Document:

Prepared by R.R. Donnelley Financial -- Videoconferencing Services Agreement

  
 Exhibit 10.42 
  
 Portions of this exhibit marked with an “*” have been omitted and filed separately with the Securities & Exchange Commission pursuant to a request for confidential treatment 
  
 ACT Videoconferencing, Inc. 
 100 Minuteman Road 
 Andover, MA 01810 
  
 

 
  
 VIDEOCONFERENCE SERVICES AGREEMENT 
  

This Agreement is made between ACT Videoconferencing, Inc. (“ACT Videoconferencing”), with its principal place of business at 100 Minuteman Road, Andover, MA 01810 and Bristol-Myers Squibb Company
(“Customer”), with its principal place of business at 345 Park Avenue NY, NY, on behalf of its subsidiaries, affiliates and divisions. 
  
 “ACT Videoconferencing and Customer agree that the following terms and conditions will govern Statements of Work for certain services related to videoconferencing, which may include, but are not limited to: certain services related to
videoconferencing which may include, but are not limited to: videoconference services, educational services, custom solutions, equipment/network installation, and related consulting services (“Services”) ordered pursuant to such Statement
of Work. The parties agree that in order for any videoconferencing services to be performed by ACT Videoconferencing and received by Customer, the parties must first execute a Statement of Work specifying in detail the services to be performed, the
price to be paid, and any other required information.” 
  
 NOW, THEREFORE, in consideration of the covenants herein contained and other good and
valuable consideration, the parties agree as follows: 
  
 1. SCOPE OF AGREEMENT. 
  
 1.1 This Agreement sets forth the terms and conditions governing ACT Videoconferencing’s performance and delivery of the Services described in each Statement of Work (“SOW”). An SOW will be executed by
the parties each time ACT Videoconferencing provides Services to Customer (“Project”) and incorporated into and made a part of this Agreement. Each SOW shall contain, at a minimum, the Completion Criteria as defined in Section 8, cure
periods and milestones payments, if applicable. 
  
 1.2 Customer acknowledges and agrees that this Agreement does not eliminate the need for any purchase
agreement, license, or similar document between ACT Videoconferencing and the Customer for the purpose of purchasing ACT Videoconferencing products or maintenance services. 
  
 2. FEES AND PAYMENT. 
  
 2.1 Customer agrees to pay ACT Videoconferencing Service fees in US Dollars in accordance
with the SOW. The fees hereunder do not include federal, state or local excise, sales, value-added, use and other taxes now or hereafter levied or imposed on the Services provided under this Agreement. Customer shall pay such taxes in full, provide
to ACT Videoconferencing an acceptable tax exemption certificate, or reimburse ACT Videoconferencing in full for any such taxes paid by ACT Videoconferencing. ACT Videoconferencing shall be responsible for payment of taxes on ACT
Videoconferencing’s net income. 
  
 2.2 Invoices are due and payable fifty (50) days following Customer’s receipt thereof and Customer will
receive a 5% discount on all invoices paid in 30 days or less. 
  
 3. ACT VIDEOCONFERENCING PERSONNEL POLICIES. 
  
 3.1 ACT Videoconferencing reserves the right to (a) determine the assignment of ACT Videoconferencing personnel for performance under any SOW, (b) replace or reassign such
personnel, or (c) subcontract with qualified third parties for all or part of the Services. No person performing Services on behalf of ACT Videoconferencing shall be restricted or prevented from performing similar services for others.
Notwithstanding the foregoing, no permitted subcontracting shall relieve ACT Videoconferencing of its responsibility and liability for any work performed by its subcontractor. 
  
 3.2 ACT Videoconferencing personnel performing long-term Services at Customer’s site may spend days off-site, at ACT Videoconferencing’s discretion. *** 
  

3.3 If Services are performed at Customer's site, ACT Videoconferencing personnel will conform to Customer's reasonable work hours and security procedures. 
  
 3.4 ACT Videoconferencing shall be responsible for drug testing and background checks to insure that its employees do not abuse illegal substances, have no outstanding felony
convictions, and have no history of crimes against property, crimes of violence or recurring drug abuse or dependency. 
  
 4. CUSTOMER’S
OBLIGATIONS. 
  
 4.1 Customer shall furnish the necessary materials, facilities, and management resources identified in the SOW. Customer agrees that
the timely and successful implementation of the Project described in any SOW requires punctual and accurate participation and cooperation by Customer. 
  
 4.2 The Project described in the SOW may proceed in phases or milestones. ACT Videoconferencing may require Customer to accept prior phases or milestones before ACT Videoconferencing proceeds with subsequent phases or milestones.

  
 5. SERVICE REPRESENTATIVES. 
  
 5.1 Each party shall
identify a Representative prior to the inception of any Project. 
  
 5.2 The Representatives shall represent their respective parties in all aspects of this
Agreement. Each party represents that its Representative has the authority to coordinate all of its responsibilities and to approve or resolve any issue regarding this Agreement. All communications relating to this Agreement will be addressed to the
appropriate Representative. 
  
 6. CHANGES. Either party may request a change to the SOW in writing (“Change Authorization”). If signed by
both parties, the Change Authorization in the form attached will set forth any modifications to the SOW including, but not limited to, changes to any specifications, fees, 
 

 1 

 completion schedules or other terms. A Change Authorization signed by both parties is the only means of modifying an SOW, and will be governed by the terms of
this Agreement. 
  
 7. REPRESENTATIONS AND WARRANTIES. ACT Videoconferencing represents and warrants that: (a) All Services will be performed
diligently, timely, professionally, and in accordance with all applicable Videoconference and industry standards, (b) ACT Videoconferencing is authorized and has the legal right to perform all Services required under this Agreement and is not
subject to any contractual or other legal impediment which would restrict, impair or prevent ACT Videoconferencing from performing its obligations under this Agreement; and (c) ACT Videoconferencing shall re-perform any work not in compliance with
this warranty, or any SOW, brought to its attention within a reasonable time after that work is performed at no additional cost to Customer. 
  
 7.1 ACT
Videoconferencing warrants (a) unless authorized in writing by Customer or (b) necessary to perform valid duties under this Agreement, any Software provided to Customer by ACT Videoconferencing, or used by ACT Videoconferencing to perform its duties
hereunder shall: (1) contain no hidden titles, (2) not replicate, transmit, or activate itself without control of a person operating computing equipment on which it resides, (3) not alter, damage, or erase any data or computer programs without
control of a person operating the computing equipment on which it resides, (4) except for license date expiration and copy protection purposes contain no key, node lock, time-out or other function, whether implemented by electronic, mechanical or
other means, which restricts or may restrict use or access to any programs or data developed under this Agreement, based on residency on a specific hardware configuration, frequency of duration of use, or other limiting criteria. Provided and to the
extent any program has any of the foregoing attributes, and notwithstanding anything elsewhere in this Agreement to the contrary, ACT Videoconferencing shall be in default of this Agreement, and no cure period shall apply. In addition to any other
remedies available to it under this Agreement, Customer reserves the right to pursue any civil and/or criminal penalties available to it against ACT Videoconferencing. ACT Videoconferencing agrees, in order to protect Customer from damages which may
be intentionally or unintentionally caused by the introduction of Illicit Code to Customer’s computer network, no software will be installed, executed, or copied on Customer’s equipment without the express approval of Customer’s
Representative. 
  
