Document:

Exhibit 10.17

                                 LOAN AGREEMENT

         THIS LOAN  AGREEMENT  (the  "Agreement"),  made this 1st day of Octber,
2008,  by and among  *****************************************************  (the
"Lender"), and PEOPLES BANCORPORATION,  INC., a South Carolina corporation and a
bank holding company (the "Borrower").

                              W I T N E S S E T H:

         THAT THE LENDER AND THE  BORROWER  for  consideration,  the receipt and
adequacy of which is hereby acknowledged, covenant and agree as follows:

         Section 1. The Revolving Loan.  Subject to the terms and conditions and
relying upon the representations and warranties set forth in this Agreement, the
Lender agrees to make loans (each,  a "Loan" and,  collectively,  the "Revolving
Loan") to the  Borrower  on the date  hereof in an  aggregate  principal  amount
outstanding  at  any  time  not  to  exceed  $15,000,000  (the  "Revolving  Loan
Commitment").  On  September  28, 2010,  all  principal  and interest  under the
Revolving  Loan shall be due in full (the "Maturity  Date").  The Revolving Loan
shall be evidenced by the  promissory  note of the Borrower  (the  "Note"),  the
terms of the Note being  incorporated  herein by reference.  The Borrower hereby
agrees to pay the Lender  interest  on the unpaid  principal  amount of the Note
from time to time outstanding at the rate or rates per annum determined pursuant
the Note,  and with such  amounts  being  payable  on the dates set forth in the
Note.

                  (a) Conversion to Term Loan. At any one or more times from and
         after the date hereof but prior to the Maturity  Date, the Borrower may
         elect to convert up to $10,000,000 of the Revolving Loan  Commitment to
         a term loan (each such conversion being deemed to be a "Converted Loan"
         and,  collectively with any other Converted Loan, the "Converted Loans"
         and collectively with the Revolving Loan, the "Loans") by notifying the
         Lender that  Borrower  desires such  conversion,  whereupon  the Lender
         shall prepare the  documentation  required to implement  such Converted
         Loan (subject to the  limitations  described in this Section 1(a), with
         financial terms to be reasonably agreed between the Lender and Borrower
         as to method and timing of borrowings and repayments,  including a term
         and loan amortization  schedule not to exceed five years) for execution
         solely by the Lender and the Borrower; provided, however, that: (i) the
         total  amount of the  Converted  Loans  shall not  exceed an  aggregate
         amount of $10,000,000;  (ii) Converted Loans shall each be in a minimum
         amount  of at  least  $500,000;  (iii)  the  rate  of  interest  of the
         Converted  Loans  shall not be less than  90-day  LIBOR Rate plus three
         hundred basis points (3.00), and upon any Event of Default, Lender may,
         at its option and upon notice to Borrower,  increase the interest  rate
         on the entire outstanding principal balance and any late fees, together
         with all accrued and unpaid interest relating to the Converted Loans to
         the 90-day LIBOR Rate plus four hundred basis points  (4.00);  (iv) the
         Borrower must be in pro forma financial covenant compliance both before
         and  immediately  after giving effect to such  Converted  Loan;  (v) no
         Default  or Event of  Default  shall have  occurred  and be  continuing
         either  before or  immediately  after giving  effect to such  Converted
         Loan; (vi) the Revolving Loan Commitment  shall be permanently  reduced
         on a dollar-for-dollar  basis in respect to the amount of the Converted
         Loan;  and (vii) all  representations  and  warranties  of the Borrower
         shall  continue  to be true in all  material  respects on the date such
         Converted  Loan is made as though  made on such date,  except for those
         representations  and warranties that specifically  relate to an earlier
         date.  All  prepayments  applicable  to the Loans will be allocated pro
         rata  among  the  Revolving  Loan and any  Converted  Loan  pari  passu
         therewith,  unless otherwise allocated by the Lender. No Converted Loan
         shall be made unless the  conditions set forth in Section 3 with regard
         to advances under the Revolving Loan shall be satisfied at the time of,

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         and giving pro forma effect to, the making of such Converted  Loan. All
         Converted  Loans shall be secured by the  Collateral  pro rata with the
         Revolving Loan. The terms and conditions of any Converted Loan shall be
         (except as  otherwise  expressly  set forth  herein or  consented to in
         writing by the Lender),  immediately prior to the effectiveness of such
         Converted  Loan,  the same as the terms and conditions of the Revolving
         Loan at such time.

                  (b)  Collateral.  To  secure  the  payment  of the Note and to
         secure the performance of the Borrower's  covenants  contained  herein,
         the  Borrower  has  given  the  Lender a first  priority  stock  pledge
         agreement  satisfactory  to the Lender (the "Stock  Pledge  Agreement")
         covering the  outstanding  shares of common stock (the  "Stock") of The
         Peoples  National Bank,  Bank of Anderson,  N.A.,  and Seneca  National
         Bank, all nationally  chartered banks and wholly owned  Subsidiaries of
         the Borrower  (the  "Banks").  The grant of this  security  interest is
         described  in more  detail  in the  Stock  Pledge  Agreement  and  loan
         documents given to evidence or secure the Revolving Loan.

                  (c)  Fees.  Borrower  hereby  agrees  to pay to the  Lender  a
         commitment  fee (the  "Commitment  Fee"),  equal to twenty basis points
         (0.20) per annum of the Revolving Loan  Commitment,  payable (i) on the
         Maturity Date, and (ii) on the first  anniversary of the Maturity Date;
         provided that any payment of the Commitment  Fee, once the same becomes
         due and  payable,  shall be fully  earned  and shall not be  subject to
         refund or rebate.  In addition,  Borrower  hereby  agrees to pay to the
         Lender a non-usage fee (the "Non-Usage  Fee") for each day equal to the
         product of (i) 20 basis points (0.20) per annum  multiplied by (ii) the
         difference  between  (A)  the  Revolving  Loan  Commitment  and (B) the
         aggregate  outstanding  amount of the Revolving Loan plus any Converted
         Loans on such day,  payable  quarterly with respect to the  immediately
         preceding quarter on the same day of each calendar quarter that accrued
         interest is paid under the Note.

         Section 2. Use of Loan Proceeds. The proceeds of the Revolving Loan are
to be used to provide capital for the Banks and for general corporate purposes.

         Section 3.  Warranties  of the Borrower;  Conditions  to  Disbursement.
Prior to the  disbursement  of any draw request  under the Revolving  Loan,  the
Lender must have received  certification  of the following  warranties  from the
Borrower, such certification being a condition to disbursement:

                  (a) The  Borrower is a  corporation  duly  organized,  validly
          existing,  and in good  standing  under the laws of the State of South
          Carolina and is qualified  to do business in all  jurisdictions  where
          such qualification is necessary.  The Borrower is registered as a bank
          holding  company with  Federal  Reserve and the South  Carolina  State
          Board of Financial  Institutions.  The principal  place of business of
          the Borrower  where the records of the Borrower are kept is located at
          1800 E. Main Street, Easley, South Carolina.

                  (b)  The  Banks  are  each  nationally  chartered  banks  duly
          organized, validly existing, and in good standing pursuant to the laws
          of the United States of America and subject to  examination by the the
          Office of the  Comptroller of the Currency (the "OCC") and the Federal
          Deposit Insurance  Corporation (the "FDIC").  The Borrower owns all of
          the Stock (consisting of 832,605 shares of common stock of The Peoples
          National  Bank;  700,000  shares of common  stock of Bank of Anderson,
          N.A.;  350,000 shares of common stock of Seneca  National Bank) of the
          Banks and there are no other  outstanding  shares of capital stock and
          no outstanding options, warrants or other rights that can be converted
          into  shares  of  capital  stock  of the  Banks.  The  Banks  have all
          requisite  corporate  power and  authority  and possess all  licenses,

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          permits  and  authorizations  necessary  for  them  to own  their  own
          properties and conduct their own business as presently conducted.

                  (c)  Each   financial   statement   of  the  Borrower  or  any
          Subsidiary,  which has been delivered to the Lender,  presents  fairly
          the financial  condition of the Borrower or such  Subsidiary as of the
          date  indicated  therein  and the  results of its  operations  for the
          periods  shown  therein.  There has been no Material  Adverse  Change,
          either  existing  or  threatened,   in  the  financial   condition  or
          operations  of the  Borrower or any  Subsidiary  since the date of the
          most recent financial  statements  delivered to the Lender or the most
          recent regulatory report filed with the appropriate agency,  except as
          previously disclosed to the Lender.

                  (d) The Borrower  has full power and  authority to execute and
          perform  the  Financing  Documents.   The  execution,   delivery,  and
          performance  by the Borrower of the Financing  Documents (i) have been
          duly authorized by all requisite  action by the Borrower,  (ii) do not
          violate any  provision  of law, and (iii) do not result in a breach of
          or  constitute a default  under any  agreement or other  instrument to
          which  the  Borrower  or any  Subsidiary  is a party or by  which  the
          Borrower or any Subsidiary is bound.  Each of the Financing  Documents
          constitutes the legal,  valid, and binding  obligation of the Borrower
          enforceable in accordance with its terms.

                  (e)  Except  for the  security  interest  created by the Stock
          Pledge  Agreement,  the Borrower  owns the Stock free and clear of all
          liens, charges, and encumbrances. The Stock is duly issued, fully paid
          and non-assessable  except to the extent provided by 12 U.S.C. Section
          55, and the Borrower has the unencumbered right to pledge the Stock.

                  (f) To the best knowledge of the Borrower, there is no action,
          arbitration,  or other proceeding at law or in equity, or by or before
          any court,  agency,  or  arbitrator,  nor,  to the best  knowledge  of
          Borrower,  is there any  judgment,  order,  or other  decree  pending,
          anticipated,  or threatened  against the Borrower or any Subsidiary or
          against any of their  properties or assets which might have a material
          adverse effect on the Borrower,  any Subsidiary,  or their  respective
          properties  or assets,  or which might call into question the validity
          or enforceability of the Financing  Documents,  or which might involve
          the alleged  violation by the Borrower or any  Subsidiary  of any law,
          rule or regulation.

                  (g) No  consent  or other  authorization  of any  governmental
          authority  or other  public  body on the part of the  Borrower  or any
          Subsidiary is required in connection  with the  Borrower's  execution,
          delivery,  or performance of the Financing Documents;  or if required,
          all such prerequisites have been fully satisfied.

                  (h) Except as previously disclosed in writing by the Borrower,
          none of the real property now or  previously  owned by Borrower or any
          Bank Subsidiary  contains any underground  petroleum  storage tank, is
          being used for the  disposal of any property or materials in violation
          of any federal,  state, or local health, safety, or environmental law,
          ordinance,  or  regulation,  nor to the best knowledge of the Borrower
          has it been so used.  No  proceeding  has been  commenced,  or  notice
          received,  concerning any alleged violation of any such law, ordinance
          or  regulations.  To the  best  knowledge  of the  Borrower,  all real
          property now or previously owned by Borrower or any Bank Subsidiary is
          free of hazardous or toxic wastes,  contaminants,  oil, radioactive or
          other  materials the removal of which is required,  or the maintenance
          of which is restricted, prohibited or penalized, by any federal, state
          or local  agency,  authority,  or  governmental  unit, or which may be
          disposed of or transported  lawfully only pursuant to a special permit
          or by or at a governmentally approved facility.

