Document:

Exhibit
10.7

 

EMPLOYMENT AGREEMENT

 

This EMPLOYMENT
AGREEMENT (this “Agreement”)
is entered into as of this 1 day of May, 2008, by and among Tidelands
Bancshares, Inc., a South Carolina corporation (the “Corporation”),
Tidelands Bank, a South Carolina-chartered bank and wholly owned subsidiary of
Tidelands Bancshares, Inc. (the “Bank”), and
James M. Bedsole, Senior Vice President and Chief Risk Officer of the Bank (the
“Executive”).  The Corporation and the Bank are referred to
in this Agreement individually and together as the “Employer.”

 

WHEREAS, the Executive possesses unique skills,
knowledge, and experience relating to the Employer’s business and the Executive
has made and is expected to continue to make major contributions to the
profitability, growth, and financial strength of the Employer and affiliates,

 

WHEREAS, the Employer and the Executive desire
to set forth in this Agreement the terms and conditions of the Executive’s
employment,

 

WHEREAS, the Executive and the Corporation are
parties to an Employment Agreement dated as of September 19, 2005, but the
Executive, the Corporation, and the Bank intend that this Agreement supersede
and replace the September 19, 2005 Employment Agreement in its entirety,
and

 

WHEREAS, none of the conditions or events
included in the definition of the term “golden parachute payment” that is set
forth in Section 18(k)(4)(A)(ii) of the Federal Deposit Insurance Act
[12 U.S.C. 1828(k)(4)(A)(ii)] and in Federal Deposit Insurance Corporation Rule 359.1(f)(1)(ii) [12
CFR 359.1(f)(1)(ii)] exists or, to the best knowledge of the Employer, is
contemplated insofar as the Employer or any affiliates are concerned.

 

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

 

ARTICLE 1

EMPLOYMENT

 

1.1          Employment.  Effective
on the date and for the term specified in section 1.3, the Employer hereby
employs the Executive to serve as the Bank’s Senior Vice President and Chief
Risk Officer according to the terms and conditions of this Agreement.  The Executive hereby accepts employment
according to the terms and conditions of this Agreement.

 

1.2          Duties.  As the Bank’s
Senior Vice President and Chief Risk Officer, the Executive shall serve in
accordance with the Employer’s Articles of Incorporation and Bylaws, as each
may be amended or restated from time to time. 
The Executive shall serve the Employer faithfully, diligently,
competently, and to the best of the Executive’s ability.  The Executive shall exclusively devote full
working time, energy, and attention to the business of the Employer and to the
promotion of the Employer’s interests throughout the term of this Agreement.  Without the 

 

 

written consent of the
Corporation and the Bank, the Executive shall not render services to or for any
person, firm, corporation, or other entity or organization in exchange for
compensation, regardless of the form in which the compensation is paid and
regardless of whether it is paid directly or indirectly to the Executive.  Nothing in this section 1.2 shall prevent the
Executive from managing personal investments and affairs, provided that doing
so does not interfere with the proper performance of the Executive’s duties and
responsibilities under this Agreement.

 

1.3          Term of Employment. 
The initial term of employment under this Agreement shall be a
three-year period commencing on May 1, 2008.  At the end of each day the term of this
Agreement shall automatically extend for one additional day so that the entire
term remains a term of three years. 
However, at any time the Employer or the Executive may provide written
notice to the other that the term of this Agreement shall be fixed to a finite
term ending three years after the date of the notice, without extension.  If the Employer or the Executive gives
written notice that the term shall be fixed at three years, this Agreement
shall nevertheless remain in force until the end of the fixed term.  The Employer’s decision not to extend the
term of this Agreement shall not — by itself — give the Executive any rights
under this Agreement to claim an adverse change in position, compensation, or
circumstances or otherwise to claim entitlement to severance or other benefits
under Articles 4 or 5 of this Agreement. 
Unless sooner terminated, the Executive’s employment and the term of
this Agreement shall terminate when the Executive attains age 65.

 

ARTICLE 2

COMPENSATION AND BENEFITS

 

2.1          Base Salary.  In
consideration of the Executive’s performance of the obligations under this
Agreement, the Employer shall pay or cause to be paid to the Executive a salary
at the annual rate of not less than $144,300, payable in accordance with the
Employer’s pay practices.  The Executive’s
salary shall be reviewed annually by the Employer’s board of directors or by
the board committee having jurisdiction over executive compensation.  The Executive’s salary shall be increased no
less frequently than annually to account for cost of living increases.  The Executive’s salary also may be increased
beyond the amount necessary to account for cost of living increases at the
discretion of the committee having jurisdiction over executive
compensation.  However, the Executive’s
salary shall not be reduced.  The
Executive’s salary, as the same may be increased from time to time, is referred
to in this Agreement as the “Base Salary.”

 

2.2          Benefit Plans and Perquisites.  The Executive shall be entitled throughout
the term of this Agreement to participate in any and all officer or employee
compensation, bonus, incentive, and benefit plans in effect from time to time,
including without limitation any stock-based compensation, option, incentive,
bonus, or purchase plans existing on the date of this Agreement or adopted
during the term of this Agreement and plans providing pension, retirement,
welfare, medical, dental, disability, and group life benefits, and to receive
any and all other fringe benefits provided from time to time, provided that the
Executive satisfies the

 

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eligibility requirements
for the plans or benefits.  Without
limiting the generality of the foregoing —

 

(a)           Automobile allowance.  The Executive shall receive an automobile
allowance consistent with past practices of the Employer, as the same may
change from time to time.

 

(b)           Reimbursement of business
expenses.  Upon submission of
appropriate documentation by the Executive, the Executive shall be entitled to reimbursement
for all reasonable business expenses incurred performing the Executive’s
obligations under this Agreement, including but not limited to all reasonable
business travel and entertainment expenses incurred while acting at the request
of or in the service of the Employer and reasonable expenses for attendance at
annual and other periodic meetings of trade associations.  To be reimbursable each expense must be of a
nature qualifying it as a proper deduction on the Employer’s income tax returns
as a business expense rather than deductible compensation to the
Executive.  The records and other
documentary evidence submitted by the Executive to the Employer with each
request for reimbursement shall be in the form required by applicable statutes
and regulations issued by appropriate taxing authorities for the substantiation
of expenditures as deductible business expenses of the Employer rather than
deductible compensation to the Executive.

 

(c)           Insurance premiums.  At no expense to the Executive, the Employer
shall pay the Executive’s individual yearly medical and dental insurance
premiums.

 

2.3          Vacation.  The
Executive shall be entitled to paid annual vacation and sick leave in
accordance with policies established from time to time by the Employer.

 

2.4          Taxes.  All
compensation of the Executive shall be subject to withholding and other
employment taxes imposed by federal, state, and local law.

 

ARTICLE 3

EMPLOYMENT TERMINATION

 

3.1          Termination Because of Death or Disability.  (a)  Death.  The Executive’s employment shall terminate
automatically on the date of the Executive’s death.  If the Executive dies in active service to
the Employer, the Executive’s estate shall receive any sums due to the
Executive as Base Salary and reimbursement of expenses through the end of the
month in which death occurred, any bonus earned or accrued through the date of
death, including any unvested amounts awarded for previous years, and for
twelve months after the Executive’s death the Employer shall provide without
cost to the Executive’s family continuing health care coverage under COBRA
substantially identical to that provided for the Executive before death.

 

(b)           Disability.  By delivery of written notice 30 days in
advance to the Executive, the Employer may terminate the Executive’s employment
if the Executive is disabled.  For
purposes of this Agreement the Executive shall be considered “disabled” if an independent
physician

 

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selected by the Employer
and reasonably acceptable to the Executive or the Executive’s legal
representative determines that, because of illness or accident, the Executive
is unable to perform the Executive’s duties and will be unable to perform those
duties for 90 consecutive days.  The
Executive shall not be considered disabled, however, if the Executive returns
to work on a full-time basis within 30 days after the Employer gives notice of
termination due to disability.  If the
Executive is terminated by either of the Corporation or the Bank because of disability,
the Executive’s employment with the other shall also terminate at the same
time.  During the period of incapacity
leading up to termination of the Executive’s employment under this provision,
the Employer shall continue to pay the full Base Salary at the rate then in
effect and all perquisites and other benefits (other than bonus) until the
Executive becomes eligible for benefits under any disability plan or insurance
program maintained by the Employer, provided that the amount of the Employer’s payments
to the Executive under this section 3.1(b) shall be reduced by the sum of
the amounts, if any, payable to the Executive for the same period under any
disability benefit or pension plan covering the Executive.  Furthermore, the Executive shall receive any
bonus earned or accrued through the date of incapacity, including any unvested
amounts awarded for previous years.

 

3.2          Involuntary Termination with Cause.  The Employer may terminate the Executive’s
employment with Cause.  If the Executive’s
employment terminates with Cause, the Executive shall receive the Base Salary
through the date on which termination becomes effective and reimbursement of
expenses to which the Executive is entitled when termination becomes effective.  If the Executive is terminated with Cause by
either of the Corporation or the Bank, the Executive shall be deemed also to
have been terminated with Cause by the other. 
For purposes of this Agreement “Cause”
means any of the following —

 

(a)           an intentional act of fraud,
embezzlement, or theft by the Executive in the course of employment.  For purposes of this Agreement no act or
failure to act on the part of the Executive shall be deemed to have been
intentional if it was due primarily to an error in judgment or negligence.  An act or failure to act on the Executive’s
part shall be considered intentional if it is not in good faith and if it is
without a reasonable belief that the action or failure to act is in the
Employer’s best interests, or

 

(b)           intentional violation of any law or
significant policy of the Employer that, in the Employer’s sole judgment, has
an adverse effect on the Employer, or

 

(c)           the Executive’s gross negligence or
gross neglect of duties in the performance of duties, or

 

(d)           intentional wrongful damage by the Executive
to the business or property of the Employer, including without limitation the
Employer’s reputation, which in the Employer’s sole judgment causes material
harm to the Employer, or

 

(e)           a breach by the Executive of
fiduciary duties or misconduct involving dishonesty, in either case whether in
the Executive’s capacity as an officer or as a director, or

 

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(f)            a breach by the Executive of this
Agreement that, in the Employer’s sole judgment, is a material breach, which
breach is not corrected by the Executive within ten days after receiving
written notice of the breach, or

 

(g)           removal of the Executive from office
or permanent prohibition of the Executive from participating in the Bank’s
affairs by an order issued under section 8(e)(4) or (g)(1) of the
Federal Deposit Insurance Act, 12 U.S.C. 1818(e)(4) or (g)(1), or

 

(h)           conviction of the Executive for or
plea of no contest to a felony or conviction of or plea of no contest to a
misdemeanor involving moral turpitude, or the actual incarceration of the
Executive for seven consecutive days or more, or

 

(i)            the occurrence of any event that
results in the Executive being excluded from coverage, or having coverage
limited for the Executive as compared to other executives of the Employer,
under the Employer’s blanket bond or other fidelity or insurance policy
covering its directors, officers, or employees.

 

3.3          Voluntary Termination by the Executive Without Good Reason.  If the Executive terminates employment without
Good Reason, the Executive shall receive the Base Salary and expense
reimbursement to which the Executive is entitled through the date on which
termination becomes effective.

 

3.4          Involuntary Termination Without Cause and Voluntary Termination with Good
Reason.  With written notice
to the Executive 90 days in advance, the Employer may terminate the Executive’s
employment without Cause.  Termination
shall take effect at the end of the 90-day period.  With advance written notice to the Employer
as provided in paragraph (b), the Executive may terminate employment with Good
Reason.  If the Executive’s employment
terminates involuntarily without Cause or voluntarily but with Good Reason, the
Executive shall be entitled to the benefits specified in Article 4 of this
Agreement.  For purposes of this
Agreement a voluntary termination by the Executive will be considered a
voluntary termination with Good Reason if the conditions stated in both
paragraphs (a) and (b) are satisfied —

 

(a)           a voluntary termination by the
Executive will be considered a voluntary termination with Good Reason if any of
the following occur without the Executive’s advance written consent, and the
term Good Reason shall mean the occurrence of any of the following without the
Executive’s advance written consent —

 

1)             a material diminution of the
Executive’s Base Salary, or

 

2)             a material diminution of the
Executive’s authority, duties, or responsibilities, or

 

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3)             a material diminution in the
authority, duties, or responsibilities of the supervisor to whom the Executive
is required to report, or

 

4)             a material diminution in the budget
over which the Executive retains authority, or

 

5)             a material change in the geographic
location at which the Executive must perform services for the Employer, or

 

6)             any other action or inaction that
constitutes a material breach by the Employer of this Agreement.

 

(b)           the Executive must give notice to the
Employer of the existence of one or more of the conditions described in
paragraph (a) within 90 days after the initial existence of the condition,
and the Employer shall have 30 days thereafter to remedy the condition.  In addition, the Executive’s voluntary
termination because of the existence of one or more of the conditions described
in paragraph (a) must occur within 24 months after the initial existence
of the condition.

 

ARTICLE 4

SEVERANCE COMPENSATION

 

4.1          Cash Severance after Termination Without Cause or Termination with Good
Reason.  (a)  Subject to
the possibility that cash severance after employment termination might be
delayed under section 4.1(b), if the Executive’s employment terminates
involuntarily but without Cause or if the Executive voluntarily terminates
employment with Good Reason, 30 days after employment termination the Employer
shall pay to the Executive in a single lump sum cash in an amount equal to (x) the
Executive’s Base Salary on the date notice of employment termination is given,
without discount for the time value of money, plus (y) any bonus earned by
the Executive or accrued by the Employer on behalf of the Executive through the
date employment termination becomes effective (including any amounts awarded
but that have not vested when termination becomes effective).  The Employer and the Executive acknowledge
and agree that the compensation and benefits under this section 4.1 shall not
be payable if compensation and benefits are payable or shall have been paid to
the Executive under Article 5 of this Agreement.

 

(b)           If when employment termination occurs
the Executive is a specified employee within the meaning of section 409A of the
Internal Revenue Code of 1986, and if the cash severance payment under section
4.1(a) would be considered deferred compensation under section 409A, and
finally if an exemption from the six-month delay requirement of section
409A(a)(2)(B)(i) is not available, the Executive’s cash severance payment
under section 4.1(a) shall be paid to the Executive in a single lump sum
on the first day of the seventh month after the month in which the Executive’s
employment terminates.  References in
this Agreement to section 409A of the Internal Revenue Code of 1986 include
rules, regulations, and guidance of

 

6

 

general application
issued by the Department of the Treasury under Internal Revenue Code section
409A.

 

4.2          Post-Termination Insurance Coverage.  (a) Subject to section 4.2(b), if the
Executive’s employment terminates involuntarily but without Cause, voluntarily
but with Good Reason, or because of disability, the Employer shall continue or
cause to be continued at the Employer’s expense and on behalf of the Executive
and the Executive’s dependents and beneficiaries medical, dental, and
hospitalization insurance coverage as in effect during and in accordance with
the same schedule prevailing in the 12 months preceding the date of the
Executive’s termination.  The insurance
benefits provided by this section 4.2(a) shall be reduced if the Executive
obtains disability, medical, dental, and hospitalization insurance benefits
through another employer, or eliminated entirely if the other employer’s
insurance benefits are equivalent or superior to the benefits provided under
this section 4.2(a).  If the insurance
benefits are reduced, they shall be reduced by an amount such that the
Executive’s aggregate insurance benefits for the period specified in this
section 4.2(a) are equivalent to the benefits to which the Executive would
have been entitled had the Executive not obtained disability, medical, dental,
and hospitalization insurance benefits through another employer.  The medical, dental, and hospitalization
insurance coverage shall continue until the first to occur of (w) the
Executive’s return to employment with the Employer or another employer
providing equivalent or superior insurance benefits, (x) the Executive’s
attainment of age 65, (y) the Executive’s death, or (z) the first
anniversary of the Executive’s termination. 
This section 4.2 shall not be interpreted to limit any benefits to which
the Executive or the Executive’s dependents or beneficiaries may be entitled
under any of the Employer’s employee benefit plans, agreements, programs, or
practices after the Executive’s employment termination, including without
limitation retiree medical and life insurance benefits.

 

(b)           If (x) under the terms of the
applicable policy or policies for the insurance benefits specified in section
4.2(a) it is not possible to continue the Executive’s coverage or (y) when
employment termination occurs the Executive is a specified employee within the
meaning of section 409A of the Internal Revenue Code of 1986, if any of the
continued insurance benefits specified in section 4.2(a) would be
considered deferred compensation under section 409A, and finally if an
exemption from the six-month delay requirement of section 409A(a)(2)(B)(i) is
not available for that particular insurance benefit, instead of continued
insurance coverage under section 4.2(a) the Employer shall pay to the
Executive in a single lump sum an amount in cash equal to the present value of
the Employer’s projected cost to maintain that particular insurance benefit had
the Executive’s employment not terminated, assuming continued coverage for the
lesser of 12 months or the number of months until the Executive attains age
65.  The lump-sum payment shall be made
30 days after employment termination or, if section 4.1(b) applies and a
six-month delay is required under Internal Revenue Code section 409A, on the
first day of the seventh month after the month in which the Executive’s
employment terminates.

 

4.3          Release.  The
Executive shall be entitled to no compensation or other benefits under this Article 4
unless the Executive enters into a release in form satisfactory to the
Executive and the Employer acknowledging the Employer’s and the Executive’s
remaining

 

7

 

obligations and
discharging both parties, as well as the Employer’s officers, directors, and
employees for their actions for or on behalf of the Employer, from any other
claims or obligations arising out of the Executive’s employment by the
Employer, including the circumstances of the Executive’s employment
termination.  The non-compete and other
covenants contained in Article 7 of this Agreement are not contingent on
the Executive entering into a release under this section 4.3 and shall be
effective regardless of whether the Executive enters into the release.

 

ARTICLE 5

CHANGE IN CONTROL BENEFITS

 

5.1          Change in Control Benefits. 
(a)  If a Change in Control occurs during the term of this
Agreement and if within 24 months thereafter the Executive is involuntarily
terminated without Cause or the Executive terminates employment voluntarily but
with Good Reason, the Employer shall make or cause to be made a lump-sum
payment to the Executive in an amount in cash equal to the Executive’s annual
compensation.  For this purpose annual
compensation means (x) the Executive’s annual base salary on the date of
the Change in Control or on the date of the Executive’s employment termination
(whichever is greater) plus (y) any bonus or incentive compensation earned
for the calendar year ended immediately before the year in which the Change in
Control occurred or for the calendar year ended immediately before the year in
which employment termination occurred (whichever is greater), regardless of
when the bonus or incentive compensation earned for the preceding calendar year
is paid and regardless of whether all or part of the bonus or incentive
compensation is subject to elective deferral or vesting.  Annual compensation shall be calculated
without regard to any deferrals under qualified or nonqualified plans, but
annual compensation shall not include interest or other earnings credited to
the Executive under qualified or nonqualified plans and annual compensation
shall not include any compensation earned in the Executive’s capacity as a
director.  The amount payable to the
Executive hereunder shall not be reduced to account for the time value of money
or discounted to present value.  The
payment required under this section 5.1(a) is payable within five business
days after the Executive’s employment termination.  If the Executive receives payment under this
section 5.1(a) the Executive shall not be entitled to any cash severance
benefits under section 4.1 of this Agreement after employment termination.

