First Reliance Bank
First Amendment of the
Salary Continuation Agreement

This First Amendment of the Salary Continuation Agreement (this “Amendment”) is
entered into as of this       day of                  , 2008, by and between
First Reliance Bank, a South Carolina-chartered bank (the “Bank”), and Paul C.
Saunders, its Senior Vice President (the “Executive”).

Whereas, the Executive and the Bank entered into a Salary Continuation Agreement
dated as of November 24, 2006 (the “SERP”), and

Whereas, the Executive and the Bank desire now to amend the SERP 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 and the Bank hereby agree as follows.

1.           Amended definition of Change in Control.  The definition of the
term “Change in Control” in section 1.4 shall be replaced by the following
revised section 1.4 definition –

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 First Reliance
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 First Reliance Bancshares, Inc. stock constituting more than 50% of
the total fair market value or total voting power of First Reliance 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 First
Reliance Bancshares, Inc. stock possessing 30% or more of the total voting power
of First Reliance Bancshares, Inc., or (y) a majority of First Reliance
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 First Reliance 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 First Reliance 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 First Reliance 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 First Reliance Bancshares, Inc.’s assets immediately
before the acquisition or acquisitions.  For this purpose, gross fair market
value means the value of First Reliance Bancshares, Inc.’s assets, or the value
of the assets being disposed of, determined without regard to any liabilities
associated with the assets.

2.           Amended definition of Separation from Service.  The definition of
the term “Separation from Service” in section 1.13 shall be replaced by the
following revised section 1.13 definition –
 
 
 

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1.13           “Separation from Service” means separation from service 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 termination for any reason of 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, 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.

3.           Revision of section 2.5.  Section 2.5 provides that the entire
remaining SERP benefit shall be paid in a single lump sum after a Change in
Control if the Change in Control occurs while the Executive is receiving SERP
benefits or if the Executive has separated from service and is awaiting
commencement of benefit payments at Normal Retirement Age.  To clarify that a
six-month payment delay could potentially apply because of section 409A, section
2.5 shall be replaced by the following revised section 2.5 –

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 within three days
after 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 third day
after 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.

4.           The SERP remains in full force and effect.  As amended by this
Amendment, the SERP shall remain in full force and effect.

In Witness Whereof, the Executive and a duly authorized officer of the Bank have
executed this Amendment of the Salary Continuation Agreement as of the date
first written above.

Executive:
 
Bank:
   
First Reliance Bank
           
By:
 
Paul C. Saunders
   
F.R. Saunders Jr.
   
Its:
President and CEO
           
And By:
       
Leonard Hoogenboom
   
Its:
Chairman of the Board

 
 
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