 8. COMPLETION. 
  
 8.1 Each phase or
milestone identified in the SOW will have separate, detailed written conditions which ACT Videoconferencing is required to meet to satisfy its obligations under this Agreement (“Completion Criteria”). Acceptance for Services within a phase
or milestone will be deemed to occur upon the satisfaction of the Completion Criteria for that phase. ACT Videoconferencing will notify Customer promptly when ACT Videoconferencing has met the Completion Criteria and any payment associated with that
phase will then be due in accordance with Section 2 and non-refundable. 
  
 8.2 ACT Videoconferencing will notify Customer when ACT Videoconferencing
believes that the Project has been completed and when the final acceptance test will be performed, if any. ACT Videoconferencing will perform and Customer may observe the acceptance test to demonstrate that the Completion Criteria have been met. On
completion of the test, all remaining payments shall become due and non-refundable in accordance with Section 2. 
  
 8.3 In the event that Customer
reasonably rejects any phase or milestone, ACT Videoconferencing shall be given a reasonable opportunity to cure by achieving the Completion Criteria and the timing or deadline for any subsequent milestones will be adjusted accordingly.

  
 10. NOTICES. All notices or correspondence under this Agreement shall be sent by overnight mail or facsimile to the Representatives at the
following addresses: 
 

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	 ACT Videoconferencing Corporation
 	 	 Company: Bristol-Myers Squibb Company
 
	 100 Minuteman Road
 	 	 Address: 100 Nassau Park Blvd
 
	 Andover, MA 01810
 	 	 Princeton NJ 08540
 
	 Attn: Managing Director
 	 	 Attn: Category Leader Telecommunications
 
	 Phone: (978) 292-5653
 	 	 Phone: 609-419-5032
 
	 Fax: 978-292-3064
 	 	 Fax: 609-419-7196
 

 
  
 10. OWNERSHIP OF INVENTIONS AND COPYRIGHTS. 
  

10.1 Videoconference Services Material shall include, but is not limited to, software, tools, equipment, special products, documentation, media, reports, curriculum and course materials, specifications and
any work product, excluding hardware and equipment, which are delivered to the Customer under this Agreement as set forth in the SOW (“Videoconference Services Material”). 
  
 10.2 ACT Videoconferencing shall have the exclusive ownership of any Videoconference Services Material and of any inventions, discoveries, improvements, ideas, techniques or know-how embodied in the Videoconference
Services Material or otherwise conceived by ACT Videoconferencing hereunder and all intellectual property rights attendant thereto; provided such inventions, discoveries, improvements, ideas, techniques or know-how, which may have been conceived
while ACT Videoconferencing was providing the Services, do not incorporate Customer’s proprietary information ACT Videoconferencing retains the right to use and provide to third parties in the normal course of business copies or portions of the
Videoconference Services Material or works derived from the Videoconference Services Material. ACT Videoconferencing will not include in the Videoconference Services Material any confidential or proprietary information of Customer, or use
Customer’s name in the Videoconference Services Material when provided to third parties. ACT Videoconferencing shall not in any way be precluded from using any generalized knowledge or expertise that ACT Videoconferencing acquires during the
performance of Services under this Agreement. 
  
 11. INDEMNIFICATION. ACT Videoconferencing will indemnify and hold Customer harmless from and
against any and all losses, damages, expenses (including reasonable attorney’s fees), claims, liabilities, suits or actions for (a) personal injury or property damage resulting from the performance or non-performance of ACT
Videoconferencing’s work pursuant to this Agreement on Customer’s premises, to the extent caused by the negligence of ACT Videoconferencing, its subcontractors, its or their employees, or anyone for whose acts they are legally liable, or
(b) ACT Videoconferencing’s infringement of any copyright, patent or other intellectual property right of any kind whatsoever arising out of systems provided or work performed by ACT Videoconferencing (excluding infringement by Customer’s
products, trademarks, trade names, service marks, etc., of others’ patents, names or marks); provided that (i) Customer promptly notifies ACT Videoconferencing in writing of the claim, (ii) ACT Videoconferencing has sole control of the defense
and all related settlement negotiations, and (iii) such indemnification and save harmless obligation will be limited in the case of real or tangible property to the reduction in value or replacement cost of such property. 
  
 11.1 If any software developed or provided under this Agreement becomes the subject of a claim under this Section, or in ACT Videoconferencing’s opinion is likely to become
the subject of such a claim, then ACT Videoconferencing may, at its option, either (a) replace or modify the software to make it non-infringing or cure any claimed misuse of another’s trade secret, while maintaining equivalent functionality,
(b) procure for Customer the right to continue using the software pursuant to this Agreement, or (c) replace the software with software which has reasonably equivalent functionality and is non-infringing or which is free of claimed misuse of
another’s trade secret. Any costs associated with implementing any of the above alternatives shall be borne by ACT Videoconferencing. Notwithstanding anything to the contrary stated above, Customer shall be responsible for any such claim
arising solely from ACT Videoconferencing’s adherence to Customer’s written instructions or directions. 
  
 12. TERM AND TERMINATION.

  
 12.1 This Agreement will become effective when executed by both parties and will continue in full force unless terminated in accordance with this
Section 12. 
  
 12.2 Customer may not terminate this Agreement prior to one year from the effective date. After at least one year from the effective date
Customer may, upon thirty (30) days prior written notice, terminate this Agreement or any Statement of Work, in whole or in part, without cause. If the Agreement is so terminated, Customer will only be liable for payment in accordance with Section 2
for Services rendered prior to the effective date of termination and for which payment has not been made.ACT Videoconferencing will not have the right to terminate this Agreement; however, ACT Videoconferencing may suspend its performance for
nonpayment of proper and accurate invoices, for work already performed, until such invoices have been paid. 
  
 12.3 Either party may request termination of
this Agreement or any SOW upon written notice to the other if a party fails to meet any of its material obligations under this Agreement. Upon receipt of such notice, the Representatives will meet and discuss their reason for the requested
termination. After the parties meet, the defaulting party will have thirty (30) days, or a longer period if the parties agree, to correct the failure. If such party does not correct the failure, then the aggrieved party may terminate the Agreement
and/or the SOW and, except as provided in Section 12.4, neither party shall have any further liability to the other. 
  
 12.4 ACT Videoconferencing may
immediately suspend its performance in the event that Customer fails to pay ACT Videoconferencing any invoice when thirty (30) days past due. 
  
 12.4
Sections 2, 7, 10, 11 and 13 shall survive the expiration or termination of this Agreement or any SOW. 
  
 12.5 Customer may elect to extend the Agreement
for an additional year at the same rates, terms and conditions provided the Customer provides thirty (30) days written notice prior to the end of the initial term. 
  
 13. LIMITATION OF LIABILITY. EXCEPT FOR CLAIMS FOR WHICH ACT VIDEOCONFERENCING HAS INDEMNIFIED CUSTOMER, IN NO EVENT WILL ACT VIDEOCONFERENCING BE LIABLE FOR INCIDENTAL, CONSEQUENTIAL, SPECIAL OR INDIRECT
DAMAGES, LOST BUSINESS PROFITS, OR LOSS, DAMAGE OR DESTRUCTION OF DATA, REGARDLESS OF THE FORM OF ACTION, WHETHER IN CONTRACT, TORT (INCLUDING NEGLIGENCE), BREACH OF WARRANTY OR OTHERWISE, EVEN IF ACT VIDEOCONFERENCING HAS BEEN ADVISED AS TO THE
POSSIBILITY OF SAME, AND ACT VIDEOCONFERENCING’S MAXIMUM LIABILITY FOR ALL OTHER DAMAGES WILL BE LIMITED IN ANY EVENT TO THE AMOUNT PAID BY CUSTOMER TO ACT VIDEOCONFERENCING UNDER THE APPLICABLE SOW. SOME JURISDICTIONS DO NOT ALLOW THE
EXCLUSION OR LIMITATION OF INCIDENTAL OR CONSEQUENTIAL DAMAGES AND THE ABOVE EXCLUSION OR LIMITATION MAY NOT APPLY. 
  
 14. CONFIDENTIALITY. ACT
Videoconferencing shall keep confidential and secret any and all confidential and proprietary information disclosed to it. “Confidential Information” shall include, but not be limited to, trade secrets, know-how, proprietary information,
formulae, processes, techniques and information relating to Customer past, present and future marketing, financial, and research and development activities that may be disclosed, whether orally or in writing, to ACT Videoconferencing by Customer
and/or its parent, subsidiary or affiliate companies, or that may be otherwise received or accessed by ACT Videoconferencing in the course of performing this Agreement. ACT Videoconferencing expressly agrees that any Confidential Information it
discovers or develops under this Agreement shall not be used or disclosed 
 

 3 

  
 by it to any third party, nor shall ACT Videoconferencing show this Agreement or disclose the existence, nature or
subject matter of this Agreement to any third party without the prior written consent of Customer. ACT Videoconferencing’s obligations not to disclose Confidential Information to third parties and otherwise not to use Confidential Information
shall survive the termination of this Agreement. ACT Videoconferencing shall not duplicate any material containing Confidential Information except in the direct performance of its obligations under this Agreement. ACT Videoconferencing shall return
all copies of materials containing Confidential Information upon ACT Videoconferencing’s completion of services under this Agreement or upon any earlier termination of this Agreement for any reason whatsoever. 
  
 ACT Videoconferencing acknowledges that, in the event of any breach of the provisions of this Section 14, Customer shall suffer damages that are not easily determinable, and
shall be entitled to seek equitable relief, including, without limitation, an injunction or an order for specific performance, in addition to all other remedies available to Customer at law or in equity. 
  
 “Information regarding videoconferences, such as, but not limited to content of videoconferences, Customer access or other authorization codes, names, phone numbers and
addresses of videoconference participants and any other information related to the use of the videoconferencing services by Customer, shall be treated as confidential and shall not be used or disclosed by ACT Videoconferencing, except pursuant to
its obligation under this Agreement.” 
  
 15. FORCE MAJEURE. In no event shall either party be liable to the other for any delay or failure to
perform under this Agreement which is due to causes beyond its reasonable control. Performance times under this Agreement shall be considered extended for a period of time equivalent to the time lost because of any such excusable delay.

  
 16. GENERAL. 
  
 16.1 Customer shall have the right
to assign or transfer this Agreement or any of its interests herein (including without limitation rights and duties of performance) to any entity (i) which owns more than fifty percent (50%) of Customer’s issued and outstanding voting stock,
(ii) in which Customer owns more than fifty percent (50%) of the issued and outstanding voting stock, (iii) which acquires all or substantially all of Customer’s operating assets or the operating assets of any affiliate or subsidiary of
Customer, (iv) into which Customer is merged or reorganized pursuant to any plan of merger or reorganization, or (v) any firm which Customer may engage to operate Customer’s data processing facilities, its business, or any portion thereof
(“Outsourcer”). There shall be no charge to Customer or the assignee for any assignment hereunder. 16.2 Either party’s failure to enforce any provision of this Agreement will not be deemed a waiver of that provision or of the right to
enforce it in the future. 
  
 16.3 This Agreement will be governed by the laws of state of New Jersey, U.S.A. 
  
 16.4 If any provision of this Agreement is held to be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions will not in any
way be affected or impaired thereby. 
  
 16.5 Neither party may advertise or promote using the name or description of the other Party (including, but not
limited to, disclosing the existence of the Agreement), without in each instance the express prior written consent of the other party. 
  
 16.6 During the
term of this Agreement and for two (2) years thereafter, Customer shall have the right *** 
  
 16.7 The parties to this Agreement are independent
contractors and nothing contained in this Agreement shall be construed to place the parties in the relationship of employer and employee, partners, principal and agent, or joint venturers. Neither party shall have the power to bind or obligate the
other party nor shall either party hold itself out as having such authority. 
  
 16.8 Neither party shall make any commitments or disbursements or incur any
obligations in the name of, on behalf of or for the other party and/or the other party’s subsidiary or affiliate companies, without the prior written approval of the other party. 
  
 THIS AGREEMENT, TOGETHER WITH ANY STATEMENT OF WORK OR AMENDMENT EXPRESSLY MADE A PART HEREOF AND SIGNED BY BOTH PARTIES, IS THE EXCLUSIVE STATEMENT OF THE AGREEMENT BETWEEN THE PARTIES, SUPERSEDING ALL
COMMUNICATIONS, PROPOSALS OR PRIOR AGREEMENTS, ORAL OR WRITTEN, RELATING TO THIS SUBJECT MATTER. IN THE EVENT OF ANY EXPRESS CONFLICT OR INCONSISTENCY BETWEEN THIS AGREEMENT AND ANY STATEMENT OF WORK OR OTHER ATTACHMENT, THE TERMS OF THIS AGREEMENT
WILL CONTROL. 
  
 
	 Customer:
 	    	  
	 	
	

	 
	 Signature:
 	    	  
	 	
	

	 
	 Name:
 	    	  
	 	
	

	 
	 Title:
 	    	  
	 	
	

	 
	 Company Name:
 	    	  
	 	
	

	 
	 Date:
 	    	  
	 	
	

	 
	  
	 
	 ACT Videoconferencing Corporation
 
	  	    	  
	 
	 Signature:
 	    	  
	 	
	

	 
	 Name:
 	    	  
	 	
	

	 
	 Title:
 	    	  
	 	
	

	 
	 Effective Date:
 	    	  
	 	
	

 
  
 

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 “EXHIBIT A” 
  
  
 

 
  
 STATEMENT OF WORK 
  
 This Statement of Work is entered into pursuant to the Videoconference Services Agreement between
                                        
                                        
         (“Customer “) and ACT Videoconferencing Corporation (“ACT Videoconferencing”) dated
                                    ,
200     (the “Agreement”). 
  
  
 Description of Scope of Work:

  
  
  
  
  
 Any Special Terms/Additional Compensation: 
  
  
  
 Customer and
ACT Videoconferencing approve the above arrangements and acknowledge that the Services to be performed hereunder are subject to the terms and conditions of the Agreement which are incorporated by reference. 
  
