**Exhibit10.19**

 

**TIDELANDS BANK**

**ENDORSEMENT SPLIT DOLLAR AGREEMENT**

 

This **ENDORSEMENTSPLIT DOLLAR AGREEMENT** (this “Agreement”) is entered into as of this1 day of May, 2008 by and between Tidelands Bank, a South Carolina-charteredbank (the “Bank”), and James M. Bedsole, an executive of the Bank (the “Executive”).  This Agreement shall append the Split DollarPolicy Endorsement entered into on even date herewith or as subsequentlyamended, by and between the Bank and the Executive.

 

**WHEREAS**, to encourage the Executive to remain aBank employee, the Bank is willing to divide the death proceeds of a lifeinsurance policy on the Executive’s life, and

 

**WHEREAS**, the Bank will pay life insurancepremiums from its general assets.

 

**NOWTHEREFORE**, inconsideration of the foregoing premises and other good and valuableconsideration, the receipt and sufficiency of which are hereby acknowledged,the parties hereto agree as follows.

 

**ARTICLE 1**

**GENERAL DEFINITIONS**

 

Capitalized terms nototherwise defined in this Agreement are used herein as defined in the SalaryContinuation Agreement between the Bank and the Executive.  The following terms shall have the meaningsspecified.

 

**1.1**          “**Administrator**” means the administrator described in Article 7.

 

**1.2**          “**Executive’s Interest**” means the benefit set forth in section2.2.

 

**1.3**          “**Insured**” means the Executive.

 

**1.4**          “**Insurer**” means each life insurance carrier for which thereis a Split Dollar Policy Endorsement attached to this Agreement.

 

**1.5**          “**Net Death Proceeds**” means the total death proceeds of thePolicy minus the cash surrender value.

 

**1.6**          “**Policy**” means the specific life insurance policy or policiesissued by the Insurer.

 

**1.7**          “**Salary Continuation Agreement**” means the Salary ContinuationAgreement between the Bank and the Executive, as the same may hereafter beamended.

 

**1.8**          “**Split Dollar Policy Endorsement**” means the form required bythe Administrator or the Insurer to indicate the Executive’s interest, if any,in a Policy on the Executive’s life.

 

**ARTICLE 2**

**POLICY OWNERSHIP/INTERESTS**

 

**2.1**          **Bank Ownership**.  TheBank is the sole owner of the Policy and shall have the right to exercise allincidents of ownership.  The Bank shallbe the beneficiary of the remaining death proceeds of the Policy after theExecutive’s interest is paid according to section 2.2 below.

 

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**2.2**          **Death Benefit**. Provided the Executive’s death occurs both before the Executive’sSeparation from Service and before the Executive attains age 65, at theExecutive’s death the Executive’s beneficiary designated in accordance with theSplit Dollar Policy Endorsement shall be entitled to Policy proceeds in anamount equal to the lesser of (x) 100% of the Net Death Proceeds or (y) aportion of the Net Death Proceeds equal to 100% of the Accrual Balance requiredat Normal Retirement Age under the Salary Continuation Agreement (the lesser ofthe amounts specified in clauses (x) and (y) being referred to inthis Agreement as the “Executive’s Interest”). The Executive’s Interest shall be extinguished at the earlier of thedate of the Executive’s Separation from Service or the date the Executiveattains age 65, and the Executive’s beneficiary shall be entitled to nobenefits under this Agreement for the Executive’s death occurringthereafter.  The Executive shall have theright to designate the beneficiary of the Executive’s Interest.

 

**2.3**          **Option to Purchase**. The Bank shall not sell, surrender, or transfer ownership of the Policybefore the Executive’s Separation from Service without first giving theExecutive or the Executive’s transferee the option to purchase the Policy for aperiod of 60 days.  The purchase priceshall be an amount equal to the Policy cash surrender value.  The option to purchase the Policy shall lapseif not exercised within 60 days after the date the Bank gives written notice ofthe Bank’s intention to sell, surrender, or transfer ownership of thePolicy.  This provision shall not impairthe Bank’s rights to terminate this Agreement.