 

(b)           If a Change in Control occurs during
the term of this Agreement and if within 24 months thereafter the Executive is
involuntarily terminated without Cause or the Executive terminates employment
voluntarily but with Good Reason, in addition to any benefits to which the
Executive may be entitled under section 4.2 the Employer shall cause the
Executive to become fully vested in awards under any stock option, stock
incentive, or other non-qualified plans, programs, or arrangements in which the
Executive participated if (x) the plan, program, or arrangement does not
address the effect of a change in control or termination after a change in
control and (y) award vesting occurs automatically with the passage of
time or years of service.  Accelerated
vesting in or entitlement to awards shall not occur under this section 5.1(b) in
the case of any award for which vesting or entitlement is based on achievement
of performance conditions, whether the conditions have to do with individual
performance or corporate

 

8

 

performance measures,
including but not limited to stock price or financial statement or other
financial measures.

 

5.2          Change in Control Defined. 
For purposes of this Agreement “Change in Control”
means a change in control as defined in Internal Revenue Code section 409A and
rules, regulations, and guidance of general application thereunder issued by
the Department of the Treasury, including —

 

(a)           Change in ownership:
a change in ownership of the Corporation occurs on the date any one person or
group accumulates ownership of Corporation stock constituting more than 50% of
the total fair market value or total voting power of Corporation stock,

 

(b)           Change in effective
control: (x) any one person or more than one person acting as a
group acquires within a 12-month period ownership of Corporation stock
possessing 30% or more of the total voting power of Corporation stock, or (y) a
majority of the Corporation’s board of directors is replaced during any
12-month period by directors whose appointment or election is not endorsed in
advance by a majority of the Corporation’s board of directors, or

 

(c)           Change in ownership of a
substantial portion of assets: a change in ownership of a
substantial portion of the Corporation’s assets occurs if in a 12-month period
any one person or more than one person acting as a group acquires from the
Corporation assets having a total gross fair market value equal to or exceeding
40% of the total gross fair market value of all of the Corporation’s assets
immediately before the acquisition or acquisitions.  For this purpose, gross fair market value
means the value of the Corporation’s assets, or the value of the assets being
disposed of, determined without regard to any liabilities associated with the
assets.

 

ARTICLE 6

CONFIDENTIALITY AND CREATIVE WORK

 

6.1          Non-disclosure.  The
Executive covenants and agrees not to reveal to any person, firm, or
corporation any confidential information of any nature concerning the Employer
or its business, or anything connected therewith.  As used in this Article 6, the term “confidential information” means all
of the Employer’s and affiliates’ confidential and proprietary information and
trade secrets in existence on the date hereof or existing at any time during
the term of this Agreement, including but not limited to —

 

(a)           the whole or any portion or phase of
any business plans, financial information, purchasing data, supplier data,
accounting data, or other financial information,

 

(b)           the whole or any portion or phase of
any research and development information, design procedures, algorithms or
processes, or other technical information,

 

(c)           the whole or any portion or phase of
any marketing or sales information, sales records, customer lists, prices,
sales projections, or other sales information, and

 

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(d)           trade secrets, as defined from time
to time by the laws of the State of South Carolina.

 

However, confidential
information excludes information that — as of the date hereof or at any time
after the date hereof — is published or disseminated without obligation of
confidence or that becomes a part of the public domain (x) by or through
action of the Employer, or (y) otherwise than by or at the direction of
the Executive.  This section 6.1 does not
prohibit disclosure required by an order of a court having jurisdiction or a
subpoena from an appropriate governmental agency or disclosure made by the
Executive in the ordinary course of business and within the scope of the
Executive’s authority.

 

6.2          Return of Materials. 
The Executive agrees to deliver or return to the Employer upon
termination, upon expiration of this Agreement, or as soon thereafter as
possible, all written information and any other similar items furnished by the
Employer or prepared by the Executive in connection with the Executive’s
services hereunder.  The Executive will
retain no copies thereof after termination of this Agreement or termination of
the Executive’s employment.

 

6.3          Creative Work.  The
Executive agrees that all creative work and work product, including but not
limited to all technology, business management tools, processes, software,
patents, trademarks, and copyrights developed by the Executive during the term
of this Agreement and in the course and scope of the Executive’s duties
hereunder, regardless of when or where such work or work product was produced,
constitutes work made for hire, all rights of which are owned by the
Employer.  The Executive hereby assigns
to the Employer all rights, title, and interest, whether by way of copyrights,
trade secret, trademark, patent, or otherwise, in all such work or work
product, regardless of whether the same is subject to protection by patent,
trademark, or copyright laws.

 

6.4          Injunctive Relief. 
The Executive acknowledges that it is impossible to measure in money the
damages that will be suffered by the Employer if the Executive fails to observe
the obligations imposed by this Article 6. 
Accordingly, if the Employer institutes an action to enforce the
provisions hereof, the Executive hereby waives the claim or defense that an
adequate remedy at law is available to the Employer and the Executive agrees
not to urge in any such action the claim or defense that an adequate remedy at
law exists.

 

6.5          Affiliates’ Confidential Information is Covered; Confidentiality
Obligation Survives Termination. 
For purposes of this Agreement the term “affiliate”
includes the Corporation, the Bank, and any entity that directly or indirectly
through one or more intermediaries controls, is controlled by, or is under
common control with the Corporation or the Bank.  The rights and obligations set forth in this Article 6
shall survive termination of this Agreement.

 

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ARTICLE 7

COMPETITION
AFTER EMPLOYMENT TERMINATION

 

7.1                               Covenant Not to Solicit Employees.  The Executive
agrees not to solicit the services of any officer or employee of the Employer
for 12 months after the Executive’s employment termination.

 

7.2                               Covenant Not to Compete.  (a) 
Without advance written consent of the Employer, the Executive covenants and
agrees not to compete directly or indirectly with the Employer for 12 months
after employment termination, plus any period during which the Executive is in
violation of this covenant not to compete and any period during which the
Employer seeks by litigation to enforce this covenant not to compete.  For purposes of this section —

 

(1)                                  the term “compete” means

 

(a)                                  providing financial products or services
on behalf of any financial institution for any person residing in the
territory,

 

(b)                                 assisting (other than through the
performance of ministerial or clerical duties) any financial institution in
providing financial products or services to any person residing in the
territory, or

 

(c)                                  inducing or attempting to induce any
person who was a customer of the Employer at the date of the Executive’s
employment termination to seek financial products or services from another
financial institution.

 

(2)                                  the phrase “compete directly or
indirectly” means —

 

(a)                                  acting as a consultant, officer,
director, independent contractor, incorporator, organizer, or employee of any
financial institution in competition with the Employer in the territory, or

 

(b)                                 ownership of more than 5% of the voting
shares of any financial institution in competition with the Employer in the
territory, or

 

(c)                                  communicating to such financial
institution the names or addresses or any financial information concerning any
person who was a customer of the Employer at the Executive’s employment
termination.

 

(3)                                  the term “customer” means any person to
whom the Employer is providing financial products or services on the date of
the Executive’s employment termination.

 

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(4)                                  the term “financial institution” means
any bank, savings association, or bank or savings association holding company,
or any other institution, including a financial institution in organization,
the business of which is or will be engaging in activities that are financial
in nature or incidental to such financial activities as described in section 4(k) of
the Bank Holding Company Act of 1956, other than the Employer or its affiliated
corporations.

 

(5)                                  “financial product or service” means any
product or service that a financial institution or a financial holding company
could offer by engaging in any activity that is financial in nature or
incidental to such a financial activity under section 4(k) of the Bank
Holding Company Act of 1956 and that is offered by the Employer or an affiliate
on the date of the Executive’s employment termination, including but not
limited to banking activities and activities that are closely related to and a
proper incident to banking.

 

(6)                                  the term “person” means any individual or
individuals, corporation, partnership, fiduciary or association.

 

(7)                                  the term “territory” means all of
Charleston, Dorchester, and Berkeley Counties in South Carolina and the area
within a 50-mile radius of any full-service banking office of the Bank on the
date of the Executive’s employment termination.

 

(b)                                 If any provision of this section or any
word, phrase, clause, sentence or other portion thereof (including without
limitation the geographical and temporal restrictions contained therein) is
held to be unenforceable or invalid for any reason, the unenforceable or
invalid provision or portion shall be modified or deleted so that the
provision, as modified, is legal and enforceable to the fullest extent
permitted under applicable law.

 

7.3                               Remedies. 
Because of the unique character of the services to be rendered by the
Executive hereunder, the Executive understands that the Employer would not have
an adequate remedy at law for the material breach or threatened breach by the
Executive of any one or more of the Executive’s covenants set forth in this Article 7.  Accordingly, the Executive agrees that the
Employer’s remedies for a material breach or threatened breach of this Article 7
include but are not limited to (x) forfeiture of any money representing
accrued salary, contingent payments, or other fringe benefits due and payable
to the Executive, (y) forfeiture of any unpaid severance benefits under
sections 4.1 and 4.2 of this Agreement, and (z) a suit in equity by the
Employer to enjoin the Executive from the breach or threatened breach of such
covenants.  The Executive hereby waives
the claim or defense that an adequate remedy at law is available to the
Employer and the Executive agrees not to urge in any such action the claim or
defense that an adequate remedy at law exists. 
Nothing herein shall be construed to prohibit the Employer from pursuing
any other remedies for the breach or threatened breach.

 

7.4                               Article 7 Survives
Termination But Is Void After a Change in Control. 
The rights and obligations set forth in this Article 7 shall
survive termination of this Agreement.

 

12

 

However, Article 7
shall be null and void if a Change in Control occurs before employment
termination.

