First
Amendment of the
Employment
Agreement
This
First Amendment of the
Employment Agreement (this “Amendment”) is
entered into as of this day
of
, 2008, by and among First Reliance Bancshares, Inc., a
South Carolina corporation (the “Corporation”), First
Reliance Bank, a South Carolina-chartered bank and a wholly owned
subsidiary of the Corporation (the “Bank”),
and
F.R. Saunders,
Jr., President and Chief Executive Officer of the Corporation and
the Bank (the “Executive”).
Whereas
, the Corporation and the Bank
entered into an Employment Agreement dated as of November 24, 2006
with the Executive, and
Whereas
, the Executive, the Corporation,
and the Bank desire now to amend the Employment Agreement to ensure
that it complies in form and in operation with Internal Revenue
Code section 409A and the rules and regulations of the Internal
Revenue Service promulgated thereunder.
Now
Therefore , in
consideration of these premises and other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the Executive, the Corporation, and the Bank hereby
agree as follows.
1
.
Deletion of the indemnification provision of section
2.5 . To ensure that the Employment Agreement is
consistent with South Carolina law governing indemnification of
corporate officers, section 2.5 of the November 24, 2006 Employment
Agreement, captioned “Indemnification and Insurance,”
is deleted.
2
.
Amended definition of Good Reason . The
definition of the term “Good Reason” in section 3.2 is
replaced by the following revised section 3.2 –
3.2
Voluntary Termination with Good Reason . With
advance written notice to the Employer as provided in clause (
y ), 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
sections 4.4 and 4.5 of this Agreement. For purposes of
this Agreement a voluntary termination by the Executive shall be
considered a voluntary termination with Good Reason if the
conditions stated in both clauses ( x ) and ( y ) are
satisfied –
( x
) a
voluntary termination by the Executive shall 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,
2) a
material diminution of the Executive’s authority, duties, or
responsibilities,
3) a
material diminution in the authority, duties, or responsibilities
of the supervisor to whom the Executive is required to
report,
4) a
material diminution in the budget over which the Executive retains
authority,
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.
( y
) the
Executive must give notice to the Employer of the existence of one
or more of the conditions described in clause ( x ) 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 clause ( x ) must occur within 24
months after the initial existence of the condition.
3
.
Deletion of the notice provision in section 3.3
. Because notice of involuntary termination by the
Employer is governed by section 3.1 and notice of voluntary
termination by the Executive is governed by revised section 3.2,
section 3.3 of the Employment Agreement, captioned
“Notice,” is no longer necessary and is
deleted.
4
.
Cash severance benefits under section 4.4
. To ensure that cash severance benefits payable after
termination without Cause or voluntary termination with Good Reason
are exempt from the requirement of section 409A that
separation-from-service benefits payable to a specified employee,
as defined in section 409A, be delayed for at least six months,
section 4.4 is replaced by the following revised section 4.4,
providing that cash severance benefits shall be paid in a single
lump sum rather than in installments –
4.4
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 4.4(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 for the unexpired term
of the Agreement (the Executive’s monthly salary multiplied
by the number of whole months remaining in the term of the
Agreement), without discount for the time value of money, plus (
y ) the bonus earned for the calendar year ended immediately
before the year in which employment termination
occurs. The Employer and the Executive acknowledge and
agree that benefits under this section 4.4 shall not be payable if
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
4.4(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 4.4(a) shall
be paid to the Executive in a single lump sum on the first day of
the seventh month after the month i
