Exhibit 10.6





 


 


Exhibit 10.6


 



EMPLOYMENT
AGREEMENT


 


 


            THIS EMPLOYMENT AGREEMENT (this “Agreement”) is
made as of and effective on the 17th  day of November,
2008 (the “Effective Date”) by and
between Southern First Bank, National Association (the “Employer”), having
its principal office at 100 Verdae Boulevard, Suite 100, Greenville, South
Carolina 29607 and Frederick Gilmer, III (hereinafter called “Employee”), whose
residence address is 8 Ruffian Way, Greenville, South Carolina 29615. 
References herein to the “Company” refer to Southern First Bancshares, Inc.,
the parent company of the Employer.


 


            Employer presently employs Employee as an
Executive Vice President.  Employer desires to provide for the continued
employment of Employee and to make certain changes in Employee’s employment
arrangements which Employer has determined will reinforce and encourage the
continued dedication of Employee to Employer.  Employee is willing to terminate
Employee’s interests and rights under the existing Employment Agreement with
Employer and to continue to serve Employer on the terms and conditions herein
provided.


 


            In consideration of the mutual covenants and
promises herein made, and other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:


 


1.    Employment. 
Employer shall continue to employ Employee, and Employee shall continue to
serve Employer, as an Executive Vice President and in such capacity shall
perform such duties as are consistent with that position, and as Employer from
time to time may direct.   Employee shall have such authority and
responsibilities consistent with Employee’s position as are set forth in
Employer’s Bylaws or assigned by Employer’s Board of Directors (the “Board”),
Employer’s Chief Executive Officer, or Employer’s President from time to time. 
Employee shall devote Employee’s full business time, attention, skill and
efforts to the performance of Employee’s duties hereunder, except during
periods of illness or periods of vacation and leaves of absence consistent with
Employer’s policy.  Such duties shall be performed at Employer’s principal
corporate offices or subsidiary offices as agreed upon by Employer and
Employee.  Employer reserves the right from time to time to extend, curtail or
change the title and duties of Employee.  Employee may devote reasonable
periods to service as a director or advisor to other organizations, to
charitable and community activities, and to managing Employee’s personal
investments; provided that such activities do not materially interfere
with the performance of Employee’s duties hereunder and are not in conflict or
competitive with, or adverse to, the interests of Employer.


 


2.    Term. 
Unless earlier terminated as provided in section 13 below, Employee’s employment
under this Agreement shall commence on the Effective Date and be for a term
ending January 31, 2011 (the “Term”).  At the end of January 2010 and on the
last day of January each year thereafter, the Term shall be extended for an
additional one (1) year so that the remaining Term shall continue to be two (2)
years; provided that Employer or Employee may at any time, by written
notice, fix the Term to a finite term of two (2) years commencing with the year
of the notice.  


 


 










 


 


 


3.    Base
Salary.  For all services rendered by Employee under this Agreement,
Employer shall pay Employee a base salary of $152,500.00 per year (the “Base
Salary”).  The Base Salary shall be reviewed annually by the Board, and may be
increased beginning February 1 of each year, by the Board or a duly appointed
committee thereof, in its sole discretion.  The Base Salary shall be paid in
accordance with Employer’s standard payroll procedures, but in any case, no
less frequently than monthly.


            Notwithstanding anything in this Agreement to
the contrary, any payments to the Employee shall be limited to the extent
required under the United States Treasury Capital Purchase Program (the
"Program") and related regulations in the event that the Employer or
its holding company participates in the Program.  The Employee agrees to such
amendments, agreements, or waivers that may be required by the United States
Treasury or requested by the Employer or its holding company to comply with the
terms of the Program. 


 


4.    Benefits. 



 


(a)        Employee shall be
entitled, to the extent that Employee’s position, title, tenure, salary, age,
health and other qualifications make Employee eligible, to participate in such
pension, profit sharing, bonus, life insurance, hospitalization, major medical,
and other employee benefit plans or programs of Employer currently in existence
on the date hereof or later established that generally are provided to
executive employees of Employer.  Employee’s participation in any such plan or
program shall be subject to the provisions, rules and regulations applicable
thereto.  Any Company stock options or similar awards shall be issued to
Employee at an exercise price per share of not less than the fair market value
per share of the corresponding shares as of the date of grant and the number of
shares subject to such grant shall be fixed on such date.  Any and all bonus
payments made to Employee shall be paid by the earlier of: (i) seventy (70)
days after the previous year end for which the bonus was earned by Employee and
became a payable of Employer or (ii) with the first payroll cycle following the
Company’s press release announcing its previous year’s financial performance. 


 


(b)        At Employer’s election,
Employer shall provide Employee with either an automobile owned or leased by
Employer of a make and model appropriate to Employee’s status, or a $700
monthly automobile allowance, paid in accordance with Employer’s standard
payroll procedures, but in any case, no less frequently than monthly.  If
Employer provides Employee with an automobile instead of a monthly automobile
allowance, Employer shall reimburse Employee for reasonable expenses associated
with the automobile, including, but not limited to, insurance, taxes, mileage,
maintenance, etc., to be paid within sixty (60) days of Employee’s written
notice to Employer of such expenses.  


 


5.    Working
Facilities.  Employee shall be furnished with an office and such other
facilities and services as may be necessary or suitable to Employee’s position
and adequate for the performance of Employee’s duties.


 


6.    Expenses. 
Employee is authorized to incur reasonable expenses for promoting the business
of Employer, including expenses for entertainment, travel and similar items,
but only to the extent that such expenses are allowable deductions to Employer
on its Federal income tax return.  Expenses for which there is a fifty percent
(50%) tax deduction limitation for entertainment, travel and similar items
shall be considered reimbursable expenses.  Employer shall reimburse Employee
for all such expenses within sixty (60) days of Employee’s written notice to
Employer of such expenses.  Employee shall repay to Employer the amounts of any
expenses claimed which, for lack of proper documentation or otherwise, are not
allowed to Employer as deductions for Federal income tax purposes.


 




	
  2

  









 










 


 


7.    Vacations. 
Employee shall be entitled each fiscal year to twenty (20) paid days off, which
shall be granted on a noncumulative basis from year-to-year, as granted by
Employer to employees of similar tenure and compensation rank, pursuant to
Employer’s paid days off policy.  Employer reserves the right to modify this
and any other personnel policy from time to time.


 


8.    Ownership
of Work Product.


 


(a)          
Employee shall diligently disclose to Employer as soon as it is created
or conceived by Employee, and Employer shall own, all Work Product (as defined
below).  To the extent permitted by law, all Work Product shall be considered
work made for hire by Employee and owned by Employer.


 


(b)           
If any of the Work Product may not, by operation of law, be considered
work made for hire by Employee for Employer (or if ownership of all right,
title and interest of the intellectual property rights therein shall not
otherwise vest exclusively in Employer), Employee agrees to assign, and upon
creation thereof automatically assigns, without further consideration, the
ownership of all Work Product to Employer, its successors and assigns.


 


(c)           
Employer, its successors and assigns, shall have the right to obtain and
hold in its or their own name copyrights, registrations, and any other
protection available in the foregoing.


 


(d)           
Employee agrees to perform upon the reasonable request of Employer,
during or after Employee’s employment, such further acts as may be necessary or
desirable to transfer, perfect and defend Employer’s ownership of the Work
Product.  When requested, Employee will:


 


(i)           
Execute, acknowledge and deliver any requested affidavits and documents
of assignment and conveyance;


 


(ii)         
Obtain and aid in the enforcement of copyrights (and, if applicable,
patents) with respect to the Work Product in any countries;


 


(iii)        
Provide testimony in connection with any proceeding affecting the right,
title or interest of Employer in any Work Product; and


 


(iv)        
Perform any other acts deemed necessary or desirable to carry out the
purposes of this Agreement.


 


(e)           
Employer shall reimburse all reasonable out-of-pocket expenses incurred
by Employee at Employer’s request in connection with subsection 8(d) within
sixty (60) days of Employee’s written notice to Employer of such expenses.


 




	
  3

  









 










 


(f)            
For purposes hereof, “Work Product” shall mean all intellectual property
rights, including all Trade Secrets (as defined below), U.S. and international
copyrights, patentable inventions, discoveries and improvements, and other
intellectual property rights, in any programming, documentation, technology or
other work product that relates to the business and interests of Employer and
that Employee conceives, develops, or delivers to Employer at any time during
the Term of Employee’s employment.  “Work Product” shall also include all
intellectual property rights in any programming, documentation, technology or
other work product that is now contained in any of the products or systems
(including development and support systems) of Employer to the extent Employee
conceived, developed or delivered such Work Product to Employer prior to the
date of this Agreement while Employee was engaged as an independent contractor
or employee of Employer.  Employee hereby irrevocably relinquishes for the
benefit of Employer and its assigns any moral rights in the Work Product
recognized by applicable law.