 

ARTICLE 8

MISCELLANEOUS

 

8.1                               Successors and Assigns.  (a) 
This Agreement is binding on the Employer’s
successors.  This Agreement
shall be binding upon the Employer and any successor, including any persons
acquiring directly or indirectly all or substantially all of the business or
assets of the Employer by purchase, merger, consolidation, reorganization, or
otherwise.  But this Agreement and the
Employer’s obligations under this Agreement are not otherwise assignable,
transferable, or delegable by the Employer. 
By agreement in form and substance satisfactory to the Executive, the
Employer shall require any successor to all or substantially all of the
business or assets of the Employer to expressly assume and agree to perform
this Agreement in the same manner and to the same extent the Employer would be
required to perform had no succession occurred.

 

(b)                                 This Agreement is enforceable by
the Executive’s heirs.  This Agreement shall inure to
the benefit of and be enforceable by the Executive’s personal or legal representatives,
executors, administrators, successors, heirs, distributees, and legatees.

 

(c)                                  This Agreement is personal and is
not assignable.  This Agreement is personal in nature.  Without written consent of the other parties,
no party shall assign, transfer, or delegate this Agreement or any rights or
obligations under this Agreement except as expressly provided herein.  Without limiting the generality or effect of
the foregoing, the Executive’s right to receive payments hereunder is not
assignable or transferable, whether by pledge, creation of a security interest,
or otherwise, except for a transfer by the Executive’s will or by the laws of
descent and distribution.  If the
Executive attempts an assignment or transfer that is contrary to this section 8.1,
the Employer shall have no liability to pay any amount to the assignee or
transferee.

 

8.2                               Governing Law, Jurisdiction, and
Forum.  This Agreement shall be construed under and
governed by the internal laws of the State of South Carolina, without giving
effect to any conflict of laws provision or rule (whether of the State of
South Carolina or any other jurisdiction) that would cause the application of
the laws of any jurisdiction other than the State of South Carolina.  By entering into this Agreement, the
Executive agrees to be subject to the jurisdiction of both the federal and
state courts in the State of South Carolina. 
Any actions or proceedings instituted under this Agreement shall be
brought and tried solely in courts located in Charleston County, South Carolina
or in the federal court having jurisdiction in Mount Pleasant, South
Carolina.  The Executive expressly waives
the right to have any such actions or proceedings brought or tried elsewhere.

 

8.3                               Entire Agreement. 
This Agreement sets forth the entire agreement of the parties concerning
the Executive’s employment.  Any oral or
written statements, representations, agreements, or understandings made or
entered into prior to or contemporaneously with the

 

13

 

execution of this
Agreement are hereby rescinded, revoked, and rendered null and void by the
parties.  Without limiting the generality
of the foregoing, the parties hereto acknowledge and agree that this Agreement
supersedes in its entirety the Employment Agreement dated as of September 19,
2005, entered into by the Executive and the Employer, as the same may have been
amended or supplemented.  The September 19,
2005 Employment Agreement shall hereafter be void and of no force or effect.

 

8.4                               Notices. 
All notices, requests, demands, and other communications hereunder shall
be in writing and shall be deemed to have been duly given if delivered by hand
or mailed, certified or registered mail, return receipt requested, with postage
prepaid.  Unless otherwise changed by
notice, notice shall be properly addressed to the Executive if addressed to the
address of the Executive on the books and records of the Employer at the time
of the delivery of notice, and properly addressed to the Employer if addressed
to the Board of Directors, Tidelands Bancshares, Inc., 875 Lowcountry
Boulevard, Mount Pleasant, South Carolina 
29464.

 

8.5                               Severability. 
In the case of conflict between a provision of this Agreement and any
statute, regulation, or judicial precedent, the latter shall prevail, but the
affected provisions of this Agreement shall be curtailed and limited solely to
the extent necessary to bring them within the requirements of law.  If any provision of this Agreement is held by
a court of competent jurisdiction to be indefinite, invalid, void or voidable,
or otherwise unenforceable, the remainder of this Agreement shall continue in
full force and effect unless that would clearly be contrary to the intentions
of the parties or would result in an injustice.

 

8.6                               Captions and Counterparts. 
Captions in this Agreement are included solely for convenience and do
not define, limit, or describe the scope or intent of this Agreement.  This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but all of which
together shall constitute one and the same instrument.

 

8.7                               No Duty to Mitigate. 
The Employer hereby acknowledges that it will be difficult and could be
impossible (x) for the Executive to find reasonably comparable employment
after employment termination, and (y) to measure the amount of damages the
Executive may suffer as a result of termination.  Additionally, the Employer acknowledges that
its general severance pay plans do not provide for mitigation, offset, or reduction
of any severance payment received thereunder. 
The Employer further acknowledges that the payment of severance benefits
under this Agreement is reasonable and shall be liquidated damages.  The Executive shall not be required to
mitigate the amount of any payment provided by this Agreement by seeking other
employment.  Moreover, the amount of any
payment provided by this Agreement shall not be reduced by any compensation
earned or benefits provided as the result of employment of the Executive or as a
result of the Executive being self-employed after employment termination.

 

8.8                               Amendment and Waiver. 
This Agreement may not be amended, released, discharged, abandoned,
changed, or modified except by an instrument in writing signed by each of the
parties hereto.  The failure of any party
hereto to enforce at any time any of the provisions of this Agreement shall not
be construed to be a waiver of any such provision nor affect the

 

14

 

validity of this Agreement
or any part thereof or the right of any party thereafter to enforce each and
every such provision.  No waiver of a
breach of this Agreement shall be held to be a waiver of any other or
subsequent breach.

 

8.9                               Payment of Legal Fees. 
The Employer is aware that after a Change in Control management could
cause or attempt to cause the Employer to refuse to comply with its obligations
under this Agreement, or could institute or cause or attempt to cause the
Employer to institute litigation seeking to have this Agreement declared
unenforceable, or could take or attempt to take other action to deny Executive
the benefits intended under this Agreement. 
In these circumstances the purpose of this Agreement would be frustrated.  The Employer desires that the Executive not
be required to incur the expenses associated with the enforcement of rights
under this Agreement, whether by litigation or other legal action, because the
cost and expense thereof would substantially detract from the benefits intended
to be granted to the Executive hereunder. 
The Employer desires that the Executive not be forced to negotiate
settlement of rights under this Agreement under threat of incurring
expenses.  Accordingly, if after a Change
in Control occurs it appears to the Executive that (x) the Employer has
failed to comply with any of its obligations under this Agreement, or (y) the
Employer or any other person has taken any action to declare this Agreement
void or unenforceable, or instituted any litigation or other legal action designed
to deny, diminish, or to recover from the Executive the benefits intended to be
provided to the Executive hereunder, the Employer irrevocably authorizes the
Executive from time to time to retain counsel of the Executive’s choice, at the
Employer’s expense as provided in this section 8.9, to represent the Executive
in the initiation or defense of any litigation or other legal action, whether
by or against the Employer or any director, officer, stockholder, or other
person affiliated with the Employer, in any jurisdiction.  Despite any existing or previous
attorney-client relationship between the Employer and any counsel chosen by the
Executive under this section 8.9, the Employer irrevocably consents to the
Executive entering into an attorney-client relationship with that counsel, and
the Employer and the Executive agree that a confidential relationship shall
exist between the Executive and that counsel. 
The fees and expenses of counsel selected from time to time by the
Executive as provided in this section shall be paid or reimbursed to the
Executive by the Employer on a regular, periodic basis upon presentation by the
Executive of a statement or statements prepared by counsel in accordance with
counsel’s customary practices, up to a maximum aggregate amount of $100,000,
whether suit be brought or not, and whether or not incurred in trial,
bankruptcy, or appellate proceedings. 
The Employer’s obligation to pay the Executive’s legal fees provided by
this section 8.9 operates separately from and in addition to any legal fee
reimbursement obligation the Employer may have with the Executive under any
separate severance or other agreement. 
Despite anything in this Agreement to the contrary, however, the
Employer shall not be required to pay or reimburse Executive’s legal expenses
if doing so would violate section 18(k) of the Federal Deposit Insurance
Act [12 U.S.C. 1828(k)] and Rule 359.3 of the Federal Deposit Insurance
Corporation [12 CFR 359.3].

 

8.10                        Consultation with Counsel and
Interpretation of this Agreement.  The Executive
acknowledges and agrees that the Executive has had the assistance of counsel of
the Executive’s choosing in the negotiation of this Agreement, or the Executive
has chosen not to

 

15

 

have the assistance of
counsel.  Both the Employer and the
Executive have participated in the negotiation and drafting of this Agreement
and they hereby agree that there shall not be strict interpretation against
either party in any review of this Agreement in which interpretation thereof is
an issue.

 

8.11                        Compliance with Internal Revenue
Code Section 409A.  The Employer and the Executive
intend that their exercise of authority or discretion under this Agreement
shall comply with section 409A of the Internal Revenue Code of 1986.  If when the Executive’s employment terminates
the Executive is a specified employee, as defined in section 409A of the
Internal Revenue Code of 1986, and if any payments under this Agreement,
including Articles 4 or 5, will result in additional tax or interest to the
Executive because of section 409A, then despite any provision of this Agreement
to the contrary the Executive shall not be entitled to the payments until the
earliest of (x) the date that is at least six months after termination of
the Executive’s employment for reasons other than the Executive’s death, (y) the
date of the Executive’s death, or (z) any earlier date that does not
result in additional tax or interest to the Executive under section 409A.  As promptly as possible after the end of the
period during which payments are delayed under this provision, the entire
amount of the delayed payments shall be paid to the Executive in a single lump
sum.  If any provision of this Agreement
does not satisfy the requirements of section 409A, such provision shall
nevertheless be applied in a manner consistent with those requirements.  If any provision of this Agreement would
subject the Executive to additional tax or interest under section 409A, the
Employer shall reform the provision. 
However, the Employer shall maintain to the maximum extent practicable
the original intent of the applicable provision without subjecting the
Executive to additional tax or interest, and the Employer shall not be required
to incur any additional compensation expense as a result of the reformed
provision.

