Amended
Employment Agreement


 


This Amended
Employment Agreement (this “Agreement”) is entered into effective as of


July 25, 2013, by and among First Reliance Bancshares, Inc.,
a South Carolina corporation (the “Corporation”), First Reliance Bank, a bank chartered under South Carolina
law 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”). The Corporation and the Bank
are referred to in this Agreement individually and together as the “Employer.”


 


Whereas,
the Executive is the President and Chief Executive Officer of the Corporation and the Bank, possessing unique skills, knowledge,
and experience relating to their business, and the Executive has made and is expected to continue to make major contributions to
the profitability, growth, and financial strength of the Corporation and affiliates,


 


Whereas,
the Executive and the Employer are parties to a November 24, 2006 Employment Agreement, as amended by the December 3, 2008 First
Amendment of the Employment Agreement, but the Executive and the Employer intend that this Agreement amend and restate in its entirety
the November 24, 2006 Employment Agreement, as amended, and


 


Whereas,
as of the date of this Agreement 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 Corporation 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. The Employer hereby employs the Executive to serve as President and Chief Executive Officer
according to the terms and conditions of this Agreement and for the period stated in section 1.3. The Executive hereby
accepts employment according to the terms and conditions of this Agreement and for the period stated in section 1.3.


 


1.2       
  Duties. As President and Chief Executive Officer, the Executive shall serve under the direction of the
Employer’s board of directors and 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 report directly to the board of directors. 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 board of directors of
each of the Corporation and the Bank, during the term of this Agreement 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. The initial term of employment under this Agreement shall be three
years, commencing November 24, 2006. The term of this Agreement shall automatically be extended at the end of each month for
one additional month unless the Bank’s board of directors determines that the term shall not be extended. If the board
of directors decides not to extend the term, the board shall promptly notify the Executive in writing, but this Agreement
shall nevertheless remain in force until its current term expires. The board’s decision not to extend the term 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 benefits under Articles 4 or 5. References
herein to the term of this Agreement mean the initial term, as the same may be extended. Unless sooner terminated, the term
of this Agreement shall terminate when the Executive attains age 65.


 


1.4          Service on the Board of Directors. The Executive is currently serving as a director of each of the
Corporation and the Bank. The Corporation shall nominate the Executive for election as a director at such times as necessary
so that the Executive will, if elected by stockholders, remain a director of the Corporation throughout the term of this
Agreement. The Executive hereby consents to serving as a director and to being named as a director of the Corporation in
documents filed with the Securities and Exchange Commission. The board of directors of each of the Corporation and the Bank
shall undertake every lawful effort to ensure that the Executive continues throughout the term of his employment to be
elected or reelected as a director of the Bank. The Executive shall be deemed to have resigned as a director of each of the
Corporation and the Bank effective immediately after termination of the Executive’s employment under Article 3 of this
Agreement, regardless of whether the Executive submits a formal, written resignation as director.


 


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 $275,000,
payable in bi-weekly installments or otherwise according to the Employer’s regular pay practices. The Executive’s
salary shall be reviewed annually by the Employer’s board of directors or the board’s Compensation Committee. The
Executive’s salary shall be increased no more frequently than annually to account for cost of living increases. At the
discretion of the Compensation Committee, the Executive’s salary also may be increased beyond the amount necessary to
account for cost of living increases. However, the Executive’s salary shall not be reduced. All compensation under this
Agreement shall be subject to customary withholding taxes and such other employment taxes as are imposed by law. 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. For as long as the Executive is employed by the
Employer the Executive shall be entitled (x) to participate in any and all officer or employee compensation, bonus,
incentive, and benefit plans in effect from time to time, including without limitation plans providing pension, retirement,
medical, dental, disability, and group life benefits and including stock-based compensation, incentive, bonus, or purchase
plans existing on the date of this Agreement or adopted after the date of this Agreement, provided that the Executive
satisfies the eligibility requirements for any such plans or benefits, and (y) to receive any and all other fringe
benefits provided from time to time, including the following fringe benefits –


 




    	 



    	 



    

 


(a)         
 Club dues. The Employer shall pay or cause to be paid the Executive’s initiation and membership assessments and
dues in civic and social clubs of the Executive’s choice. The Executive shall be solely responsible for personal
expenses for use of the civic and clubs.


 


(b)           Reimbursement
of business expenses. The Executive shall be entitled to reimbursement for all reasonable business expenses incurred performing
the 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.


 


(c)           Use
of automobile. The Executive shall have the use of an automobile titled in the Employer’s name for use by the Executive
to carry out the Executive’s duties, the insurance and maintenance expenses of which shall be paid by the Employer. As additional
compensation, the Executive may use such automobile for personal purposes, provided that the Executive renders an accounting of
business and personal use to the Employer in accordance with regulations under the Internal Revenue Code of 1986, as amended.