 


9.    Protection
of Trade Secrets and Confidential Information.  


 


(a)           
Through exercise of Employee’s rights and performance of Employee’s
obligations under this Agreement, Employee will be exposed to “Trade Secrets”
and “Confidential Information” (as those terms are defined below).  “Trade
Secrets” shall mean information or data of or about Employer or any Affiliates
(as defined in subsection 26(a)), including, but not limited to, technical or
non-technical data, formulas, patterns, compilations, programs, devices,
methods, techniques, drawings, processes, financial data, financial plans,
product plans, or lists of actual or potential customers, clients,
distributors, or licensees, that: (i) derive economic value, actual or
potential, from not being generally known to, and not being readily
ascertainable by proper means by, other persons who can obtain economic value
from their disclosure or use; and (ii) are the subject of efforts that are
reasonable under the circumstances to maintain their secrecy.  To the extent
that the foregoing definition is inconsistent with the definition of “trade
secret” mandated under applicable law, the latter definition shall govern for
purposes of interpreting Employee’s obligations under this Agreement.  Except
as required to perform Employee’s obligations under this Agreement, or except
with Employer’s prior written permission, Employee shall not use, redistribute,
market, publish, disclose or divulge to any other person or entity any Trade
Secrets of Employer.  Employee’s obligations under this provision shall remain
in force (during and after the Term) for so long as such information or data
shall continue to constitute a Trade Secret under applicable law.  Employee
agrees to cooperate with any and all confidentiality requirements of Employer,
and Employee shall immediately notify Employer of any unauthorized disclosure
or use of any Trade Secrets of which Employee becomes aware.


 


(b)           
Employee agrees to maintain in strict confidence and, except as
necessary to perform Employee’s duties for Employer, not to use or disclose any
Confidential Information at any time, either during the Term of Employee’s
employment or for a period of one (1) year after Employee’s last date of
employment, so long as the pertinent data or information remains Confidential
Information.  “Confidential Information” shall mean any non-public information
of a competitively sensitive or personal nature, other than Trade Secrets,
acquired by Employee during Employee’s employment, relating to Employer or
Employer’s business, operations, customers, suppliers, products, employees,
financial affairs or industrial practices.  Notwithstanding anything herein to
the contrary, no obligation or liability shall accrue hereunder with respect to
any information that is or becomes publicly available without the fault of
Employee.


 


(c)           
Employee will abide by Employer’s policies and regulations, as
established from time to time, for the protection of its Confidential
Information.  Employee acknowledges that all records, files, data, documents,
and the like relating to suppliers, customers, costs, prices, systems, methods,
personnel, technology and other materials relating to Employer or its
Affiliated entities shall be and remain the sole property of Employer and/or
such Affiliated entity.  Employee agrees, upon the request of Employer, and in
any event upon termination of Employee’s employment, to turn over all copies of
all media, records, documentation, etc., pertaining to Employer (together with
a written statement certifying as to Employee’s compliance with the foregoing).


 




	
  4

  









 










 


 


10.   Non-Solicitation
of Customers.  During the Employee’s employment with the Employer and for a
period of one (1) year following termination or expiration of this Agreement,
Employee shall not (except on behalf of or with the prior written consent of
the Employer) directly or indirectly solicit any individual or entity which was
a customer or client of Employer or any of its Affiliates for the purpose of
providing a service or product to such customer or client which is the same
type of service or product offered or provided by Employer or any of its
Affiliates; provided, however, that this restriction shall apply
only to those customers or clients with whom Employee had contact in connection
with services or products provided by Employer or any of its Affiliates within
two (2) years prior to the date of termination of such employment.


 


11.   Non-Solicitation
of Employees.  During the Employee’s employment with the Employer and for a
period of one (1) year following termination or expiration of this Agreement,
Employee shall not, directly or indirectly, on the Employee’s own behalf or in
the service of or on behalf of others, induce or solicit, or attempt to induce
or solicit, for employment purposes or for any type of consulting purposes any
employee of or consultant to the Employer or any of its Affiliates for the
purpose of providing services that are the same or similar to the types of
services offered or engaged in by any employee of or consultant to the Employer
or any of its Affiliates at the time of termination of Employee’s employment
with Employer.  


 


12.   Non-Competition
Agreement.  During Employee’s employment with the Employer and for a period
of one (1) year following termination or expiration of this Agreement, Employee
shall not (without the prior written consent of Employer) compete with Employer
or any of its Affiliates, directly or indirectly, engage in forming, serving as
an organizer, director, officer of, employee or agent, or consultant to, or
acquiring or maintaining more than a one percent (1%) passive investment in, a
depository financial institution or holding company thereof if such depository
institution or holding company has, or upon formation will have, one or more
offices or branches located within thirty (30) miles of any office or branch of
Employer or any of its Affiliates in existence at the time Employee’s
employment with Employer is terminated (the “Territory”).  Notwithstanding the
foregoing, Employee may serve as an officer of or consultant to a depository
institution or holding company thereof even though such institution operates
one or more offices or branches in the Territory, if Employee’s employment does
not directly involve, in whole or in part, the depository financial
institution’s or holding company’s operations in the Territory.  


