Exhibit 10.3


 


[Date]


 


[Name
of Executive]


Tidelands
Bancshares, Inc.


875
Lowcountry Blvd.


Mount
Pleasant, South Carolina 29464


 


Dear
[Executive],


 


Tidelands
Bancshares, Inc. (the “Company”) anticipates entering into a Securities
Purchase Agreement (the “Participation Agreement”) with the United States
Department of Treasury (the “Treasury”) that provides, among other things, for
the purchase by the Treasury of securities issued by the Company. This purchase
is anticipated to occur as part of the Company’s participation in the Treasury’s
Troubled Asset Relief Program - Capital Purchase Program (the “CPP”).


 


As
a condition to the closing of the investment contemplated by the Participation
Agreement, the Company is required to take certain actions with respect to
compensation arrangements of its senior executive officers. The Company has
determined that you are or may be a senior executive officer for purposes of
the CPP. To comply with the requirements of the CPP, and in consideration of
the benefits that you will receive as a result of the Company’s participation
in the CPP and for other good and valuable consideration, the sufficiency of
which you hereby acknowledge, you agree as follows:


 


(1)           No Golden
Parachute Payments. You will not be entitled to receive from the Company any
golden parachute payment (as defined below) during any period in which the
Treasury holds an equity or debt position acquired from the Company in the CPP
(the “CPP Covered Period”) (or during the year following any acquisition of the
Company, to the extent required by the CPP Limitations (as defined below)).


 


(2)           Recovery of
Bonus and Incentive Compensation. You will be required to and shall return to
the Company any bonus or incentive compensation paid to you by the Company
during the CPP Covered Period if such bonus or incentive compensation is paid
to you based on materially inaccurate financial statements or any other
materially inaccurate performance metric criteria.


 


(3)           Compensation
Program Amendments. Each of the Company’s compensation, bonus, salary
continuation, incentive and other benefit plans, arrangements and agreements,
including your employment agreement (all such plans, arrangements and
agreements, the “Benefit Plans”) are hereby amended to the extent necessary to
give effect to provisions (1) and (2) of this letter.


 


The
Company is also required as a condition to participation in the CPP to review
the Benefit Plans to ensure that the Benefit Plans do not encourage its senior
executive officers to take unnecessary and excessive risks that threaten the
value of the Company. To the extent that the Company determines that the
Benefit Plans must be revised as a result of such review, or determines that
the Benefit Plans must otherwise be revised to comply with Section 111(b) of
the EESA (as defined below) as


 

















 


implemented
by any guidance or regulation thereunder that has been issued and is in effect
as of the closing date of the Company’s issuance of preferred stock and
warrants to acquire common stock to the Treasury pursuant to the CPP (the “CPP
Limitations”), you and the Company agree to negotiate and effect such changes
promptly and in good faith.


 


(4)           Definitions and
Interpretation. This letter shall be interpreted as follows:


 


·      “Senior executive officer”
means the Company’s “senior executive officers” as defined in Q&A 2 of the
Interim Final Rule issued by the Treasury at 31 CFR Part 30,
effective on October 20, 2008 (the “Interim Final Rule”).


 


·      “Golden parachute payment”
shall have the meaning set forth in Q&A 9 of the Interim Final Rule.


 


·      The term “Company” includes
any entities treated as a single employer with the Company under Q&A 1 and
Q&A 11 of the Interim Final Rule.


 


·      This letter is intended to,
and shall be interpreted, administered and construed to comply with Section 111
of the Emergency Economic Stabilization Act of 2008 (the “EESA”) and the
regulations and guidance promulgated thereunder (and, to the maximum extent
consistent with the preceding, to permit operation of the Benefit Plans in
accordance with their terms before giving effect to this letter).


 


(5)           Miscellaneous.
To the extent not subject to federal law, this letter will be governed by and
construed in accordance with the laws of the State of South Carolina. This
letter may be executed in two or more counterparts, each of which will be
deemed to be an original. A signature transmitted by facsimile will be deemed
an original signature.


 


(6)           If the Treasury
does not purchase the securities contemplated by the Participation Agreement,
then this letter shall be of no force or effect. In addition, upon such time as
the Treasury no longer holds securities or debt of the Company acquired under
the CPP, this letter shall be of no further force or effect, except to the
extent required by the CPP Limitations. If you cease to be a senior executive
officer of the Company for purposes of the CPP, you shall be released from the
restrictions and obligations set forth in this letter to the extent permissible
under the CPP. If it is determined that you are not a senior executive officer
of the Company as of the date hereof, this letter shall be of no force or
effect.


 


The
Company appreciates the concessions you are making and looks forward to your
continued leadership during these financially turbulent times.


 


[Signature page follows]


 

















 


	
   

  	
  Sincerely,

  
	
   

  	
   

  
	
   

  	
  TIDELANDS
  BANCSHARES, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
  Robert
  E. Coffee, Jr.

  
	
   

  	
  Title:

  	
  President
  and Chief Executive Officer

  



 


 


Intending
to be legally bound, I agree with and accept the


foregoing
terms on the date set forth below.


 


	
  By:

  	
   

  	
   

  
	
  Name:

  	
   

  
	
  Title:

  	
   

  
	
  Date: