Document:

First
Reliance Bank

Amended
Salary Continuation Agreement

 

This Amended
Salary Continuation Agreement (this “Agreement”) is entered into as of July 25, 2013, by and between First
Reliance Bank, a South Carolina-chartered bank (the “Bank”), and Jeffrey A. Paolucci, Executive Vice President and
Chief Financial Officer (the “Executive”).

 

Whereas,
recognizing the Executive’s substantial contribution to the Bank’s success and intending to encourage the Executive
to remain an employee, the Bank entered into a Salary Continuation Agreement dated as of November 24, 2006 with the Executive,
amended on December 3, 2008 by the First Amendment of the Salary Continuation Agreement,

 

Whereas,
as amended the Salary Continuation Agreement promises specified benefits to the Executive after retirement, which benefits are
payable from the Bank’s general assets,

 

Whereas,
the Bank and the Executive intend that this Agreement shall amend and restate in its entirety the November 24, 2006 Salary Continuation
Agreement, as amended,

 

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 Bank, is contemplated insofar as the Bank is concerned, and

 

Whereas,
the parties hereto intend that this Agreement shall be considered an unfunded arrangement maintained primarily to provide supplemental
retirement benefits for the Executive, and to be considered a non-qualified benefit plan for purposes of the Employee Retirement
Income Security Act of 1974, as amended (“ERISA”). The Executive is fully advised of the Bank’s financial status.

 

Now
Therefore, in consideration of these premises and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the Executive and the Bank hereby agree as follows.

 

Article
1

Definitions

 

1.1           “Accrual
Balance” means the liability that should be accrued by the Bank under generally accepted accounting principles (“GAAP”)
for the Bank’s obligation to the Executive under this Agreement, applying Accounting Principles Board Opinion No. 12, as
amended by Statement of Financial Accounting Standards No. 106, and the calculation method and discount rate specified hereinafter.
The Accrual Balance shall be calculated such that when it is credited with interest each month the Accrual Balance at Normal Retirement
Age equals the present value of the normal retirement benefits. The discount rate means the rate used by the Plan Administrator
for determining the Accrual Balance. In its sole discretion the Plan Administrator may adjust the discount rate to maintain the
rate within reasonable standards according to GAAP.

 

    	 

    	 

    

 

1.2           “Beneficiary”
means each designated person, or the estate of the deceased Executive, entitled to benefits, if any, upon the death of the Executive,
determined according to Article 4.

 

1.3           “Beneficiary
Designation Form” means the form established from time to time by the Plan Administrator that the Executive completes,
signs, and returns to the Plan Administrator to designate one or more Beneficiaries.

 

1.4           “Change
in Control” shall mean a change in control as defined in Internal Revenue Code section 409A and rules, regulations, and
guidance of general application thereunder issued by the Department of the Treasury, including –

 

(a)            Change
in ownership: a change in ownership of First Reliance Bancshares, Inc., a South Carolina corporation of which the Bank is a
wholly owned subsidiary, occurs on the date any one person or group accumulates ownership of First Reliance Bancshares, Inc. stock
constituting more than 50% of the total fair market value or total voting power of First Reliance Bancshares, Inc. stock, or

 

(b)            Change
in effective control: (x) any one person or more than one person acting as a group acquires within a 12-month period
ownership of First Reliance Bancshares, Inc. stock possessing 30% or more of the total voting power of First Reliance Bancshares,
Inc., or (y) a majority of First Reliance Bancshares, Inc.’s board of directors is replaced during any 12-month period
by directors whose appointment or election is not endorsed in advance by a majority of First Reliance Bancshares, Inc.’s
board of directors, or

 

(c)            Change
in ownership of a substantial portion of assets: a change in ownership of a substantial portion of First Reliance Bancshares,
Inc.’s assets occurs if in a 12-month period any one person or more than one person acting as a group acquires from First
Reliance Bancshares, Inc. assets having a total gross fair market value equal to or exceeding 40% of the total gross fair market
value of all of First Reliance Bancshares, Inc.’s assets immediately before the acquisition or acquisitions. For this purpose,
gross fair market value means the value of First Reliance Bancshares, Inc.’s assets, or the value of the assets being disposed
of, determined without regard to any liabilities associated with the assets.

 

1.5           “Code”
means the Internal Revenue Code of 1986, as amended, and rules, regulations, and guidance of general application issued by the
Department of the Treasury under the Internal Revenue Code of 1986, as amended.

 

1.6           “Disability”
means, because of a medically determinable physical or mental impairment that can be expected to result in death or that can be
expected to last for a continuous period of at least 12 months, (x) the Executive is unable to engage in any substantial
gainful activity, or (y) the Executive is receiving income replacement benefits for a period of at least three months under
an accident and health plan of the employer. Medical determination of disability may be made either by the Social Security Administration
or by the provider of an accident or health plan covering employees of the Bank. Upon request of the Plan Administrator, the Executive
must submit proof to the Plan Administrator of the Social Security Administration’s or provider’s determination.

 

    	 

    	 

    

 

1.7           “Early
Termination” means Separation from Service before Normal Retirement Age for reasons other than death, Disability, Termination
with Cause, or after a Change in Control.

 

1.8           “Effective
Date” means January 1, 2006.

 

1.9           “Intentional,”
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 Bank.

 

1.10         “Normal
Retirement Age” means age 65.

 

1.11         “Plan
Administrator” or “Administrator” means the plan administrator described in Article 8.

 

1.12         “Plan
Year” means a twelve-month period commencing on January 1 and ending on December 31 of each year. The initial Plan Year
shall commence on the effective date of this Agreement.

 

1.13         “Separation
from Service” means separation from service as defined in Internal Revenue Code section 409A and rules, regulations,
and guidance of general application thereunder issued by the Department of the Treasury, including termination for any reason of
the Executive’s service as an executive and independent contractor to the Bank and any member of a controlled group, as defined
in Code section 414, other than because of a leave of absence approved by the Bank or the Executive’s death. For purposes
of this Agreement, if there is a dispute about the employment status of the Executive or the date of the Executive’s Separation
from Service, the Bank shall have the sole and absolute right to decide the dispute unless a Change in Control shall have occurred.

 

1.14         “Termination
with Cause” and “Cause” shall have the same meaning specified in any effective severance or employment
agreement existing on the date hereof or hereafter entered into between the Executive and the Bank or between the Executive and
First Reliance Bancshares, Inc. If the Executive is not a party to a severance or employment agreement containing a definition
of termination with cause, Termination with Cause means the Bank terminates the Executive’s employment for any of the following
reasons –

 

(a)            the
Executive’s gross negligence or gross neglect of duties or intentional and material failure to perform stated duties after
written notice thereof, or

 

(b)            disloyalty
or dishonesty by the Executive in the performance of the Executive’s duties, or a breach of the Executive’s fiduciary
duties for personal profit, in any case whether in the Executive’s capacity as a director or officer, or

 

(c)            intentional
wrongful damage by the Executive to the business or property of the Bank or its affiliates, including without limitation the reputation
of the Bank, which in the judgement of the Bank causes material harm to the Bank or affiliates, or

 

    	 

    	 

    

 

(d)          a
willful violation by the Executive of any applicable law or significant policy of the Bank or an affiliate that, in the Bank’s
judgement, results in an adverse effect on the Bank or the 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 Bank, or

 

(e)          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 Bank, under the Bank’s blanket bond or other fidelity or insurance policy covering
its directors, officers, or employees, or

 

(f)          the
Executive is removed from office or permanently prohibited from participating in the Bank’s affairs by an order issued under
section 8(e)(4) or section 8(g)(1) of the Federal Deposit Insurance Act, 12 U.S.C. 1818(e)(4) or (g)(1), or

 

(g)          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 45 consecutive days or more.

 

Article
2

Lifetime
Benefits

 

2.1           Normal
Retirement Age. Unless Separation from Service or a Change in Control occurs before Normal Retirement Age, when the Executive
attains Normal Retirement Age the Bank shall pay to the Executive the benefit described in this section 2.1 instead of any other
benefit under this Agreement. If the Executive’s Separation from Service thereafter is a Termination with Cause or if this
Agreement terminates under Article 5, no further benefits shall be paid.

 

		2.1.1	Amount of benefit. The annual benefit under this section 2.1 is $100,000.

 

		2.1.2	Payment of benefit. The Bank shall pay the annual benefit to the Executive in 12 equal monthly installments payable
on the first day of each month, beginning with the month immediately after the month in which the Executive attains Normal Retirement
Age. The annual benefit shall be paid to the Executive for 15 years.

 

2.2           Early
Termination. Unless a Change in Control shall have previously occurred, upon Early Termination the Bank shall pay to the Executive
the benefit described in this section 2.2 instead of any other benefit under this Agreement.

 

		2.2.1	Amount of benefit. The annual benefit under this section 2.2 is calculated as the amount that fully amortizes the Accrual
Balance existing at the end of the month immediately before the month in which Separation from Service occurs, amortizing that
Accrual Balance over 15 years and taking into account interest at the discount rate or rates established by the Plan Administrator.

 

    	 

    	 

    

 

		2.2.2	Payment of benefit. The Bank shall pay the annual benefit to the Executive in 12 equal monthly installments payable
on the first day of each month, beginning with the later of (x) the seventh month after the Executive’s Separation
from Service, or (y) the month immediately after the month in which the Executive attains Normal Retirement Age. The annual
benefit shall be paid to the Executive for 15 years.

 

2.3           Disability.
Unless a Change in Control shall have previously occurred, upon Separation from Service because of Disability before Normal Retirement
Age the Bank shall pay to the Executive the benefit described in this section 2.3 instead of any other benefit under this Agreement.

 

		2.3.1	Amount of benefit. The annual benefit under this section 2.3 is calculated as the amount that fully amortizes the Accrual
Balance existing at the end of the month immediately before the month in which Separation from Service occurs, amortizing that
Accrual Balance over 15 years and taking into account interest at the discount rate or rates established by the Plan Administrator.

 

		2.3.2	Payment of benefit. Beginning with the later of (x) the seventh month after the Executive’s Separation
from Service, or (y) the month immediately after the month in which the Executive attains Normal Retirement Age, the Bank
shall pay the Disability benefit to the Executive in 12 equal monthly installments on the first day of each month. The annual benefit
shall be paid to the Executive for 15 years.

 

2.4           Change
in Control. If a Change in Control occurs after the date of this Agreement but before Normal Retirement Age and before Separation
from Service, the Bank shall pay to the Executive the benefit described in this section 2.4 instead of any other benefit under
this Agreement.

 

		2.4.1	Amount of benefit. The benefit under this section 2.4 is the Accrual Balance that would exist on the date that is the
earlier to occur of (x) the date on which the executive attains the Normal Retirement Age and (y) the date that is
60 months after the date on which the Change in Control occurs, with the Accrual Balance calculated in accordance with this Agreement
to account for the Bank’s obligation to the Executive under section 2.1 at the Executive’s Normal Retirement Age, disregarding
the Change in Control occurring before the Executive’s Normal Retirement Age. For example, if the Change in Control occurs
when fewer than 60 months remain before the Executive attains Normal Retirement Age, for example at age 61 or 63, the benefit under
this section 2.4 is the Accrual Balance required by section 2.1 at the Executive’s Normal Retirement Age. If instead the
Change in Control occurs when more than 60 months remain before the Executive attains Normal Retirement Age, for example at age
57 or 59, the benefit under this section 2.4 is the Accrual Balance required by section 2.1 as of the date that is 60 months after
the date of the Change in Control.

 

		2.4.2	Payment of benefit. The Bank shall pay the Change-in-Control benefit under section 2.4 of this Agreement to the Executive
in one lump sum within three days after the Change in Control, without discount for the time value of money. If the Executive receives
the benefit under this section 2.4 because of the occurrence of a Change in Control, the Executive shall not be entitled to claim
additional benefits under section 2.4 if an additional Change in Control occurs thereafter.