 


13.   Termination.


 


(a)           
Employee’s employment under this Agreement may be terminated prior to
the end of the Term only as follows:


 


(i)           
upon the death of Employee;


 


(ii)         
by Employer upon the Disability (as defined in subsection 26(d)) of
Employee for a period of one hundred and eighty (180) days;


 


(iii)        
by Employer for Cause (as defined in subsection 26(b)) upon delivery of
a Notice of Termination (as defined in subsection 26(g)) to Employee;


 


(iv)        
by Employer without Cause upon delivery of a Notice of Termination to
Employee;


 




	
  5

  









 










 


 


(v)         
by Employee for Good Reason (as defined in subsection 26(e)) upon
delivery of a Notice of Termination to the Employer within a ninety (90) day
period beginning on the thirtieth (30th) day after the occurrence of
a Change in Control (as defined in subsection 26(c)) or within a ninety (90)
day period beginning on the one (1) year anniversary of the occurrence of a
Change in Control; or


 


(vi)        
by Employee upon delivery of a Notice of Termination to Employer.


 


(b)           
If Employee’s employment is terminated because of the Employee’s death,
Employer shall pay Employee’s estate: 


                        


(i)         any
sums due Employee as Base Salary and/or reimbursement of expenses through the
end of the month during which death occurred, paid in accordance with
Employer’s standard payroll procedures, but in any case, no less frequently
than monthly; and 


 


(ii)        any
bonus earned or accrued through the date of death.  Any bonus for previous
years which was not yet paid will be paid pursuant to the terms as set forth in
section 4(a).  Any bonus that is earned in the year of death will be paid on
the earlier of: (i) seventy (70) days after the year end in which the Employee
died or (ii) with the first payroll cycle following the Company’s press release
announcing its financial performance for the year in which the Employee died. 
To the extent that the bonus is performance-based, the amount of the bonus will
be calculated by taking into account the performance of the Employer for the
entire year and prorating this through the date of Employee’s death.  


            


(c)           
During the period of any Disability leading up to the termination of
Employee’s employment as a result of the Disability, Employer shall:


 


(i)         continue
to pay the Employee’s full Base Salary at the rate then in effect and all
perquisites and other benefits (other than any bonus) in accordance with
Employer’s standard payroll procedures, but in any case, no less frequently
than monthly, until Employee becomes eligible for benefits under any long-term
disability plan or insurance program maintained by Employer; provided
that the amount of any such payments to Employee shall be reduced by the sum of
the amounts, if any, payable to Employee for the same period under any disability
benefit or pension plan covering the Employee; and


 


(ii)        pay
Employee any bonus earned or accrued through the date of Disability.  Any bonus
for previous years which was not yet paid will be paid pursuant to the terms as
set forth in section 4(a).  Any bonus that is earned in the year of Disability
will be paid on the earlier of: (i) seventy (70) days after the year end in
which Employee became Disabled or (ii) with the first payroll cycle following
the Company’s press release announcing its financial performance for the year
in which the Employee became Disabled.  


 


(d)        If Employee’s
employment is terminated for Cause, Employee shall receive only any sums due
Employee as Base Salary and/or reimbursement of expenses through the date of
termination, paid in accordance with Employer’s standard payroll procedures,
but in any case, no less frequently than monthly. 


 




	
  6

  









 










 


 


(e)        If Employee’s
employment is terminated by Employer without Cause, beginning on the date that
is six (6) months and one (1) day following the date of the Employee’s
termination, and continuing on the first day of the month for the next twelve
(12) months, the Employer shall pay to the Employee severance compensation in
cash in an amount equal to one hundred percent (100%) of the Employee’s Base
Salary at the date of termination.  Employer shall also pay Employee any bonus
earned or accrued through the date of termination.  Any bonus for previous
years which was not yet paid will be paid in a lump sum on the date that is six
(6) months and one (1) day following the date of the Employee’s termination. 
Any bonus that is earned in the year of the Employee’s termination will be paid
on the later of: (i) the date that is six (6) months and one (1) day following
the date of the Employee’s termination or (ii) with the first payroll cycle
following the Company’s press release announcing its financial performance for
the year of the Employee’s termination.  The restrictive covenants contained in
sections 10, 11 and 12 shall not apply to Employee. 


 


(f)        If Employee’s
employment is terminated by Employee for Good Reason, in addition to other
rights and remedies available in law or equity, Employee shall be entitled to
the following:


 


(i)         Employer
shall pay Employee, beginning on the date that is six (6) months and one (1)
day following the date of the Employee’s termination, and continuing on the
first day of the month for the next twelve (12) months, severance compensation
in cash in an amount equal to one hundred percent (100%) of the Employee’s Base
Salary at the date of termination.  Employer shall also pay Employee any bonus
earned or accrued through the date of termination.  Any bonus for previous
years which was not yet paid will be paid in a lump sum on the date that is six
(6) months and one (1) day following the date of the Employee’s termination. 
Any bonus that is earned in the year of the Employee’s termination will be paid
on the later of: (i) the date that is six (6) months and one (1) day following
the date of the Employee’s termination or (ii) with the first payroll cycle
following the Company’s press release announcing its financial performance for
the year of the Employee’s termination;