 


(d)           Long-term
care insurance. The Employer shall purchase and maintain long-term care insurance for the benefit of the Executive, which policy
shall be fully paid no later than the date on which the Executive attains age 65, provided the Executive remains employed by the
Employer to age 65. The long-term care insurance policy shall be owned by the Executive exclusively. If before attaining age 65
the Executive’s employment terminates involuntarily but without Cause, voluntarily but with Good Reason, or because of disability,
the Executive’s right to the long-term care insurance benefit under this section 2.2(d) shall be determined under section
4.5.


 


(e)           Disability
insurance. The Employer shall reimburse the Executive for the Executive’s cost to purchase and maintain disability insurance
coverage. The amount reimbursed by the Employer shall be grossed up to compensate the Executive for federal and state income taxes
imposed as a result of the Employer’s reimbursement of the Executive’s cost. The disability insurance policy shall
be owned by the Executive exclusively.


 


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


 


Article
3


Employment
Termination


 


3.1          Termination
by the Employer. (a) Death or Disability. 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, for twelve months after the Executive’s
death the Employer shall assist the Executive’s family with continuing health care coverage under COBRA substantially identical
to that provided for the Executive before death. 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 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 the Executive’s duties for a period of 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.


 




    	 



    	 



    

 


(b)          Termination
without Cause. With written notice to the Executive 60 days in advance, the Employer may terminate the Executive’s employment
without Cause.


 


(c)          Termination
with Cause. The Employer may terminate the Executive’s employment with Cause. The Executive shall not be deemed to have
been terminated for Cause under this Agreement unless and until there is delivered to the Executive a copy of a resolution duly
adopted at a meeting of the board of directors called and held for such purpose, which resolution shall (x) contain findings
that, in the good faith opinion of the board, the Executive has committed an act constituting Cause, and (y) specify the
particulars thereof. The resolution of the board of directors shall be deemed to have been duly adopted if and only if it is adopted
by the affirmative vote of a majority of the directors of the Employer then in office, excluding the Executive, at a meeting duly
called and held for that purpose. Notice of the meeting and the proposed termination for Cause shall be given to the Executive
a reasonable time before the board’s meeting. The Executive and the Executive’s counsel (if the Executive chooses to
have counsel present) shall have a reasonable opportunity to be heard by the board at the meeting. Nothing in this Agreement limits
the Executive’s or beneficiaries’ right to contest the validity or propriety of the board’s determination of
Cause.


 


(d)          Definition
of Cause. For purposes of this Agreement, “Cause” means any of the following –


 


1)          an
act of fraud, embezzlement, or theft by the Executive in the course of employment,


 


2)          intentional
violation of any law or significant policy of the Employer or an affiliate, which in the Employer’s sole judgement causes
material harm to the Employer or 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 Employer,


 


3)          the
Executive’s gross negligence in the performance of the Executive’s duties,


 


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


 


5)          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 of the Employer,


 


6)          a
breach by the Executive of this Agreement that in the sole judgment of the Employer is a material breach, which breach is not corrected
by the Executive within 10 days after receiving written notice of the breach,


 


7)          removal
of the Executive from office or permanent prohibition of the Executive from participating in the Employer’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),


 




    	 



    	 



    

 


8)          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, or


 


9)          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.


 


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,
including a requirement that the Executive report to a corporate officer or employee instead of reporting directly to the board
of directors,


 


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.


 


Article
4


Compensation
and Benefits After Termination


 


4.1          Cause.
If the Executive’s employment terminates for Cause, the Executive shall receive the Base Salary through the date on which
termination becomes effective and any other benefits to which the Executive may be entitled under the Employer’s benefit
plans and policies in effect on the date of termination.


 




    	 



    	 



    

 


4.2          Termination
by the Executive Other than for Good Reason. If the Executive terminates employment other than for Good Reason, the Executive
shall receive the Base Salary through the date on which termination becomes effective and any other benefits to which the Executive
may be entitled under the Employer’s benefit plans and policies.


 


4.3          Termination
Because of Disability. If the Executive’s employment terminates because of disability, the Executive shall receive Base
Salary through the date on which termination becomes effective, any unpaid bonus or incentive compensation due to the Executive
for the calendar year preceding the calendar year in which termination becomes effective, any payments the Executive is eligible
to receive under any disability insurance program in which the Executive participates, such other benefits to which the Executive
may be entitled under the Employer’s benefit plans, policies, and agreements, and any benefits provided for elsewhere in
this Agreement.