    	 

    	 

    

 

2.5           Lump-sum
Payment of Normal Retirement Benefit, Early Termination Benefit, or Disability Benefit Being Paid to the Executive when a Change
in Control Occurs. If when a Change in Control occurs the Executive is receiving the benefit under section 2.1, the Bank shall
pay the remaining salary continuation benefits to the Executive in a single lump sum within three days after the Change in Control.
If when a Change in Control occurs the Executive is receiving or is entitled at Normal Retirement Age to receive the benefit under
sections 2.2 or 2.3, the Bank shall pay the remaining salary continuation benefits to the Executive in a single lump sum on the
later of (x) the third day after the Change in Control or (y) the first day of the seventh month after the month
in which the Executive’s Separation from Service occurs. The lump-sum payment due to the Executive as a result of a Change
in Control shall be an amount equal to the Accrual Balance amount corresponding to the particular benefit when the Change in Control
occurs.

 

2.6           Annual
Benefit Statement. Within 120 days after the end of each Plan Year the Plan Administrator shall provide or cause to be provided
to the Executive an annual benefit statement showing benefits payable or potentially payable to the Executive under this Agreement.
Each annual benefit statement shall supersede the previous year’s annual benefit statement. If there is a contradiction between
this Agreement and the annual benefit statement concerning the amount of a particular benefit payable or potentially payable to
the Executive under sections 2.2, 2.3, or 2.4 hereof, the amount of the benefit determined under this Agreement shall control.

 

2.7           Savings
Clause Relating to Compliance with Code Section 409A. Despite any contrary provision of this Agreement, if when the Executive’s
employment terminates the Executive is a specified employee, as defined in Code section 409A, and if any payments under Article
2 of this Agreement will result in additional tax or interest to the Executive because of section 409A, the Executive will not
be entitled to the payments under Article 2 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. If
any provision of this Agreement would subject the Executive to additional tax or interest under section 409A, the Bank shall reform
the provision. However, the Bank 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 Bank shall not be required to incur any additional compensation
expense as a result of the reformed provision.

 

2.8           One
Benefit Only. Despite anything to the contrary in this Agreement, the Executive and Beneficiary are entitled to one benefit
only under this Agreement, which shall be determined by the first event to occur that is dealt with by this Agreement. Except as
provided in section 2.5 or Article 3, subsequent occurrence of events dealt with by this Agreement shall not entitle the Executive
or Beneficiary to other or additional benefits under this Agreement.

 

    	 

    	 

    

 

Article
3

Death
Benefits

 

3.1           Death
Before Separation from Service. If the Executive dies before Separation from Service, at the Executive’s death the Executive’s
Beneficiary shall be entitled to an amount in cash equal to the Accrual Balance existing when the Executive’s death occurs,
unless the Change-in-Control benefit shall have been paid to the Executive under section 2.4 or unless a Change-in-Control payout
shall have occurred under section 2.5. No benefit shall be paid under this section 3.1 if the Change-in-Control benefit shall have
been paid to the Executive under section 2.4 or if a Change-in-Control payout shall have occurred under section 2.5. If a benefit
is payable to the Executive’s Beneficiary under this section 3.1, the benefit shall be paid in a single lump sum 90 days
after the Executive’s death. However, no benefits shall be paid or payable under this Agreement to the Executive, the Executive’s
Beneficiary, or the Executive’s estate if this Agreement is terminated under Article 5.

 

3.2           Death
after Separation from Service. If the Executive dies after Separation from Service and if Separation from Service was not a
Termination with Cause, at the Executive’s death the Executive’s Beneficiary shall be entitled to an amount in cash
equal to the Accrual Balance remaining when the Executive’s death occurs, unless the Change-in-Control benefit shall have
been paid to the Executive under section 2.4 or unless a Change-in-Control payout shall have occurred under section 2.5. No benefit
shall be paid under this section 3.2 if the Change-in-Control benefit shall have been paid to the Executive under section 2.4 or
if a Change-in-Control payout shall have occurred under section 2.5. If a benefit is payable to the Executive’s Beneficiary
under this section 3.2, the benefit shall be paid in a single lump sum 90 days after the Executive’s death. However, no benefits
shall be paid or payable under this Agreement to the Executive, the Executive’s Beneficiary, or the Executive’s estate
if this Agreement is terminated under Article 5.

 

Article
4

Beneficiaries

 

4.1           Beneficiary Designations. The Executive shall
have the right to designate at any time a Beneficiary to receive any benefits payable under this Agreement after the Executive’s
death. The Beneficiary designated under this Agreement may be the same as or different from the beneficiary designation under
any other benefit plan of the Bank in which the Executive participates.

 

4.2           Beneficiary
Designation: Change. The Executive shall designate a Beneficiary by completing and signing the Beneficiary Designation Form
and delivering it to the Plan Administrator or its designated agent. The Executive’s Beneficiary designation shall be deemed
automatically revoked if the Beneficiary predeceases the Executive or if the Executive names a spouse as Beneficiary and the marriage
is subsequently dissolved. The Executive shall have the right to change a Beneficiary by completing, signing, and otherwise complying
with the terms of the Beneficiary Designation Form and the Plan Administrator’s rules and procedures, as in effect from time
to time. Upon acceptance by the Plan Administrator of a new Beneficiary Designation Form, all Beneficiary designations previously
filed shall be cancelled. The Plan Administrator shall be entitled to rely on the last Beneficiary Designation Form filed by the
Executive and accepted by the Plan Administrator before the Executive’s death.

 

    	 

    	 

    

 

4.3           Acknowledgment.
No designation or change in designation of a Beneficiary shall be effective until received, accepted, and acknowledged in writing
by the Plan Administrator or its designated agent.

 

4.4           No
Beneficiary Designation. If the Executive dies without a valid beneficiary designation or if all designated Beneficiaries predecease
the Executive, the Executive’s spouse shall be the designated Beneficiary. If the Executive has no surviving spouse the benefits
shall be made to the personal representative of the Executive’s estate.

 

4.5           Facility
of Payment. If a benefit is payable to a minor, to a person declared incapacitated, or to a person incapable of handling the
disposition of his or her property, the Bank may pay the benefit to the guardian, legal representative, or person having the care
or custody of the minor, incapacitated person, or incapable person. The Bank may require proof of incapacity, minority, or guardianship
as it may deem appropriate before distribution of the benefit. Distribution shall completely discharge the Bank from all liability
for the benefit.

 

Article
5

General
Limitations

 

5.1           Termination
with Cause. Despite any contrary provision of this Agreement, the Bank shall not pay any benefit under this Agreement and this
Agreement shall terminate if Separation from Service is the result of Termination with Cause.

 

5.2           Removal.
If the Executive is removed from office or permanently prohibited from participating in the Bank’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), all obligations of the Bank
under this Agreement shall terminate as of the effective date of the order.

 

5.3           Default.
Despite any contrary provision of this Agreement, if the Bank is in “default” or “in danger of default,”
as those terms are defined in section 3(x) of the Federal Deposit Insurance Act, 12 U.S.C. 1813(x), all obligations under this
Agreement shall terminate.

 

5.4           FDIC
Open-Bank Assistance. All obligations under this Agreement shall terminate, except to the extent determined that continuation
of the contract is necessary for the continued operation of the Bank, when the Federal Deposit Insurance Corporation enters into
an agreement to provide assistance to or on behalf of the Bank under the authority contained in Federal Deposit Insurance Act section
13(c). 12 U.S.C. 1823(c). Rights of the parties that have already vested shall not be affected by such action, however.

 

Article
6

Claims
and Review Procedures

 

6.1           Claims
Procedure. Any person who has not received benefits under this Agreement that he or she believes should be paid (the “claimant”)
shall make a claim for benefits as follows.

 

    	 

    	 

    

 

		6.1.1	Initiation – written claim. The claimant
initiates a claim by submitting to the Administrator a written claim for the benefits. If the claim relates to the contents of
a notice received by the claimant, the claim must be made within 60 days after the notice was received by the claimant. All other
claims must be made within 180 days after the date of the event that caused the claim to arise. The claim must state with particularity
the determination desired by the claimant.

 

		6.1.2	Timing of Administrator response. The Administrator
shall respond to the claimant within 90 days after receiving the claim. If the Administrator determines that special circumstances
require additional time for processing the claim, the Administrator can extend the response period by an additional 90 days by
notifying the claimant in writing, before the end of the initial 90-day period, that an additional period is required. The notice
of extension must set forth the special circumstances and the date by which the Administrator expects to render its decision.