 




	
  7

  









 










 


 


(ii)        for
the period from the date of termination through the date that Employee attains
the age of sixty-five (65) years (the “Continuation Period”), Employer shall at
its expense continue on behalf of Employee and Employee’s spouse, dependents
and beneficiaries the life insurance, disability, medical, dental, and
hospitalization benefits provided (x) to Employee at any time during the
ninety (90) day period prior to the Change in Control or at any time thereafter
or (y) to other similarly situated executives who continue in the employ
of Employer during the Continuation Period.  Such coverage and benefits (including
deductibles and costs) shall be no less favorable to Employee, Employee’s
spouse, dependents and beneficiaries than the most favorable of such coverages
and benefits during any of the periods referred to above.  Employer’s
obligation hereunder with respect to the foregoing benefits shall be limited to
the extent that Employee obtains any such benefits pursuant to a subsequent
employer’s benefit plans, in which case Employer may reduce the coverage of any
benefits it is required to provide Employee hereunder as long as the aggregate
coverages and benefits of the combined benefit plans is no less favorable to
Employee than the coverages and benefits required to be provided hereunder. 
This subsection (ii) shall not be interpreted so as to limit any benefits to
which Employee, Employee’s spouse, dependents or beneficiaries may be entitled
under any of Employer’s employee benefit plans, programs, or practices
following Employee’s termination of employment, including, without limitation,
retiree medical and life insurance benefits;


 


(iii)       the
restrictions on any outstanding incentive awards (including restricted stock)
granted to Employee under the Company’s or the Employer’s long-term equity
incentive program or any other incentive plan or arrangement shall lapse and
become one hundred percent (100%) vested and any Employee election rights
thereto must be exercised contemporaneously with the Change in Control;


 


(iv)       all
stock options and stock appreciation rights granted to Employee shall become
immediately exercisable and shall become one hundred percent (100%) vested and
must be exercised, if exercised, contemporaneously with the Change in Control;


 


(v)        all
performance units granted to Employee shall become one hundred percent (100%)
vested and any compensation associated with such units must be paid
contemporaneously with the Change in Control; and 


 


(vi)       the
restrictive covenants contained in sections 10, 11 and 12 shall not apply to
Employee.


 


(g)        If Employee’s
employment is terminated by Employee without Good Reason, Employee shall
receive only any sums due Employee as Base Salary and/or reimbursement of
expenses through the date of termination, paid in accordance with Employer’s
standard payroll procedures, but in any case, no less frequently than monthly. 


 


(h)        With the exceptions of
the provisions of this section 13, and the express terms of any benefit plan
under which Employee is a participant, it is agreed that, upon Employee’s
Termination of Employment, Employer shall have no obligation to Employee for,
and Employee waives and relinquishes, any further compensation or benefits
(exclusive of COBRA benefits).  Unless otherwise stated in this section 13, the
effect of termination on any outstanding incentive awards, stock options, stock
appreciation rights, performance units, or other incentives shall be governed
by the terms of the applicable benefit or incentive plan and/or the agreements
governing such incentives.  At the time of Termination of Employment, Employer
and Employee shall enter into a mutually satisfactory form of release
acknowledging such remaining obligations and discharging both parties, as well
as Employer’s officers, directors and employees with respect to their actions
for or on behalf of Employer, from any other claims or obligations arising out
of or in connection with Employee’s employment by Employer, including the
circumstances of such termination.


 




	
  8

  









 










 


 


(i)         The parties intend
that the severance payments and other compensation provided for herein are
reasonable compensation for Employee’s services to Employer and shall not
constitute “excess parachute payments” within the meaning of Section 280G of
the Internal Revenue Code of 1986, as amended (the “I.R.C.”), and any
regulations thereunder.  In the event that Employer’s independent accountants
acting as auditors for Employer on the date of a Change in Control determine
that the payments provided for herein constitute “excess parachute payments,”
then the compensation payable hereunder shall be increased, on a tax gross-up
basis, so as to reimburse Employee for the tax payable by Employee, pursuant to
Section 4999 of the I.R.C., on such “excess parachute payments,” taking into
account all taxes payable by Employee with respect to such tax gross-up
payments hereunder, so that Employee shall be, after payment of all taxes, in
the same financial position as if no taxes under Section 4999 of I.R.C. had
been imposed upon Employee.


 


14.   Oral
Modification Not Binding.  This Agreement supersedes all prior agreements
and understandings between the parties and may not be changed or terminated
orally, and no change or attempted waiver of the provisions hereof shall be
binding unless in writing and signed by the party against whom the same is
sought to be enforced; provided, however, that Employee’s compensation
may be increased at any time by Employer without in any way affecting any of
the other terms and conditions of this Agreement, which in all other respects
shall remain in full force and effect.  