 

**2.4**          **Comparable Coverage**. The Bank shall maintain the Policy in full force and effect.  The Bank may not amend, terminate, orotherwise abrogate the Executive’s interest in the Policy before the Executive’sSeparation from Service unless the Bank replaces the Policy with a comparableinsurance policy to cover the benefit provided under this Agreement andexecutes a new split dollar agreement and endorsement for the comparableinsurance policy.  The Policy or anycomparable policy shall be subject to claims of the Bank’s creditors.

 

**2.5**          **Internal Revenue Code Section 1035 Exchanges**.  The Executive recognizes and agrees that theBank may after this Agreement is adopted wish to exchange the Policy of lifeinsurance on the Executive’s life for another contract of life insuranceinsuring the Executive’s life.  Providedthat the Policy is replaced (or intended to be replaced) with a comparablepolicy of life insurance, the Executive agrees to provide medical informationand cooperate with medical insurance-related testing required by a prospectiveinsurer for implementing the Policy or, if necessary, for modifying or updatingto a comparable insurer.

 

**ARTICLE 3**

**PREMIUMS**

 

**3.1**          **Premium Payment**.  TheBank shall pay any premiums due on the Policy.

 

**3.2**          **Economic Benefit**.  TheAdministrator shall annually determine the economic benefit attributable to theExecutive based on the life insurance premium factor for the Executive’s agemultiplied by the aggregate death benefit payable to the Executive’sbeneficiary.   The “life insurancepremium factor” is the minimum factor applicable under guidance publishedpursuant to Treasury Reg. section 1.61-22(d)(3)(ii) or any subsequentauthority.

 

**3.3**          **Imputed Income**.  TheBank shall impute the economic benefit to the Executive on an annual basis byadding the economic benefit to the Executive’s W-2, or if applicable, Form 1099.

 

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**ARTICLE 4**

**ASSIGNMENT**

 

The Executive mayirrevocably assign without consideration all of the Executive’s interest in thePolicy and in this Agreement to any person, entity, or trust established by theExecutive or the Executive’s spouse.  Ifthe Executive transfers all of the Executive’s interest in the Policy, all ofthe Executive’s interest in the Policy and in the Agreement shall be vested inthe Executive’s transferee, who shall be substituted as a party hereunder andthe Executive shall have no further interest in this Agreement.

 

**ARTICLE 5**

**INSURER**

 

The Insurer shall bebound by the terms of the Policy only. Any payments the Insurer makes or actions it takes in accordance withthe Policy shall fully discharge it from all claims, suits, and demands of allentities or persons.  The Insurer shallnot be bound by or be deemed to have notice of the provisions of thisAgreement.

 

**ARTICLE 6**

**CLAIMS AND REVIEW PROCEDURES**

 

**6.1**          **Claims Procedure**.  Anyperson or entity who has not received benefits under this Agreement that he orshe believes should be paid (the “claimant”) shall make a claim for benefits asfollows —

 

6.1.1        *Initiation — written claim*.  The claimant initiates a claim by submittingto the Administrator a written claim for benefits.  If the claim relates to the contents of anotice received by the claimant, the claim must be made within 60 days afterthe notice was received by the claimant. All other claims must be made within 180 days after the date of theevent that caused the claim to arise. The claim must state with particularity the determination desired by theclaimant.

 

6.1.2        *Timing of Administratorresponse*.  The Administratorshall respond to the claimant within 90 days after receiving the claim.  If the Administrator determines that specialcircumstances require additional time for processing the claim, theAdministrator can extend the response period by an additional 90 days bynotifying the claimant in writing, before the end of the initial 90-day period,that an additional period is required. The notice of extension must set forth the special circumstances and thedate by which the Administrator expects to render its decision.

