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                        Form of PALFED, Inc./Palmetto Federal

                       Executive Salary Continuation Agreement


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                               PALFED/PALMETTO FEDERAL
                       EXECUTIVE SALARY CONTINUATION AGREEMENT


         THIS IS AN EXECUTIVE SALARY CONTINUATION AGREEMENT (this "Agreement")
dated as of November 1, 1996, by and among PALFED, Inc., a South Carolina
corporation (the "Company"), Palmetto Federal Savings Bank of South Carolina, a
wholly-owned subsidiary of the Company (the "Bank"), and ____________________
(the "Officer").

    BACKGROUND STATEMENT

         The Company considers the establishment and maintenance of a sound and
vital group of management personnel for the Company and its subsidiaries to be
essential to protecting and enhancing the best interests of the Company and its
shareholders.  In this connection, the Company recognizes that, as is the case
with many publicly-held corporations, the possibility of a change in control of
the Company may exist and that such possibility, and the uncertainty and
concerns which it may raise among management personnel, may result in the
departure or distraction of management personnel to the detriment of the Company
and its shareholders.  Accordingly, the Company's and the Bank's Boards of
Directors have determined that appropriate steps should be taken to reinforce
and encourage the continued attention and dedication of key management members
of the Company and its subsidiaries, including the Officer, to their assigned
duties without distraction in the face of the potentially disturbing
circumstances arising from the possibility of a change in control of the
Company, and to assure fair treatment of management of the Company and the Bank
in the event of a change of control.

         In connection therewith and to induce the Officer to remain in his
present employment with the Bank and the Company and possible future employment
with other subsidiaries of the Company, and to retain the Officer's services
during any actual or threatened change of control, and in consideration of the
Officer's agreement to continue such employment subject to the terms and
conditions of this Agreement, this Agreement sets forth the severance and other
benefits which the Company and the Bank agree will be provided to the Officer in
the event of a "Change in Control" as defined in Section 3 and a termination of
employment or a "Change in Duties or Salary" of the Officer as defined in
Section 4 .

    AGREEMENT

    1.   TERM.  This Agreement shall commence as of November 1, 1996, and shall
continue for a three (3) year term unless extended as provided herein.  On each
monthly anniversary date beginning with the first month following the date of
this Agreement, the term of this Agreement shall automatically be extended for
one additional month, unless prior to any monthly anniversary date, the Company
or the Bank shall give notice to the Officer to fix the term of this Agreement
to a definite three (3) year term from the date of such notice and no further
automatic monthly extensions shall occur.  This Agreement shall not be extended
beyond the first

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PALFED/Palmetto Federal
Executive Salary Continuation Agreement
page 3
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month on which the Officer attains age sixty-five (65).  Notwithstanding any
notice by the Bank or the Company not to extend this Agreement or the expiration
of the term of this Agreement, this Agreement shall continue in effect for a
period of twenty-four (24) months beyond the expiration of this Agreement if a
Change in Control of the Company or the Bank shall have occurred during such
term.  If the Officer voluntarily terminates his employment with the Company or
the Bank prior to a Change of Control, then this Agreement shall terminate.

    2.   PAYMENTS.  No salary continuation payments or benefits shall be paid
to or provided for the Officer pursuant to this Agreement unless the following
shall have occurred during the term of this Agreement:  (a) a "Change in
Control" of the Company or the Bank, and (b) a termination of employment or a
"Change in Duties or Salary" of the Officer.  Any payments made to the Officer
pursuant to this Agreement are subject to and conditioned upon their compliance
with 12 U.S.C. Section 1828(k) and any regulations promulgated thereunder.

    3.   CHANGE IN CONTROL.  For purposes of this Agreement, a "Change in
Control" shall mean a change in control of either the Company or the Bank, or
the execution of a definitive agreement or the acceptance of an offer by the
Company contemplating a change in control of either the Company or the Bank
(other than the acquisition of the Bank by the Company), (i) within the meaning
of Office of Thrift Supervision ("OTS") Regulations Part 574, or any successor
regulations, or (ii) of a nature that would be required to be reported in
response to Item 6(e) of Schedule l4A of Regulation l4A promulgated under the
Securities Exchange Act of 1934, as amended ("Exchange Act"); provided that,
without limitation, such a change in control shall be deemed to have occurred
if: (a) any person, entity or group of persons (as such terms are used in
Sections 13(d) and 14(d) of the Exchange Act) together with any affiliates, is
or becomes the "beneficial owner" (as defined in Rule l3d-3 under the Exchange
Act), directly or indirectly, of securities of the Company or the Bank
representing 15 percent or more of the combined voting power of the Company's or
the Bank's then outstanding voting securities; or (b) during the term of this
Agreement as a result of a tender or exchange offer, proxy contest, merger or
consolidation, or as a result of any combination of the foregoing, individuals
who at the beginning of any two-year period constitute the Board of Directors of
the Company (the "Incumbent Directors") cease for any reason during such
two-year period to constitute at least two-thirds of the members of the Board of
Directors, unless the election or the nomination for election by the Company's
shareholders of each new director is approved by vote of at least two-thirds of
the Incumbent Directors then still in office other than in connection with an
actual or threatened proxy contest; or (c) the shareholders of the Company
approve a plan of complete liquidation or winding-up of the Company or an
agreement for the sale or disposition by the Company of all or substantially all
of its assets; or (d) any other event not specified above which the Company's
Board of Directors determines should constitute a Change of Control.