 


15.   Governing Law. 
This Agreement has been entered into in the State of South Carolina and shall
be governed by the laws of such State without giving effect to the conflict of
laws principles thereof.  Any action brought by any party to this Agreement
shall be brought and maintained in a court of competent jurisdiction in the
State of South Carolina.


 


16.   Remedies for
Breach; Non-Waiver.  Employee recognizes and agrees that a breach by
Employee of any covenant contained in this Agreement would cause immeasurable
and irreparable harm to Employer.  In the event of a breach or threatened
breach of any covenant contained herein, Employer shall be entitled to
temporary and permanent injunctive relief, restraining Employee from violating
or threatening to violate any covenant contained herein, as well as all costs
and fees incurred by Employer, including attorneys’ fees, as a result of
Employee’s breach or threatened breach of the covenant.  Employer and Employee
agree that the relief described herein is in addition to such other and further
relief as may be available to Employer at equity or by law.  Nothing herein
shall be construed as prohibiting Employer from pursuing any other remedies
available to it for such breach of threatened breach, including the recovery of
damages from Employee.  Failure of the Employer to enforce any of the
provisions of this Agreement or any rights with respect thereto shall in no way
be considered a waiver of such provisions or rights or in any way otherwise
affect the validity of this Agreement.


 


17.   Consideration. 
Employee acknowledges and agrees that valid consideration has been given to
Employee by Employer in return for the promises of Employee set forth herein.


 


18.   Covenants are
Independent.  The covenants on the part of Employee contained herein shall
each be construed as agreements independent of each other and of any other
provisions in this Agreement and the unenforceability of one shall not affect
the enforceability of the remaining covenants.


 


19.   Severability
and Substitution of Valid Provisions.  To the extent that any provision or
language of this Agreement is deemed unenforceable, by virtue of the scope of
the business activity prohibited or the length of time the activity is
prohibited, Employer and Employee agree that this Agreement shall be enforced
to the fullest extent permissible under the laws and public policies of the
State of South Carolina.


 


20.   Extension of
Periods.  Each of the time periods described in this Agreement shall be
automatically extended by any length of time during which Employee is in breach
of the corresponding covenant contained herein.  The provisions of this
Agreement shall continue in full force and effect throughout the duration of
the extended periods.


 




	
  9

  









 










 


 


21.   Reasonable
Restraint.  It is agreed by the parties that the foregoing covenants in
this Agreement are necessary for the legitimate business interests of Employer
and impose a reasonable restraint on Employee in light of the activities and
business of Employer on the date of the execution of this Agreement.


 


22.   Withholding of
Taxes.  Employer may withhold from any amounts payable to Employee under
this Agreement all federal, state, city or other taxes and withholdings as
shall be required pursuant to any applicable law, rule or regulation.


 


23.   Notices. 
Any notice required or permitted to be given under this Agreement shall be
sufficient if given in writing and either personally delivered or sent by
registered or certified mail to Employee’s residence in the case of Employee or
to its principal office in the case of Employer.


 


24.   Assignment. 
The rights and obligations of the parties to this Agreement shall inure to the
benefit of and shall be binding upon the successors and assigns of Employer. 
This Agreement shall not be terminated by any merger or consolidation whether
or not the Employer or the Company is the consolidated or surviving corporation
or by transfer of all or substantially all of the assets of the Employer or the
Company to another corporation if there is a surviving or resulting corporation
in such transfer.


 


25.   Severability.
It is not the intent of any party hereto to violate any public policy of any
jurisdiction in which this Agreement may be enforced.  If any provision of this
Agreement or the application of any provision hereof to any person or
circumstances is held invalid, unenforceable or otherwise unlawful, the
remainder of this Agreement and the application of such provision to any other
person or circumstances shall not be affected.  In addition, the applicable
provision shall be reformed to the extent (and only to the extent) necessary to
make it valid, enforceable and legal.


 


26.   Certain
Definitions. 


 


(a)        “Affiliate”
shall mean any business entity controlled by the Employer or the Company,
controlling or under common control with the Employer or the Company.


                        


(b)        “Cause”
shall consist of any of: 


 


(i)         the
commission by Employee of a willful act (including, without limitation, a
dishonest or fraudulent act) or a grossly negligent act, or the willful or
grossly negligent omission to act by Employee, which is intended to cause, causes
or is reasonably likely to cause material harm to Employer (including harm to
its business reputation); 


 


(ii)        the
indictment of Employee for the commission or perpetration by Employee of any
felony or any crime involving dishonesty, moral turpitude or fraud; 


 


(iii)       the
material breach by Employee of this Agreement that, if susceptible of cure,
remains uncured thirty (30) days following written notice to Employee of such
breach; 


 




	
  10

  









 










 


 