 

IN
WITNESS WHEREOF,
the parties have executed this Employment Agreement as of the date first
written above.

 

	
  EXECUTIVE

  	
   

  	
  TIDELANDS BANK

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  /s/ James M. Bedsole

  	
   

  	
  By:

  	
  /s/ Robert E.
  Coffee, Jr.

  
	
   

  	
   

  	
   

  	
  Robert E. Coffee Jr.

  
	
   

  	
   

  	
  Its:

  	
  President and CEO

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  TIDELANDS BANCSHARES, INC.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Robert E.
  Coffee, Jr.

  
	
   

  	
   

  	
   

  	
  Robert E. Coffee Jr.

  
	
   

  	
   

  	
  Its:

  	
  President and CEO

  

 

16Exhibit
10.13

 

TIDELANDS BANK

SALARY CONTINUATION AGREEMENT

 

This SALARY
CONTINUATION AGREEMENT (this “Agreement”) is entered into as of this
1  day of May, 2008, by and between Tidelands Bank, a South
Carolina-chartered bank (the “Bank”), and James M. Bedsole, its Senior Vice
President and Chief Risk Officer (the “Executive”).

 

WHEREAS, the Executive has contributed
substantially to the Bank’s success and the Bank desires that the Executive
continue in its employ,

 

WHEREAS, to encourage the Executive to remain an
employee, the Bank is willing to provide to the Executive salary continuation
benefits payable from the Bank’s general assets,

 

WHEREAS, none of the conditions or events
included in the definition of the term “golden parachute payment” that is set forth
in section 18(k)(4)(A)(ii) of the Federal Deposit Insurance Act [12 U.S.C.
1828(k)(4)(A)(ii)] and in Federal Deposit Insurance Corporation Rule 359.1(f)(1)(ii) [12
CFR 359.1(f)(1)(ii)] exists or, to the best knowledge of the Bank, is
contemplated insofar as the Bank is concerned, and

 

WHEREAS, the parties hereto intend that this
Agreement shall be considered an unfunded arrangement maintained primarily to
provide supplemental retirement benefits for the Executive, and to be
considered a non-qualified benefit plan for purposes of the Employee Retirement
Income Security Act of 1974, as amended (“ERISA”).  The Executive is fully advised of the Bank’s
financial status.

 

NOW
THEREFORE, in
consideration of these premises and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Executive and the
Bank hereby agree as follows.

 

ARTICLE 1

DEFINITIONS

 

1.1          “Accrual Balance” means the liability that should be accrued
by the Bank under generally accepted accounting principles (“GAAP”) for the
Bank’s obligation to the Executive under this Agreement, applying Accounting
Principles Board Opinion No. 12, as amended by Statement of Financial
Accounting Standards No. 106.  The
Accrual Balance shall be calculated such that when it is credited with interest
each month the Accrual Balance at Normal Retirement Age equals the present
value of the normal retirement benefits. 
The discount rate means the rate used by the Plan Administrator for
determining the Accrual Balance.  In its
sole discretion the Plan Administrator may adjust the discount rate to maintain
the rate within reasonable standards according to GAAP.

 

1.2          “Beneficiary” means each designated person, or the estate of
the deceased Executive, entitled to benefits, if any, upon the death of the
Executive, as provided in Article 4.

 

 

1.3          “Beneficiary Designation Form” means the form established
from time to time by the Plan Administrator that the Executive completes,
signs, and returns to the Plan Administrator to designate one or more
Beneficiaries.

 

1.4          “Change in Control” shall mean a change in control as defined
in Internal Revenue Code section 409A and rules, regulations, and guidance of
general application thereunder issued by the Department of the Treasury, including
—

 

(a)           Change in ownership:
a change in ownership of Tidelands Bancshares, Inc., a South Carolina
corporation of which the Bank is a wholly owned subsidiary, occurs on the date
any one person or group accumulates ownership of Tidelands Bancshares, Inc.
stock constituting more than 50% of the total fair market value or total voting
power of Tidelands Bancshares, Inc. stock, or

 

(b)           Change in effective
control: (x) any one person or more than one person acting as a
group acquires within a 12-month period ownership of Tidelands Bancshares, Inc.
stock possessing 30% or more of the total voting power of Tidelands Bancshares, Inc.,
or (y) a majority of Tidelands Bancshares, Inc.’s board of directors
is replaced during any 12-month period by directors whose appointment or
election is not endorsed in advance by a majority of Tidelands Bancshares, Inc.’s
board of directors, or

 

(c)           Change in ownership of a
substantial portion of assets: a change in ownership of a
substantial portion of Tidelands Bancshares, Inc.’s assets occurs if in a
12-month period any one person or more than one person acting as a group
acquires from Tidelands Bancshares, Inc. assets having a total gross fair
market value equal to or exceeding 40% of the total gross fair market value of
all of Tidelands Bancshares, Inc.’s assets immediately before the
acquisition or acquisitions.  For this
purpose, gross fair market value means the value of Tidelands Bancshares, Inc.’s
assets, or the value of the assets being disposed of, determined without regard
to any liabilities associated with the assets.

 

1.5          “Code” means the Internal Revenue Code of 1986, as amended,
and rules, regulations, and guidance of general application issued thereunder
by the Department of the Treasury.

 

1.6          “Disability”  means, because
of a medically determinable physical or mental impairment that can be expected
to result in death or that can be expected to last for a continuous period of
at least 12 months, (x) the Executive is unable to engage in any
substantial gainful activity, or (y) the Executive is receiving income
replacement benefits for a period of at least three months under an accident
and health plan of the employer.  Medical
determination of disability may be made either by the Social Security
Administration or by the provider of an accident or health plan covering
employees of the Bank.  Upon request of
the Plan Administrator, the Executive must submit proof to the Plan
Administrator of the Social Security Administration’s or provider’s
determination.

 

2

 

1.7          “Early Termination” means Separation from Service before
Normal Retirement Age for reasons other than death, Disability, or Termination
with Cause, but Early Termination excludes a Separation from Service governed
by section 2.4.

 

1.8          “Effective Date” means                                        ,
2008.

 

1.9          “Intentional,” for purposes of this Agreement, no act or
failure to act on the Executive’s part shall be deemed to have been intentional
if it was due primarily to an error in judgment or negligence.  An act or failure to act on the Executive’s
part shall be considered intentional if it is not in good faith and if it is
without a reasonable belief that the action or failure to act is in the Bank’s
best interests.

 

1.10        “Normal Retirement Age” means the Executive’s 65th birthday.

 

1.11        “Plan Administrator” or “Administrator”
means the plan administrator described in Article 8.

 

1.12        “Plan Year” means a twelve-month period commencing on January 1
and ending on December 31 of each year. 
The initial Plan Year shall commence on the effective date of this
Agreement.

 

1.13        “Separation from Service” means the Executive’s service as an
executive and independent contractor to the Bank and any member of a controlled
group, as defined in Code section 414, terminates for any reason, other than
because of a leave of absence approved by the Bank or the Executive’s
death.  For purposes of this Agreement,
if there is a dispute about the employment status of the Executive or the date
of the Executive’s Separation from Service, the Bank shall have the sole and
absolute right to decide the dispute unless a Change in Control shall have
occurred.

 

1.14        “Termination with Cause” and “Cause”
shall have the same meaning specified in any effective severance or employment
agreement existing on the date hereof or hereafter entered into between the
Executive and the Bank or between the Executive and Tidelands Bancshares, Inc.  If the Executive is not a party to a
severance or employment agreement containing a definition of termination with
cause, Termination with Cause means the Executive’s employment is terminated
for any of the following reasons —

 

(a)           the Executive’s gross negligence or
gross neglect of duties or intentional and material failure to perform stated
duties after written notice thereof, or

 

(b)           disloyalty or dishonesty by the
Executive in the performance of the Executive’s duties, or a breach of the
Executive’s fiduciary duties, in any case whether in the Executive’s capacity
as a director or officer, or

 

3

 

(c)           intentional wrongful damage by the
Executive to the business or property of the Bank or its affiliates, including
without limitation the reputation of the Bank, which in the judgement of the
Bank causes material harm to the Bank or affiliates, or

 

(d)           a willful violation by the Executive
of any applicable law or significant policy of the Bank or an affiliate that,
in the Bank’s judgement, results in an adverse effect on the Bank or the
affiliate, regardless of whether the violation leads to criminal prosecution or
conviction.  For purposes of this
Agreement applicable laws include any statute, rule, regulatory order,
statement of policy, or final cease-and-desist order of any governmental agency
or body having regulatory authority over the Bank, or

 

(e)           an intentional act of fraud,
embezzlement, or theft by the Executive in the course of employment.  For purposes of this Agreement no act or
failure to act on the part of the Executive shall be deemed to have been
intentional if it was due primarily to an error in judgment or negligence.  An act or failure to act on the Executive’s
part shall be considered intentional if it is not in good faith and if it is
without a reasonable belief that the action or failure to act is in the best
interests of the Bank, or

 

(f)            the occurrence of any event that
results in the Executive being excluded from coverage, or having coverage
limited for the Executive as compared to other executives of the  Bank, under the Bank’s blanket bond or other
fidelity or insurance policy covering its directors, officers, or employees, or

 

(g)           the Executive is removed from office
or permanently prohibited from participating in the Bank’s affairs by an order
issued under section 8(e)(4) or section 8(g)(1) of the Federal
Deposit Insurance Act, 12 U.S.C. 1818(e)(4) or (g)(1), or

 

(h)           conviction of the Executive for or
plea of no contest to a felony or conviction of or plea of no contest to a
misdemeanor involving moral turpitude, or the actual incarceration of the
Executive for seven consecutive days or more.