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PALFED/Palmetto Federal
Executive Salary Continuation Agreement
page 4
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    4.   CHANGE IN DUTIES OR SALARY.  For purposes of this Agreement, "Change
in Duties or Salary" of the Officer shall mean any one of the following:  (a) a
change in the nature or scope of the duties, authority, supervision, status,
title or responsibilities of the Officer, which change results in the diminution
in any respect of the Officer's then current duties, authority, status or
responsibilities to those duties, authority, status and responsibilities of the
Officer immediately prior to the time such Change in Control occurs; (b) a
reduction in the overall level of the Officer's current compensation and
benefits, including bonuses, or exclusion from participation in the Company's or
the Bank's employee benefit plans, or the Company's or the Bank's failure to
increase (within 12 months of the Officer's last increase in base salary) the
Officer's base salary in an amount which at least equals, on a percentage basis,
the average percentage increase in base salary for all executives entitled to
participate in the Bank's or the Company's executive incentive plans for which
the Officer was eligible during the preceding 12 months; (c) a change in the
place of the Officer assignment of the Officer from Aiken, South Carolina, to
any other city or geographical location that is located further than 25 miles
from the principal office of the Company in Aiken, South Carolina; (d) any
purported termination of the employment of the Officer by the Company or the
Bank which is not effected in accordance with this Agreement; or (e) the failure
of the Company to comply with and satisfy Section 6 of this Agreement.
Notwithstanding any provision of this Agreement to the contrary, a Change in
Duties or Salary shall be deemed to have occurred in the event of: (i) a merger
or combination of the Company with any other corporation or entity (regardless
of which entity is the survivor), or (ii) the acquisition of more than eighty
percent (80%) of the outstanding voting securities of the Bank or the Company,
other than a merger, combination or acquisition of voting securities pursuant to
which, immediately following such transaction, the Company's voting securities
outstanding immediately prior to such transaction continue to represent (either
by remaining outstanding or being converted into voting securities of the
surviving entity) at least fifty percent (50%) of the combined voting power of
the voting securities of the Company or surviving entity.

    5.   SALARY CONTINUATION PAYMENTS.  In the event that:  (i) a Change in
Control and Change in Duties or Salary occurs during the term hereof, but before
the Officer reaches the age of 65, or (ii) the Officer's employment is
terminated except for cause at any time within twenty-four (24) months following
a Change in Control, but before the Officer reaches the age of 65, then the
Officer shall be entitled to receive, in a lump sum in cash, immediately
following the Officer's resignation or termination, an aggregate amount equal to
three times the Employee's average annual taxable compensation from the Company
and the Bank (and its affiliates determined pursuant to Section 280G(d)(5) of
the Internal Revenue Code) for the most recent five taxable years ending before
the Change of Control (or for the period during which the Employee was employed
by the Bank if the Officer has been employed by Bank for less than five (5)
years) less one dollar ($1.00).  Alternately, the Officer may choose to be paid
in monthly or quarterly installments the aggregate amount that has a total
present value (determined by using a discount

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PALFED/Palmetto Federal
Executive Salary Continuation Agreement
page 5
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rate equal to 120% of the "applicable federal rate" determined under section
1274(d) of the Internal Revenue Code in effect on such date, compounded
semi-annually) equal to the aggregate amount calculated for determining a lump
sum payment.  Such payment may, at the Officer's option, be applied to the cost
of group-term life insurance and long-term disability benefits for the Officer
on the basis that such benefits are being provided by the Bank and the Company
for the Officer immediately prior to such resignation or termination, and any
balance of such monthly amount shall be paid to the Officer in cash.  It is
intended that the aggregate payment to be made hereunder shall not constitute a
"parachute payment" within the meaning of Section 280G(b)(2)(A) of the Internal
Revenue Code, and this Agreement shall be construed (and the payment to be made
pursuant to this Agreement may be adjusted) to effect such intent.  Payments to
the Officer pursuant to Section 5 of this Agreement shall be in addition to any
compensation due but not yet paid through the date of the Officer's termination
or resignation and all other benefits or compensation to which the Officer is
entitled under the Company's employee benefit plans.

