Exhibit 10.16


 


TIDELANDS BANCSHARES, INC.


2004
STOCK INCENTIVE PLAN


 


AMENDMENT NO. 2


ADOPTED BY THE BOARD OF DIRECTORS


OCTOBER 20, 2008


 


First, the Board  amended
the definition of “Fair Market Value” found in Article I by deleting it in
its entirety and replacing it with the following:


 


“Fair Market
Value” on any date shall mean:


 


(i)            if
the Stock is readily tradable on an established securities market (as defined
in Treasury Regulation § 1.897-1(m)), the closing sales price of the Stock on
the trading day immediately preceding such date on the securities exchange
having the greatest volume of trading in the Stock during the 30-day period
preceding the day the value is to be determined or, if such exchange was not
open for trading on such date, the next preceding date on which it was open;


 


(ii)           if
the Stock is not traded on any securities exchange (as defined in Treasury
Regulation §1.897-1(m)), the average of the closing high bid and low asked
prices of the Stock on the over-the-counter market on the day such value is to
be determined, or in the absence of closing bids on such day, the closing bids
on the next preceding day on which there were bids; or


 


(iii)          if
the Stock also is not traded on the over-the-counter market, the fair market
value as determined in good faith by the Board or the Committee by application
of a reasonable valuation method consistently applied and taking into
consideration all available information material to the value of the Company;
factors to be considered may include, as applicable, the value of tangible and
intangible assets of the Company, the present value of future cash-flows of the
Company, the market value of stock or equity interests in similar corporations
which can be readily determined through objective means (such as through
trading prices on an established securities market or an amount paid in an arm’s
length private transaction), and other relevant factors such as control
premiums or discounts for lack of marketability.  For purposes of the foregoing, a valuation
prepared in accordance with any of the methods set forth in Treasury Regulation
§ 1.409A-1(b)(5)(iv)(B)(2), consistently used, shall be rebuttably presumed to
result in a reasonable valuation.  This
paragraph is intended to comply with the definition of “fair market value”
contained in Treasury Regulation § 1.409A-1(b)(5)(iv) and should be
interpreted consistently therewith.


 


Second, the Board adopted, and made an integral
part of the Plan, Article X, Section 10.7 to read as follows:


 


10.7         Amendment
to Meet the Requirements of Code Section 409A.  It is intended that this Plan and any Options
granted under this Plan comply with or meet an exemption from Section 409A
of the Code, so that the income inclusion provisions of Code Section 409A(a)(1) do
not apply to an Optionee.  Optionee
acknowledges that the Board shall have the sole discretion and authority to
amend the Plan and any Stock Option Agreement hereunder including, but not
limited to, increasing the Exercise Price and/or changing the exercise period,
payment periods, or restrictions of any Option in the event that the Fair
Market Value of the Stock is subsequently determined to be greater than the
Exercise Price initially established at the time of grant, to the extent
necessary to cause the Plan or such Options to comply with the provisions of
Code Section 409A. Such amendment may be retroactive to the extent
permitted by Section 409A of the Code, and shall not require the consent
of the Optionee.


 

















 


IN WITNESS WHEREOF, the
Company has caused this Amendment No. 2 to the Plan to be executed as of October 20,
2008 in accordance with the authority provided by the Board of Directors.


 


	
   

  	
   

  	
   

  
	
   

  	
  TIDELANDS BANCSHARES,
  INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Robert E. Coffee, Jr.

  
	
   

  	
   

  	
  Name:
  Robert E. Coffee, Jr.

  
	
   

  	
   

  	
  Title:
  Chief Executive Officer