 

		6.1.3	Notice of decision. If the Administrator denies
part or all of the claim, the Administrator shall notify the claimant in writing of the denial. The Administrator shall write
the notification in a manner calculated to be understood by the claimant. The notification shall set forth –

 

		(a)	The specific reasons for the denial,

		(b)	A reference to the specific provisions of this Agreement on which the denial is based,

		(c)	A description of any additional information or material necessary for the claimant to perfect the claim and an explanation
of why it is needed,

		(d)	An explanation of the Agreement’s review procedures and the time limits applicable to such procedures, and

		(e)	A statement of the claimant’s right to bring a civil action under ERISA section 502(a) after an adverse benefit determination
on review.

 

6.2           Review
Procedure. If the Administrator denies part or all of the claim, the claimant shall have the opportunity for a full and fair
review by the Administrator of the denial, as follows.

 

		6.2.1	Initiation – written request. To initiate
the review, the claimant must file with the Administrator a written request for review within 60 days after receiving the Administrator’s
notice of denial.

 

		6.2.2	Additional submissions – information access.
The claimant shall then have the opportunity to submit written comments, documents, records, and other information relating to
the claim. Upon request and free of charge, the Administrator shall also provide the claimant reasonable access to and copies
of all documents, records, and other information relevant (as defined in applicable ERISA regulations) to the claimant’s
claim for benefits.

 

		6.2.3	Considerations on review. In considering the
review, the Administrator shall take into account all materials and information the claimant submits relating to the claim, without
regard to whether the information was submitted or considered in the initial benefit determination.

 

    	 

    	 

    

 

		6.2.4	Timing of Administrator response. The Administrator
shall respond in writing to the claimant within 60 days after receiving the request for review. If the Administrator determines
that special circumstances require additional time for processing the claim, the Administrator can extend the response period
by an additional 60 days by notifying the claimant in writing before the end of the initial 60-day period that an additional period
is required. The notice of extension must set forth the special circumstances and the date by which the Administrator expects
to render its decision.

 

		6.2.5	Notice of decision. The Administrator shall
notify the claimant in writing of its decision on review. The Administrator shall write the notification in a manner calculated
to be understood by the claimant. The notification shall set forth:

 

		(a)	The specific reasons for the denial,

		(b)	A reference to the specific provisions of the Agreement on which the denial is based,

		(c)	A statement that the claimant is entitled to receive, upon request and free of charge, reasonable access to and copies of all
documents, records, and other information relevant (as defined in applicable ERISA regulations) to the claimant’s claim for
benefits, and

		(d)	A statement of the claimant’s right to bring a civil action under ERISA section 502(a).

 

Article
7

Miscellaneous

 

7.1           Amendments
and Termination. Subject to section 7.14 of this Agreement, this Agreement may be amended solely by a written agreement signed
by the Bank and by the Executive, and except for termination occurring under Article 5 this Agreement may be terminated solely
by a written agreement signed by the Bank and by the Executive.

 

7.2           Binding
Effect. This Agreement shall bind the Executive, the Bank, and their beneficiaries, survivors, executors, successors, administrators,
and transferees.

 

7.3           No
Guarantee of Employment. This Agreement is not an employment policy or contract. It does not give the Executive the right to
remain an employee of the Bank, nor does it interfere with the Bank’s right to discharge the Executive. It also does not
require the Executive to remain an employee nor interfere with the Executive’s right to terminate employment at any time.

 

7.4           Non-Transferability.
Benefits under this Agreement cannot be sold, transferred, assigned, pledged, attached, or encumbered in any manner.

 

7.5           Successors;
Binding Agreement. The Bank will require any successor (whether direct or indirect, by purchase, merger, consolidation, or
otherwise) to all or substantially all of the business or assets of the Bank, by an assumption agreement in form and substance
satisfactory to the Executive, to expressly assume and agree to perform this Agreement in the same manner and to the same extent
that the Bank would be required to perform this Agreement if no such succession had occurred.