                  (i) No employee benefit plan established or maintained,  or to
          which contributions have been made, by Borrower or any Bank Subsidiary
          which is subject of Part 3 of  Subtitle I of the  Employee  Retirement
          Income Security Act of 1974,  amended  ("ERISA"),  had an "accumulated
          funding  deficiency" (as such term is defined in Section 302 of ERISA)

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          as of the last day of the most  recent  fiscal year of such plan ended
          prior  to the date  hereof,  or  would  have  had such an  accumulated
          funding  deficiency  of such day if such were the  first  year of such
          plan to which such Part 3 applied;  and no material  liability  to the
          Pension Benefit Guaranty Corporation has been incurred with respect to
          any such plan by Borrower or any Bank  Subsidiary.  Each such employee
          benefit  plan  complies  and will  comply  fully  with all  applicable
          requirements  of ERISA  and of the  Internal  Revenue  Code of 1986 as
          amended (the "Code"), and which all applicable rulings and regulations
          issued under the provisions of ERISA and the Code.  This Agreement and
          the  consummation  of the  transactions  contemplated  herein will not
          involve  any  prohibited  transactions  within  the  scope of ERISA or
          Section 4975 of the Code.

          Section 4. Covenants of the Borrower.  The Borrower  hereby  covenants
                     and agrees with the Lender as follows:

         Affirmative Covenants:

                  (a) The Borrower shall promptly furnish to the Lender: (i) not
          later  than  120  days  after  the end of each  fiscal  year,  audited
          consolidated   financial   statements  of  the  Borrower  prepared  in
          accordance with accounting principles generally accepted in the United
          States of  America  ("GAAP")  and  certified  by a  registered  public
          accounting  firm;  (ii) not later than 45 days after each of the first
          three quarters of each fiscal year, unaudited  consolidated  financial
          statements of the Borrower,  prepared in accordance with GAAP (subject
          to changes  resulting from normal year-end  adjustments) and certified
          by the chief financial  officer of the Borrower;  (iii) not later than
          45 days  after the end of each of the  first  three  quarters  of each
          year,  copies of the Call Reports and Problem  Asset  Summaries of the
          Banks for the  fiscal  quarter  then  ended,  in  compliance  with the
          requirements of the governmental regulatory agency which has authority
          to examine the Banks, all prepared in accordance with the requirements
          imposed  by  the  applicable   governmental  regulatory  agency;  (iv)
          immediately  after the occurrence of a Material  Adverse Change or the
          imposition of any letter agreement, memorandum of understanding, cease
          and desist order,  or other similar  regulatory  action  involving the
          Borrower  or any  Subsidiary,  a  statement  of the  Borrower's  chief
          executive   officer  or  chief  financial  officer  setting  forth  in
          reasonable  detail such event and the action which the Borrower or any
          Subsidiary  proposes to take with  respect  thereto;  (v) from time to
          time upon  request  of the  Lender,  copies of the  Borrower's  annual
          reports and quarterly  regulatory reports and each Subsidiary's annual
          reports and quarterly regulatory reports, as applicable; and (vi) from
          time to time  upon  request  of the  Lender,  such  other  information
          relating  to  the   operations,   business,   condition,   management,
          properties,  or  prospects of the  Borrower or any  Subsidiary  as the
          Lender may reasonably request (including  meetings with the Borrower's
          or Subsidiary's officers and employees).

                  (b) The Borrower and each Subsidiary  shall punctually pay and
          discharge all taxes,  assessments  and other  governmental  charges or
          levies imposed upon it or upon its income or upon any of its property,
          except  taxes,  assessments  and other charges which are in good faith
          being timely litigated or otherwise properly contested by the Borrower
          or the Subsidiary  and as to which the  contestant has  established an
          adequate reserve on its books.

                  (c) The  Borrower  and each  Subsidiary  shall  comply  in all
          material  respects with all requirements of  constitutions,  statutes,
          rules,  regulations,  and orders and all orders and  decrees of courts
          and arbitrators applicable to it or its properties.

                  (d) The Borrower shall, immediately upon distribution, provide
          the Lender with a copy of any offering  disclosure  materials  for any
          stock offering along with any additional information about commitments
          for sale of stock associated with any such offering.

                  (e) The Borrower  shall  furnish the Lender with a copy of the
          most recent  external  loan review for the Banks if  requested  by the
          Lender.

                  (f) The Borrower shall pay the reasonable  out-of-pocket costs
          and  expenses,  including  attorneys  fees,  incurred by the Lender in
          connection with this Revolving Loan.

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                  (g) The Borrower shall maintain and keep in force insurance of
          the types and in  amounts  customarily  carried  in lines of  business
          similar to  Borrower's,  including  but not  limited  to fire,  public
          liability,   property   damage,   business   interruption,    worker's
          compensation,  director and officer liability and errors and omissions
          coverage.

                  (h) The  Borrower  shall  keep  all of  Borrower's  properties
          useful  or  necessary  to  Borrower's  business  in  good  repair  and
          condition, and from time to time make necessary repairs,  renewals and
          replacements  thereto so that  Borrower's  property shall be fully and
          efficiently preserved and maintained.

                  (i)  Within  90 days of the date  hereof,  the  Borrower  will
          furnish to the Lender  true,  correct and  complete  copies of (i) the
          Borrower's  articles  of  incorporation  as in effect at the time such
          articles  are provided to the Lender;  (ii) the Banks'  charters as in
          effect  at the time such  charters  are  provided  to the  Lender  (as
          certified by the OCC and dated within 90 days of the date  provided to
          the Lender); (iii) certificate of existence for the Borrower issued by
          the South  Carolina  Secretary of State  (dated  within 90 days of the
          date  provided  to the  Lender);  (iv) the bylaws of the  Borrower  in
          effect  immediately prior to the adoption of the resolutions  referred
          to below  (and such  bylaws  shall  have not been  further  altered or
          amended and shall have  remained in full force and effect at all times
          since the adoption of such  resolutions  through the date  provided to
          the  Lender);  and (v)  resolutions  of the Board of  Directors of the
          Borrower  adopted at a duly called meeting  authorizing  the Revolving
          Loan and the  granting  of a  security  interest  in the  Stocks  (the
          "Resolutions").  When provided to the Lender, the Resolutions shall be
          in full  force and  effect  and shall  have not been  modified  in any
          respect.  The Borrower  and the Banks shall remain in valid  existence
          under the laws of the state of South Carolina and the United States of
          America.  Finally,  neither  the  Borrower  nor any of the Banks shall
          materially   amend  the   Borrower's   or  the  Banks'   articles   of
          incorporation or association without prior notice to the Lender.

         Negative Covenants:

                  (a) The  Borrower  shall not permit its capital or the capital
         of any  subsidiary  Bank as of the end of any fiscal quarter during the
         term of this  Agreement  to be less than "well  capitalized;"  provided
         however  that it  shall  not be a  violation  of this  covenant  if the
         Borrower  or a  Subsidiary  Bank shall again  become  well  capitalized
         within 60 days of the date  that such  entity  determined  or  received
         notice  that  it  had  been  determined  that  it  is  no  longer  well
         capitalized.  For the purposes of this  Agreement,  "well  capitalized"
         shall  mean as  defined  by 12 CFR ss. 6.4 for each of the Banks and 12
         CFR ss. 225.2(r) for the Borrower.

                  (b) The Borrower  shall not permit the  allowance for loan and
         lease  losses of any of the  Banks to be less  than  1.25% of its gross
         loans at the end of each fiscal quarter; provided however, if permitted
         by the  appropriate  regulatory  agencies and the  applicable  internal
         calculations  formula  of the Bank,  any of the Banks may  reduce  such
         allowance  upon the  prior  written  approval  from the  Lender,  which
         approval shall not be unreasonable withheld.

                  (c) The Borrower shall not permit the ratio of  Non-performing
         Assets  to total  assets of the  Borrower  to  exceed  3.50%;  provided
         however that, if the ratio of Non-performing  Assets to total assets of
         the Borrower  exceeds 1.50% but is less than 3.50%,  the Borrower shall
         not be in breach of this  covenant  but the  interest  rate of the Loan
         shall be adjusted as stated in the Note.

                  (d) The Borrower shall pay no cash dividend, without the prior
         written consent of the Lender (not to be unreasonably  withheld) if the
         payment would cause the Borrower to fail to be well capitalized.

                  (e) The Borrower shall not,  directly or indirectly,  become a
         guarantor of any obligation of, or an endorser of, or otherwise  assume
         or become liable upon any notes, obligations,  or other indebtedness of

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         any other Person  (other than a Subsidiary)  without prior  approval by
         the Lender except in connection with deposits,  repurchase  agreements,
         overdrafts,  and  other  banking  transactions  entered  into by a Bank
         Subsidiary in the ordinary  course of its business,  including  without
         limitation   borrowings  of  federal  funds,  Federal  Home  Loan  Bank
         advances,  or  Trust  Preferred   Indebtedness.   Notwithstanding  this
         provision, the Borrower and the Lender acknowledge that the projections
         of the Banks indicate  additional earnings will be generated during the
         term of the Loans,  and that such additional  earnings could be used to
         service  additional  debt in the  form of trust  preferred  securities.
         Provided  that the Borrower and the Banks are  otherwise in  compliance
         and will remain in compliance with all of the ratio requirements of the
         Loans,  the Borrower may incur  additional  debt without the consent of
         the Lender,  with such  additional  debt  restricted to trust preferred
         securities and related guaranty.

                  (f)  Except  in  the   settlement   of   previously   incurred
         obligations  acquired in the ordinary  course of business,  neither the
         Borrower nor any Subsidiary  shall acquire any material  portion of the
         stock, other equity interests or assets or business of any other Person
         without the prior written consent of the Lender (not to be unreasonably
         withheld).

                  (g)  Neither  the  Borrower  nor any  Subsidiary  shall  sell,
         convey, pledge, assign, lease, abandon or otherwise transfer or dispose
         of,  voluntarily  or  involuntarily  any of its  properties  or  assets
         whether tangible or intangible  (including,  but not limited to, shares
         of capital stock of the Borrower nor the Pledged  Shares (as defined in
         the Stock  Pledge  Agreement  or any portion  thereof),  except for (i)
         leases  entered  into  in  the  ordinary   course  of  business,   (ii)
         dispositions of its properties or assets;  if such properties or assets
         are replaced by  replacement  properties  or assets used for similar or
         related purposes,  and (iii) other dispositions of properties or assets
         in the ordinary  course of business which are not,  individually  or in
         the aggregate, material to the operation of such Person's business.

                  (h) Neither the  Borrower  nor any  Subsidiary  shall merge or
         enter a binding agreement to merge with or into or consolidate with any
         other Person without the prior written consent of the Lender (not to be
         unreasonably  withheld);  provided,  however,  that  one or more of the
         Borrower's  Subsidiaries  may  merge  with  another  Subsidiary  of the
         Borrower without consent.

                  (i) Unless required by the Securities and Exchange Commission,
         the OCC, the FDIC, the Federal Reserve,  the South Carolina State Board
         of  Financial  Institutions  or any other  state or federal  regulatory
         entity having or claiming jurisdiction over the Borrower, Borrower will
         not disclose information relating to the Lender or terms and conditions
         of the Loans.

         Section 5. Advances under the Revolving  Loan.  The Lender shall not be
         obligated  to make  any advance of the  Revolving  Loan to the Borrower
         unless:

               (a) All  representations and warranties of the Borrower contained
         in  this  Agreement or the Note shall be true in all material  respects
         on and as of  the date of each advance of the Revolving Loan.

               (b) The Borrower and each Subsidiary  shall have performed in all
         material respects  all their agreements and obligations required by the
         Financing Documents.

               (c) No Material Adverse Change shall have occurred since the date
         of this Agreement.

               (d) No  Default  or event  which,  with the  giving  of notice or
         passage of  time (or both),  would constitute a Default under the terms
         of this Agreement shall have occurred.

         Section 6. No Third-Party Beneficiary.  All conditions precedent to the
obligation of the Lender to make the  disbursement  hereunder are imposed solely
and exclusively  for the benefit of the Lender and its assigns.  No Person other

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than the Borrower and its Subsidiaries shall, under any circumstances, be deemed
a beneficiary of this Agreement,  or any of the terms or conditions  hereof, any
or all of which  may be freely  waived in whole or in part by the  Lender at any
time if in its sole discretion it deems it advisable to do so.

         Section 7. Events of Default.  The following shall constitute  defaults
(each a "Default") hereunder:

                  (i) The failure of the Borrower to pay when due any payment of
          interest or of principal due and payable under the Note.

                  (ii) The failure of the  Borrower to keep,  perform or observe
          any covenant, agreement, term or condition herein required to be kept,
          performed or observed by the Borrower under this  Agreement,  the Note
          or the Stock Pledge Agreement,  unless such failure is cured within 30
          days (or such  shorter  cure  period  deadline  as  specified  herein)
          thereof.

                  (iii) The Borrower or any of the Banks (a) files a petition or
          has a  petition  filed  against  it under the  Bankruptcy  Code or any
          proceeding for the relief of insolvent debtors; (b) generally fails to
          pay its  debts  as  such  debts  become  due  and  payable;  (c) has a
          custodian  appointed for the Borrower or a guarantor or for the assets
          of any thereof;  (d)  benefits  from or is subject to the entry of any
          order for relief by any court of insolvency; (e) makes an admission of
          insolvency seeking relief provided in the Bankruptcy Code or any other
          insolvency  law; (f) makes an assignment for the benefit of creditors;
          (g)  has a  receiver  appointed,  voluntarily  or  otherwise,  for its
          property;  (h) suspends business; (i) permits a judgment in the amount
          of $250,000.00 or more to be obtained against it which is not promptly
          paid or promptly  appealed and secured pending appeal;  or (j) becomes
          insolvent, however otherwise evidenced.

                  (iv) The  occurrence  of a default  under any of the Financing
          Documents.

                  (v) Any  representation  or  certificate  given or at any time
          hereafter  required to be given  hereunder shall be false or erroneous
          in any material respect when made.

                  (vi) (a) the OCC,  the FDIC,  the Federal  Reserve,  the South
          Carolina State Board of Financial  Institutions  or any other state or
          federal  regulatory  entity having or claiming  jurisdiction  over the
          Borrower or any  Subsidiary  shall issue any formal order,  directive,
          Memorandum of  Understanding,  or cease and desist order involving the
          Borrower  or  any  Subsidiary,  which  materially  restricts  or has a
          reasonable  prospect of restricting the Borrower's ability to make the
          required  payments  when due pursuant to the  Financing  Documents and
          which is not  resolved  within 60 days in a manner  acceptable  to the
          Lender its reasonable discretion;  or (b) the FDIC shall terminate its
          insurance coverage with respect to the Borrower or any of the Banks.

         Section 8. Remedies.  Upon the occurrence of a Default, the Lender may,
at its  option,  declare  the entire  indebtedness  evidenced  by the Note to be
immediately due and payable and may exercise each and every other remedy granted
herein, in the Stock Pledge Agreement,  in the Financing Documents, or any other
right,  power,  privilege or remedy,  either at law, in equity or otherwise,  to
which the Lender may be entitled. All rights and remedies of the Lender shall be
cumulative  and the exercise of one right or remedy shall not be deemed to be an
election of  remedies  to the  exclusion  of the  exercise  of other  rights and
remedies.  No  failure or delay by the Lender to  exercise  any right,  power or
privilege  hereunder  shall  operate  as a waiver  of any such  right,  power or
privilege or preclude any other or future exercise thereof.

         In addition to the remedies described above, Borrower acknowledges that
a violation  of any  Covenant or event of Default  will result in an increase in

                                       7
<PAGE>

the  interest  rate on any  amounts  outstanding  under  the Note as well as any
future advances, should the Lender elect to make future advances in the event of
Default.

         Section 9. Confidentiality.  The Lender acknowledges that any nonpublic
information  about the  Borrower  and its  Subsidiaries  provided  to the Lender
pursuant to this  Agreement  and the  Financing  Documents  is the  confidential
business information of the Borrower (the "Information"). The Lender agrees that
it will maintain the  Information in confidence and will restrict  access to the
Information  to those of its  employees  and  agents who have a need to know the
Information in order to make and administer the Revolving Loan  contemplated  by
this  Agreement.  The Lender agrees that it will not use, and it will not permit
its employees and agents to use, the  Information for any purpose other than the
making and  administration  of the Revolving Loan contemplated by this Agreement
and  specifically  agrees  that it will  not use the  Information  in any way to
compete with the Borrower.  In addition,  Borrower shall not disclose or provide
the identity of the Lender to any third party.  Notwithstanding  the  foregoing,
Borrower may disclose the identity of the Lender (i) to those third  parties who
have  a  "need  to  know"  such   identity  to  enable  them  to  perform  their
responsibilities to or on behalf of the Borrower and (ii) to the extent required
by law,  regulation or order of any court or regulatory  agency having competent
jurisdiction,  provided that Borrower  first  notifies  Lender and cooperates to
protect the confidentiality thereof by all means reasonably available.

         Section 10.  Miscellaneous.

                  (a) This Agreement  shall survive the  disbursements  of funds
          under the Note and shall  remain in full  force and  effect  until the
          later of the  Maturity  Date or such time as the Loans shall have been
          paid in full.

                  (b)  This   Agreement   may  be  executed  in  any  number  of
          counterparts, all of which taken together shall constitute but one and
          the same instrument.

                  (c) The covenants, terms and conditions herein contained shall
          bind (and the  benefits  and  powers  shall  inure to) the  respective
          successors and assigns of the parties hereto.  The Borrower,  however,
          shall not assign its rights or obligations under this Agreement unless
          such  assignment  has been  consented  to by the  Lender  in  writing.
          Whenever used herein, the singular number shall include the plural, he
          plural the singular, and the term the "Lender" shall include any payee
          of the  indebtedness  hereby  secured and any  transferee  or assignee
          thereof, whether by operation of law or otherwise.

                  (d) This Agreement  shall be deemed to be a contract under the
          Laws of the State of South  Carolina and the execution and delivery of
          this Agreement and, to the extent not inconsistent  with the preceding
          sentence, the terms and provisions of this Agreement shall be governed
          by and  construed in  accordance  with the Laws of that State of South
          Carolina  without  regard to the  principles  of the conflicts of laws
          thereof.  Whenever possible, each provision of this Agreement shall be
          interpreted in a manner as to be effective and valid under  applicable
          law, but if any provision of this Agreement  shall be prohibited by or
          invalid under  applicable  law, such provision shall be ineffective to
          the extent of such prohibition or invalidity without  invalidating the
          remainder  of  such  provision  or the  remaining  provisions  of this
          Agreement.  This  Agreement  is  to be  read,  construed  and  applied
          together  with the Note and the Stock  Pledge  Agreement,  which  when
          taken together,  set forth the complete understanding and agreement of
          the parties with respect to matters referred to herein and therein.

                  (e) All  notices,  requests,  demands,  directions  and  other
          communications  (collectively  "Notices") under the provisions of this
          Agreement  must  be  in  writing   (including  telexed  or  telecopied
          communication)   unless  otherwise   expressly  permitted  under  this
          Agreement and must be sent by first-class or first-class express mail,

                                       8
<PAGE>

          private  overnight  or next  business  day  courier,  or by  telex  or
          telecopy with confirmation in writing mailed first class, in all cases
          with  charges  prepaid,  and any such  properly  given  Notice will be
          effective  when  received.  All Notices will be sent to the applicable
          party at the  addresses  stated below or in  accordance  with the last
          unrevoked written direction from such party to the other parties.

                           If to Borrower:   Peoples Bancorporation, Inc.
                                             Attention: Chief Executive Officer
                                             P.  O.  Box  1989   Easley,
                                             South Carolina 29641

                           If to Lender:     **************************
                                             Attention:  *******************
                                             *****************
                                             *****************************

         Section 11.  Definitions.

                  (a) "Bank  Subsidiaries"  means any banking  Subsidiary of the
          Borrower, now or hereafter in existence,  including but not limited to
          the Banks.

                  (b) "Capital"  means all capital or all  components of capital
          as defined from time to time by the primary  federal  regulator of the
          Borrower,  the Banks, or each of the other Bank  Subsidiaries  (as the
          case may be).

                  (c) "Financing  Documents"  means and includes this Agreement,
          the  Promissory  Note,  the  Stock  Pledge  Agreement,  and all  other
          associated   loan  and   collateral   documents   including,   without
          limitation,  all  guaranties,  suretyship  agreements,  stock  powers,
          security  agreements,   security  deeds,   subordination   agreements,
          exhibits,  schedules,  attachments,   financing  statements,  notices,
          consents, waivers, opinions,  letters, reports, records,  assignments,
          documents,   instruments,   information  and  other  writings  related
          thereto,  or  furnished  by the  Borrower to the Lender in  connection
          therewith  or in  connection  with  any of  the  Collateral,  and  any
          amendments,   extensions,  renewals,  modifications  or  substitutions
          thereof or therefore.

                  (d) "Material  Adverse  Change" shall mean a material  adverse
          change in (a) the  business,  operations  or condition  (financial  or
          otherwise) of either the Borrower or any  Subsidiary;  (b) the ability
          of the  Borrower to perform  any of its  payment or other  obligations
          under this  Agreement or the ability of the Borrower to perform any of
          its obligations under any other Financing Document;  (c) the legality,
          validity or  enforceability  of the  obligations of the Borrower under
          this  Agreement  or under any  other  Financing  Document;  or (d) the
          ability of the Lender to exercise its rights and remedies with respect
          to, or otherwise realize upon, the Stock.

                  (e)  "Non-performing  Assets"  shall  include  all  nonaccrual
          loans,  loans  past  due 90 days or more  and  still  accruing,  other
          impaired   loans,   and  other  real  estate   owned  or  acquired  in
          satisfaction of  indebtedness,  and other collateral owned or acquired
          in satisfaction of indebtedness.

                  (f) "Person" means any individual,  corporation,  partnership,
          joint venture, association, joint-stock company, trust, unincorporated
          organization  or  government  or any agency or  political  subdivision
          thereof.

                  (g) "Subsidiary"  means each of the Bank  Subsidiaries and any
          other  corporation  for which the Borrower has the power,  directly or
          indirectly,  to direct its  management  or  policies or to vote 25% or
          more of any class of its voting securities.

                  (h) "Tier 1  Capital"  means  Tier 1 capital as defined by the
          capital maintenance regulations of the primary federal bank regulatory
          agency of the relevant Bank Subsidiary.

                                       9
<PAGE>

                  (i) "Tier 2  Capital"  means  Tier 2 capital as defined by the
          capital maintenance regulations of the primary federal bank regulatory
          agency of the relevant Bank Subsidiary.

                  (g)  "Trust  Preferred  Indebtedness"  means any  indebtedness
          issued by the  Borrower or any  Subsidiary  that  qualifies  as Tier 1
          Capital or Tier 2 Capital.

                  (h) All accounting terms not otherwise defined herein have the
          meanings assigned to them in accordance with GAAP.

                                       10
<PAGE>

         IN WITNESS WHEREOF,  this Agreement has been executed under seal by the
parties hereto.

                                            BORROWER:

                                            PEOPLES BANCORPORATION, INC.  (SEAL)

                                         By:______________________________
                                                 R. Riggie Ridgeway
                                            Its: Chief Executive Officer

                                            LENDER:

                                            ************************** (SEAL)

                                          By:______________________________
                                                 *********************
                                            Its: *********************

                                       11
<PAGE>

                             STOCK PLEDGE AGREEMENT

         This Stock Pledge  Agreement (this  "Agreement"),  dated as of this 1st
day       of       October,       2008,       is      by       and       between
**************************************************** (the "Lender"), and PEOPLES
BANCORPORATION,  INC., a South Carolina  corporation  and a bank holding company
(the "Borrower").