 

ARTICLE 2

LIFETIME BENEFITS

 

2.1          Normal Retirement Benefit. 
Unless Separation from Service occurs before Normal Retirement Age, when
the Executive attains Normal Retirement Age the Bank shall pay to the Executive
the benefit described in this section 2.1 instead of any other benefit under
this Agreement.  If the Executive’s
Separation from Service thereafter is a Termination with Cause or if this
Agreement terminates under Article 5, no further benefits shall be paid to
the Executive.

 

2.1.1        Amount of benefit.  The annual benefit under this section 2.1 is
$81,938.

 

2.1.2        Payment of benefit.  Beginning with the month immediately after
the month in which the Executive attains Normal Retirement Age, the Bank shall
pay the annual 

 

4

 

benefit to the Executive
in equal monthly installments on the first day of each month.  The annual benefit shall be paid to the
Executive for ten years.

 

2.2          Early Termination Benefit. 
If Early Termination occurs before Normal Retirement Age but on or after
the date the Executive attains age 55, the Bank shall pay to the Executive the
benefit described in this section 2.2 instead of any other benefit under this
Agreement.  If Early Termination occurs
before the Executive attains age 55, no benefit shall be payable under this
Agreement.  Additionally, no benefits
shall be payable if the Executive’s Separation from Service is a Termination
with Cause or if this Agreement terminates under Article 5.  Neither the Bank nor the Executive shall be
entitled to elect in the 24-month period after a Change in Control between the
benefit under this section 2.2 versus the benefit under section 2.4.  If the Executive’s Separation from Service
within 24 months after a Change in Control is an involuntary termination
without Cause or a Voluntary Termination with Good Reason, no benefit shall be
payable under this section 2.2 and the Executive shall instead be entitled to
the benefit under section 2.4 or, if the Executive first attained Normal
Retirement Age, section 2.1.

 

2.2.1        Amount of benefit.  The annual benefit under this section 2.2 is
calculated as the amount that fully amortizes the Accrual Balance existing at
the end of the month immediately before the month in which Separation from
Service occurs, amortizing that Accrual Balance over ten years and taking into
account interest at the discount rate or rates established by the Plan
Administrator.

 

2.2.2        Payment of benefit.  Beginning with the later of (x) the
seventh month after the month in which the Executive’s Separation from Service
occurs, or (y) the month immediately after the month in which the
Executive attains Normal Retirement Age, the Bank shall pay the benefit under
this section 2.2 to the Executive in equal monthly installments on the first
day of each month.  The annual benefit
shall be paid to the Executive for ten years.

 

2.3          Disability Benefit. 
For Separation from Service because of Disability before Normal
Retirement Age the Bank shall pay to the Executive the benefit described in
this section 2.3 instead of any other benefit under this Agreement.

 

2.3.1        Amount of benefit.  The annual benefit under this section 2.3 is
calculated as the amount that fully amortizes the Accrual Balance existing at
the end of the month immediately before the month in which Separation from
Service occurs, amortizing that Accrual Balance over ten years and taking into
account interest at the discount rate or rates established by the Plan
Administrator.

 

2.3.2        Payment of benefit.  Beginning with the later of (x) the
seventh month after the month in which the Executive’s Separation from Service
occurs, or (y) the month immediately after the month in which the
Executive attains Normal Retirement Age, the Bank shall pay the benefit under
this section 2.3 to the Executive in equal monthly 

 

5

 

installments on the first
day of each month.  The annual benefit
shall be paid to the Executive for ten years.

 

2.4          Change-in-Control Benefit. 
If the Executive’s Separation from Service is an involuntary termination
without Cause or a Voluntary Termination with Good Reason, in either case
within 24 months after a Change in Control, the Bank shall pay to the Executive
the benefit described in this section 2.4 instead of any other benefit under
this Agreement.  However, no benefits
shall be payable if the Executive’s Separation from Service is a Termination
with Cause or if this Agreement terminates under Article 5.  Neither the Bank nor the Executive shall be
entitled to elect in the 24-month period after a Change in Control between the
benefit under this section 2.4 versus the Early Termination benefit under
section 2.2.  If the Executive’s Separation
from Service within 24 months after a Change in Control is an involuntary
termination without Cause or a Voluntary Termination with Good Reason, no
benefit shall be payable under section 2.2 and the Executive shall instead be
entitled to the benefit under this section 2.4. 
But if the Executive shall have attained Normal Retirement Age when
Separation from Service within 24 months after a Change in Control occurs,
whether Separation from Service is voluntary or involuntary for any reason
other than Termination with Cause, the Executive shall be entitled solely to
the benefit provided by section 2.1, not this section 2.4.

 

2.4.1        Amount of benefit.  The benefit under this section 2.4 is the
Accrual Balance maintained by the Bank when Separation from Service occurs.

 

2.4.2        Payment of benefit.  The Bank shall pay the Change-in-Control
benefit under this section 2.4 to the Executive in a single lump sum on the
first day of the seventh month after the month in which Separation from Service
occurs.

 

2.4.3        Preservation of
Change-in-Control benefit if the Executive is preemptively terminated without
Cause.  If before the
Executive attains Normal Retirement Age the Executive is involuntarily
terminated without Cause after a Change in Control is announced but before the
Change in Control occurs, the Executive shall be entitled to the benefit under
this section 2.4 instead of any other benefit under this Agreement, including
the benefit under section 2.2.  The Bank
shall pay the Change-in-Control benefit to the Executive in a single lump sum
on the later of (x) the first day of the seventh month after the month in
which the Executive’s Separation from Service occurs or (y) the day of the
Change in Control.  A Change in Control
shall be considered to have been announced on the date a press release is
issued by the Bank or by Tidelands Bancshares, Inc. concerning the Change
in Control, on the date a Form 8-K Current Report is filed by Tidelands
Bancshares, Inc. with the Securities and Exchange Commission to report the
Change in Control event, on the date an annual or quarterly report or proxy
statement is filed by Tidelands Bancshares, Inc. with the Securities and
Exchange Commission disclosing the Change in Control event, or on the date
information concerning the Change in Control is publicly disseminated by the
Bank or by Tidelands Bancshares, Inc. in any other manner, whichever
occurs first.

 

6

 

2.5          Lump-sum Payment of Normal Retirement Benefit, Early Termination Benefit,
or Disability Benefit Being Paid to the Executive when a Change in Control
Occurs.  If when a Change in
Control occurs the Executive is receiving the benefit under section 2.1, the
Bank shall pay the remaining salary continuation benefits to the Executive in a
single lump sum on the date of the Change in Control.  If when a Change in Control occurs the
Executive is receiving or is entitled at Normal Retirement Age to receive the
benefit under sections 2.2 or 2.3, the Bank shall pay the remaining salary
continuation benefits to the Executive in a single lump sum on the later of (x) the
date of the Change in Control or (y) the first day of the seventh month
after the month in which the Executive’s Separation from Service occurs.  The lump-sum payment due to the Executive as
a result of a Change in Control shall be an amount equal to the Accrual Balance
amount corresponding to the particular benefit when the Change in Control
occurs.

 

2.6          Annual Benefit Statement. 
Within 120 days after the end of each Plan Year the Plan Administrator
shall provide or cause to be provided to the Executive an annual benefit
statement showing benefits payable or potentially payable to the Executive
under this Agreement.  Each annual benefit
statement shall supersede the previous year’s annual benefit statement.  If there is a contradiction between this
Agreement and the annual benefit statement concerning the amount of a
particular benefit payable or potentially payable to the Executive under sections
2.2, 2.3, or 2.4 hereof, the amount of the benefit determined under the
Agreement shall control.

 

2.7          Savings Clause Relating to Compliance with Code Section 409A.  Despite any contrary provision of this
Agreement, if when the Executive’s employment terminates the Executive is a specified
employee, as defined in Code section 409A, and if any payments under Article 2
of this Agreement will result in additional tax or interest to the Executive
because of section 409A, the Executive shall not be entitled to the payments
under Article 2 until the earliest of (x) the date that is at least
six months after termination of the Executive’s employment for reasons other
than the Executive’s death, (y) the date of the Executive’s death, or (z) any
earlier date that does not result in additional tax or interest to the
Executive under section 409A.  If any
provision of this Agreement would subject the Executive to additional tax or
interest under section 409A, the Bank shall reform the provision.  However, the Bank shall maintain to the
maximum extent practicable the original intent of the applicable provision
without subjecting the Executive to additional tax or interest, and the Bank
shall not be required to incur any additional compensation expense as a result
of the reformed provision.

 

2.8          One Benefit Only. 
Despite anything to the contrary in this Agreement, the Executive and
Beneficiary are entitled to one benefit only under this Agreement, which shall
be determined by the first event to occur that is dealt with by this
Agreement.  Except as provided in section
2.5 or Article 3, subsequent occurrence of events dealt with by this
Agreement shall not entitle the Executive or Beneficiary to other or additional
benefits under this Agreement.

 

7

 

ARTICLE 3

DEATH BENEFITS

 

3.1          Death Before Separation from Service.  Except as provided in section 5.2, if the
Executive dies before Separation from Service, at the Executive’s death the
Executive’s Beneficiary shall be entitled to an amount in cash equal to the
Accrual Balance existing at the Executive’s death, unless the Change-in-Control
benefit shall have been paid to the Executive under section 2.4 or unless a
Change-in-Control payout shall have occurred under section 2.5.  No benefit shall be paid if the Change-in-Control
benefit shall have been paid to the Executive under section 2.4 or if a
Change-in-Control payout shall have occurred under section 2.5.  If a benefit is payable to the Executive’s
Beneficiary, the benefit shall be paid in a single lump sum 90 days after the
Executive’s death.  However, no benefits
under this Agreement shall be paid or payable to the Executive or the Executive’s
Beneficiary if this Agreement is terminated under Article 5.