 

    	 

    	 

    

 

7.6           Tax
Withholding. The Bank shall withhold any taxes that are required to be withheld from the benefits provided under this Agreement.

 

7.7           Applicable
Law. This Agreement and all rights hereunder shall be governed by the laws of the State of South Carolina, except to the extent
preempted by the laws of the United States of America.

 

7.8           Unfunded
Arrangement. The Executive and Beneficiary are general unsecured creditors of the Bank for the payment of benefits under this
Agreement. The benefits represent the mere promise by the Bank to pay benefits. Rights to benefits are not subject in any manner
to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, attachment, or garnishment by creditors. Any insurance
on the Executive’s life is a general asset of the Bank to which the Executive and Beneficiary have no preferred or secured
claim.

 

7.9           Entire
Agreement. This Agreement constitutes the entire agreement between the Bank and the Executive concerning the subject matter.
No rights are granted to the Executive under this Agreement other than those specifically set forth. This Agreement amends and
restates in its entirety the Salary Continuation Agreement dated as of November 24, 2006 between the Bank and the Executive, as
amended on December 3, 2008 by the First Amendment of the Salary Continuation Agreement. From and after the date of this Agreement
the November 24, 2006 Salary Continuation Agreement, as amended by the December 3, 2008 First Amendment of the Salary Continuation
Agreement, shall be void and of no further force or effect.

 

7.10         Severability.
If any provision of this Agreement is held invalid, such invalidity shall not affect any other provision of this Agreement not
held invalid, and each such other provision shall continue in full force and effect to the full extent consistent with law. If
any provision of this Agreement is held invalid in part, such invalidity shall not affect the remainder of the provision not held
invalid, and the remainder of such provision together with all other provisions of this Agreement shall continue in full force
and effect to the full extent consistent with law.

 

7.11         Headings.
Caption headings and subheadings herein are included solely for convenience of reference and shall not affect the meaning or interpretation
of any provision of this Agreement.

 

7.12         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, to the following
addresses or to such other address as either party may designate by like notice. If to the Bank, notice shall be given to the board
of directors, First Reliance Bank, 2170 West Palmetto Street, Florence, South Carolina 29501, or to such other or additional person
or persons as the Bank shall have designated to the Executive in writing. If to the Executive, notice shall be given to the Executive
at the Executive’s address appearing on the Bank’s records, or to such other or additional person or persons as the
Executive shall have designated to the Bank in writing.

 

    	 

    	 

    

 

7.13         Payment
of Legal Fees. The Bank is aware that after a Change in Control management of the Bank could cause or attempt to cause the
Bank to refuse to comply with its obligations under this Agreement, or could institute or cause or attempt to cause the Bank 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.
The Bank intends 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. The Bank intends 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 Bank has failed to comply with any of its obligations under this Agreement, or (y)
the Bank 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 Bank irrevocably authorizes the Executive from time to time to retain counsel of the Executive’s
choice, at the Bank’s expense as provided in this section 7.13, to represent the Executive in the initiation or defense of
any litigation or other legal action, whether by or against the Bank or any director, officer, stockholder, or other person affiliated
with the Bank, in any jurisdiction. Despite any existing or previous attorney-client relationship between the Bank and any counsel
chosen by the Executive under this section 7.13, the Bank irrevocably consents to the Executive entering into an attorney-client
relationship with that counsel, and the Bank 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 Bank on a regular, periodic basis upon presentation by the Executive of a statement
or statements prepared by counsel in accordance with counsel’s customary practices, up to a maximum aggregate amount of $250,000,
whether suit be brought or not, and whether or not incurred in trial, bankruptcy, or appellate proceedings. The Bank’s obligation
to pay the Executive’s legal fees provided by this section 7.13 operates separately from and in addition to any legal fee
reimbursement obligation the Bank may have with the Executive under any separate employment, severance, or other agreement between
the Executive and the Bank. Despite any contrary provision within this Agreement however, the Bank 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].