                              W I T N E S S E T H:

         WHEREAS,  the  Borrower  and the Lender have  entered into that certain
Loan  Agreement and  Promissory  Note,  dated of even date  herewith,  which are
incorporated herein by reference thereto, pursuant to which the Borrower and the
Lender  agreed that the Lender shall extend  credit to the Borrower in an amount
as set forth in the Loan  Agreement (as amended  modified or  supplemented  from
time to time, the "Loan  Agreement")  (capitalized  terms used in this Agreement
that are defined in the Loan Agreement shall have the meanings  assigned to them
therein unless otherwise defined in this Agreement); and

         WHEREAS, the obligations of the Lender under the Loan Agreement and the
Note are subject to the  further  condition,  among  others,  that the  Borrower
grants to and creates in favor of the Lender a first priority  security interest
in the  Pledged  Shares  (as  hereinafter  defined)  pursuant  to the  terms and
conditions as hereinafter  provided except as otherwise  specifically  set forth
herein.

         NOW,  THEREFORE,  in  consideration of the Loan (as defined in the Loan
Agreement),  and of other  good and  valuable  consideration,  the  receipt  and
sufficiency of which are hereby  acknowledged  by the Borrower,  and in order to
induce  the Lender to enter  into the Loan  Agreement  and the Note and make the
Loan, the Borrower,  intending to be legally bound hereby,  covenants and agrees
as follows:

         Pledge.  As security for the full and timely  payment of the  aggregate
principal  amount  plus any  accrued  interest  under the Loan (the  "Debt")  in
accordance  with the terms of the  Financing  Documents  and the full and timely
payment and  performance of the  obligations of the Borrower under the Financing
Documents,  the  Borrower  hereby  grants a perfected  first  priority  security
interest in and  pledges to the Lender all of the  Borrower's  right,  title and
interest  in and to  832,605  shares,  which  represents  100% of the issued and
outstanding  common stock, of The Peoples National Bank;  700,000 shares,  which
represents 100% of the issued and outstanding common stock, of Bank of Anderson,
N.A.; and 350,000  shares,  which  represents 100% of the issued and outstanding
common stock,  of Seneca  National Bank, all  wholly-owned  subsidiaries  of the
Borrower, together with all additions, substitutions,  replacements and proceeds
thereof and all income,  interest,  dividends  and other  distributions  thereon
(collectively, the "Pledged Shares).

         Upon  execution  and delivery of this  Agreement,  the  Borrower  shall
deliver to the Lender certificates evidencing the Pledged Shares, accompanied by
executed  stock powers in blank with  respect to the Pledged  Shares in favor of
the Lender,  the rights of the Lender under which shall be exercisable only upon
the  occurrence  of an Event of Default (as  hereinafter  defined),  and by such
other  instruments  or  documents  as the Lender or its counsel  may  reasonably
request.  The Borrower  represents  that it is the legal and equitable owner of,
and has the complete and  unconditional  authority to pledge the Pledged Shares,
and  holds  the same  free and clear of all  liens,  charges,  encumbrances  and
security interests except those in favor of Lender granted  hereunder,  and will
defend its title thereto  against the claims of all persons  whomsoever.  All of
the  Pledged  Shares  are  duly  authorized,  validly  issued,  fully  paid  and
nonassessable except as provided by 12 U.S.C. Section 55.

                                       1
<PAGE>

         The Borrower  agrees to pay prior to  delinquency  all taxes,  charges,
liens and assessments  against the Pledged  Shares,  and upon the failure of the
Borrower to do so, the Lender at its option may pay any of them and shall be the
sole judge of the  legality or  validity  thereof  and the amount  necessary  to
discharge  the  same.  All  advances,  charges,  costs and  expenses,  including
reasonable  attorneys'  fees,  incurred or paid by the Lender in exercising  any
right,  power or  remedy  conferred  by this  Agreement,  or in the  enforcement
thereof,  shall become a part of the indebtedness secured hereunder and shall be
paid to the  Lender by the  Borrower  immediately  upon  demand  therefor,  with
interest thereon until paid in full at the rate as set forth in the Note.

         Section 2. Sale or  Transfer of the Note.  Upon the  transfer of all or
any part of the  indebtedness,  the Lender may  transfer  all or any part of the
Pledged  Shares  constituting  the  collateral  and  shall be  fully  discharged
thereafter  from all liability and  responsibility  with respect to such Pledged
Shares so  transferred,  and the transferee  shall be vested with all the rights
and powers of the  Lender  hereunder  with  respect  to such  Pledged  Shares so
transferred;  but with  respect to any Pledged  Shares not so  transferred,  the
Lender shall retain all rights and powers hereby given.

         Covenants,  Representations and Warranties. The Borrower represents and
warrants to the Lender as follows:

                  There are no  restrictions on the pledge or transfer of any of
         the Pledged Shares,  other than restrictions  referenced on the face of
         any certificates evidencing the Pledged Shares.

                  The Borrower is the legal owner  of the Pledged  Shares, which
         are registered in the name of the Borrower.

                  The  Pledged  Shares  are  free  and  clear  of  any  security
         interests, pledges, liens, encumbrances, charges, agreements, claims or
         other arrangements or restrictions of any kind, except as referenced in
         Sections 1 and 3(a) above;  and the  Borrower  will not incur,  create,
         assume or permit to exist any pledge,  security interest,  lien, charge
         or other  encumbrance  of any nature  whatsoever  on any of the Pledged
         Shares or assign,  pledge or  otherwise  encumber  any right to receive
         income from the Pledged Shares, other than in favor of the Lender.

                  The Borrower has the right to transfer the Pledged Shares free
         of any  encumbrances  and the Borrower will defend the Borrower's title
         to  the  Pledged   Shares   against  the  claims  of  all  persons  Any
         registration  with,  or consent or approval of, or other action by, any
         federal, state or other governmental authority or regulatory body which
         was or is necessary  for the validity of the pledge of and grant of the
         security interest in the Pledged Shares has been obtained.

                  The  pledge  of and  grant  of the  security  interest  in the
         Pledged Shares is effective to vest in the Lender a valid and perfected
         first priority security  interest,  superior to the rights of any other
         person, in and to the Pledged Shares as set forth herein.

                                       2
<PAGE>

         Voting Rights and Transfer.

                  So long as no Event of Default (as defined in Section 5 below)
         shall have occurred and be continuing  and the Lender has not delivered
         the notice  specified in subsection  (b) below,  the Borrower  shall be
         entitled to  exercise  any and all voting and other  consensual  rights
         pertaining  to the Pledged  Shares or any part  thereof for any purpose
         not  inconsistent  with the terms of this  Agreement or any document or
         agreement executed in connection herewith.

                  Upon the occurrence and during the  continuance of an Event of
         Default and to the extent  permitted by applicable law and regulations,
         at  the  option  of the  Lender  exercised  in a  writing  sent  to the
         Borrower,  all rights of the  Borrower to exercise the voting and other
         consensual  rights  which it would  otherwise  be  entitled to exercise
         pursuant to  subsection  (a) above shall  cease,  and the Lender  shall
         thereupon  have the sole  right  to  exercise  such  voting  and  other
         consensual rights.

         Events of Default.

                  If any of the  following  occurs (each an "Event of Default"),
         (i) an event of Default under any of the Financing Documents,  (ii) the
         failure by the  Borrower to perform any of its  obligations  hereunder,
         (iii) the  failure of the  Lender to have a  perfected  first  priority
         security  interest in the Pledged  Shares,  or (iv) any  restriction is
         imposed on the pledge or transfer of any of the  Pledged  Shares  after
         the date of this Agreement  without the Lender's prior written consent,
         then the Lender is authorized  in its  discretion to declare any or all
         of the Debt to be immediately due and payable without demand or notice,
         which are  expressly  waived,  and may  exercise any one or more of the
         rights and remedies  granted  pursuant to this  Agreement or given to a
         secured  party  under the UCC of South  Carolina,  as it may be amended
         from time to time, or otherwise at law or in equity,  including without
         limitation the right to sell or otherwise  dispose of any or all of the
         Pledged Shares at public or private sale, with or without advertisement
         thereof, upon such terms and conditions as it may deem advisable and at
         such prices as it may deem best. Any such sale is subject to compliance
         by Lender and any purchaser with  applicable  state and federal banking
         laws and regulations.

                  At any bona fide public sale,  and to the extent  permitted by
         law, at any private  sale,  the Lender shall be free to purchase all or
         any  part  of the  Pledged  Shares,  free of any  right  or  equity  of
         redemption in the Borrower,  which right or equity is hereby waived and
         released.  Any such  sale may be on cash or  credit  provided  that any
         portion of the sales price which shall be due to the Borrower  shall be
         paid in cash.  The Lender will not be  obligated to make any sale if it
         determines not to do so, regardless of the fact that notice of the sale
         may have been  given.  The Lender may  adjourn any sale and sell at the
         time and place to which the sale is adjourned. The Lender shall provide
         the  Borrower (at its address  specified  above) at least ten (10) days
         notice of any sale or other  disposition  of the  Pledged  Shares.  Any
         purchase  of the  Pledged  Shares  by  Lender is  subject  to  Lender's
         compliance  with   applicable   federal  and  state  banking  laws  and
         regulations.

                  The  Lender  shall  apply  the  net  proceeds  of any  sale or
         liquidation  of  the  Pledged  Shares,  first  to  the  payment  of the
         reasonable costs and expenses incurred by the Lender in connection with
         such  sale or  collection  including,  without  limitation,  reasonable
         attorneys' fees and legal expenses,  second to the payment of the Debt,
         whether on account of  principal or interest or otherwise as the Lender
         in its sole discretion may elect, and then to pay the balance,  if any,
         to the Borrower or as otherwise  required by law. If such  Proceeds are
         insufficient to pay the amounts  required by law, the Borrower shall be

                                       3
<PAGE>

         liable for any deficiency;  provided,  however,  that nothing contained
         herein will obligate the Lender to proceed  against the Borrower or any
         other party  obligated  under the Debt or against any other  collateral
         for the Debt prior to proceeding against the Pledged Shares.

                  If any  demand  is made at any time  upon the  Lender  for the
         repayment  or  recovery  of any amount  received by it in payment or on
         account of any of the Debt and if the Lender  repays all or any part of
         such amount by reason of any judgment,  decree or order of any court or
         administrative body or by reason of any settlement or compromise of any
         such demand,  the Borrower will be and remain liable for the amounts so
         repaid or recovered to the same extent as if such amount had never been
         originally  received by the Lender. The provisions of this Section will
         be and  remain  effective  notwithstanding  the  release  of any of the
         Pledged  Shares by the Lender in reliance  upon such  payment (in which
         case the Borrower's liability will be limited to an amount equal to the
         fair market value of the Pledged Shares  determined as of the date such
         Pledged  Shares were  released)  and any such  release  will be without
         prejudice to the Lender's  rights  hereunder and will be deemed to have
         been conditioned upon such payment having become final and irrevocable.
         This subsection shall survive the termination of this Agreement.

         Dividends,  Interest and Premiums.  The Borrower will have the right to
receive all cash  dividends,  interest  and  premiums  declared  and paid on the
Pledged Shares prior to the occurrence of any Event of Default. In the event any
additional  shares are issued to the Borrower as a stock  dividend or in lieu of
interest  on any of the Pledged  Shares,  as a result of any split of any of the
Pledged Shares, by  reclassification or otherwise,  any certificates  evidencing
any such additional shares will be immediately  delivered to the Lender and such
shares will be subject to this Agreement and a part of the Pledged Shares to the
same extent as the original Pledged Shares.  At any time after the occurrence of
an Event of Default,  the Lender  shall be entitled to receive all cash or stock
dividends,  interest and premiums declared or paid on the Pledged Shares, all of
which shall be subject to the Lender's rights under Section 5 above.

