a trust as Beneficiary, please
provide the name of the trustee(s) and the exact name and date of
the trust agreement.

·                  To name your estate as Beneficiary, please
write “Estate of [your name]”.

·                  Be aware that none of the contingent
beneficiaries will receive anything unless ALL of the primary beneficiaries
predecease you.

 

I
understand that I may change these beneficiary designations by delivering a new
written designation to the Plan Administrator, which shall be effective only
upon receipt and acknowledgment by the Plan Administrator prior to my
death.  I further understand that the
designations will be automatically revoked if the Beneficiary predeceases me,
or, if I have named my spouse as Beneficiary and our marriage is subsequently
dissolved.

 

Name:

 

	
  Signature:

  	
   

  	
   

  	
  Date:

  	
   

  	
   

  

Received
by the Plan Administrator this
                
day of
                                      ,
200

 

	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Title:

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