(iv)       the
receipt of any form of notice, written or otherwise, that any regulatory agency
having jurisdiction over Employer intends to institute any form of formal or
informal (e.g., a memorandum of understanding which relates to
Employee’s performance) regulatory action against Employee or Employer (provided
that the Board determines in good faith, with Employee abstaining from
participating in the consideration of and vote on the matter, that the subject
matter of such action involves acts or omissions by or under the supervision of
Employee or that termination of Employee would materially advance Employer’s
compliance with the purpose of the action or would materially assist Employer
in avoiding or reducing the restrictions or adverse effects to Employer related
to the regulatory action); 


 


(v)        the
exhibition by Employee of a standard of behavior within the scope of Employee’s
employment that is materially disruptive to the orderly conduct of Employer’s
business operations (including, without limitation, substance abuse or sexual
misconduct) to a level which, in the Board’s good faith and reasonable
judgment, with Employee abstaining from participating in the consideration of
and vote on the matter, is materially detrimental to Employer’s best interest,
that, if susceptible of cure remains uncured ten (10) days following written
notice to Employee of such specific inappropriate behavior; or 


 


(vi)       the
failure of Employee to devote Employee’s full business time and attention to
Employee’s employment as provided under this Agreement that, if susceptible of
cure, remains uncured thirty (30) days following written notice to Employee of
such failure.


 


(c)        “Change
in Control” shall mean the occurrence during the Term of any of the
following events, unless such event is a result of a Non-Control Transaction:


 


 (i)         the
individuals who, as of the date of this Agreement, are members of the Board of
Directors of the Company (the “Incumbent Board”) cease for any reason to
constitute at least fifty percent (50%) of the Board of Directors of the
Company; provided, however, that if the election, or nomination
for election by the Company’s shareholders, of any new director was approved in
advance by a vote of at least fifty percent (50%) of the Incumbent Board, such
new director shall, for purposes of this Agreement, be considered as a member
of the Incumbent Board; provided, further, that no individual
shall be considered a member of the Incumbent Board if such individual
initially assumed office as a result of either an actual or threatened election
contest, or other actual or threatened solicitation of proxies or consents by
or on behalf of any person other than the Board of Directors of the Company,
including by reason of any agreement intended to avoid or settle any election
contest or proxy contest;


 


(ii)        an
acquisition (other than directly from the Company) of any voting securities of
the Company (the “Voting Securities”) by any “Person” (as the term “person” is
used for purposes of Section 13(d) or 14(d) of the Securities Exchange Act of
1934 (the “Exchange Act”)) immediately after which such Person has “Beneficial
Ownership” (within the meaning of Rule 13d-3 promulgated under the Exchange
Act) of twenty percent (20%) or more of the combined voting power of the
Company’s then outstanding Voting Securities; provided, however,
that in determining whether a Change in Control has occurred, Voting Securities
which are acquired in a Non-Control Transaction shall not constitute an
acquisition which would cause a Change in Control;  


 




	
  11

  









 










 






(iii)       consummation
of: (a) a merger, consolidation, or reorganization involving the Company; (b) a
complete liquidation or dissolution of the Company; or (c) the sale or other
disposition of all or substantially all of the assets of the Company to any
Person (other than a transfer to a subsidiary); or


 


(iv)       a
notice of an application is filed with the South Carolina Board of Financial
Institutions, the Office of Comptroller of the Currency (the “OCC”) or the
Federal Reserve Board or any other bank or thrift regulatory approval (or
notice of no disapproval) is granted by the Federal Reserve, South Carolina
Board of Financial Institutions, the OCC, the Federal Deposit Insurance
Corporation, or any other regulatory authority for permission to acquire
control of the Company or any of its banking subsidiaries; provided, however,
that if the application is filed in connection with a transaction which has
been approved by the Board of Directors of the Company, then the Change in
Control shall not be deemed to occur until consummation of the transaction.


 


(d)          “Disability”
or “Disabled” shall mean as defined by Treasury Regulation       §
1.409A-3(i)(4).             


 


(e)          “Good
Reason” shall mean the occurrence after a Change in Control of any of the
events or conditions described in subsections (i) through (vii) hereof:


 


(i)           
a change in the Employee’s status, title, position or responsibilities
(including reporting responsibilities) which, in the Employee’s reasonable
judgment, represents an adverse change from Employee’s status, title, position
or responsibilities as in effect at any time within ninety (90) days preceding
the date of a Change in Control or at any time thereafter; the assignment to
the Employee of any duties or responsibilities which, in the Employee’s
reasonable judgment, are inconsistent with Employee’s status, title, position
or responsibilities as in effect at any time within ninety (90) days preceding
the date of a Change in Control or at any time thereafter; any removal of the
Employee from or failure to reappoint or reelect Employee to any of such
offices or positions, except in connection with the termination of Employee’s
employment for Disability or Cause, as a result of Employee’s death, or by the
Employee other than for Good Reason, or any other change in condition or
circumstances that in the Employee’s reasonable judgment makes it materially
more difficult for the Employee to carry out the duties and responsibilities of
the Employee’s office than existed at any time within ninety (90) days
preceding the date of Change in Control or at any time thereafter;