         Further  Assurances.  The Borrower  hereby  irrevocably  authorizes the
Lender,  at any  time and  from  time to time,  to  execute  (on  behalf  of the
Borrower), file and record against the Borrower any notice, financing statement,
continuation statement, amendment statement,  instrument,  document or agreement
under the UCC that the Lender may  consider  necessary  or  desirable to create,
preserve,  continue, perfect or validate any security interest granted hereunder
or to enable the Lender to exercise or enforce its rights hereunder with respect
to such security interest. Without limiting the generality of the foregoing, the
Borrower   hereby   irrevocably   appoints   the   Lender   as  the   Borrower's
attorney-in-fact  to take any of the actions set forth in this  Section 7 in the
Borrower's  name.  This power of attorney is coupled with an interest  with full
power of substitution and is irrevocable.

         Continuing  Validity of Obligations.  The agreements and obligations of
the Borrower  hereunder  are  continuing  agreements  and  obligations,  and are
absolute  and  unconditional  irrespective  of  the  genuineness,   validity  or
enforceability of the Financing Documents or any other instrument or instruments
now or hereafter evidencing the Debt or any other agreement or agreements now or
hereafter entered into by the Lender and the Borrower pursuant to which the Debt
or any part thereof is issued or of any other circumstance which might otherwise
constitute a legal or equitable  discharge of such  agreements and  obligations.
Without  limitation upon the foregoing,  such  agreements and obligations  shall
continue  in full  force  and  effect  as long as the Debt or any  part  thereof

                                       4
<PAGE>

remains outstanding and unpaid and shall remain in full force and effect without
regard to and shall not be  released,  discharged  or in any way affected by (i)
any renewal,  refinancing or refunding of the Debt in whole or in part, (ii) any
extension of the time of payment of the Note or other  instrument or instruments
now or hereafter evidencing the Debt, or any part thereof,  (iii) any compromise
or settlement  with respect to the Debt or any part thereof,  or any forbearance
or indulgence extended to the Borrower, (iv) any amendment to or modification of
the  terms of the Note or  other  instrument  or  instruments  now or  hereafter
evidencing the Debt or any part thereof or any other agreement or agreements now
or hereafter  entered into by the Lender and the Borrower  pursuant to which the
Debt or any part thereof is issued or secured,  (v) any substitution,  exchange,
or release of a portion of, or failure to preserve, perfect or protect, or other
dealing in respect of, the Pledged  Shares or any other property or any security
for  the  payment  of the  Debt  or  any  part  thereof,  (vi)  any  bankruptcy,
insolvency, arrangement, composition, assignment for the benefit of creditors or
similar proceeding commenced by or against the Borrower,  (vii) any dissolution,
liquidation or  termination of the Borrower for any reason  whatsoever or (viii)
any other matter or thing  whatsoever  whereby the agreements and obligations of
the Borrower hereunder,  would or might otherwise be released or discharged. The
Borrower hereby waives notice of the acceptance of this Agreement by the Lender.

         Defeasance.  Notwithstanding anything to the contrary contained in this
Agreement,  upon  payment in full of the Debt,  performance  of all  obligations
under the Loan  Agreement,  the Note and any  other  instrument  or  instruments
evidencing the Debt, and termination of the Loan Agreement, this Agreement shall
terminate  and be of no  further  force and  effect  and the  Lender's  security
interest in the Pledged Shares shall thereupon  terminate.  Upon  termination of
this  Agreement,  the Lender shall  promptly  return  possession  of the Pledged
Shares to the Borrower.

         Binding Agreement; Assignment. This Agreement shall be binding upon and
inure to the benefit of the parties,  their  successors  and assigns;  provided,
however,  that the Borrower  may not assign this  Agreement or any of its rights
under this  Agreement  or delegate any of its duties or  obligations  under this
Agreement and any such  attempted  assignment  or  delegation  shall be null and
void. Except as specifically provided herein, this Agreement is not intended and
shall not be construed to obligate the Lender to take any action whatsoever with
respect to the Pledged  Shares or to incur  expenses or perform or discharge any
obligation, duty or disability of the Borrower.

         Miscellaneous.

                  The provisions of this Agreement are intended to be severable.
         If any provision of this Agreement shall for any reason be held invalid
         or  unenforceable,  in  whole  or in part,  in any  jurisdiction,  such
         provision shall, as to such jurisdiction,  be ineffective to the extent
         of such invalidity or unenforceability  without in any manner affecting
         the  validity  or   enforceability  of  such  provision  in  any  other
         jurisdiction   or  any  other   provision  of  this  Agreement  in  any
         jurisdiction.

                  No failure  or delay on the part of the  Lender in  exercising
         any right,  remedy,  power or privilege  under the Financing  Documents
         shall operate as a waiver thereof or of any other right,  remedy, power
         or privilege of the Lender under the Financing Documents; nor shall any
         single  or  partial  exercise  of any  such  right,  remedy,  power  or
         privilege  preclude  any other  right,  remedy,  power or  privilege or
         further  exercise  thereof or the exercise of any other right,  remedy,
         power or privilege. The rights, remedies,  powers and privileges of the
         Lender under the Financing  Documents are  cumulative and not exclusive
         of any rights or remedies which it may otherwise have.

                                       5
<PAGE>

                  (c)  This   Agreement   may  be  executed  in  any  number  of
         counterparts,  all of which taken together shall constitute but one and
         the same instrument.

                  The  section  headings  contained  in this  Agreement  are for
         reference   purposes   only  and  shall  not   control  or  affect  its
         construction or interpretation in any respect.

                  The UCC shall govern the settlement, perfection and the effect
         of attachment and perfection of the Lender's  security  interest in the
         Pledged Shares and the rights, duties and obligations of the Lender and
         the Borrower with respect to the Pledged Shares (whether or not the UCC
         applies to the Pledged Shares).  This Agreement shall be deemed to be a
         contract  under  the  Laws  of the  State  of  South  Carolina  and the
         execution  and  delivery  of this  Agreement  and,  to the  extent  not
         inconsistent with the preceding  sentence,  the terms and provisions of
         this  Agreement  shall be governed by and construed in accordance  with
         the  Laws of  that  State  of  South  Carolina  without  regard  to the
         principles of the conflicts of laws thereof.

                  The Borrower consents to the exclusive  jurisdiction and venue
         of the  federal and state  Courts  located in  Richland  County,  South
         Carolina in any action on,  relating  to or  mentioning  the  Financing
         Documents or any one or more of them.

                  (f) All  notices,  requests,  demands,  directions  and  other
         communications  (collectively  "Notices")  under the provisions of this
         Agreement  must  be  in  writing   (including   telexed  or  telecopied
         communication)   unless  otherwise   expressly   permitted  under  this
         Agreement and must be sent by first-class or first-class  express mail,
         private overnight or next business day courier, or by telex or telecopy
         with  confirmation  in writing  mailed first  class,  in all cases with
         charges  prepaid,  and any such properly given Notice will be effective
         when received.  All Notices will be sent to the applicable party at the
         addresses stated below or in accordance with the last unrevoked written
         direction from such party to the other parties.

                           If to Borrower:    Peoples Bancorporation, Inc.
                                              Attention: Chief Executive Officer
                                              P. O. Box 1989
                                              Easley, SC  29641

                           If to Lender:      **************************
                                              Attention: **********************
                                              *******************
                                              *************************

                      [signatures appear on following page]

                                       6
<PAGE>

IN WITNESS  WHEREOF,  this Agreement has been executed under seal by the parties
hereto.

                                            BORROWER:

                                            Peoples Bancorporation, Inc.  (SEAL)

                                         By:______________________________
                                                 R. Riggie Ridgeway
                                            Its: Chief Executive Officer

                                            LENDER:

                                            ************************** (SEAL)

                                         By:______________________________
                                                 **********************
                                            Its: **********************

                                       7
<PAGE>

                                 PROMISSORY NOTE

$15,000,000                                                      October 1, 2008

         FOR VALUE  RECEIVED,  on or before  September  28, 2010 (the  "Maturity
Date"),  the  undersigned,  PEOPLES  BANCORPORATION,   INC.,  a  South  Carolina
corporation  (referred  to herein as  "Maker"),  promises to pay to the order of
**********************************************    ("Payee";    Payee   and   any
subsequent   holder(s)  hereof  are  hereinafter  referred  to  collectively  as
"Holder"),  without grace except as provided for herein,  at the office of Payee
at ***************************  *************,  or at such other place as Holder
may  designate  to Maker in  writing  from time to time,  the  principal  sum of
FIFTEEN  MILLION AND NO/100 DOLLARS  ($15,000,000),  or such other amount as may
hereafter be outstanding hereunder, whichever is less, together with interest on
the outstanding principal balance from the date hereof.

         This is a variable  rate loan with an interest  rate that may change as
stated. Except as provided below, the interest rate on all Loans under this Note
(i) made prior to  September  30, 2009 will be 2.40% above the  following  index
rate: LONDON INTERBANK OFFERED RATE 90 DAY (LIBOR) and (ii) made after September
30, 2009 and before  September  28, 2010 will be the 90-day  LIBOR Rate plus two
hundred seventy-five basis points (2.75).  Provided,  however, in no event shall
the interest rate payable in respect of the indebtedness evidenced hereby exceed
the  maximum  rate of  interest  from  time to time  allowed  to be  charged  by
applicable law (the "Maximum  Rate").  The interest rate will be adjusted on the
first  business  day of the month based on the LIBOR rate  published in the Wall
Street Journal on the first business day of the month. The interest rate on this
note may change as often as every month beginning October 1, 2008. Interest will
be  calculated  on an  actual/360  basis.  In  addition,  if  Maker's  ratio  of
Non-performing  Assets to total assets (as defined in the Loan  Agreement  dated
October 1, 2008) exceeds 1.5% but is less than 2.5%,  the interest rate shall be
the 90-day LIBOR Rate plus three hundred basis points  (3.00).  If Maker's ratio
of Non-performing  Assets to total assets exceeds 2.5% but is less than 3.5% the
interest  rate shall be the 90-day  LIBOR Rate plus four  hundred  basis  points
(4.00).  As stated in the Loan  Agreement  dated October 1, 2008, it shall be an
event of Default  if  Maker's  ratio of  Non-performing  Assets to total  assets
exceeds  3.5%,  and upon such event of Default the interest rate shall be as set
forth  below.  A change  in the  interest  rate  will  take  effect on the first
business day of the month, and the amount of each scheduled  payment will change
accordingly.

         Payments  of accrued  interest  on the  outstanding  principal  balance
hereunder  shall be due and  payable  quarterly,  in  arrears,  with  the  first
interest payment due on December 29, 2008, and subsequent  payments due on March
29, 2009, June 29, 2009,  September 29, 2009, December 29, 2009, March 29, 2010,
June 29,  2010 and the  Maturity  Date,  at which  time the  entire  outstanding
principal balance,  together with all accrued and unpaid interest,  shall be due
and payable in full.  All such  payments  or other  amounts due from Maker under
this Note shall be payable at 2:00 p.m.  (********************* time) on the day
when due.

         All payments in respect of the  indebtedness  evidenced hereby shall be
made in collected funds, and shall be applied to principal, accrued interest and
charges and expenses  owing under or in connection  with this Note in such order
as Holder  elects,  except that  payments  shall be applied to accrued  interest
before principal. Maker may prepay the principal amount and any accrued interest
due  hereunder  at any  time,  in full or in  part,  without  any  penalty.  The
indebtedness  evidenced by this Note is secured pursuant to the terms of a Stock
Pledge  Agreement  dated October 1, 2008,  between Maker and Payee.  Maker shall
also be subject to commitment and nonusage fees, as set forth under Section 1(c)
of the Loan Agreement dated October 1, 2008.

