Exhibit
10.19


 


TIDELANDS BANK


ENDORSEMENT SPLIT DOLLAR AGREEMENT


 


This ENDORSEMENT
SPLIT DOLLAR AGREEMENT (this “Agreement”) is entered into as of this
1 day of May, 2008 by and between Tidelands Bank, a South Carolina-chartered
bank (the “Bank”), and James M. Bedsole, an executive of the Bank (the “Executive”).  This Agreement shall append the Split Dollar
Policy Endorsement entered into on even date herewith or as subsequently
amended, by and between the Bank and the Executive.


 


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


 


WHEREAS, the Bank will pay life insurance
premiums from its general assets.


 


NOW
THEREFORE, in
consideration of the foregoing premises and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties hereto agree as follows.


 


ARTICLE 1


GENERAL DEFINITIONS


 


Capitalized terms not
otherwise defined in this Agreement are used herein as defined in the Salary
Continuation Agreement between the Bank and the Executive.  The following terms shall have the meanings
specified.


 


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


 


1.2          “Executive’s Interest” means the benefit set forth in section
2.2.


 


1.3          “Insured” means the Executive.


 


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


 


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


 


1.6          “Policy” means the specific life insurance policy or policies
issued by the Insurer.


 


1.7          “Salary Continuation Agreement” means the Salary Continuation
Agreement between the Bank and the Executive, as the same may hereafter be
amended.


 


1.8          “Split Dollar Policy Endorsement” means the form required by
the 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.  The
Bank is the sole owner of the Policy and shall have the right to exercise all
incidents of ownership.  The Bank shall
be the beneficiary of the remaining death proceeds of the Policy after the
Executive’s interest is paid according to section 2.2 below.


 

















 


2.2          Death Benefit. 
Provided the Executive’s death occurs both before the Executive’s
Separation from Service and before the Executive attains age 65, at the
Executive’s death the Executive’s beneficiary designated in accordance with the
Split Dollar Policy Endorsement shall be entitled to Policy proceeds in an
amount equal to the lesser of (x) 100% of the Net Death Proceeds or (y) a
portion of the Net Death Proceeds equal to 100% of the Accrual Balance required
at Normal Retirement Age under the Salary Continuation Agreement (the lesser of
the amounts specified in clauses (x) and (y) being referred to in
this Agreement as the “Executive’s Interest”). 
The Executive’s Interest shall be extinguished at the earlier of the
date of the Executive’s Separation from Service or the date the Executive
attains age 65, and the Executive’s beneficiary shall be entitled to no
benefits under this Agreement for the Executive’s death occurring
thereafter.  The Executive shall have the
right 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 Policy
before the Executive’s Separation from Service without first giving the
Executive or the Executive’s transferee the option to purchase the Policy for a
period of 60 days.  The purchase price
shall be an amount equal to the Policy cash surrender value.  The option to purchase the Policy shall lapse
if not exercised within 60 days after the date the Bank gives written notice of
the Bank’s intention to sell, surrender, or transfer ownership of the
Policy.  This provision shall not impair
the 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, or
otherwise abrogate the Executive’s interest in the Policy before the Executive’s
Separation from Service unless the Bank replaces the Policy with a comparable
insurance policy to cover the benefit provided under this Agreement and
executes a new split dollar agreement and endorsement for the comparable
insurance policy.  The Policy or any
comparable 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 the
Bank may after this Agreement is adopted wish to exchange the Policy of life
insurance on the Executive’s life for another contract of life insurance
insuring the Executive’s life.  Provided
that the Policy is replaced (or intended to be replaced) with a comparable
policy of life insurance, the Executive agrees to provide medical information
and cooperate with medical insurance-related testing required by a prospective
insurer for implementing the Policy or, if necessary, for modifying or updating
to a comparable insurer.


 


ARTICLE 3


PREMIUMS


 


3.1          Premium Payment.  The
Bank shall pay any premiums due on the Policy.


 


3.2          Economic Benefit.  The
Administrator shall annually determine the economic benefit attributable to the
Executive based on the life insurance premium factor for the Executive’s age
multiplied by the aggregate death benefit payable to the Executive’s
beneficiary.   The “life insurance
premium factor” is the minimum factor applicable under guidance published
pursuant to Treasury Reg. section 1.61-22(d)(3)(ii) or any subsequent
authority.


 


3.3          Imputed Income.  The
Bank shall impute the economic benefit to the Executive on an annual basis by
adding the economic benefit to the Executive’s W-2, or if applicable, Form 1099.