 


(ii)         
a reduction in the Employee’s Base Salary or any failure to pay the
Employee any compensation or benefits to which Employee is entitled within five
(5) days of the date due;


 


(iii)        
 the Employer’s requiring the Employee to be based at any place outside
a thirty (30) - mile radius from the executive offices occupied by the Employee
immediately prior to the Change in Control, except for reasonably required
travel on the Employer’s business which is not materially greater than such
travel requirements prior to the Change in Control;


 




	
  12

  









 










 


(iv)        
 the failure by the Employer to (A) continue in effect (without
reduction in benefit level and/or reward opportunities) any material
compensation or employee benefit plan in which the Employee was participating
at any time within ninety (90) days preceding the date of a Change in Control
or at any time thereafter, unless such plan is replaced with a plan that
provides substantially equivalent compensation or benefits to the Employee, or
(B) provide the Employee with compensation and benefits, in the aggregate, at
least equal (in terms of benefit levels and/or reward opportunities) to those
provided for under each other employee benefit plan, program and practice in
which the Employee was participating at any time within ninety (90) days preceding
the date of a Change in Control or at any time thereafter;


 


(v)         
the insolvency or the filing (by any party, including the Company or the
Employer) of a petition for bankruptcy of the Company or the Employer, which
petition is not dismissed within sixty (60) days;


 


(vi)        
 any material breach by the Employer of any material provision of this
Agreement; or


 


(vii)       
any purported termination of the Employee’s employment for Cause by the
Employer which does not comply with the terms of this Agreement.


 


Any event or
condition described in clause (i) through (vii) above which occurs prior to a
Change in Control but which the Employee reasonably demonstrates (A) was at the
request of a third party, or (B) otherwise arose in connection with, or in
anticipation of, a Change in Control which actually occurs, shall constitute
Good Reason for purposes of this Agreement, notwithstanding that it occurred
prior to the Change in Control.  Employee’s right to terminate Employee’s
employment for Good Reason shall not be affected by Employee’s incapacity due
to physical or mental illness.


 


(f)        “Non-Control
Transaction” shall mean a transaction described below:


 


            (i)         the
shareholders of the Company, immediately before such merger, consolidation or
reorganization own, directly or indirectly, immediately following such merger,
consolidation or reorganization, at least fifty percent (50%) of the combined
voting power of the outstanding voting securities of the corporation resulting
from such merger, consolidation or reorganization (the “Surviving Corporation”)
in substantially the same proportion as their ownership of the Voting
Securities immediately before such merger, consolidation or reorganization; and



 


            (ii)        immediately
following such merger, consolidation or reorganization, the number of directors
on the board of directors of the Surviving Corporation who were members of the
Incumbent Board shall at least equal the number of directors who were
affiliated with or appointed by the other party to the merger, consolidation or
reorganization.


 


(g)        “Notice
of Termination” shall mean a written notice of termination from one party
to the other which specifies an effective date of termination, indicates the
specific termination provision in this Agreement relied upon, and, in the case
of a termination for Good Reason or for Cause, sets forth in reasonable detail
the facts and circumstances claimed to provide a basis for termination of
Employee’s employment under the provision so indicated.

 




	
  13

  









 










 


 


(h)        “Terminate”,
“terminated”, “termination”, or “Termination of Employment”
shall mean separation from service as defined by Treasury Regulation §
1.409A-1(h).


 


27.   Entire
Agreement.  This Agreement supersedes any other agreements, oral or
written, between the parties with respect to the subject matter hereof, and
contains all of the agreements and understandings between the parties with
respect to the employment of Employee by Employer.  Any waiver or modification
of any term of this Agreement shall be effective only if it is set forth in
writing signed by all parties hereto.


 


28.   Counterparts. 
This Agreement may be executed in one or more counterparts, each of which shall
be deemed to be an original but all of which together will constitute one and
the same agreement.


 




	
  [Signatures appear on the following page.] 

	 

	14

  









 










 


            IN WITNESS WHEREOF, the parties hereto have
executed this Agreement as of the Effective Date.


 


                                                                        EMPLOYER:


 


                                                                        SOUTHERN
FIRST BANK, 


NATIONAL
ASSOCIATION


 


 


 


[CORPORATE SEAL]                                     By:       /s/James
B. Orders, III                        


                                                                            
Name: James B. Orders, III


Attest:                                                                  
Title: Chairman of the Board


 


 


                                                


Secretary


 


                                                                        


            


                                                                        EMPLOYEE:


 


 


 


                                                                         /s/
Frederick Gilmer, III         


                                                                        Frederick
Gilmer, III


 


 


 


 




	
  15