                                       1
<PAGE>

         Any  advance  by  Payee  to  Maker  that is not  evidenced  by  another
instrument or agreement  between the parties shall be  conclusively  presumed to
have been made  hereunder  when such advance is either (1) upon  instruction  of
Maker, deposited or credited to an account of Maker with Payee,  notwithstanding
that such advance was  requested,  orally or in writing,  by someone  other than
Maker or that someone other than Maker is authorized to draw on such account and
may or  does  withdraw  the  whole  or  part of  such  advance,  or (2)  made in
accordance with the oral or written instructions of Maker. The entire balance of
all  advances  hereunder  that  may be  outstanding  from  time  to  time  shall
constitute  a  single  indebtedness,   and  no  single  advance  increasing  the
outstanding  balance  hereof shall itself be  considered  a separate  loan,  but
rather an  increase in the  aggregate  outstanding  balance of the  indebtedness
evidenced hereby.

         Time is of the essence of this Note. It is hereby expressly agreed that
in the event that any Default, as defined in the Loan Agreement, shall occur; or
should any  default  or event of default  occur  under any other  instrument  or
document now or  hereafter  evidencing,  securing or  otherwise  relating to the
indebtedness  evidenced  hereby,  subject to  applicable  cure period,  then the
entire  outstanding  principal  balance of the  indebtedness  evidenced  hereby,
together  with any other  outstanding  sums advanced  hereunder,  under the Loan
Agreement, or under any other instrument, document or agreement now or hereafter
evidencing,  securing  or in any  way  relating  to the  indebtedness  evidenced
hereby,  together with all unpaid interest accrued thereon, shall, at the option
of Holder and without notice to Maker, at once become due and payable and may be
collected forthwith, regardless of the stipulated date of maturity.

         Upon any event of  Default,  as defined in the Loan  Agreement,  or any
default  or event of  default  under any other  instrument  or  document  now or
hereafter  evidencing,  securing  or  otherwise  relating  to  the  indebtedness
evidenced hereby,  subject to applicable cure period,  Holder may, at the option
of Holder  and upon  notice to Maker,  (a)  accelerate  and  declare  the entire
outstanding  principal  balance  of the  indebtedness  due and  payable  and (b)
regardless of whether there has been an acceleration of the payment of principal
as set forth herein,  increase the interest  rate on (i) the entire  outstanding
principal  balance  and any late  fees,  together  with all  accrued  and unpaid
interest,  and (ii) any future principal  amounts from advances under this Note,
to the  lesser of (i) the  90-day  LIBOR  Rate plus four  hundred  basis  points
(4.00), calculated as such LIBOR rate is adjusted from time to time, or (ii) the
Maximum Rate.  All such interest shall be paid at the time of and as a condition
precedent to the curing of any such default.

         To the extent  permitted by applicable law, Maker shall pay to Holder a
late charge equal to four percent (4%) of any monthly payment  hereunder that is
not received by Holder within  fifteen (15) days of the date on which it is due,
in  order  to  cover  the  additional  expenses  incident  to the  handling  and
processing  of  delinquent  payments;  provided,  however,  that nothing in this
provision  shall be  deemed to waive  any  other  right or remedy of the  Holder
hereof by reason of Maker's failure to make payments when due hereunder.

         In the  event  this Note is  placed  in the  hands of an  attorney  for
collection or for enforcement or protection of the security, or if Holder incurs
any costs incident to the collection of the indebtedness evidenced hereby or the
enforcement or protection of the security,  Maker and any indorsers hereof agree
to pay a  reasonable  attorney's  fee,  all  court  and  other  costs,  and  the
reasonable costs of any other collection efforts.

         Presentment for payment,  demand, protest and notice of demand, protest
and  nonpayment  are hereby  waived by Maker and all other  parties  hereto.  No
failure to accelerate  the  indebtedness  evidenced  hereby by reason of default
hereunder,  acceptance of a past-due  installment or other  indulgences  granted

                                       2
<PAGE>

from time to time,  shall be construed as a novation of this Note or as a waiver
of such right of  acceleration  or of the right of Holder  thereafter  to insist
upon strict compliance with the terms of this Note or to prevent the exercise of
such right of acceleration or any other right granted hereunder or by applicable
laws. Unless otherwise  specifically agreed by Holder in writing,  the liability
of Maker and all other  persons  now or  hereafter  liable  for  payment  of the
indebtedness  evidenced hereby, or any portion thereof, shall not be affected by
(1) any  renewal  hereof  or other  extension  of the time  for  payment  of the
indebtedness  evidenced hereby or any amount due in respect thereof,  or (2) the
release of or resort to any person now or  hereafter  liable for  payment of the
indebtedness  evidenced  hereby  or any  portion  thereof.  This Note may not be
changed orally,  but only by an agreement in writing signed by the party against
whom enforcement of any waiver, change, modification or discharge is sought.

         All  agreements  herein made are expressly  limited so that in no event
whatsoever, whether by reason of advancement of proceeds hereof, acceleration of
maturity of the unpaid balance hereof or otherwise,  shall the interest and loan
charges  agreed to be paid to Holder for the use of the money  advanced or to be
advanced hereunder exceed the maximum amounts  collectible under applicable laws
in effect from time to time. If for any reason  whatsoever  the interest or loan
charges paid or contracted to be paid in respect of the  indebtedness  evidenced
hereby shall exceed the maximum  amounts  collectible  under  applicable laws in
effect from time to time,  then, ipso facto, the obligation to pay such interest
and/or loan charges shall be reduced to the maximum  amounts  collectible  under
applicable laws in effect from time to time, and any amounts collected by Holder
that  exceed  such  maximum  amounts  shall be applied to the  reduction  of the
principal balance remaining unpaid hereunder and/or refunded to Maker so that at
no time shall the  interest  or loan  charges  paid or payable in respect of the
indebtedness  evidenced hereby exceed the maximum amounts permitted from time to
time by applicable  law. This provision  shall control every other  provision in
any and all other  agreements and instruments now existing or hereafter  arising
between Maker and Holder with respect to the indebtedness evidenced hereby.

         This Note has been  negotiated,  executed and delivered in the State of
South  Carolina,  and is intended as a contract under and shall be construed and
enforceable in accordance with the laws of said state, except to the extent that
Federal law may be applicable to the determination of the Maximum Rate.

         As used  herein,  the terms  "Maker"  and  "Holder"  shall be deemed to
include their respective successors,  legal representatives and assigns, whether
by  voluntary  action of the parties or by  operation  of law. In the event that
more than one person,  firm or entity is a maker hereunder,  then all references
to "Maker" shall be deemed to refer equally to each of said persons,  firms,  or
entities,  all of whom  shall be  jointly  and  severally  liable for all of the
obligations of Maker hereunder.

                      [signature appears on following page]

                                       3
<PAGE>

         IN WITNESS  WHEREOF,  the undersigned  Maker has caused this Note to be
executed by its duly authorized officer as of the date first above written.

                                        MAKER:

                                        PEOPLES BANCORPORATION, INC.      (SEAL)

                                        By:
                                           -------------------------------------
                                           R. Riggie Ridgeway
                                        Its:   Chief Executive Officer

                                       4Exhibit 10.18

                                                                       #2008-141
                            AGREEMENT BY AND BETWEEN
                     Bank of Anderson, National Association
                            Anderson, South Carolina
                                       and
                         The Comptroller of the Currency

          Bank of  Anderson,  National  Association,  Anderson,  South  Carolina

("Bank") and the  Comptroller  of the  Currency of the United  States of America

("Comptroller")  wish  to  protect  the  interests  of  the  depositors,   other

customers,  and shareholders of the Bank, and, toward that end, wish the Bank to

operate safely and soundly and in accordance with all applicable laws, rules and

regulations.

          The Comptroller,  through his National Bank Examiner, has examined the

Bank and his findings are contained in the Report of Examination ("ROE") for the

examination commenced on April 28, 2008.

          In  consideration  of the above  premises,  it is agreed,  between the

Bank,  by and through its duly elected and acting Board of Directors  ("Board"),

and the Comptroller, through his authorized representative,  that the Bank shall

operate at all times in compliance with the articles of this Agreement.

                                    ARTICLE I
                                  JURISDICTION

          (1) This  Agreement  shall be  construed  to be a  "written  agreement

entered into with the agency" within the meaning of 12 U.S.C. ss. 1818(b)(1).

          (2) This  Agreement  shall be  construed  to be a  "written  agreement

between such  depository  institution  and such agency" within the meaning of 12

U.S.C. ss. 1818(e)(1) and 12 U.S.C. ss. 1818(i)(2).

<PAGE>

          (3)  This  Agreement  shall  be  construed  to  be a  "formal  written

agreement" within the meaning of 12 C.F.R. ss. 5.51(c)(6)(ii). See 12 U.S.C. ss.

1831i.

         (4) This  Agreement  shall be  construed  to be a  "written  agreement"

within the meaning of 12 U.S.C. ss. 1818(u)(1)(A).

         (5) All reports or plans which the Bank or Board has agreed to submit

to the  Assistant  Deputy  Comptroller  pursuant  to  this  Agreement  shall  be

forwarded to:

          Kent D. Stone
          Assistant Deputy Comptroller
          Carolinas Field Office
          212 South Tryon Street, Suite 700
          Charlotte, North Carolina 28281

                                   ARTICLE II
                              COMPLIANCE COMMITTEE

         (1) Within fifteen (15) days of the date of this  Agreement,  the Board

shall appoint a Compliance Committee of at least five (5) directors, of which no

more than one (1) shall be an employee or controlling shareholder of the Bank or

any of its  affiliates  (as the term  "affiliate"  is defined  in 12 U.S.C.  ss.

371c(b)(1)), or a family member of any such person. Upon appointment,  the names

of the members of the Compliance  Committee and, in the event of a change of the

membership,  the name of any new  member  shall be  submitted  in writing to the

Assistant Deputy Comptroller.  The Compliance Committee shall be responsible for

monitoring  and  coordinating  the Bank's  adherence to the  provisions  of this

Agreement.

          (2) The Compliance Committee shall meet at least monthly.

          (3) Within  thirty (30) days of the date of this  Agreement  and every

thirty (30) days  thereafter,  the Compliance  Committee  shall submit a written

progress report to the Board setting forth in detail:

                                     - 2 -
<PAGE>

               (a)  description of the action needed to achieve full  compliance

                    with each Article of this Agreement;

               (b)  actions taken to comply with each Article of this Agreement;

                    and

               (c)  the results and status of those actions.

          (4) The  Board  shall  forward  a copy of the  Compliance  Committee's

report,  with any  additional  comments by the Board,  to the  Assistant  Deputy

Comptroller within ten (10) days of receiving such report.

                                  ARTICLE III
                           LOAN PORTFOLIO MANAGEMENT

          (1) The Board shall, within sixty (60) days, develop,  implement,  and

thereafter ensure Bank adherence to a written program to improve the Bank's loan

portfolio management. The program shall include, but not be limited to:

               (a)  procedures to ensure that  extensions of credit are granted,

                    by  renewal  or  otherwise,   to  any  borrower  only  after

                    obtaining  and  analyzing  current and  satisfactory  credit

                    information;

               (b)  a system to track and analyze exceptions;

               (c)  procedures to ensure continued  conformance with Call Report

                    instructions;

               (d)  procedures  to ensure the  continued  accuracy  of  internal

                    management information systems;

               (e)  a  performance  appraisal  process,   including  performance

                    appraisals,  job  descriptions,  and incentive  programs for

                    loan officers,  which adequately  consider their performance

                    relative  to  policy  compliance,  documentation  standards,

                                     - 3 -
<PAGE>

                    accuracy in credit  grading,  and other loan  administration

                    matters;

               (f)  procedures  to track and analyze  concentrations  of credit,

                    significant  economic  factors,  and general  conditions and

                    their  impact on the credit  quality of the Bank's  loan and

                    lease portfolios;

               (g)  a process to ensure market analysis is performed for various

                    property  types and  geographic  markets  represented in the

                    banks portfolio no less than quarterly;

               (h)  a  comprehensive  loan review  process that  quantifies  the

                    overall  level of credit  risk and  assesses  the quality of

                    credit risk management; and

               (i)  procedures  to ensure  the  re-appraisal  of  property  that

                    defines the criteria for when a new or adjusted appraisal is

                    required based upon changes in market conditions or original

                    project plans.

          (2) Upon  completion,  a copy of the program shall be forwarded to the

Assistant Deputy Comptroller.

          (3) Within sixty (60) days,  the Board shall develop,  implement,  and

thereafter  ensure  Bank  adherence  to  systems  which  provide  for  effective

monitoring of:

                   (a)      early  problem  loan  identification  to assure  the

                            timely identification and rating of loans and leases

                            based on lending officer submissions;

                   (b)      statistical  records  that will serve as a basis for

                            identifying  sources of problem  loans and leases by

                            industry,   size,   collateral,   division,   group,

                            indirect dealer, and individual lending officer;

                   (c)      previously  charged-off  assets  and their  recovery

                            potential;

                                     - 4 -
<PAGE>

                   (d)      compliance  with the  Bank's  lending  policies  and

                            laws,  rules,  and  regulations  pertaining  to  the

                            Bank's lending function;

                   (e)      adequacy of credit and collateral documentation; and

                   (f)      concentrations of credit.

          (4)  Beginning  December  2008,  on a monthly  basis  management  will

provide the Board with written reports  including,  at a minimum,  the following

information:

                   (a)      the  identification,  type,  rating,  and  amount of

                            problem loans and leases;

                   (b)      the  identification  and amount of delinquent  loans

                            and leases;

                   (c)      credit and collateral documentation exceptions;

                   (d)      the  identification  and  status of  credit  related

                            violations of law, rule or regulation;

                   (e)      the identity of the loan officer who originated each

                            loan reported in accordance with  subparagraphs  (a)

                            through (d) of this Article and Paragraph;

                   (f)      an analysis of concentrations of credit, significant

                            economic factors,  and general  conditions and their

                            impact on the credit  quality of the Bank's loan and

                            lease portfolios;

                   (g)      the identification and amount of loans and leases to

                            executive     officers,     directors,     principal

                            shareholders  (and their  related  interests) of the

                            Bank; and

                   (h)      the  identification  of  loans  and  leases  not  in

                            conformance  with the  Bank's  lending  and  leasing

                            policies,  and  exceptions to the Bank's lending and

                            leasing policies.

                                     - 5 -
<PAGE>

          (5) The Board shall ensure that the Bank has processes, personnel, and

control  systems to ensure  implementation  of and  adherence to the program and

systems developed pursuant to this Article.

                                   ARTICLE IV
                      ALLOWANCE FOR LOAN AND LEASE LOSSES

          (1) Within  sixty (60) days,  the Board shall  adopt,  implement,  and

thereafter  ensure  adherence to written policies and procedures for maintaining

an adequate  Allowance  for Loan and Lease Losses  ("ALLL") in  accordance  with

generally accepted accounting principles. The ALLL policies and procedures shall

be consistent with the guidance set forth in the Federal Financial  Institutions

Examination  Council's  "Interagency  Policy Statement on the Allowance for Loan

and Lease Losses" dated December 13, 2006 (OCC Bulletin 2006-47), and shall at a

minimum include:

                   (a)      procedures  for   determining   whether  a  loan  is

                            impaired  and  measuring  the amount of  impairment,

                            consistent   with  FASB   Statement   of   Financial

                            Accounting   Standards   No.  114,   Accounting   by

                            Creditors for Impairment of a Loan;

                   (b)      procedures  for  segmenting  the loan  portfolio and

                            estimating loss on groups of loans,  consistent with

                            FASB Statement of Financial Accounting Standards No.

                            5, Accounting for Contingencies;

                   (c)      procedures for validating the ALLL methodology;

                   (d)      a process for summarizing and  documenting,  for the

                            Board's  review  and  approval,  the  amount  to  be

                            reported in the  Consolidated  Reports of  Condition

                            and  Income  ("Call  Reports")  for  the  ALLL.  Any

                            deficiency  in the  ALLL  shall be  remedied  in the

                                     - 6 -
<PAGE>

                            quarter it is discovered, prior to the filing of the

                            Call Reports, through additional provision expense.

          (2) The Board shall ensure that the Bank has processes, personnel, and

control  systems to ensure  implementation  of and adherence to the policies and

procedures developed pursuant to this Article.

          (3) A copy of the Board's  program shall be submitted to the Assistant

Deputy Comptroller for review and prior written  determination of no supervisory

objection.  Upon receiving a determination of no supervisory  objection from the

Assistant  Deputy  Comptroller,  the Bank  shall  implement  and  adhere  to the

program.

                                    ARTICLE V

                               CRITICIZED ASSETS

          (1) The Bank shall take immediate and continuing action to protect its

interest in those  assets  criticized  in the ROE, in any  subsequent  Report of

Examination,  by internal or external  loan review,  or in any list  provided to

management by the National Bank Examiners during any examination.

          (2) Within  sixty (60) days,  the Board shall  adopt,  implement,  and

thereafter  ensure Bank adherence to a written program designed to eliminate the

basis of criticism of assets  criticized in the ROE, in any subsequent Report of

Examination, or by any internal or external loan review, or in any list provided

to  management  by  the  National  Bank  Examiners  during  any  examination  as

"doubtful,"  "substandard," or "special mention." This program shall include, at

a minimum:

                   (a) an identification of the expected sources of repayment;

                                     - 7 -
<PAGE>

                   (b)      the appraised value of supporting collateral and the

                            position of the Bank's lien on such collateral where

                            applicable;

                   (c)      an  analysis  of  current  and  satisfactory  credit

                            information,  including  cash  flow  analysis  where

                            loans are to be repaid from operations; and

                   (d)      the  proposed  action  to  eliminate  the  basis  of

                            criticism and the time frame for its accomplishment.

          (3) Upon  adoption,  a copy of the program for all  criticized  assets

equal to or exceeding fifty thousand dollars ($50,000) shall be forwarded to the

Assistant Deputy Comptroller.

          (4) The Board shall ensure that the Bank has processes, personnel, and

control  systems  to  ensure  implementation  of and  adherence  to the  program

developed pursuant to this Article.

          (5) The Board, or a designated  committee,  shall conduct a review, on

at least a monthly basis, to determine:

                   (a)      the status of each  criticized  asset or  criticized

                            portion   thereof  that  equals  or  exceeds   fifty

                            thousand dollars ($50,000);

                   (b) management's adherence to the program adopted pursuant to

this Article;

                   (c) the status and effectiveness of the written program; and

                   (d) the  need  to  revise  the  program  or take  alternative

action.

          (6) A copy of each review shall be forwarded to the  Assistant  Deputy

Comptroller  on a monthly  basis (in a format  similar to Appendix  A,  attached

hereto).

          (7) The Bank may extend  credit,  directly  or  indirectly,  including

renewals,  extensions or capitalization of accrued interest, to a borrower whose

                                     - 8 -
<PAGE>

loans or other extensions of credit are criticized in the ROE, in any subsequent

Report of Examination,  in any internal or external loan review,  or in any list

provided to management by the National Bank Examiners during any examination and

whose  aggregate  loans  or  other  extensions  exceed  fifty  thousand  dollars

($50,000) only if each of the following conditions is met:

                   (a)      the Board or  designated  committee  finds  that the

                            extension  of  additional  credit  is  necessary  to

                            promote  the  best  interests  of the  Bank and that

                            prior to  renewing,  extending or  capitalizing  any

                            additional  credit, a majority of the full Board (or

                            designated  committee) approves the credit extension

                            and  records,  in  writing,  why such  extension  is

                            necessary to promote the best interests of the Bank;

                            and

                   (b)      a comparison to the written program adopted pursuant

                            to this Article  shows that the Board's  formal plan

                            to collect or strengthen the  criticized  asset will

                            not be compromised.

          (8) A copy of the approval of the Board or of the designated committee

shall be maintained in the file of the affected borrower.

                                   ARTICLE VI

                    CONSTRUCTION LOAN UNDERWRITING STANDARDS

          (1) Within sixty (60) days,  the Board shall develop,  implement,  and

thereafter  adhere  to a  written  program  to  improve  its  construction  loan

underwriting  standards.  The  program  shall  include,  but not be limited  to,

procedures for ensuring that:

                   (a) market feasibility analyses are performed on construction

projects;

                   (b)      cash flow  analyses are  performed  on  construction

                            loan borrowers;

                                     - 9 -
<PAGE>

                   (c)      current  rental and sales  information is maintained

                            in all construction projects;

                   (d)      periodic  independent  inspections  are performed on

                            all construction projects; and

                   (e)      all construction loans are either in conformity with

                            the Bank's construction loan policies and procedures

                            or in compliance with the Bank's written  provisions

                            for exceptions to loan policies and procedures.

          (2) Upon  completion,  the Board shall submit a copy of the program to

the Assistant Deputy Comptroller for review.

          (3) The Board shall ensure that the Bank has processes, personnel, and

control  systems  to  ensure  implementation  of and  adherence  to the  program

developed pursuant to this Article.

                                   ARTICLE VII

                            CONCENTRATIONS OF CREDIT

          (1) Within  sixty (60) days,  the Board shall  adopt,  implement,  and

thereafter  ensure Bank  adherence to a written  asset  diversification  program

consistent  with OCC Banking  Circular 255. The program shall  include,  but not

necessarily be limited to, the following:

                   (a)  a  review  of  the  balance   sheet  to   identify   any

concentrations of credit;

                   (b)      a written  analysis of any  concentration  of credit

                            identified above in order to identify and assess the

                            inherent credit, liquidity, and interest rate risk;

                   (c)      policies  and  procedures  to  control  and  monitor

                            concentrations of credit;

                                     - 10 -
<PAGE>

                   (d)      an action  plan  approved by the Board to reduce the

                            risk of any  concentration  deemed  imprudent in the

                            above analysis; and

                   (e)      a review  of  established  North  American  Industry

                            Classification  System  (NAICS) limits to ensure the

                            concentrations  of credit limits are  reasonable and

                            establish an effective risk measure.

          (2) For  purposes of this  Article,  a  concentration  of credit is as

defined  in  the  "Loan  Portfolio  Management"  booklet  of  the  Comptroller's

Handbook.

          (3) The Board shall  ensure that future  concentrations  of credit are

subjected to the  analysis  required by  subparagraph  (b) and that the analysis

demonstrate that the concentration  will not subject the Bank to undue credit or

interest rate risk.

          (4) The  Board  shall  forward  a copy of any  analysis  performed  on

existing  or  potential   concentrations  of  credit  to  the  Assistant  Deputy

Comptroller immediately following the review.

          (5) The Board shall ensure that the Bank has processes, personnel, and

control  systems  to  ensure  implementation  of and  adherence  to the  program

developed pursuant to this Article.

                                  ARTICLE VIII

                                 STRATEGIC PLAN

          (1) Within  sixty (60) days,  the Board shall  adopt,  implement,  and

thereafter  ensure  Bank  adherence  to a  written  strategic  plan for the Bank

covering  at least a  three-year  period.  The  strategic  plan shall  establish

objectives for the Bank's overall risk profile,  earnings  performance,  growth,

balance sheet mix, off-balance sheet activities,  liability  structure,  capital

                                     - 11 -
<PAGE>

adequacy,  reduction  in  the  volume  of  nonperforming  assets,  product  line

development  and market  segments  that the Bank  intends to promote or develop,

together with strategies to achieve those objectives and, at a minimum, include:

                   (a)      a mission statement that forms the framework for the

                            establishment of strategic goals and objectives;

                   (b)      an  assessment  of the  Bank's  present  and  future

                            operating environment;

                   (c)      the development of strategic goals and objectives to

                            be accomplished over the short and long term;

                   (d)      an  identification  of the Bank's present and future

                            product lines (assets and liabilities)  that will be

                            utilized  to  accomplish  the  strategic  goals  and

                            objectives established in (1 )(c) of this Article;

                   (e)      an  evaluation  of the Bank's  internal  operations,

                            staffing   requirements,    board   and   management

                            information  systems and policies and procedures for

                            their    adequacy    and    contribution    to   the

                            accomplishment of the goals and objectives developed

                            under (1)(c) of this Article;

                   (f)      a management  employment and  succession  program to

                            promote  the  retention  and  continuity  of capable

                            management;

                   (g)      product line  development  and market  segments that

                            the Bank intends to promote or develop;

                   (h)      an  action  plan  to  improve   bank   earnings  and

                            accomplish    identified    strategic    goals   and

                            objectives,  including individual  responsibilities,

                            accountability and specific time frames;

                                     - 12 -
<PAGE>

                   (i)      a  financial  forecast  to include  projections  for

                            major  balance sheet and income  statement  accounts

                            and desired financial ratios over the period covered

                            by the strategic plan;

                   (j)      control  systems to mitigate risks  associated  with

                            planned  new  products,   growth,  or  any  proposed

                            changes in the Bank's operating environment;

                   (k)      specific  plans to  establish  responsibilities  and

                            accountability  for the strategic  planning process,

                            new products,  growth goals, or proposed  changes in

                            the Bank's operating environment; and

                   (l)      systems to monitor  the  Bank's  progress in meeting

                            the plan's goals and objectives.

          (2) Within ninety (90) days, the Board shall develop,  implement,  and

thereafter  ensure Bank adherence to a three year capital  program.  The program

shall include:

                   (a)      projections  for  growth  and  capital  requirements

                            based upon a detailed analysis of the Bank's assets,

                            liabilities, earnings, fixed assets, and off-balance

                            sheet activities;

                   (b)      projections  of the sources and timing of additional

                            capital to meet the Bank's current and future needs;

                   (c)      the  primary  source(s)  from  which  the Bank  will

                            strengthen its capital  structure to meet the Bank's

                            needs;

                   (d)      contingency plans that identify  alternative methods

                            should the primary  source(s) under (c) above not be

                            available; and

                   (e)      a dividend  policy that permits the declaration of a

                            dividend only:

                                     - 13 -
<PAGE>

                           (i)  when the Bank is in compliance with its approved

                                capital program; and

                           (ii) when the Bank is  in  compliance  with 12 U.S.C.
                                ss.ss. 56 and 60.

          (3) Upon  adoption,  a copy of the  plan  shall  be  forwarded  to the

Assistant  Deputy  Comptroller for review and prior written  determination of no

supervisory  objection.   Upon  receiving  a  determination  of  no  supervisory

objection from the Assistant  Deputy  Comptroller,  the Bank shall implement and

adhere to the strategic and capital plans.

                                   ARTICLE IX

                                  PROFIT PLAN

          (1) Within sixty (60) days,  the Board shall develop,  implement,  and

thereafter ensure Bank adherence to a written profit plan to improve and sustain

the earnings of the Bank.  This plan shall  include,  at minimum,  the following

elements:

                   (a)      identification  of the  major  areas in and means by

                            which the  Board  will seek to  improve  the  Bank's

                            operating performance;

                   (b)      realistic  and  comprehensive   budgets,   including

                            projected   balance   sheets  and  year-end   income

                            statements;

                   (c)      a budget  review  process to monitor both the Bank's

                            income and expenses,  and to compare  actual figures

                            with budgetary projections; and

                   (d)      a description of the operating assumptions that form

                            the basis for major  projected  income  and  expense

                            components.

          (2) The budgets and related documents  required in paragraph (1) above

for 2008 shall be submitted to the Assistant Deputy Comptroller upon completion.

                                     - 14 -
<PAGE>

The Board shall submit to the Assistant  Deputy  Comptroller  annual  budgets as

described in paragraph (1) above for each year this Formal Agreement  remains in

effect.  The budget for each year shall be submitted on or before January 31, of

that year.

          (3) The Board  shall  forward  comparisons  of its  balance  sheet and

profit and loss statement to the profit plan projections to the Assistant Deputy

Comptroller on a quarterly basis.

          (4) The Board shall ensure that the Bank has processes, personnel, and

control systems to ensure  implementation of and adherence to the plan developed

pursuant to this Article.

                                    ARTICLE X

                                   LIQUIDITY

          (1) The  Board  shall  ensure  the level of  liquidity  at the Bank is

sufficient  to sustain  the  Bank's  current  operations  and to  withstand  any

anticipated or  extraordinary  demand against its funding base. Such actions may

include, but are not necessarily limited to:

                   (a) selling assets;

                   (b) obtaining lines of credit from the Federal Reserve Bank;

                   (c) obtaining lines of credit from correspondent banks;

                   (d)  recovering charged-off assets; and

                   (e) injecting additional equity capital.

         (2) The Board shall  review the Bank's  liquidity  on a monthly  basis.

Such reviews shall consider: (a) a maturity schedule of certificates of deposit,

including large uninsured deposits;

                    (b)  the  volatility  of demand  deposits  including  escrow

                         deposits;

                                     - 15 -
<PAGE>

                    (c)  the amount  and type of loan  commitments  and  standby

                         letters of credit;

                    (d)  an  analysis  of  the   continuing   availability   and

                         volatility of present funding sources;

                    (e)  an analysis of the impact of  decreased  cash flow from

                         the Bank's loan portfolio resulting from delinquent and

                         non-performing loans;

                    (f)  an analysis of the impact of  decreased  cash flow from

                         the sale of loans or loan participations; and

                    (g)  geographic  disbursement  of  and  risk  from  brokered

                         deposits.

          (3) The Board shall take appropriate action to ensure adequate sources

of liquidity in relation to the Bank's  needs.  Monthly  reports shall set forth

liquidity  requirements and sources and establish a contingency  plan. Copies of

these  reports  shall be forwarded to the Assistant  Deputy  Comptroller  in the

Bank's quarterly report to the Assistant Deputy Comptroller.

                                   ARTICLE XI

                               BROKERED DEPOSITS

          (1) The Bank may accept Brokered Deposits (as defined by 12 C.F.R. ss.

337.6(a)(2))  for  deposit  at the Bank only  after  obtaining  a prior  written

determination of no supervisory objection from the Assistant Deputy Comptroller.

          (2) The  limitation of paragraph (1) shall include the  acquisition of

Brokered Deposits through any transfer,  purchase, or sale of assets,  including

Federal funds transactions.

          (3) If the Bank seeks to acquire  Brokered  Deposits,  the Board shall

apply  to  the  Assistant  Deputy  Comptroller  for  written  permission.   Such

application shall contain, at a minimum, the following:

                                     - 16 -
<PAGE>

                    (a)  the dollar volume, maturities, and cost of the Brokered

                         Deposits to be acquired;

                    (b)  the  proposed  use  of  the  Brokered  Deposits,  i.e.,

                         short-term liquidity or restructuring of liabilities to

                         reduce cost;

                    (c)  alternative funding sources available to the Bank; and

                    (d)  the reasons why the Bank believes  that the  acceptance

                         of the Brokered  Deposits does not constitute an unsafe

                         and unsound practice in its particular circumstances.

                    (e)  The  Assistant  Deputy   Comptroller  may  require  the

                         submission of such additional  information as necessary

                         to make an informed decision. Upon consideration of the

                         Bank's  application,  the Assistant Deputy  Comptroller

                         will  determine  whether the  proposed  acquisition  of

                         Brokered  Deposits  may be  accomplished  in a safe and

                         sound manner and may condition  the Bank's  acquisition

                         as  the  Assistant   Deputy   Comptroller   shall  deem

                         appropriate.

                                   ARTICLE XII

                                    CLOSING

          (1)  Although  the Board has  agreed to submit  certain  programs  and

reports  to the  Assistant  Deputy  Comptroller  for  review  or  prior  written

determination  of  no  supervisory   objection,   the  Board  has  the  ultimate

responsibility for proper and sound management of the Bank.

          (2) It is expressly and clearly  understood  that if, at any time, the

Comptroller deems it appropriate in fulfilling the responsibilities  placed upon

                                     - 17 -
<PAGE>

him/her by the several  laws of the United  States of America to  undertake  any

action  affecting the Bank,  nothing in this Agreement shall in any way inhibit,

estop, bar, or otherwise prevent the Comptroller from so doing.

          (3) Any time limitations  imposed by this Agreement shall begin to run

from  the  effective  date of this  Agreement.  Such  time  requirements  may be

extended  in writing by the  Assistant  Deputy  Comptroller  for good cause upon

written application by the Board.

          (4) The provisions of this Agreement shall be effective upon execution

by the parties hereto and its provisions shall continue in full force and effect

unless or until such  provisions are amended in writing by mutual consent of the

parties to the  Agreement or excepted,  waived,  or terminated in writing by the

Comptroller.

          (5) In each instance in this  Agreement in which the Board is required

to ensure  adherence to, and  undertake to perform  certain  obligations  of the

Bank, it is intended to mean that the Board shall:

                   (a)      authorize  and adopt  such  actions on behalf of the

                            Bank as may be necessary for the Bank to perform its

                            obligations and undertakings under the terms of this

                            Agreement;

                   (b)      require the timely  reporting by Bank  management of

                            such actions directed by the Board to be taken under

                            the terms of this Agreement;

                   (c)      follow-up on any non-compliance with such actions in

                            a timely and appropriate manner; and

                   (d)      require  corrective  action  be  taken  in a  timely

                            manner of any non-compliance with such actions.

     (6) This  Agreement  is  intended  to be, and shall be  construed  to be, a

supervisory "written agreement entered into with the agency" as contemplated  by

                                     - 18 -
<PAGE>

12 U.S.C. ss. 1818(b)(1),  and expressly does not form, and may not be construed

to  form,  a  contract   binding  on  the  Comptroller  or  the  United  States.

Notwithstanding the absence of mutuality of obligation, or of consideration,  or

of a contract, the Comptroller may enforce any of the commitments or obligations

herein undertaken by the Bank under his supervisory powers,  including 12 U.S.C.

ss.  1818(b)(1),  and not as a  matter  of  contract  law.  The  Bank  expressly

acknowledges  that  neither the Bank nor the  Comptroller  has any  intention to

enter into a contract.  The Bank also expressly  acknowledges that no officer or

employee of the Office of the Comptroller of the Currency has statutory or other

authority  to  bind  the  United  States,  the  U.S.  Treasury  Department,  the

Comptroller,  or any other  federal  bank  regulatory  agency or entity,  or any

officer  or  employee  of any of those  entities  to a  contract  affecting  the

Comptroller's  exercise of his supervisory  responsibilities.  The terms of this

Agreement,   including  this   paragraph,   are  not  subject  to  amendment  or

modification   by  any  extraneous   expression,   prior   agreements  or  prior

arrangements between the parties, whether oral or written.

         IN TESTIMONY WHEREOF,  the undersigned,  authorized by the Comptroller,

has hereunto set his hand on behalf of the Comptroller.

 /S/ Kent D. Stone October 15, 2008
 ------------------------------------- -----------------------------------------
 Kent D. Stone                         Date
 Assistant Deputy Comptroller
 Carolinas Field Office

                       [Signatures of the Board omitted.]

                                     - 19 -

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