 


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


 




    	 



    	 



    

 


4.5          Post-Termination
Insurance Coverage. (a) If the Employer terminates the Executive’s employment involuntarily but without Cause, if the
Executive’s employment terminates because of disability, or if the Executive voluntarily terminates employment with Good
Reason, 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 a medical and dental insurance coverage benefit consisting of reimbursement by the Employer of
a portion of the Executive’s cost to continue medical insurance coverage under Title X of the Consolidated Omnibus Budget
Reconciliation Act of 1985 (COBRA) [Pub. L. 99-272, 100 Stat. 82]. Regardless of whether it is sufficient to reimburse the Executive’s
entire monthly cost for continued medical insurance coverage under COBRA, the amount of the Employer’s reimbursement under
this section 4.5 shall be equal to the monthly medical insurance premium cost incurred by the Employer on account of the Executive’s
participation in the Employer’s medical and dental insurance plan in the month immediately before the month in which the
Executive’s employment terminated. If providing the medical and dental insurance coverage reimbursement benefit under this
section 4.5(a) would result in the Employer or any of its affiliates breaching the terms of any insurance policy with an applicable
insurer or incurring any penalty or additional tax for failing to comply with any applicable law, instead of receiving the medical
and dental insurance coverage reimbursement benefit the Executive shall be entitled to elect continuation coverage under COBRA
section 4980B(f) and, beginning with the first payroll period after the first day of the seventh month after the month in which
the Executive's employment terminates, the Employer shall pay to the Executive a monthly cash amount equal to the monthly premium
amount the Employer would have paid for the Executive’s medical and dental coverage reimbursement under this section 4.5(a)
had the Executive remained actively employed, less any applicable tax withholdings (each such payment, an “Employer
Payment”). The first Employer Payment shall include the amount that the Executive would have received in the seven-month
period after the date of employment termination had the Executive otherwise received the Employer Payments during the seven-month
period. Any benefit provided by the Employer in accordance with the preceding sentences after employment termination shall not
count toward the medical and dental plan’s obligation to provide continuation coverage under COBRA or any applicable provision
of the Employer’s health plans that provide for continuing coverage for the Executive, and the last day of the post-termination
period in which the Executive is entitled to the benefit under this section 4.5(a) shall be deemed to be the date of the Executive’s
“qualifying event” for purposes of COBRA, provided that if application of this sentence would result in the Employer
or any of its affiliates incurring any penalty or additional tax for failing to comply with any applicable law, this section 4.5(a)
shall be applied without giving effect to this sentence.


 


(b)           If
(x) under the terms of the applicable policy or policies for the insurance benefits specified in section 4.5(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 4.5(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 4.5(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 36 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 4.4(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. Instead of providing the continued long-term care insurance benefit under section 4.5(a) (including income
tax gross up), 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 the long-term care insurance policy (including income tax gross up) until the Executive
attains age 65, (x) if under the terms of the policy it is not possible to continue the Executive’s coverage or (y)
if when employment termination occurs the Executive is a specified employee within the meaning of section 409A of the Internal
Revenue Code of 1986, if the continued long-term care insurance benefit specified in section 4.5(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. The lump-sum payment shall be made 30 days after employment termination or,
if section 4.4(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.


 


(c)           If
the Employer terminates the Executive’s employment involuntarily but without Cause, or if the Executive’s employment
terminates because of Disability, or if the Executive voluntarily terminates employment with Good Reason, the Employer shall continue
or cause to be continued at the Employer’s expense the disability reimbursement and gross-up benefit under section 2.2(c),
and the long-term care insurance benefit under section 2.2(d), in each case as in effect during the two years preceding the date
of the Executive’s termination.


 




    	 



    	 



    

 


(d)           The
medical and disability (including income tax gross up) insurance benefits provided by this section 4.5 shall continue until the
first to occur of (w) the Executive’s return to employment with the Employer or another employer, (x) the Executive’s
attainment of age 65, (y) the Executive’s death, or (z) the end of the term remaining under this Agreement
when the Executive’s employment terminates. The long-term care insurance benefit under section 2.2(d) shall continue until
the policy is fully paid. If continued long-term care insurance benefits under section 2.2(d) constitute taxable income to the
Executive, the Employer shall reimburse the Executive for federal and state income taxes imposed on the Executive that are attributable
to continued maintenance of the long-term care insurance coverage, and the amount reimbursed by the Employer shall be grossed up
to compensate the Executive for federal and state income taxes imposed as a result of the Employer’s reimbursement. Termination
of the benefit under this section 4.5 shall not, however, relieve the Employer of its obligation to make a reimbursement payment
due but not yet paid to the Executive. This section 4.5 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 benefits.


 


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, the Employer shall make or cause
to be made a lump-sum payment to the Executive in an amount in cash equal to three times the Executive’s annual compensation.
For this purpose, annual compensation means (x) the Executive’s Base Salary when the Change in Control occurs plus
(y) any bonus or incentive compensation earned for the calendar year ended immediately before the year in which the Change
in Control occurs, 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. 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 paragraph (a) is payable no later than five business days after the Change in Control occurs. If the Executive receives payment
under section 5.1 the Executive shall not be entitled to any additional severance benefits under section 4.4 of this Agreement.
The Executive shall be entitled to benefits under this paragraph (a) on no more than one occasion.