 
	 CUSTOMER
 	 	  	 	  	 	 ACT VIDEOCONFERENCING CORPORATION         
 
	  	 	  	 	  	 	  
	
	 	 	 	 	
	

	 Authorized Signature
 	 	  	 	  	 	 Authorized Signature 
 
	  	 	  	 	  	 	  
	
	 	 	 	 	
	

	 Name
 	 	  	 	  	 	 Name 
 
	  	 	  	 	  	 	  
	
	 	 	 	 	
	

	 Title
 	 	  	 	  	 	 Title 
 
	  	 	  	 	  	 	  
	
	 	 	 	 	
	

	 Date
 	 	  	 	  	 	 Date 
 

 
 

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 ACT Videoconferencing, Inc. 
 100 Minuteman Road

 Andover, MA 01810 
  
 

 
  
 VIDEOCONFERENCE SERVICES AGREEMENT 
 CHANGE AUTHORIZATION 
  
  
 The parties agree to modify the SOW as follows:

  
  
  
  
 This change shall become
effective on                             . 

	 	                                       
                                     (Date)
	 
	
 

  
  
 In the event of any
conflict or inconsistency between the terms of this Change Authorization and the terms of the SOW, the terms of this Change Authorization shall control. 
  
  

 
  
 
	 Customer:
 	 	  	 	  	 	 ACT Videoconferencing Corporation                               
 
 
	 	
	
	 	 	 	 
	  
 Signature:
 	 	  	 	  	 	 Signature:
 	 	  
	 	
	
	 	 	 	 	
	

	 Name:
 	 	  	 	  	 	 Name:
 	 	  
	 	
	
	 	 	 	 	
	

	 Title:
 	 	  	 	  	 	 Title:
 	 	  
	 	
	
	 	 	 	 	
	

	 Date:
 	 	  	 	  	 	 Effective Date:
 	 	  
	 	
	
	 	 	 	 	
	

 
  
  
 

 6 

  
 “Exhibit A” 
  
 STATEMENT OF WORK 
 For 
 VIDEOCONFERENCE
SERVICES 
  
 This Statement of Work (“SOW”) for Videoconference Services is hereby incorporated into and made a part of the Videoconferencing
Services Agreement between Customer (“Customer”) and ACT Videoconferencing, Inc. (“ACT Videoconferencing”) dated 
                                        
             (“Agreement”). This SOW describes the videoconference services (“Videoconference Services”) to be provided by ACT Videoconferencing and its wholly owned
subsidiaries and/or affiliates hereunder. This SOW will commence on the date first written above and shall continue in full force and effect unless otherwise terminated in accordance with the Agreement. The parties agree to discuss any extension of
the term of this SOW at least six months prior to its expiration. 
  
 Any modifications to the SOW must be agreed to by the parties in writing pursuant to
the Agreement’s “Change Authorization Form”. 
  
 The following Attachments are hereby incorporated into and made part of this SOW by
reference: 
  
 Attachment 1 – Global Videoconferencing Services RFP dated 9/01 
 Attachment 2
– Questions and Answers dated October 26, 2001 
 Attachment 3 – Service Pricing 
 Attachment 4 – Regional Network Pricing

  
 I. Definitions: 
  
 For purposes of this SOW,
the following definitions shall apply: 
  
 “CSC” means the ACT Videoconferencing Conference Service Center. 
  
 “VCS” means a Videoconferencing System. 
  
 “Host” shall be
defined to be the Site originating the multipoint videoconference call. The entire videoconference call, including all Site participants for the length of the call is billed to the Host, in accordance with the procedures and costs identified in this
SOW. 
  
 “Site(s)” shall be defined to be Customer’s locations, or a location specified by Customer, participating in a multipoint
videoconference call. 
  
 “Site Coordinator” shall be defined to be a contact at Customer’s Site who is trained and knowledgeable about
videoconferencing systems. Each Site with a videoconferencing room has a Site Coordinator to assist with the set-up, reservations, and use of the videoconferencing systems. 
  
 *** 
  
 *** 
  
 

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 “Set-Up Period” means, for Multipoint videoconference calls, the period of time prior to the scheduled start
time of the videoconference to enable ACT Videoconferencing to perform Call Launching activities. For Multipoint videoconferences with seven (7) or less registered sites involved, ACT Videoconferencing will require a (15) minute Set-Up Period. For
Multipoint videoconferences with eight (8) or more registered sites, a Set-Up Period of thirty (30) minutes will be required. 
  
 “Metrics”, for
the purpose of computing ACT Videoconferencing’s Start on Time metrics of any videoconference, the Set-Up Period will not be considered to start until ALL Customer registered videoconference sites participating in a given conference are
available for Call Launching in the “ACT Videoconferencing Ready” state. 
  
 “Call Launching” shall be defined as a conference that is
initiated by ACT Videoconferencing to customer site from the bridge. 
  
 II.    Scope of Service 
  

	A.
	 
	The Videoconference Services to be provided by ACT Videoconferencing to Customer include Site Registration, Conference, Multipoint Conferencing, Call Launching, Conference
Support, Problem Management, Conference Reporting and Billing (“Videoconference Services”). Definitions for these Services are identified in this SOW. Said Videoconference Services shall be provided by ACT Videoconferencing 24 hours/day, 7
days/week. 
 

  

	B.
	 
	Registered Customer site locations will be provided with *** 
 

  

	C.
	 
	The language in which the Videoconference Services will be delivered to Customer will be coordinated by ACT Videoconferencing’s staff at no cost in accordance with page 23
of Attachment 1. Translation services for languages not listed will be charged on an ad hoc basis. 
 

  

	D.
	 
	Multipoint videoconferences will be delivered by ACT Videoconferencing *** 
 

  

	E.
	 
	ACT Videoconferencing will launch all Multipoint videoconference calls, *** from its bridging facility to each Site using “Call Launching” unless otherwise specified
by Customer. *** 
 

  
 III.    Site Registration  
  

	A.
	 
	In order for a Site to participate in a multipoint videoconference, Customer must complete a Room Information Form, an example of which is provided in the Policies &
Procedures Manual, which has been (or will be) provided to Customer. ACT Videoconferencing will then test Customer’s Site to ensure that the connectivity capabilities and system integrity of Customer’s equipment and network will work with
ACT Videoconferencing’s network and bridging services. Upon successful completion of said registration test, ACT Videoconferencing will document Customer’s Site as registered (“Registered Sites”) and said Site will be able to
participate in any subsequent videoconference ***. If BMS subscribes to Problem Management offering, ACT Videoconferencing will work with BMS vendors to resolve issue (s). If BMS declines Problem Management offering, it will be BMS’s
responsibility to work with BMS vendors to resolve issue (s). 
 

  

	B.
	 
	In the event that Customer modifies any such Registered Site in a material way which may impact the multipoint videoconference connectivity or system integrity, including but
not limited to a Customer facility change, change to wiring, network vendor, videoconference equipment, or the like, Customer shall notify ACT Videoconferencing prior to scheduling any multipoint videoconference. Said Site must be re-registered in
accordance with Section IIIA above. 
 

 

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 IV.    Conference Scheduling and Reservations 
  

	A.
	 
	Reservations 
 

  

	1.
	 
	Reservation requests will be accepted by the CSC by Host, Site Coordinators, or any employee of Customer via phone, fax, web or e-mail. ACT Videoconferencing will make
reservations based on the time zone of the Host/requesting location, and shall inform Customer of such, unless otherwise specified by the Host/requester. 
 

  

	2.
	 
	At the time of reservation, Customer requester shall supply Customer’s company code and cost center code. The cost center code is chargeable to the Host for the entire
multipoint videoconference call, including all participating Sites. ACT Videoconferencing will reject any scheduling request if said code is not provided. Only one (1) code shall be accepted by ACT Videoconferencing for said videoconference.

 

  

	3.
	 
	Reservations should be received by the CSC at least 24 hours before the required start time of any multipoint videoconference. 
 

  

	4.
	 
	Reservation requests which include Sites that have not completed a Site registration test cannot be processed until the Site registration has been completed, in accordance with
Section III above. 
 

  

	B.
	 
	Confirmations 
 

  
 All requesters and designated Customer
personnel who are to be scheduled for an ACT Videoconferencing videoconference will be asked to select their preferred method of contact (either fax or e-mail) for confirmations sent from ACT Videoconferencing’s scheduling system. Said
confirmation shall be within 2 hours of ACT Videoconferencing’s receipt of Customer’s reservation request.  
  

	C.
	 
	Modifications to Reservations 
 

  

	1.
	 
	Modifications as described herein above, will be allowed to be made provided that the changes involve properly Registered Sites 
 

  

	2.
	 
	Reservations include video Multipoint meetings and can be made by Customer designated site coordinators and conference requesters. 
 

  

	D.
	 
	Cancellations 
 

  

	1.
	 
	Only the original conference requester, the person scheduling the conference or Customer designated site coordinator, is authorized to cancel a scheduled conference.

 

  

	2.
	 
	Cancellation of any or all Sites on a scheduled videoconference shall be permitted by ACT Videoconferencing without any penalty, charge or fee associated with such
cancellation. Cancellation is permitted at any time prior to the Set-Up Period. However, any successful videoconference connection made by a Site to ACT Videoconferencing shall be chargeable for Actual Use time, in accordance with Section XI below.

 

 

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	E.
	 
	Conference Extension (during an active videoconference) 
 

  

	1.
	 
	Host Customer Site Coordinators and/or Customer Registered Site participants may request an extension of conference call time at any time during the scheduled time period.
However, ACT Videoconferencing recommends that this be not less than fifteen (15) minutes prior to the scheduled end of the conference. 
 

  

	2.
	 
	Depending on port availability on the bridge, ACT Videoconferencing will schedule the extension to enable the conference to proceed beyond its originally allocated scheduled
time. Disconnect and reconnect of conference may be required. 
 

  
 V.    Conference Support

  

	A.
	 
	The designated Customer site coordinator or conference participant shall report to the ACT Videoconferencing CSC whenever a problem is experienced during the Set-Up period or
an actual conference. 
 

  

	B.
	 
	ACT Videoconferencing will attempt to resolve issues so that the videoconference can continue or proceed without further delay if possible. If this is not possible, ACT
Videoconferencing will offer to the location(s) experiencing the problem and the meeting host an option to participate in the conference via an audio port or, if applicable, conduct the meeting as an audio conference. If this alternative is not
acceptable, ACT Videoconferencing will explore other alternatives with the meeting host. 
 

  

	C.
	 
	For problems that can not be resolved, ACT Videoconferencing will engage Problem Management for the next level of support (see Section VI. Problem Management). 

  
 VI.    Problem Management 
  

	A.
	 
	If BMS elects, Problem Management Service is engaged when conference support is unable to re-establish a conference or proactively through trend analysis. Upon initial
notification of a problem, a ticket is opened. ACT Videoconferencing will initiate the coordination of the corrective action required to resolve whatever technical problem Customer is experiencing. All of this Problem Management ticket data will be
gathered and provided in detailed monthly reports to Customer. 
 

  

	B.
	 
	In order for ACT Videoconferencing to initiate any service calls to third party vendors, Customer must ensure that ACT Videoconferencing is authorized to request service calls
under third party maintenance agreements on Customer’s behalf. 
 

  

	C.
	 
	Specific Problem Management escalation information will be provided in the Policies & Procedures Guide. 
 

  
 VII.    Conference Reporting 
  

	A.
	 
	Utilization Reports 
 

  

	1.
	 
	ACT Videoconferencing will provide Customer with standard monthly Services utilization reports. The method of delivery of the reports will be through the web site in a
downloadable version of a pdf file formatted for presentation and a raw data file in excel format. 
 

	 	·
	 
	Conference Statistics 
 

	 	·
	 
	Conference Details Complete 
 

	 	·
	 
	Conference Problem Summary 
 

	 	·
	 
	Conference Usage 
 

	 	·
	 
	Conference Usage by Site 
 

  

	2.
	 
	ACT Videoconferencing will provide Customer with custom reports upon request. See Attachment 3 – Service Pricing. 
 

 

 10 

  

	B.
	 
	Service Related Documents 
 

  
 ACT Videoconferencing will
work with Customer to jointly develop a Policies and Procedures (Customer Procedures) document for general distribution for Customer Site Coordinators and Customer end users. This document will focus on the Services delivered by ACT
Videoconferencing and will be written from the Customer viewpoint. The document will also include the forms identified pursuant to this SOW required for Site registration and reservations. 
  

VIII.    Billing  
  

	A.
	 
	Individual pricing for Conference Service options shall be at the rates identified in Section XI below. *** 
 

  

	B.
	 
	ACT Videoconferencing will provide Customer *** to Customer’s corporate headquarters location via an EDI interface and mailed in hardcopy form. Customer shall be
responsible for reasonable development fees associated with EDI setup. 
 

  
 IX.    Customer Responsibilities

  

	A.
	 
	Customer will designate a single point of contact to manage the Videoconference Services relationship with ACT Videoconferencing. 
 

  

	B.
	 
	Customer will identify a designated Site Coordinator for each videoconference room. The designated Site Coordinators should be reasonably proficient in using videoconferencing
systems. 
 

  

	C.
	 
	Customer will register Sites and re-register Sites in accordance with Section III herein. Customer will report trouble calls in accordance with Section V herein. 

  
 X.    Service and Performance Metrics 
  
 ACT Videoconferencing shall monitor the quality of its Services by tracking critical performance statistics. Within *** after ***, ACT Videoconferencing will attain the following performance level goals for
videoconferences managed by the Conference Service Center (CSC): 
  

	A.
	 
	*** 
 

  

	B.
	 
	*** 
 

  

	C.
	 
	*** 
 

  

	D.
	 
	*** 
 

  

	E.
	 
	*** 
 

 

 11 

 *** 
  
 

 12 

  
 XI.    Service Charges  
  

*** 
  
 Refer to Attachment 3 & 4. 
 