    6.   TRANSFER OF EMPLOYMENT TO OTHER SUBSIDIARIES.  The  Company hereby
agrees that in the event that the Officer should, at any time or from time to
time, hereafter become an Officer of any subsidiary of the Company, the Company
will cause such subsidiary to promptly become an obligor of the Agreement with
respect to such employment.  In addition, as agent of its subsidiaries, the
Company, on behalf of its subsidiaries, hereby obligates such subsidiaries with
respect to the terms hereof as to any such employment of the Officer.  Further,
the Company hereby unconditionally guarantees the performance by any of its
subsidiaries of such subsidiary's obligations under this Agreement.  Any
business entity succeeding to substantially all of the business of the Company
or the Bank by purchase, merger, consolidation, sale or assets or otherwise,
shall be bound by and shall adopt and assume this Agreement and the Company and
the Bank shall obtain the assumption of this Agreement by such successor.

    7.   NO OBLIGATION OF CONTINUED EMPLOYMENT.  While it is the intent of this
Agreement to induce the Officer to continue employment with the Bank and the
Company at the pleasure of the Company during the term of this Agreement, this
Agreement does not in any way obligate either the Company or the Bank to
continue the Officer's employment or any specific level of salary or benefits in
connection therewith except as specifically provided herein, and the Officer
shall not be entitled to any benefits hereunder in the event of termination of
his employment prior to a Change in Control.  The Officer agrees, however, in
the event of exercise of his right to resign following a Change in Control,
that, at the request of the Company made within five (5) days of notice of
resignation, he will enter into an employment contract to continue employment
for a specified period, up to six months, at the then existing compensation and
benefits and in accordance with historical working conditions, for the purpose
of maintaining the continuity of his job function during such period for the
benefit of the Company; it being acknowledged and agreed that the salary
continuation and benefits set forth above shall be paid in the time and

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PALFED/Palmetto Federal
Executive Salary Continuation Agreement
page 6
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manner provided above and without regard to the Officer's continued employment
at the request of the Company.

    8.   TERMINATION FOR CAUSE.  Notwithstanding any other provision of this
Agreement:

         (a)  The Bank's Board of Directors may terminate the Officer's
employment at any time, but any termination by the Bank's Board of Directors
other than termination for "cause", shall not prejudice the Officer's right to
compensation or other benefits under this Agreement.  The Officer shall have no
right to receive compensation or other benefits for any period after termination
for "cause".  Termination for "cause" shall include termination because of the
Officer's personal dishonesty, incompetence, willful misconduct, breach of
fiduciary duty involving personal profit, intentional failure to perform stated
duties, willful violation of any law, rule, or regulation (other than traffic
violations or similar offenses) or final cease-and-desist order, or material
breach of any provision of this Agreement.

         (b)  If the Officer is suspended and/or temporarily prohibited from
participating in the conduct of the Bank's affairs by a notice served under
section 8(e)(3) or (g)(1) of Federal Deposit Insurance Act (12 U.S.C. Section
1818(e)(3) and (g)(1)), the Bank's obligations under this Agreement shall be
suspended as of the date of service unless stayed by appropriate proceedings.
If the charges in the notice are dismissed, the Bank may in its discretion (i)
pay the Officer all or part of the compensation withheld while its contract
obligations were suspended, and (ii) reinstate (in whole or in part) any of its
obligations which were suspended.

         (c)  If the Officer is removed and/or permanently prohibited from
participating in the conduct of the Bank's affairs by an order issued under
section 8(e)(4) or (g)(1) of the Federal Deposit Insurance Act (12 U.S.C.
Section 1818(e)(4) or (g)(1)), all obligations of the Bank under this Agreement
shall terminate as of the effective date of the order, but vested rights of the
contracting parties shall not be affected.

         (d)  If the Bank is in default (as defined in section 3(x)(1) of the
Federal Deposit Insurance Act), all obligations under this Agreement shall
terminate as of the date of default, but this paragraph (b)(4) shall not affect
any vested rights of the contracting parties.

         (e)  All obligations under this Agreement shall be terminated, except
to the extent determined that continuation of this Agreement is necessary for
the continued operation of the Bank:

              (i)  by the Director of the OTS or his or her designee, at the
         time the Federal Deposit Insurance Corporation or Resolution Trust
         Corporation enters into

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PALFED/Palmetto Federal
Executive Salary Continuation Agreement
page 7
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         an agreement to provide assistance to or on behalf of the association
         under the authority contained in 13(c) of the Federal Deposit
         Insurance Act; or

             (ii)  by the Director of the OTS or his or her designee, at the
         time the Director or his or her designee approves a supervisory merger
         to resolve problems related to operation of the association or when
         the association is determined by the Director to be in an unsafe or
         unsound condition.

         Any rights of the parties that have already vested, however, shall not
be affected by such action.