 

7.14         Termination
or Modification of Agreement Because of Changes in Law, Rules or Regulations. The Bank is entering into this Agreement on the
assumption that certain existing tax laws, rules, and regulations will continue in effect in their current form. If that assumption
materially changes and the change has a material detrimental effect on this Agreement, then the Bank reserves the right to terminate
or modify this Agreement accordingly, subject to the written consent of the Executive, which shall not be unreasonably withheld.
This section 7.14 shall become null and void effective immediately upon a Change in Control.

 

Article
8

Administration
of Agreement

 

8.1           Plan
Administrator Duties. This Agreement shall be administered by a Plan Administrator consisting of the Board or such committee
or person as the Board shall appoint. The Executive may not be a member of the Plan Administrator. The Plan Administrator shall
have the discretion and authority to (x) make, amend, interpret, and enforce all appropriate rules and regulations for the
administration of this Agreement and (y) decide or resolve any and all questions that may arise, including interpretations
of this Agreement.

 

    	 

    	 

    

 

8.2           Agents.
In the administration of this Agreement the Plan Administrator may employ agents and delegate to them such administrative duties
as it sees fit (including acting through a duly appointed representative) and may from time to time consult with counsel, who may
be counsel to the Bank.

 

8.3           Binding
Effect of Decisions. The decision or action of the Plan Administrator about any question arising out of the administration,
interpretation, and application of the Agreement and the rules and regulations promulgated hereunder shall be final and conclusive
and binding upon all persons having any interest in the Agreement. No Executive or Beneficiary shall be deemed to have any right,
vested or nonvested, regarding the continued use of any previously adopted assumptions, including but not limited to the discount
rate and calculation method employed in the determination of the Accrual Balance.

 

8.4           Indemnity
of Plan Administrator. The Bank shall indemnify and hold harmless the members of the Plan Administrator against any and all
claims, losses, damages, expenses, or liabilities arising from any action or failure to act with respect to this Agreement, except
in the case of willful misconduct by the Plan Administrator or any of its members.

 

8.5           Bank
Information. To enable the Plan Administrator to perform its functions, the Bank shall supply full and timely information to
the Plan Administrator on all matters relating to the date and circumstances of the retirement, Disability, death, or Separation
from Service of the Executive, and such other pertinent information as the Plan Administrator may reasonably require.

 

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

 

	Executive:	Bank:
	 	First Reliance Bank

 

	 	 	By:	 
	Jeffrey A. Paolucci	 	 	F.R. Saunders Jr.
	 	 	Its:	President and Chief Executive Officer

 

	 	And By:	 
	 	 	Leonard A. Hoogenboom
	 	Its:	Chairman of the Board

 

    	 

    	 

    

 

Beneficiary
Designation

First
Reliance Bank

Amended
Salary Continuation Agreement

 

I, Jeffrey A. Paolucci, designate the following
as beneficiary of any death benefits under this Amended Salary Continuation Agreement –

 

Primary:

	 	.

 

Contingent:

	 	.

 

Note: To name a trust as beneficiary,
please provide the name of the trustee(s) and the exact name and date of the trust agreement.

 

I understand that I may change these beneficiary
designations by filing a new written designation with the Bank. I further understand that the designations will be automatically
revoked if the beneficiary predeceases me, or if I have named my spouse as beneficiary and our marriage is subsequently dissolved.

 

	Signature:	 
	 	Jeffrey A. Paolucci
	 	 
	Date:	July 25, 2013 

 

Accepted by the Bank this                 day
of                                       
, 2013            .

 

By:

 

Print Name:

 

Title: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 Paul C. Saunders, Senior Vice President 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 Senior Vice President 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 Senior Vice President 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.
The Executive shall serve under the direction of the Employer’s President and Chief Executive Officer 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 President and Chief Executive Officer. 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.

 

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 $110,000, 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 to (x)
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) 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 social 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)          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. 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,

 

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 became 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.

 

(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)
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. 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 on him 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” means
–

 

		(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 between the Bank and the
Executive, 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 in nature 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 he 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 his rights 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 his employment terminates, 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 termination of his employment.

 

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
connection with 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 $250,000, 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: 
	Paul C. Saunders	 	 
	 	 	Its:
	 	 	 
	 	 	First Reliance Bancshares, Inc.
	 	 	 
	 	 	By: 
	 	 	 
	 	 	Its:

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