 

3.2          Death after Separation from Service.  If the Executive dies after Separation from
Service, if Separation from Service was not a Termination with Cause, and if at
death the Executive was receiving the benefit under section 2.1 or was
receiving or was entitled at Normal Retirement Age to receive the benefit under
sections 2.2 or 2.3, at the Executive’s death the Executive’s Beneficiary shall
be entitled to an amount in cash equal to the Accrual Balance remaining at the
Executive’s death, unless the Change-in-Control benefit shall have been paid to
the Executive under section 2.4 or unless a Change-in-Control payout shall have
occurred under section 2.5.  No benefit
shall be paid if the Change-in-Control benefit shall have been paid to the
Executive under section 2.4 or if a Change-in-Control payout shall have
occurred under section 2.5.  If a benefit
is payable to the Executive’s Beneficiary, the benefit shall be paid in a
single lump sum 90 days after the Executive’s death.  However, no benefits under this Agreement
shall be paid or payable to the Executive or the Executive’s Beneficiary if
this Agreement is terminated under Article 5.

 

ARTICLE 4

BENEFICIARIES

 

4.1          Beneficiary Designations. 
The Executive shall have the right to designate at any time a
Beneficiary to receive any benefits payable under this Agreement at the
Executive’s death.  The Beneficiary
designated under this Agreement may be the same as or different from the
beneficiary designation under any other benefit plan of the Bank in which the
Executive participates.

 

4.2          Beneficiary Designation: Change.  The Executive shall designate a Beneficiary
by completing and signing the Beneficiary Designation Form and delivering
it to the Plan Administrator or its designated agent.  The Executive’s Beneficiary designation shall
be deemed automatically revoked if the Beneficiary predeceases the Executive or
if the Executive names a spouse as Beneficiary and the marriage is subsequently
dissolved.  The Executive shall have the
right to change a Beneficiary by completing, signing, and otherwise complying
with the terms of

 

8

 

the Beneficiary
Designation Form and the Plan Administrator’s rules and procedures,
as in effect from time to time.  Upon the
acceptance by the Plan Administrator of a new Beneficiary Designation Form, all
Beneficiary designations previously filed shall be cancelled.  The Plan Administrator shall be entitled to
rely on the last Beneficiary Designation Form filed by the Executive and
accepted by the Plan Administrator before the Executive’s death.

 

4.3          Acknowledgment.  No
designation or change in designation of a Beneficiary shall be effective until
received, accepted, and acknowledged in writing by the Plan Administrator or
its designated agent.

 

4.4          No Beneficiary Designation. 
If the Executive dies without a valid beneficiary designation or if all
designated Beneficiaries predecease the Executive, the Executive’s spouse shall
be the designated Beneficiary.  If the
Executive has no surviving spouse, the benefits shall be paid to the Executive’s
estate.

 

4.5          Facility of Payment. 
If a benefit is payable to a minor, to a person declared incapacitated,
or to a person incapable of handling the disposition of his or her property,
the Bank may pay the benefit to the guardian, legal representative, or person
having the care or custody of the minor, incapacitated person, or incapable
person.  The Bank may require proof of
incapacity, minority, or guardianship as it may deem appropriate before
distribution of the benefit. 
Distribution shall completely discharge the Bank from all liability for
the benefit.

 

ARTICLE 5

GENERAL LIMITATIONS

 

5.1          Termination with Cause. 
Despite any contrary provision of this Agreement, the Bank shall not pay
any benefit under this Agreement and this Agreement shall terminate if
Separation from Service is a Termination with Cause.

 

5.2          Suicide or Misstatement. 
The Bank shall not pay any benefit under this Agreement if the Executive
commits suicide within two years after the date of this Agreement or if the
Executive makes any material misstatement of fact on any application or resume
provided to the Bank or on any application for benefits provided by the Bank.

 

5.3          Removal.  If the
Executive is removed from office or permanently prohibited from participating
in the Bank’s affairs by an order issued under section 8(e)(4) or (g)(1) of
the Federal Deposit Insurance Act, 12 U.S.C. 1818(e)(4) or (g)(1), all
obligations of the Bank under this Agreement shall terminate as of the
effective date of the order.

 

5.4          Default.  Despite any
contrary provision of this Agreement, if the Bank is in “default” or “in danger
of default,” as those terms are defined in section 3(x) of the Federal
Deposit Insurance Act, 12 U.S.C. 1813(x), all obligations under this Agreement
shall terminate.

 

5.5          FDIC Open-Bank Assistance. 
All obligations under this Agreement shall terminate, except to the
extent determined that continuation of the contract is necessary for the

 

9

 

continued operation of
the Bank, when the Federal Deposit Insurance Corporation enters into an
agreement to provide assistance to or on behalf of the Bank under the authority
contained in Federal Deposit Insurance Act section 13(c).  12 U.S.C. 1823(c).  Rights of the parties that have already vested
shall not be affected by such action, however.

 

ARTICLE 6

CLAIMS AND REVIEW PROCEDURES

 

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

 

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

 

6.1.2                        Timing of Bank response. 
The Bank shall respond to the claimant within 90 days after receiving
the claim.  If the Bank determines that
special circumstances require additional time for processing the claim, the
Bank may extend the response period by an additional 90 days by notifying the
claimant in writing before the end of the initial 90-day period that an
additional period is required.  The
notice of extension must state the special circumstances and the date by which
the Bank expects to render its decision.

 

6.1.3                        Notice of decision. 
If the Bank denies part or all of the claim, the Bank shall notify the
claimant in writing of the denial.  The
Bank shall write the notification in a manner calculated to be understood by
the claimant.  The notification shall set
forth —

 

6.1.3.1                                                             the specific reasons for the denial,

 

6.1.3.2                                                             a reference to the specific provisions of
the Agreement on which the denial is based,

 

6.1.3.3                                                             a description of any additional
information or material necessary for the claimant to perfect the claim and an
explanation of why it is needed,

 

6.1.3.4                                                             an explanation of the Agreement’s review
procedures and the time limits applicable to such procedures, and

 

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

 

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

 

10

 

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

 

6.2.2        Additional submissions — information access. 
The claimant shall then have the opportunity to submit written comments,
documents, records, and other information relating to the claim.  The Bank shall also provide the claimant,
upon request and free of charge, reasonable access to and copies of all
documents, records, and other information relevant (as defined in applicable
ERISA regulations) to the claimant’s claim for benefits.

 

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

 

6.2.4        Timing of Bank response. 
The Bank shall respond in writing to the claimant within 60 days after
receiving the request for review.  If the
Bank determines that special circumstances require additional time for
processing the claim, the Bank may extend the response period by an additional
60 days by notifying the claimant in writing before the end of the initial 60-day
period that an additional period is required. 
The notice of extension must state the special circumstances and the
date by which the Bank expects to render its decision.

 

6.2.5        Notice of decision.  The Bank
shall notify the claimant in writing of its decision on review.  The Bank shall write the notification in a
manner calculated to be understood by the claimant.  The notification shall set forth —

 

6.2.5.1                     the specific reason for the denial,

6.2.5.2                     a reference to the specific provisions of the Agreement
on which the denial is based,

6.2.5.3                     a statement that the claimant is entitled to receive,
upon request and free of charge, reasonable access to and copies of all
documents, records, and other information relevant (as defined in applicable
ERISA regulations) to the claimant’s claim for benefits, and

6.2.5.4                     a statement of the claimant’s right to bring a civil
action under ERISA section 502(a).

 

ARTICLE 7

MISCELLANEOUS

 

7.1          Amendments and Termination.  Subject to
section 7.14, this Agreement may be amended solely by a written agreement
signed by the Bank and by the Executive, and except for termination occurring
under Article 5 this Agreement may be terminated solely by a written
agreement signed by the Bank and by the Executive.

 

11

 

7.2          Binding Effect.  This Agreement shall bind the
Executive, the Bank, and their beneficiaries, survivors, executors, successors,
administrators, and transferees.

 

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

 

7.4          Non-Transferability.  Benefits
under this Agreement may not be sold, transferred, assigned, pledged, attached,
or encumbered.

 

7.5          Successors; Binding Agreement.  By an
assumption agreement in form and substance satisfactory to the Executive, the
Bank shall require any successor (whether direct or indirect, by purchase,
merger, consolidation, or otherwise) to all or substantially all of the
business or assets of the Bank to expressly assume and agree to perform this
Agreement in the same manner and to the same extent that the Bank would be
required to perform this Agreement had no succession occurred.

 

7.6          Tax Withholding.  The Bank shall withhold any
taxes that are required to be withheld from the benefits provided under this
Agreement.

 

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

 

7.8          Unfunded Arrangement.  The Executive
and Beneficiary are general unsecured creditors of the Bank for the payment of
benefits.  The benefits represent the
mere promise by the Bank to pay benefits. 
Rights to benefits are not subject to anticipation, alienation, sale,
transfer, assignment, pledge, encumbrance, attachment, or garnishment by
creditors.  Any insurance on the
Executive’s life is a general asset of the Bank to which the Executive and
Beneficiary have no preferred or secured claim.

 

7.9          Entire Agreement.  This Agreement constitutes the
entire agreement between the Bank and the Executive concerning the subject
matter.  No rights are granted to the
Executive under this Agreement other than those specifically set forth.

 

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

 

12

 

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

 

7.12        Notices.  All notices, requests, demands and other
communications hereunder shall be in writing and shall be deemed to have been
duly given if delivered by hand or mailed, certified or registered mail, return
receipt requested, with postage prepaid, to the following addresses or to such
other address as either party may designate by like notice.  If to the Bank, notice shall be given to the
board of directors, Tidelands Bank, 875 Lowcountry Boulevard, Mount Pleasant,
South Carolina 29464, or to such other or additional person or persons as the
Bank shall have designated to the Executive in writing.  If to the Executive, notice shall be given to
the Executive at the Executive’s address appearing on the Bank’s records, or to
such other or additional person or persons as the Executive shall have
designated to the Bank in writing.