 13<PAGE>

                                                                    Exhibit 10.1

               1999 FIRST RELIANCE BANK EMPLOYEE STOCK OPTION PLAN

                                    ARTICLE I
                      PURPOSE; EFFECTIVE DATE; DEFINITIONS

     1.1 Purpose. The 1999 First Reliance Bank Employee Stock Option Plan is
         -------
intended to secure for First Reliance Bank and its shareholders the benefits of
the incentive inherent in common stock ownership by the employees of the Company
who are largely responsible for the Company's future growth and continued
financial success and to afford such persons the opportunity to obtain or
increase their proprietary interest in the Company on a favorable basis and
thereby have an opportunity to share in its success.

     1.2 Effective Date and Term of the Plan. Subject to the approval of the
         -----------------------------------
Board (as hereinafter defined) and to ratification by the Company's shareholders
as provided in Section 5.9, this Plan shall be effective on and after August 16,
1999. No grant of Options (as hereinafter defined) shall be made under the Plan
after August 15, 2009; provided, however, that the Plan and all grants made
under the Plan prior to such date shall remain in effect until such grants have
been satisfied or terminated in accordance with the Plan and the terms of the
Option Agreements (as hereinafter defined).

     1.3 Definitions. Throughout this Plan, the following terms shall have the
         -----------
meanings indicated:

         (a) "Board" shall mean the Board of Directors of the Company.
              -----

         (b) "Code" shall mean the Internal Revenue Code of 1986, as amended,
              ----
and any successor revenue laws of the United States and the rules and
regulations promulgated thereunder.

         (c) "Committee" shall mean any committee of the Board designated by the
              ---------
Board to administer this Plan.

         (d) "Common Stock" shall mean the common stock, without par value, of
              ------------
the Company.

         (e) "Company" shall mean First Reliance Bank, a South Carolina banking
              -------
corporation.

         (f) "Employee" shall mean any person engaged or proposed to be engaged
              --------
as an officer or employee of the Company.

         (g) "Fair Market Value" shall mean, with respect to a share of Common
              -----------------
Stock on any day, the closing sales price of a share of Common Stock for the
then most recent preceding business day for which a closing price is available
from the principal trading market

                                       1

<PAGE>

for the Common Stock or, if the Common Stock is not publicly traded, the fair
market value of a share of Common Stock on such day as determined by the
Committee in such manner as it may in good faith deem appropriate; provided that
in making such determination, the Committee shall not take into account the
effect of any restrictions on the Common Stock other than restrictions which, by
their terms, will never lapse. A "business day" is any day, other than a
Saturday or Sunday, on which the relevant market is open for trading.

         (h) "ISO" shall mean an Option that qualifies as an incentive stock
              ---
option under Code Section 422. No Option that is intended to be an ISO shall be
invalid under this Plan for failure to qualify as an ISO.

         (i) "NQSO" shall mean a nonqualified stock option which is an Option
              ----
that does not qualify as an incentive stock option under Code Section 422.

         (j) "Option" shall mean an option to purchase shares of Common Stock
              ------
granted by the Committee to an Employee pursuant to this Plan. An Option may be
an ISO or an NQSO.

         (k) "Option Agreement" shall mean an agreement between the Company and
              ----------------
an Employee evidencing an Option grant.

         (l) "Option Shares" shall mean the shares of Common Stock purchased
              -------------
upon exercise of an Option.

         (m) "Plan" shall mean this 1999 First Reliance Bank Employee Stock
              ----
Option Plan, as the same may be amended from time to time.

         (n) "10% Stockholder" shall mean an individual owning (directly or by
              ---------------
attribution as provided in Code Section 424(d)) stock possessing more than 10%
of the total combined voting power of all classes of stock of the Company.

                                   ARTICLE II
                                 ADMINISTRATION

     2.1 Committee Administration. This Plan and the Options granted hereunder
         ------------------------
shall be interpreted, construed and administered by the Committee in its sole
discretion. An Employee eligible for Options under the Plan may appeal to the
Committee in writing any decision or action of the Committee with respect to the
Plan that adversely affects the Employee. Upon review of such appeal and in any
other case where the Committee has acted with respect to the Plan, the
interpretation and construction by the Committee of any provisions of this Plan
or of any Option shall be conclusive and binding on all parties.

     2.2 Committee Composition. The Committee shall consist of not less than
         ---------------------
two persons who shall be members of the Board and shall be subject to such terms
and conditions as the Board may prescribe. Once designated, the Committee shall
continue to serve until otherwise directed by the Board. From time to time, the
Board may increase the size of the Committee and appoint

                                       2

<PAGE>

additional members thereof, remove members (with or without cause) and appoint
new members in substitution therefor, fill vacancies however caused and remove
all members of the Committee.

     A majority of the entire Committee shall constitute a quorum, and the
action of a majority of the members present at any meeting at which a quorum is
present shall be deemed the action of the Committee. In addition, any decision
or determination reduced to writing and signed by all of the members of the
Committee shall be fully as effective as if it had been made by a majority vote
at a meeting duly called and held. Subject to the provisions of this Plan and
the Company's bylaws, and to any terms and conditions prescribed by the Board,
the Committee may make such additional rules and regulations for the conduct of
its business as it shall deem advisable. The Committee shall hold meetings at
such times and places as it may determine.

     2.3 Committee Powers. The Committee shall have authority to grant Options
         ----------------
pursuant to an Option Agreement providing for such terms (not inconsistent with
the provisions of this Plan) as the Committee may consider appropriate. Such
terms shall include, without limitation, the number of shares, the Option price,
the medium and time of payment, the term of each award and any vesting
requirements and may include conditions (in addition to those contained in this
Plan) on the exercisability of all or any part of an Option. Notwithstanding any
such conditions, the Committee may, in its discretion, accelerate the time at
which any Option may be exercised. In addition, the Committee shall have
complete discretionary authority to prescribe the form of Option Agreements; to
adopt, amend and rescind rules and regulations pertaining to the administration
of the Plan; and to make all other determinations necessary or advisable for the
administration of this Plan. The express grant in the Plan of any specific power
to the Committee shall not be construed as limiting any power or authority of
the Committee. All expenses of administering this Plan shall be borne by the
Company.

     2.4 Good Faith Determinations.  No member of the Committee or other member
         -------------------------
of the Board shall be liable for any action or determination made in good faith
with respect to this Plan or any Option granted hereunder.

                                   ARTICLE III
                     ELIGIBILITY; SHARES SUBJECT TO THE PLAN

     3.1 Eligibility. Based upon the recommendations of the President, the
         -----------
Committee shall determine and designate the Employees of the Company to receive
Options under this Plan and the number of Options to be awarded to each such
Employee, or the formula or other basis on which such Options shall be awarded
to Employees. In making any such award, the Committee may take into account the
nature of services rendered by an Employee, commissions or other compensation
earned by the Employee, the capacity of the Employee to contribute to the
success of the Company and other factors that the Committee may consider
relevant.

     3.2 Shares Subject to this Plan. Subject to the provisions of Section 4.1
         ---------------------------
(e) (relating to adjustment for changes in Common Stock), the maximum number of
shares that may be issued under this Plan shall not exceed in the aggregate
119,000 shares of Common Stock. Such shares shall be authorized and unissued. If
any Options granted under this Plan shall for any reason

                                       3

<PAGE>

terminate or expire or be surrendered without having been exercised in full, the
shares not purchased under such Options shall be available again for grant
hereunder.

                                   ARTICLE IV
                                  STOCK OPTIONS

     4.1 Grant; Terms and Conditions. The Committee, in its discretion, may
         ---------------------------
grant ISOs and/or NQSOs to any Employee eligible to receive Options under this
Plan. Each Employee who is granted an Option shall enter into an Option
Agreement with the Company in a form specified by the Committee and containing
such provisions as the Committee, in its sole discretion, shall approve
consistent with this Plan. The Option Agreements need not be identical, but each
Option Agreement by appropriate language shall include the substance of all of
the following terms and conditions:

         (a) Number of Shares. Each Option Agreement shall state the number of
             ----------------
shares to which it pertains.

         (b) Option Price. Each Option Agreement shall state the Option exercise
             ------------
price, which shall not be less than 100% of the Fair Market Value of the shares
of Common Stock subject to the Option on the date of granting the Option. In the
case of an ISO granted to a 10% Stockholder, the price at which each share of
Common Stock covered by the Option may be purchased shall not be less than 110%
of the Fair Market Value per share of Common Stock on the date of grant of the
Option. The date of the grant of an Option shall be the date specified by the
Committee in its grant of the Option.

         (c) Medium and Time of Payment. Upon the exercise of an Option, the
             --------------------------
Option exercise price shall be payable in United States dollars in cash
(including by check) or other immediately available funds. If payment is made by
check, such payment shall be contingent on such check being irrevocably paid by
the institution on which it was drawn.

         (d) Term and Exercise of Options. The term of each Option shall be
             ----------------------------
determined by the Committee; provided that the exercise of an Option shall in no
event be more than ten years from the date of grant, or in the case of an ISO
granted to a 10% Stockholder, more than five years from the date of grant. Not
less than 100 shares may be purchased at any one time unless the number
purchased is the total number at the time purchasable under the Option. During
the lifetime of the optionee, the Option shall be exercisable only by him or her
and shall not be assignable or transferable by him or her and no person shall
acquire any rights therein. An Option may be transferred (unless the Committee
otherwise prescribes) by will or the laws of descent or distribution. Upon
request by the Company, a transferee of an Option may be required to furnish
proof satisfactory to the Company that he or she is authorized to exercise the
Option pursuant to the preceding sentence.

         (e) Recapitalization; Reorganization. The grant of an Option pursuant
             --------------------------------
to this Plan shall not affect in any way the right or power of the Company to
make adjustments, reclassifications, reorganizations or changes of its capital
or business structure or to merge or to

                                       4

<PAGE>

consolidate or to dissolve, liquidate, sell or otherwise transfer all or any
part of its business or assets. The maximum number of shares of Common Stock
that may be issued under this Plan pursuant to Section 3.2 above, the number of
shares of Common Stock covered by each outstanding Option and the per share
exercise price under each outstanding Option shall be adjusted, in each case, to
the extent and in the manner the Committee deems appropriate for any increase or
decrease in the number of issued shares of Common Stock resulting from a
reorganization, recapitalization, stock split, stock dividend, combination of
shares, merger, consolidation, rights offering, subdivision or consolidation of
shares or the payment of a stock dividend (but only on the Common Stock) or any
other change in the corporate structure or shares of the Company.

         If the Company is the surviving corporation in any merger, then each
outstanding Option shall pertain to and apply to the securities or other
consideration that a holder of the number of shares of Common Stock subject to
the Option would have been entitled to receive in the merger. A dissolution,
liquidation or consolidation of the Company or a merger in which the Company is
not the surviving corporation, other than a merger effected for the purpose of
changing the Company's domicile, shall cause each outstanding Option to
terminate, provided that each holder shall, in such event, have the right
immediately prior to such dissolution, liquidation, merger or consolidation to
exercise his or her Option in whole or in part without regard to any installment
provision contained in his or her Option Agreement. The last sentence shall
apply to any outstanding Options which are ISOs to the extent permitted by Code
Section 422(d), and such outstanding ISO's in excess thereof shall, immediately
upon the occurrence of a merger, consolidation, sale, transfer, acquisition,
tender offer or exchange offer, be treated for all purposes of the Plan as NQSOs
and shall be immediately exercisable as such as provided in such sentence.
Notwithstanding the foregoing, in no event shall any Option be exercisable after
the date of termination of the exercise period of such Option. In the case of a
merger effected for the purpose of changing the Company's domicile, each
outstanding Option shall continue in effect in accordance with its terms and
shall apply or relate to the same number of shares of common stock of such
surviving corporation as the number of shares of Common Stock to which it
applied or related immediately prior to such merger, adjusted for any increase
or decrease in the number of outstanding shares of common stock of the surviving
corporation effected without receipt of consideration.

         In the event of a change in the Common Stock as presently constituted,
which change is limited to a change of all of the authorized shares without par
value into the same number of shares with par value, the shares resulting from
any such change shall be deemed to be the Common Stock within the meaning of
this Plan.

         The foregoing adjustments shall be made by the Committee, whose
determination shall be final, binding and conclusive.

         Except as expressly provided in this subsection, the holder of an
Option shall have no rights by reason of (i) any subdivision or consolidation of
shares of any class, (ii) any stock dividend, (iii) any other increase or
decrease in the number of shares of stock of any class, (iv) any dissolution,
liquidation, merger or consolidation or spin-off, split-off or split-up of
assets of the Company or stock of another corporation or (v) any issuance by the
Company of shares of stock of

                                       5

<PAGE>

any class or securities convertible into shares of stock of any class. Moreover,
except as expressly provided in this subsection, the occurrence of one or more
of such events shall not affect, and no adjustment by reason thereof shall be
made with respect to, the number or price of shares of Common Stock subject to
the Option.

         (f) Rights as a Shareholder. An optionee or a transferee of an Option
             -----------------------
shall have no rights as a shareholder with respect to any shares covered by his
or her Option until the date of the issuance of a stock certificate to him or
her for those shares upon payment of the exercise price. No reserve shall be
established, and no other adjustments shall be made for dividends (ordinary or
extraordinary, whether in cash, securities or other property) or distributions
or other rights for which the record date is prior to the date such stock
certificate is issued, except as provided in subsection 4.1(e).

         (g) Modification Extension and Renewal of Options. Subject to the
             ---------------------------------------------
terms and conditions and within the limitations of this Plan, the Committee may
modify, extend or renew outstanding Options granted under this Plan or accept
the surrender of outstanding Options (to the extent not theretofore exercised)
and authorize the granting of new Options in substitution therefor (to the
extent not theretofore exercised). No modification of an Option shall, without
the consent of the optionee, alter or impair any rights or obligations under any
Option theretofore granted under this Plan.

         (h) Termination of Options. Every Option Agreement shall provide that,
             ----------------------
unless earlier terminated, Options granted pursuant to this Plan shall be
exercisable at any time on or after the date of exercise set forth in the Option
Agreement and before the date that is ten years after the date of grant or, in
the case of an ISO granted to a 10% Stockholder, before the date that is five
years after the date of grant. Notwithstanding the foregoing, an Option shall
terminate and may not be exercised if the Employee to whom it is granted ceases
to be employed by the Company, except that the Option Agreement may, in the
discretion of the Committee, provide: (1) that, if such Employee's employment
terminates for any reason other than conduct that in the judgment of the
Committee involves dishonesty or action by the Employee that is detrimental to
the best interest of the Company, then the Employee may at any time within three
months after termination of his or her employment exercise his or her Option but
only to the extent the Option was exercisable by him or her on the date of
termination of employment; (2) that, if such Employee's employment terminates on
account of total and permanent disability, then the Employee may at any time
within one year after termination of his or her employment exercise his or her
Option but only to the extent that the Option was exercisable on the date of
termination of employment and (3) that, if such Employee dies while in the
employ of the Company, or within the three or twelve month period following
termination of his or her employment as described in clause (1) or (2) above,
then his or her Option may be exercised at any time within twelve months
following his or her death by the person or persons to whom his or her rights
under the Option shall pass by will or by the laws of descent and distribution,
but only to the extent that such Option was exercisable by him or her on the
date of termination of employment. Each Option Agreement may provide for
acceleration of exercisability in the event of retirement, death or disability.
Any cessation of employment, for purposes of ISOs only, shall include any leave
of absence in excess of 90 days unless the optionee's reemployment rights are
guaranteed by law or by contract. Notwithstanding anything to the contrary

                                       6

<PAGE>

in this subsection, an Option may not be exercised by anyone after the
expiration of its term.

     4.2 Other Terms and Conditions. Through the Option Agreements authorized
         --------------------------
under this Plan, the Committee may impose such other terms and conditions, not
inconsistent with the terms hereof, on the grant or exercise of Options, as it
deems advisable.

     4.3 Additional Provisions Applicable to Incentive Stock Options. The
         -----------------------------------------------------------
Committee may, in its discretion, grant options under the Plan to eligible
Employees which Options constitute ISOs; provided, however, that the aggregate
fair market value of the Common Stock with respect to which ISOs are exercisable
for the first time by the optionee during any calendar year shall not exceed the
limitation set forth in Code Section 422(d).

     4.4 Regulatory Forfeiture. Notwithstanding anything to the contrary herein,
         ---------------------
if the capital of the Company falls below the minimum capital requirements
imposed upon the Company, as determined by the Company's state or primary
federal regulator, the Company may, if so directed by a regulator having
jurisdiction, require all holders of outstanding Options to exercise all of such
Options or forfeit their right to exercise such Options.

                                    ARTICLE V
                                  MISCELLANEOUS

     5.1 Withholding Taxes. An Employee granted Options under this Plan shall be
         -----------------
conclusively deemed to have authorized the Company to withhold from the salary,
commissions or other compensation of such Employee funds in amounts or property
(including Common Stock) in value equal to any federal, state and local income,
employment or other withholding taxes applicable to the income recognized by
such Employee and attributable to the Options or the Option Shares as, when and
to the extent, if any, required by law; provided, however, that, in lieu of the
withholding of federal, state and local taxes as herein provided, the Company
may require that the Employee (or other person exercising such Option) pay the
Company an amount equal to the federal, state and local withholding taxes on
such income at the time such withholding is required or such other time as shall
be satisfactory to the Company.

     5.2 Amendment, Suspension, Discontinuance or Termination of Plan. The
         ------------------------------------------------------------
Committee may from time to time amend, suspend, discontinue or terminate this
Plan or revise it in any respect whatsoever for the purpose of maintaining or
improving the effectiveness of this Plan as an incentive device, for the purpose
of conforming this Plan to applicable governmental regulations or to any change
in applicable law or regulations or for any other purpose permitted by law;
provided, however, that, except as provided in Section 4.4, no such action by
the Committee shall adversely affect any Option theretofore granted under this
Plan without the consent of the holder so affected; and provided further that
the Committee may not materially increase the number of shares of Common Stock
authorized under Section 3.2 of this Plan or materially modify this Plan's
requirements as to eligibility for Participation without the approval of the
shareholders of the Company.

     5.3 Governing Law.  This Plan and all rights and obligations hereunder
         -------------
shall be

                                       7

<PAGE>

construed in accordance with and governed by the laws of the State of South
Carolina and all applicable federal laws and regulations.

     5.4  Designation. This Plan may be referred to in other documents and
          -----------
instruments as the "1999 First Reliance Bank Employee Stock Option Plan."

     5.5  Indemnification of Committee. In addition to such other rights of
          ----------------------------
indemnification as they may have as directors or as members of the Committee,
the members of the Committee shall be indemnified by the Company against the
reasonable expenses, including attorneys' fees, actually and necessarily
incurred in connection with the defense of any investigation, action, suit or
proceeding, or in connection with any appeal therefrom, to which they or any of
them may be a party by reason of any action taken or failure to act under or in
connection with this Plan or any Option, and against all amounts paid by them in
settlement thereof (provided such settlement is approved by independent legal
counsel selected by the Company) or paid by them in satisfaction of a judgment
in or dismissal or other discontinuance of any such investigation, action, suit
or proceeding, except in relation to matters as to which a final judgment is
rendered that such Committee member is liable for negligence or misconduct in
the performance of his or her duties; provided that, within 60 days after
institution of any such investigation, action, suit or proceeding, a Committee
member shall in writing offer the Company the opportunity, at its own expense,
to handle and defend the same and shall cooperate with the Company and the
Company's counsel.

     5.6  Reservation of Shares. The Company shall at all times during the term
          ---------------------
of this Plan, and so long as any Option shall be outstanding, reserve and keep
available (and will seek or obtain any requisite authority in order to issue
from any regulatory body having jurisdiction) such number of shares of its
Common Stock as shall be sufficient to satisfy the requirements of this Plan.
Notwithstanding the foregoing, the inability of the Company to obtain from any
regulatory body of appropriate jurisdiction authority considered by the Company
to be necessary or desirable to the lawful issuance of any shares of its Common
Stock hereunder shall relieve the Company of any liability in respect of the
nonissuance or sale of such Common Stock as to which such requisite authority
shall not have been obtained.

     5.7  Application of Funds. The proceeds received by the Company from the
          --------------------
sale of Common Stock pursuant to Options will be used for general corporate
purposes.

     5.8  No Obligation to Exercise.  The granting of a Option shall impose no
          -------------------------
obligation upon the holder to exercise such Option.

     5.9  Approval of Shareholders. The Plan is conditioned upon obtaining the
          ------------------------
appropriate approval by the shareholders of the Company in the manner and to
the extent required by the South Carolina Business Corporation Act of 1988, as
amended. The Plan shall be submitted for approval by the shareholders of the
Company prior to April 30, 2000. If the Plan is not so approved prior to such
date, the Company shall be deemed to have adopted, effective August 16, 1999, a
nonqualified stock option plan which will have the same provisions as the Plan.

     5.10 Other Actions. Nothing contained in the Plan shall be construed to
          -------------
limit the

                                       8

<PAGE>

authority of the Company to exercise its corporate rights and powers, including,
but not by way of limitation, the right of the Company to grant or assume
options for proper corporate purposes other than under the Plan with respect to
any employee or other person, firm, corporation or association.

                                       9

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