 

















 


ARTICLE 4


ASSIGNMENT


 


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


 


ARTICLE 5


INSURER


 


The Insurer shall be
bound by the terms of the Policy only. 
Any payments the Insurer makes or actions it takes in accordance with
the Policy shall fully discharge it from all claims, suits, and demands of all
entities or persons.  The Insurer shall
not be bound by or be deemed to have notice of the provisions of this
Agreement.


 


ARTICLE 6


CLAIMS AND REVIEW PROCEDURES


 


6.1          Claims Procedure.  Any
person or entity who has not received benefits under this Agreement that he or
she believes should be paid (the “claimant”) shall make a claim for benefits as
follows —


 


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


 


6.1.2        Timing of Administrator
response.  The Administrator
shall respond to the claimant within 90 days after receiving the claim.  If the Administrator determines that special
circumstances require additional time for processing the claim, the
Administrator can extend the response period by an additional 90 days by
notifying 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 the
date by which the Administrator expects to render its decision.


 


6.1.3        Notice of decision.  If the Administrator denies part or all of
the claim, the Administrator shall notify the claimant in writing of the
denial.  The Administrator 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, and


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


 

















 


6.2          Review Procedure.  If
the Administrator denies part or all of the claim, the claimant shall have the
opportunity for a full and fair review by the Administrator of the denial, as
follows —


 


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


 


6.2.2        Additional submissions —
information access.  The
claimant shall then have the opportunity to submit written comments, documents,
records, and other information relating to the claim.  Upon request and free of charge, the
Administrator shall also provide the claimant 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.


 


6.2.3        Considerations on review.  In considering the review, the Administrator
shall take into account all materials and information the claimant submits
relating to the claim, without regard to whether the information was submitted
or considered in the initial benefit determination.


 


6.2.4        Timing of Administrator
response.  The Administrator
shall respond in writing to the claimant within 60 days after receiving the
request for review.  If the Administrator
determines that special circumstances require additional time for processing
the claim, the Administrator can extend the response period by an additional 60
days by notifying the claimant in writing before the end of the initial 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 Administrator expects to render its decision.


 


6.2.5        Notice of decision.  The Administrator shall notify the claimant
in writing of its decision on review. 
The Administrator 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 the 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).


 


ARTICLE 7


ADMINISTRATION OF AGREEMENT


 


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


 

















 


7.2          Agents.  In the
administration of this Agreement, the Administrator may employ agents and
delegate to them such administrative duties as it 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.


 


7.3          Binding Effect of Decisions. 
The decision or action of the Administrator about any question arising
out of the administration, interpretation, and 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 the Agreement.


 


7.4          Indemnity of Administrator. 
The Bank shall indemnify and hold harmless the members of the
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 Administrator or any
of its members.


 


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


 


ARTICLE 8


MISCELLANEOUS


 


8.1          Amendment and Termination of Agreement.  This Agreement may be amended or terminated
solely by a written agreement signed by the Bank and the Executive.  However, this Agreement shall terminate upon
the first to occur of (w) distribution of the death benefit proceeds in
accordance with section 2.2 above, or (x) termination of the Salary
Continuation Agreement under Article 5 of the Salary Continuation
Agreement, or (y) the Executive’s Separation from Service, or (z) the
date the Executive attains age 65.


 


8.2          Binding Effect.  This
Agreement shall bind the Executive and the Bank and their beneficiaries,
survivors, executors, administrators, and transferees, and any Policy
beneficiary.


 


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


 


8.4          Successors; Binding Agreement.  By an assumption agreement in form and
substance 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 expressly
assume and agree to perform this Agreement in the same manner and to the same
extent that the Bank would be required to perform this Agreement had no succession
occurred.


 


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


 


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


 

















 


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


 


8.7          Severability.  If any
provision of this Agreement is held invalid, such invalidity shall not affect
any other provision of this Agreement not held invalid, and each such other
provision shall continue in full force and effect to the full extent consistent
with law.  If any provision of this
Agreement is held invalid in part, such invalidity shall not affect the
remainder of the provision not held invalid, and the remainder of the provision
together with all other provisions of this Agreement shall continue in full
force and effect to the full extent consistent with law.


 


8.8          Headings.  Headings
and subheadings herein are included solely for convenience of reference and
shall not affect the meaning or interpretation of any provision of this
Agreement.


 


8.9          Notices.  All notices,
requests, demands and other communications hereunder shall be in writing and
shall 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 may
designate by like notice.  Unless
otherwise changed by notice, notice shall be properly addressed to the
Executive if addressed to the address of the Executive on the books and records
of the Bank at the time of the delivery of such notice, and properly addressed
to the Bank if addressed to the board of directors, Tidelands Bank, 875
Lowcountry Boulevard, Mount Pleasant, South Carolina 29464.


 


IN
WITNESS WHEREOF,
the Executive and a duly authorized representative of the Bank have executed
this 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