 

7.13        Payment of Legal Fees.  The Bank is
aware that after a Change in Control management of the Bank could cause or
attempt to cause the Bank to refuse to comply with its obligations under this
Agreement, or could institute or cause or attempt to cause the Bank to
institute litigation seeking to have this Agreement declared unenforceable, or
could take or attempt to take other action to deny Executive the benefits
intended under this Agreement.  In these
circumstances the purpose of this Agreement would be frustrated.  The Bank desires that the Executive not be
required to incur the expenses associated with the enforcement of rights under
this Agreement, whether by litigation or other legal action, because the cost
and expense thereof would substantially detract from the benefits intended to
be granted to the Executive hereunder. 
The Bank desires that the Executive not be forced to negotiate
settlement of rights under this Agreement under threat of incurring
expenses.  Accordingly, if after a Change
in Control occurs it appears to the Executive that (x) the Bank has failed
to comply with any of its obligations under this Agreement, or (y) the
Bank or any other person has taken any action to declare this Agreement void or
unenforceable, or instituted any litigation or other legal action designed to
deny, diminish, or to recover from the Executive the benefits intended to be
provided to the Executive hereunder, the Bank irrevocably authorizes the
Executive from time to time to retain counsel of the Executive’s choice, at the
Bank’s expense as provided in this section 7.13, to represent the Executive in
the initiation or defense of any litigation or other legal action, whether by
or against the Bank or any director, officer, stockholder, or other person
affiliated with the Bank, in any jurisdiction. 
Despite any existing or previous attorney-client relationship between
the Bank and any counsel chosen by the Executive under this section 7.13, the
Bank irrevocably consents to the Executive entering into an attorney-client
relationship with that counsel, and the Bank and the Executive agree that a
confidential relationship shall exist between the Executive and that counsel.  The fees and expenses of counsel selected
from time to time by the Executive as provided in this section shall be paid or
reimbursed to the Executive by the Bank on a regular, periodic basis upon
presentation by the Executive of a statement or statements prepared by counsel
in accordance with counsel’s customary practices, up to a maximum aggregate
amount of $100,000, whether suit be brought or not, and whether or not incurred
in trial, bankruptcy, or appellate proceedings. 
The Bank’s obligation to pay the Executive’s legal fees provided by this
section 7.13 operates separately from and in addition to any legal fee

 

13

 

reimbursement obligation
the Bank may have with the Executive under any separate employment, severance,
or other agreement between the Executive and the Bank.  Despite any contrary provision within this
Agreement however, the Bank shall not be required to pay or reimburse the
Executive’s legal expenses if doing so would violate section 18(k) of the
Federal Deposit Insurance Act [12 U.S.C. 1828(k)] and Rule 359.3 of the
Federal Deposit Insurance Corporation [12 CFR 359.3].

 

7.14        Termination or Modification of Agreement Because of Changes in Law, Rules or
Regulations.  The Bank is entering into this Agreement on
the assumption that certain existing tax laws, rules, and regulations will
continue in effect in their current form. 
If that assumption materially changes and the change has a material
detrimental effect on this Agreement, then the Bank reserves the right to
terminate or modify this Agreement accordingly, subject to the written consent
of the Executive, which shall not be unreasonably withheld.  This section 7.14 shall become null and void
effective immediately upon a Change in Control.

 

ARTICLE 8

ADMINISTRATION OF AGREEMENT

 

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

 

8.2          Agents.  In the administration of this Agreement, the
Plan Administrator may employ agents and delegate to them such administrative
duties as it sees fit (including acting through a duly appointed
representative) and may from time to time consult with counsel, who may be
counsel to the Bank.

 

8.3          Binding Effect of Decisions.  The decision
or action of the Plan Administrator concerning any question arising out of the
administration, interpretation, and application of the Agreement and the rules and
regulations promulgated hereunder shall be final and conclusive and binding
upon all persons having any interest in the Agreement.  No Executive or Beneficiary shall be deemed
to have any right, vested or nonvested, regarding the continued use of any
previously adopted assumptions, including but not limited to the discount rate
and calculation method described in section 1.1.

 

8.4          Indemnity of Plan Administrator.  The Bank shall
indemnify and hold harmless the members of the Plan Administrator against any
and all claims, losses, damages, expenses, or liabilities arising from any
action or failure to act with respect to this Agreement, except in the case of
willful misconduct by the Plan Administrator or any of its members.

 

8.5          Bank Information.  To enable the Plan
Administrator to perform its functions, the Bank shall supply full and timely
information to the Plan Administrator on all matters relating to the date and
circumstances of the retirement, Disability, death, or Separation from

 

14

 

Service of the Executive
and such other pertinent information as the Plan Administrator may reasonably
require.

 

ARTICLE 9

COMPETITION AFTER SEPARATION FROM SERVICE

 

9.1          Covenant Not to Solicit Employees.  The Executive
agrees not to solicit the services of any officer or employee of the Bank for
12 months after the Executive’s Separation from Service.

 

9.2          Covenant Not to Compete.  (a) 
Without advance written consent of the Bank, the Executive covenants and agrees
not to compete directly or indirectly with the Bank for 12 months after
Separation from Service, plus any period during which the Executive is in
violation of this covenant not to compete and any period during which the Bank
seeks by litigation to enforce this covenant not to compete.  For purposes of this section —

 

(1)           the term “compete” means

 

(a)           providing financial products or services on behalf of
any financial institution for any person residing in the territory,

 

(b)           assisting (other than through the performance of
ministerial or clerical duties) any financial institution in providing
financial products or services to any person residing in the territory, or

 

(c)           inducing or attempting to induce any person who was a
customer of the Bank at the date of the Executive’s Separation from Service to
seek financial products or services from another financial institution.

 

(2)           the phrase “compete directly or indirectly” means —

 

(a)           acting as a consultant, officer, director, independent
contractor, incorporator, organizer, or employee of any financial institution
in competition with the Bank in the territory, or

 

(b)           ownership of more than 5% of the voting shares of any
financial institution in competition with the Bank in the territory, or

 

(c)           communicating to such financial institution the names
or addresses or any financial information concerning any person who was a
customer of the Bank at the Executive’s Separation from Service.

 

(3)           the term “customer” means any person to whom the Bank
is providing financial products or services on the date of the Executive’s
Separation from Service.

 

15

 

(4)           the term “financial institution” means any bank,
savings association, or bank or savings association holding company, or any
other institution, including a financial institution in organization, the
business of which is or will be engaging in activities that are financial in
nature or incidental to such financial activities as described in section 4(k) of
the Bank Holding Company Act of 1956, other than the Bank or its affiliated
corporations.

 

(5)           “financial product or service” means any product or
service that a financial institution or a financial holding company could offer
by engaging in any activity that is financial in nature or incidental to such a
financial activity under section 4(k) of the Bank Holding Company Act of
1956 and that is offered by the Bank or an affiliate on the date of the Executive’s
Separation from Service, including but not limited to banking activities and
activities that are closely related to and a proper incident to banking.

 

(6)           the term “person” means any individual or individuals,
corporation, partnership, fiduciary or association.

 

(7)           the term “territory” means all of Charleston,
Dorchester, and Berkeley Counties in South Carolina and the area within a
50-mile radius of any full-service banking office of the Bank on the date of
the Executive’s Separation from Service.

 

(b)           If any provision of this section or any word, phrase,
clause, sentence or other portion thereof (including without limitation the
geographical and temporal restrictions contained therein) is held to be
unenforceable or invalid for any reason, the unenforceable or invalid provision
or portion shall be modified or deleted so that the provision, as modified, is
legal and enforceable to the fullest extent permitted under applicable law.

 

9.3          Remedies.  Because of the unique character of the
services to be rendered by the Executive hereunder, the Executive understands
that the Bank would not have an adequate remedy at law for the material breach
or threatened breach by the Executive of any one or more of the Executive’s
covenants set forth in this Article 9. 
Accordingly, the Executive agrees that the Bank’s remedies for a
material breach or threatened breach of this Article 9 include but are not
limited to (x) forfeiture of any money representing accrued salary,
contingent payments, or other fringe benefits due and payable to the Executive,
(y) forfeiture of any unpaid benefits under Article 2 of this
Agreement, and (z) a suit in equity by the Bank to enjoin the Executive
from the breach or threatened breach of such covenants.  The Executive hereby waives the claim or
defense that an adequate remedy at law is available to the Bank and the
Executive agrees not to urge in any such action the claim or defense that an
adequate remedy at law exists.  Nothing
herein shall be construed to prohibit the Bank from pursuing any other remedies
for the breach or threatened breach.

 

9.4          Article 9 Survives Termination But Is Void After a Change in
Control.  The rights and obligations set forth in this Article 9
shall survive termination of this Agreement. 
However, Article 9 shall be null and void if a Change in Control
occurs before Separation from Service.

 

16

 

IN
WITNESS WHEREOF,
the Executive and a duly authorized officer of the Bank have executed this
Salary Continuation Agreement as of the date first written above.

 

	
  EXECUTIVE:

  	
   

  	
  BANK:

  
	
   

  	
   

  	
  Tidelands Bank

  
	
   

  	
   

  	
   

  
	
  /s/ James M. Bedsole

  	
   

  	
  By: 

  	
  /s/ Robert E.
  Coffee, Jr.

  
	
  James M. Bedsole

  	
   

  	
   

  	
  Robert E. Coffee Jr.

  
	
   

  	
   

  	
  Its:

  	
  President and CEO

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  And By: 

  	
  /s/ Alan W. Jackson

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Its:

  	
  Chief Financial Officer

  
						

 

17

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