 

6.1.3        *Notice of decision*.  If the Administrator denies part or all ofthe claim, the Administrator shall notify the claimant in writing of thedenial.  The Administrator shall writethe 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 specificprovisions of this Agreement on which the denial is based,

(c)           A description of any additionalinformation or material necessary for the claimant to perfect the claim and anexplanation of why it is needed,

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

(e)           A statement of the claimant’s rightto bring a civil action under ERISA section 502(a) after an adversebenefit determination on review.

 

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**6.2**          **Review Procedure**.  Ifthe Administrator denies part or all of the claim, the claimant shall have theopportunity for a full and fair review by the Administrator of the denial, asfollows —

 

6.2.1        *Initiation — writtenrequest*.  To initiate thereview, the claimant must file with the Administrator a written request forreview within 60 days after receiving the Administrator’s notice of denial.

 

6.2.2        *Additional submissions —information access*.  Theclaimant shall then have the opportunity to submit written comments, documents,records, and other information relating to the claim.  Upon request and free of charge, theAdministrator shall also provide the claimant reasonable access to and copiesof all documents, records, and other information relevant (as defined inapplicable ERISA regulations) to the claimant’s claim for benefits.

 

6.2.3        *Considerations on review*.  In considering the review, the Administratorshall take into account all materials and information the claimant submitsrelating to the claim, without regard to whether the information was submittedor considered in the initial benefit determination.

 

6.2.4        *Timing of Administratorresponse*.  The Administratorshall respond in writing to the claimant within 60 days after receiving therequest for review.  If the Administratordetermines that special circumstances require additional time for processingthe claim, the Administrator can extend the response period by an additional 60days by notifying the claimant in writing before the end of the initial 60-dayperiod that an additional period is required. The notice of extension must set forth the special circumstances and thedate by which the Administrator expects to render its decision.

 

6.2.5        *Notice of decision*.  The Administrator shall notify the claimantin writing of its decision on review. The Administrator shall write the notification in a manner calculated tobe understood by the claimant.  Thenotification shall set forth —

 

(a)           The specific reasons for the denial,

(b)           A reference to the specificprovisions of the Agreement on which the denial is based,

(c)           A statement that the claimant isentitled to receive, upon request and free of charge, reasonable access to andcopies of all documents, records, and other information relevant (as defined inapplicable ERISA regulations) to the claimant’s claim for benefits, and

(d)           A statement of the claimant’s rightto bring a civil action under ERISA section 502(a).

 

**ARTICLE 7**

**ADMINISTRATION OF AGREEMENT**

 

**7.1**          **Administrator Duties**. This Agreement shall be administered by an Administrator, which shallconsist of the Bank’s board of directors or such committee as the board shallappoint.  The Executive may not be amember of the Administrator.  TheAdministrator shall have the discretion and authority to (x) make, amend,interpret, and enforce all appropriate rules and regulations for theadministration of this Agreement and (y) decide or resolve any and allquestions that may arise, including interpretations of this Agreement.

 

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**7.2**          **Agents**.  In theadministration of this Agreement, the Administrator may employ agents anddelegate to them such administrative duties as it sees fit (including actingthrough a duly appointed representative) and may from time to time consult withcounsel, who may be counsel to the Bank.

 

**7.3**          **Binding Effect of Decisions**. The decision or action of the Administrator about any question arisingout of the administration, interpretation, and application of this Agreementand the rules and regulations promulgated hereunder shall be final andconclusive and binding upon all persons having any interest in the Agreement.

 

**7.4**          **Indemnity of Administrator**. The Bank shall indemnify and hold harmless the members of theAdministrator against any and all claims, losses, damages, expenses, orliabilities arising from any action or failure to act with respect to thisAgreement, except in the case of willful misconduct by the Administrator or anyof its members.

 

**7.5**          **Information**.  Toenable the Administrator to perform its functions, the Bank shall supply fulland timely information to the Administrator on all matters relating to the dateand circumstances of the retirement, death, or Separation from Service of theExecutive, and such other pertinent information as the Administrator mayreasonably require.

 

**ARTICLE 8**

**MISCELLANEOUS**

 

**8.1**          **Amendment and Termination of Agreement**.  This Agreement may be amended or terminatedsolely by a written agreement signed by the Bank and the Executive.  However, this Agreement shall terminate uponthe first to occur of (w) distribution of the death benefit proceeds inaccordance with section 2.2 above, or (x) termination of the SalaryContinuation Agreement under Article 5 of the Salary ContinuationAgreement, or (y) the Executive’s Separation from Service, or (z) thedate the Executive attains age 65.

 

**8.2**          **Binding Effect**.  ThisAgreement shall bind the Executive and the Bank and their beneficiaries,survivors, executors, administrators, and transferees, and any Policybeneficiary.

 

**8.3**          **No Guarantee of Employment**. This Agreement is not an employment policy or contract.  It does not give the Executive the right toremain an employee of the Bank nor does it interfere with the Bank’s right todischarge the Executive.  It also doesnot require the Executive to remain an employee or interfere with the Executive’sright to terminate employment at any time.

 

**8.4**          **Successors; Binding Agreement**.  By an assumption agreement in form andsubstance satisfactory to the Executive, the Bank shall require any successor(whether direct or indirect, by purchase, merger, consolidation, or otherwise)to all or substantially all of the business or assets of the Bank to expresslyassume and agree to perform this Agreement in the same manner and to the sameextent that the Bank would be required to perform this Agreement had no successionoccurred.

 

**8.5**          **Applicable Law**.  ThisAgreement and all rights hereunder shall be governed by and construed accordingto the laws of the State of South Carolina, except to the extent preempted bythe laws of the United States of America.

 

**8.6**          **Entire Agreement**. This Agreement and the Salary Continuation Agreement constitute theentire agreement between the Bank and the Executive concerning the subject 

 

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matter.  No rights are granted to the Executive underthis Agreement other than those specifically set forth.

 

**8.7**          **Severability**.  If anyprovision of this Agreement is held invalid, such invalidity shall not affectany other provision of this Agreement not held invalid, and each such otherprovision shall continue in full force and effect to the full extent consistentwith law.  If any provision of thisAgreement is held invalid in part, such invalidity shall not affect theremainder of the provision not held invalid, and the remainder of the provisiontogether with all other provisions of this Agreement shall continue in fullforce and effect to the full extent consistent with law.

 

**8.8**          **Headings**.  Headingsand subheadings herein are included solely for convenience of reference andshall not affect the meaning or interpretation of any provision of thisAgreement.

 

**8.9**          **Notices**.  All notices,requests, demands and other communications hereunder shall be in writing andshall be deemed to have been duly given if delivered by hand or mailed,certified or registered mail, return receipt requested, with postage prepaid,to the following addresses or to such other address as either party maydesignate by like notice.  Unlessotherwise changed by notice, notice shall be properly addressed to theExecutive if addressed to the address of the Executive on the books and recordsof the Bank at the time of the delivery of such notice, and properly addressedto the Bank if addressed to the board of directors, Tidelands Bank, 875Lowcountry Boulevard, Mount Pleasant, South Carolina 29464.

 

**INWITNESS WHEREOF**,the Executive and a duly authorized representative of the Bank have executedthis Agreement as of the date first written above.

 
| **EXECUTIVE**:       |   | **BANK**:            |
|----------------------|--------|----------------------|
|                 |   | Tidelands Bank       |
|                 |   |                 |
| /s/ James M. Bedsole |   |                 |
| James M. Bedsole     |   | By:                  | /s/ Robert E.  Coffee, Jr. |
|                 |   | Robert E. Coffee Jr. |
|                 |   | Its:                 | President and CEO |
|                      |        |                      |  |  |

 

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