    9.   REIMBURSEMENT OF EXPENSES; INTEREST; NO DUTY TO MITIGATE.

         (a)  The Company shall pay all legal fees and expenses reasonably
incurred by the Officer as a result of any contest following any Change in
Control (regardless of the outcome thereof) by the Company or others of the
validity or enforceability of, or liability under, any provision of this
Agreement or any guarantee of performance thereof, including any legal fees and
expenses and other out-of-pocket expenses incurred by the Officer relating to or
as a result of the enforcement or contest by the Officer of any provision of
this Agreement.  Such reimbursement shall be paid within 30 days of the Officer
furnishing to the Company or the Bank written evidence of any costs or expenses
incurred by the Officer.  In addition, the Company or the Bank shall pay the
Officer interest on any salary continuation payments pursuant to Section 5 of
this Agreement that are not paid when due at a rate equal to the prime rate as
announced by the Bank or its successors from time to time.

         (b)  The Officer shall not be required to mitigate the amount of any
payment provided for in Section 5 by seeking other employment or otherwise, nor
shall the amount of any payment provided for in Section 5 be reduced by any
compensation earned by the Officer as the result of employment by another
employer after the date of his termination or resignation, or otherwise.

    10.  SUCCESSORS; SEVERABILITY.  All benefits of this Agreement shall accrue
to, and be payable to, the Officer's heirs, executors, administrators or
assigns.  Whenever possible, each provision of this Agreement shall be
interpreted in such manner as to be effective and valid, but if any one or more
of the provisions contained in this Agreement shall be invalid, illegal or
unenforceable in any respect for any reason, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions of this Agreement shall not be in any way impaired.

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PALFED/Palmetto Federal
Executive Salary Continuation Agreement
page 8
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     11.  NOTICES.

          (a)  NOTICE OF TERMINATION.  Any termination of the Officer's
employment by the Bank or the Company or by resignation of the Officer shall be
communicated by a written notice of termination or resignation to the other
party, and shall specify the provision of this Agreement relied upon and shall
set forth in reasonable detail the circumstances claimed to provide a basis for
termination.  The date of termination shall be the date on which the notice of
termination is delivered if by the Officer or thirty (30) days after the date of
the notice of termination if given by the Bank or the Company.  If the Officer's
employment is terminated by death, disability or retirement, the date of
termination shall be the date provided in any other written contract or, in the
absence of any such contractual provision, by the policy of the Company or the
Bank at the time of the occurrence of such event.


          (b)  GENERAL.  All notices and other communications, including notice
of resignation or dismissal, shall be in writing and shall be deemed to have
been duly given when mailed by the United States certified or registered mail,
return receipt requested, postage prepaid, addressed to the respective addresses
set forth hereafter, provided that all notices to the Bank or the Company shall
be directed to the attention of the Boards of Directors of such corporate
entities with copies to both the Secretary of the Company and the Bank, or to
such other addresses as either party may have furnished the other in writing in
accordance herewith, except that notice of change of address shall be effective
only upon receipt.

    If to the Company or the Bank:     PALFED, Inc.
                                       107 Chesterfield Street South
                                       Aiken, SC 29801
                                       Attn:  Chairman

    If to the Officer:            
                                       -----------------------------------
                                       -----------------------------------
                                       -----------------------------------


    12.  ENTIRE AGREEMENT; PRIOR AGREEMENTS.  This Agreement constitutes the
entire understanding and agreement among the Company, the Bank and the Officer
with regard to all matters herein.  There are no other agreements, conditions or
representations, oral or written, express or implied, with regard thereto.  This
Agreement may be amended, modified or renewed only in writing signed by both
parties hereto.  Any and all executive salary continuation

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PALFED/Palmetto Federal
Executive Salary Continuation Agreement
page 9
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agreements or change of control agreements previously entered into between the
Officer and the Company or the Bank are hereby terminated and canceled as of the
date of this Agreement.

    13.  GOVERNING LAW; JOINT AND SEVERAL.  This Agreement shall be construed
and enforced in accordance with the laws of the State of South Carolina.  To the
extent permitted by applicable law, all obligations of the Company and the Bank
shall be joint and several.

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PALFED/Palmetto Federal
Executive Salary Continuation Agreement
page 10
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         IN WITNESS WHEREOF, the parties hereto have executed and Delivered
this Agreement as of the date first above written.


                                            PALFED, INC.


Attest:                                     By:
                                               -------------------------------
                                                 Title:
                                                       ------------------------



--------------------------------
Title:
      --------------------------

                                            PALMETTO FEDERAL SAVINGS BANK
                                               OF SOUTH CAROLINA


Attest:                                     By:
                                               -------------------------------
                                                 Title:
                                                       -----------------------


-------------------------------
Title:
      -------------------------






                                            ----------------------------------
                                                              Officer








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