 


(b)           If
a Change in Control occurs during the term of this Agreement 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. Provided the Executive
is at the time a covered employee within the meaning of Internal Revenue Code section 162(m), 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 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 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.


 


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 the Employer’s 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


 


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


 


Notwithstanding the foregoing, 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, 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          Affiliates’
Confidential Information is Covered; Confidentiality Obligation Survives Termination. For purposes of this Agreement, the term
“affiliate” of the Employer includes 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.


 


6.5          Injunctive
Relief. The Executive acknowledges that it is impossible to measure in money the damages that will accrue to 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.
The confidentiality and remedies provisions of this Article 6 shall be in addition to and shall not be deemed to supersede or restrict,
limit, or impair the Employer’s rights under applicable state or federal statute or regulation dealing with or providing
a remedy for the wrongful disclosure, misuse, or misappropriation of trade secrets or proprietary or confidential information.


 


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 Bank for one year
after the Executive’s employment termination.


 


7.2          Covenant
Not to Compete. (a) The Executive covenants and agrees not to compete directly or indirectly with the Employer for one year
after employment termination. 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 words “directly or indirectly” mean –






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



 


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



 


		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.



 


		4)	the term “financial institution” means any
bank, savings association, or bank or savings association holding company, or any other institution, the business of which is
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 any of 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 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 the area within
a 15-mile radius of any office of the Employer at 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 provisions
hereof, as modified, are legal and enforceable to the fullest extent permitted under applicable law.


 


7.3          Injunctive
and Other Relief. 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 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 severance benefits under sections 4.4 and 4.5 of this Employment Agreement, and (z) a suit in equity by the Employer
to enjoin the Executive from the breach or threatened breach of such covenants. Despite anything to the contrary in the Salary
Continuation Agreement between the Bank and the Executive or in the Endorsement Split Dollar Agreement attached thereto as Addendum
A, if after termination of the Executive’s employment the Executive competes with the Employer in violation of this Article
7, the Employer shall be entitled to withhold all benefits payable under the Salary Continuation Agreement and the Executive shall
be deemed to have forfeited any and all rights to benefits under the Salary Continuation Agreement and under the Endorsement Split
Dollar Agreement. 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 Employer from pursuing any other or additional 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. However, Article 7 shall become null and void effective immediately upon a Change in Control.


 


Article
8


Miscellaneous


 


8.1          Successors
and Assigns. (a) This Agreement is binding on successors. This Agreement shall be binding upon the Employer and any
successor to the Employer, 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 expressly to assume and agree to perform this Agreement in the same manner and to the same extent the Employer would
be required to perform if no such succession had occurred.


 


(b)           This
Agreement is enforceable by the Executive’s heirs. This Agreement will 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 acknowledges that the Executive is 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 Florence County, South Carolina or in the federal court having jurisdiction in Florence, 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 employment of the Executive by the
Employer. Any oral or written statements, representations, agreements, or understandings made or entered into prior to or contemporaneously
with the execution of this Agreement are hereby rescinded, revoked, and rendered null and void by the parties. This Agreement amends
and restates in its entirety the November 24, 2006 Employment Agreement, as amended by the December 3, 2008 First Amendment of
the Employment Agreement. From and after the date of this Agreement the November 24, 2006 Employment Agreement, as amended by the
December 3, 2008 First Amendment of the Employment Agreement, shall be void and of no further 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 such notice, and properly addressed to the Employer if addressed to
the Board of Directors, First Reliance Bancshares, Inc., 2170 West Palmetto Street, Florence, South Carolina 29501.


 


8.5      
   Severability. If there is a conflict between any 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. The captions in this Agreement are solely for convenience. The captions in
no way 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 for in this
Agreement by seeking other employment. Moreover, the amount of any payment provided for in 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 in any manner, 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 validity of this Agreement or any part thereof or the right of any party thereafter to enforce each
and every such provision. No waiver or any 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. It is the Employer’s intention 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. It is the Employer’s intention 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. Notwithstanding 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 such counsel in accordance with
such counsel’s customary practices, up to a maximum aggregate amount of $500,000, 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 under 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
section 8.9 to the contrary however, the Employer 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].


 


8.10    
   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 contrary provision of this Agreement the Executive
will 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 Amended Employment Agreement as of the date first written above.


 


	Executive	 	First Reliance Bank
	 	 	 
	 	 	By:	 
	F.R. Saunders Jr.	 	 
	 	 	Its:	 
	 	 	 
	 	 	First Reliance Bancshares, Inc.
	 	 	 
	 	 	By:	 
	 	 	 
	 	 	Its: