Document:

Exhibit 10.1

 

 

 

 

Exhibit 10.1

Southern
First Bank

Salary
Continuation Agreement

 

            This
Salary Continuation Agreement
(this “Agreement”) is made and entered into as of the 30th day of  September,
2013, by and between Southern First Bank, a South Carolina-chartered bank (the
“Bank”), and Michael D. Dowling, its Executive Vice President and Chief
Financial Officer (the “Executive”).

 

            Whereas, the Executive has
contributed substantially to the success of the Bank and the Bank desires that
the Executive continue in its employ,

 

            Whereas, to encourage the Executive
to remain an employee of the Bank, the Bank is willing to provide salary
continuation benefits to the Executive, payable from the Bank’s general assets,

 

            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

 

            The
following words and phrases used in this Agreement have the meanings specified.

 

            1.1       “Accrual
Balance” means the liability that should be accrued by the Bank under
generally accepted accounting principles (“GAAP”), as consistently applied in
accordance with past practices at the Bank, for the Bank’s obligation to the
Executive under this Agreement.

 

            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 any one of the following events occurs, provided the
event constitutes a change in control within the meaning of Internal Revenue
Code section 409A and rules, regulations, and guidance of general application
thereunder issued by the Department of the Treasury, and provided the
occurrence of the event is objectively determinable and does not require the
exercise of judgment or discretion on the part of the Plan Administrator or any
other person –

 

                        (a)       
the individuals who, as of the date of this Agreement, are members of the Board
of Directors of Southern First Bancshares, Inc., of which the Bank is a wholly
owned subsidiary (the “Incumbent Board”) cease for any reason during any twelve
(12) -month period to constitute more than fifty percent (50%) of the Board of
Directors of Southern First Bancshares, Inc.; provided, however, that if the
election, or nomination for election by Southern First Bancshares, Inc.’s
shareholders, of any new director was approved in advance by a vote of more
than fifty percent (50%) of the then existing Board of Directors of Southern
First Bancshares, Inc., such new director shall, for purposes of this
Agreement, be considered as a member of the Incumbent Board; 

 

(b)        acquisitions during a
twelve (12) – month period ending on the date of the most recent acquisition by
such Person (as the term “person” is used for purposes of Section 13(d) or
14(d) of the Exchange Act, specifically excluding a transfer to a subsidiary of
Southern First Bancshares, Inc.) of any voting securities of Southern First
Bancshares, Inc. (the “Voting Securities”) by any Person immediately after
which such Person has “Beneficial Ownership” (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of thirty-five percent (35%) or more of the
combined voting power of Southern First Bancshares, Inc.'s then outstanding
Voting Securities; or

 

(c)        acquisitions of the
assets of Southern First Bancshares, Inc. that have a total gross fair market
value equal to or more than forty percent (40%) of the total gross fair market
value (as the term “gross fair market value” is used for purposes of Section
1.409A-3(g)(5)(vi) of the Code) of all of the assets of Southern First
Bancshares, Inc. immediately prior to such acquisitions by any Person during a
twelve (12) – month period ending on the date of the most recent acquisition. 

 

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

 

            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 twelve (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 (3) 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.

 

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

 

            1.8       “Effective
Date” means September 30, 2013.

 

            1.9       “Intentional”
does not mean an act or failure to act on the part of the Executive 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 the Executive’s 65th birthday.

 

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

 

            1.12     “Plan
Year” means a twelve (12) - 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 the Executive’s service as an executive or independent
contractor to the Bank and any member of a controlled group, as defined in Code
section 414, terminates for any reason, 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, such status will be
determined in compliance with Section 409A of the Code, specifically Reg. §
1.409A-1(h).

 

            1.14     “Termination
for Cause” and “Cause” shall have the meaning specified in any
effective severance or employment agreement existing on the date hereof or
hereafter entered into between the Executive and the Bank and/or Southern First
Bancshares, Inc.  If the Executive is not a party to a severance or employment
agreement containing a definition for termination for cause, Termination for
Cause, for purposes of this Agreement, means the Bank and/or Southern First
Bancshares, Inc. 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

 

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                        (c)        intentional
wrongful damage by the Executive to the business or property of the Bank or
Southern First Bancshares, Inc. or any of its affiliates, including without
limitation the reputation of the Bank or Southern First Bancshares, Inc., which
in the judgment of the Bank or Southern First Bancshares, Inc. causes material
harm to the Bank or Southern First Bancshares, Inc. or any of its affiliates,
or

 

                        (d)        a
willful violation by the Executive of any applicable law or significant policy
of the Bank or Southern First Bancshares, Inc. or any of its affiliates that,
in the Bank’s or Southern First Bancshares, Inc.’s judgment, results in an
adverse effect on the Bank or Southern First Bancshares, Inc. or any of its
affiliates, 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 Southern First Bancshares, Inc., 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 or Southern First Bancshares, Inc., under the Bank’s or
Southern First Bancshares, Inc.’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 or Southern First Bancshares, Inc.’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 forty-five (45) consecutive days or more.

 

Article 2

Lifetime with a Fifteen (15) – Year Term
Certain Benefits Period

 

            2.1       Normal
Retirement Benefit.  Unless Separation from Service or a Change in Control
occurs before Normal Retirement Age, when the Executive attains the 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 for 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 One Hundred Fifty
Thousand & No/100 ($150,000) Dollars.

 

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            2.1.2    Payment of
Benefit.  The Bank shall pay the annual benefit to the Executive in twelve
(12) equal monthly installments payable on the first (1st) day of
each month, beginning with the month immediately after the month in which the
Executive attains the Normal Retirement Age.  The Normal Retirement annual
benefit shall be paid to the Executive for the Executive’s lifetime with a
fifteen (15) – year term certain period.

 

            2.2       Early
Termination Benefit.  Provided the Executive shall have been continuously
employed by the Bank for five (5) consecutive years from his hire date of March
17, 2011 when Early Termination occurs, upon such 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.  The Executive and the Executive’s
Beneficiary shall be entitled to no benefits whatsoever under this Agreement if
Early Termination occurs before the Executive shall have been continuously
employed by the Bank for five (5) consecutive years from his hire date of March
17, 2011; provided, however, all of the Executive’s benefits under this
section 2.2 shall be forfeited if at any time from the date of the Executive’s
Early Termination and for a period of one (1) year thereafter, the Executive
(without the prior written consent of the Bank) competes with the Bank or
Southern First Bancshares, Inc. or any of its subsidiaries, directly or
indirectly, by engaging in forming, by serving as an organizer, director,
officer of, employee or agent, or consultant to, or by acquiring or maintaining
more than a one percent (1%) passive investment in, a depository financial
institution or holding company thereof if such depository financial institution
or holding company has or establishes one (1) or more offices or branches which
are located within thirty (30) miles of any office or branch of the Bank in
existence at the date of the Executive’s Early Termination.  

 

            2.2.1    Amount of
Benefit.  The annual benefit under this section 2.2 is calculated by taking
the Accrual Balance existing at the end of the month immediately before the
month in which Separation from Service occurs, compounding this Accrual Balance
forward to the Executive’s Normal Retirement Age taking into account interest
at the discount rate or rates established by the Plan Administrator, and
amortizing this resulting amount over the period specified in section 2.2.2
beginning with the Executive’s Normal Retirement Age.

 

            2.2.2    Payment of
Benefit.   The Bank shall pay the annual benefit to the Executive in twelve
(12) equal monthly installments payable on the first (1st) day of
each month, beginning with the later of (x) the seventh (7th)
month after the Executive’s Separation from Service, or (y) the month
immediately after the month in which the Executive attains the Normal
Retirement Age.  The annual benefit shall be paid to the Executive for the
Executive’s lifetime with a fifteen (15) – year term certain period.

 

            2.3       Disability
Benefit.  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.

 

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            2.3.1    Amount of
Benefit.   The annual benefit under this section 2.3 is calculated by
taking the Accrual Balance existing at the end of the month immediately before
the month in which Separation from Service occurs, compounding this Accrual
Balance forward to the Executive’s Normal Retirement Age taking into account
interest at the discount rate or rates established by the Plan Administrator,
and amortizing this resulting amount over the period specified in section 2.3.2
beginning with the Executive’s Normal Retirement Age.

 

            2.3.2    Payment of
Benefit.  Beginning with the later of (x) the seventh (7th)
month after the Executive’s Separation from Service, or (y) the month
immediately after the month in which the Executive attains the Normal
Retirement Age, the Bank shall pay the Disability benefit to the Executive in
twelve (12) equal monthly installments on the first (1st) day of
each month.  The annual benefit shall be paid to the Executive for the
Executive’s lifetime with a fifteen (15) – year term certain period.

 

            2.4       Change-in-Control
Benefit.  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 and the Bank shall exercise its
discretion to terminate this Agreement.

 

            2.4.1    Amount of
Benefit.  The benefit under this
section 2.4 is the amount equal to the Executive’s Accrual Balance at the
Executive’s Normal Retirement Age, without additional discount for the time
value of money.

 

            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 (3) days
after the Change in Control.  Payment of the Change-in-Control benefit shall
fully discharge the Bank from all obligations under this Agreement, except the
legal fee reimbursement obligation under section 7.13. 

 

            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 a
Change in Control occurs at any time during the salary continuation benefit
payment period and if when the Change in Control occurs the Executive is
receiving the benefit provided by sections 2.1.2, 2.2.2, or 2.3.2, the Bank
shall pay the present value, calculated at the discount rate or rates
established by the Plan Administrator, of the remaining salary continuation
benefits to the Executive in a single lump-sum within three (3) days after the
Change in Control. 

 

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            2.6       Contradiction
Between the Agreement and Schedule A.  Schedule A attached hereto and
incorporated herein contains sample calculations of the Executive’s potential
benefits under the various sections of this Agreement, using certain
assumptions as detailed in the attached Schedule A.  These calculations are for
illustrative and informational purposes only and are subject to change due to
changes in the assumptions from time to time, such as changes in the assumed
discount rate, variations between the assumed timing of certain payments and
events and the eventual actual timing of such payments and events, and other
factors.  If there is a contradiction between the terms of this Agreement and
Schedule A concerning the actual amount of a particular benefit amount due the
Executive under this Agreement, then the actual amount of the benefit as set
forth in this Agreement shall control.  If the Plan Administrator changes the
discount rate employed for purposes of calculating the Accrual Balance, the
Plan Administrator shall prepare or cause to be prepared a revised Schedule A,
which shall supersede and replace any and all Schedules A previously prepared
under or attached to this Agreement.

 

            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 (6) 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
during Active Service.  Except as provided in section 5.2, if the Executive
dies in active service to the Bank before Normal Retirement Age, the
Executive’s Beneficiary shall be entitled to:

 

            3.1.1    Amount of
Benefit.  The benefit under this section 3.1 is an amount equal to the Executive’s
Accrual Balance at the time of the Executive’s death.

 

            3.1.2    Payment of
Benefit.  The Bank shall pay the Death during Active Service benefit to the
Executive’s Beneficiary within sixty (60) days of the Executive’s death.

 

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3.2       Death
before any Separation from Service but after Normal Retirement Age and before
the End of the Fifteen (15) – Year Term Certain Period.  If the Executive dies before any
Separation from Service and the Executive is receiving the Executive’s normal
retirement benefit provided by section 2.1, but the Executive has not received
the Executive’s normal retirement benefit for the full fifteen (15) – year term
certain period, the Executive’s Beneficiary shall be entitled to:

 

3.2.1    Amount and Payment of
Benefit.   At the Bank’s sole discretion upon the Executive’s death, the
benefit under this section 3.2 shall be either: (i) the present value,
calculated at the discount rate or rates established by the Plan Administrator,
at the Executive’s death of the Executive’s remaining salary continuation
benefits as determined under section 2.1, paid to the Executive’s Beneficiary
in a lump-sum within sixty (60) days of the Executive’s death; or (ii) the
Executive’s remaining salary continuation benefits as determined under section
2.1, paid to the Executive’s Beneficiary at the times specified in section 2.1;
provided, however, that no benefits under this Agreement shall be
paid or payable to the Executive or the Executive’s Beneficiary if this
Agreement is terminated under Article 5.

 

            3.3       Death
after Separation from Service before Normal Retirement Age.  If the
Executive dies after Separation from Service and the Executive is entitled to
the Early Termination benefit provided by section 2.2 or the Disability benefit
provided by section 2.3, but has not started receiving such benefits because
the Executive has not reached the Normal Retirement Age, the Executive’s
Beneficiary shall be entitled to:

 

3.3.1    Amount
of Benefit.   The lump-sum benefit under this section 3.3 is the present
value, calculated at the discount rate or rates established by the Plan
Administrator, at the Executive’s death of the Accrual Balance which existed at
the end of the month immediately before the month in which Separation from
Service occurred, after compounding this Accrual Balance forward to the
Executive’s Normal Retirement Age taking into account interest at the discount
rate or rates established by the Plan Administrator.  Assuming the two discount
rates referred to in the previous sentence are the same, the resulting lump-sum
benefit under this section 3.3 would be the Executive’s Accrual Balance which
existed at the end of the month immediately before the month in which
Separation from Service occurred; provided, however, that no
benefits under this Agreement shall be paid or payable to the Executive or the
Executive’s Beneficiary if this Agreement is terminated under Article 5.

 

3.3.2    Payment of Benefit. 
The Bank shall pay the Death after Separation from Service before Normal
Retirement Age lump-sum benefit to the Executive’s Beneficiary within sixty
(60) days of the Executive’s death.  

 

3.4       Death
after Separation from Service after Normal Retirement Age.  If the Executive dies after
Separation from Service and the Executive is receiving the normal retirement
benefit provided by section 2.1, the Early Termination benefit provided by
section 2.2, or the Disability benefit provided by section 2.3, the Executive’s
Beneficiary shall be entitled to:

 

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3.4.1    Amount and Payment of
Benefit.   At the Bank’s sole discretion upon the Executive’s death, the
benefit under this section 3.4 shall be either: (i) the present value,
calculated at the discount rate or rates established by the Plan Administrator,
at the Executive’s death of the Executive’s remaining salary continuation
benefits as determined under section 2.1, 2.2, or 2.3, as applicable, paid to
the Executive’s Beneficiary in a lump-sum within sixty (60) days of the
Executive’s death; or (ii) the Executive’s remaining salary continuation
benefits as determined under section 2.1, 2.2, or 2.3, as applicable, in the
amounts specified in the applicable section, paid to the Executive’s
Beneficiary at the times specified in the applicable section; provided, however,
that no benefits under this Agreement shall be paid or payable to the Executive
or the Executive’s Beneficiary 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 upon the death of the Executive.  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 the 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, then
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.

 

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            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 such 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
for 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 for Cause.  

 

            5.2       Suicide
or Misstatement.  The Bank shall not pay any benefit under this Agreement
and the Beneficiary shall be entitled to no benefits if the Executive commits
suicide within two (2) years after the date of this Agreement or if the
Executive makes any material misstatement of fact on any application or resume
provided to the Bank or on any application for benefits provided by the Bank.

 

            5.3       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.

 

            5.4       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.

 

            5.5       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.

 

5.6       FDIC Troubled Condition
Designation.  In the event that the Bank is deemed by Federal Deposit
Insurance Corporation to be in troubled condition as defined in 12 C.F.R.
Section 303.101(c), any payment to be paid pursuant to this Agreement will be
made only as permitted by applicable federal regulations. 

 

 

 

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Article 6

Claims and Review Procedures

 

 

 

            6.1       Claims
Procedure.  A person or beneficiary (“claimant”) who has not received
benefits under this Agreement that he or she believes should be paid shall make
a claim for such 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
sixty (60) days after the notice was received by the claimant.  All other
claims must be made within one-hundred eighty (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
Bank Response.  The Bank shall respond to the claimant within ninety (90)
days after receiving the claim.  If the Bank determines that special
circumstances require additional time for processing the claim, the Bank may
extend the response period by an additional ninety (90) days by notifying the
claimant in writing before the end of the initial ninety (90) - day period that
an additional period is required.  The notice of extension must state the
special circumstances and the date by which the Bank expects to render its
decision.

 

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

 

                                                            6.1.3.1
            the specific reasons for the denial,

 

                                                            6.1.3.2
            a reference to the specific provisions of the Agreement on which
the denial is based,

 

                                                            6.1.3.3
            a description of any additional information or material necessary
for the claimant to perfect the claim and an explanation of why it is needed,

 

                                                            6.1.3.4
            an explanation of the Agreement’s review procedures and the time
limits applicable to such procedures, and

 

                                                            6.1.3.5
            a statement of the claimant’s right to bring a civil action under
ERISA section 502(a) following an adverse benefit determination on review.

 

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

 

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            6.2.1    Initiation –
Written Request.  To initiate the review, the claimant, within sixty (60)
days after receiving the Bank’s notice of denial, must file with the Bank a
written request for review.

 

            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.  The Bank shall also provide the claimant,
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.

 

            6.2.3    Considerations
on Review.  In considering the review, the Bank 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
Bank Response.  The Bank shall respond in writing to the claimant within
sixty (60) days after receiving the request for review.  If the Bank determines
that special circumstances require additional time for processing the claim,
the Bank may extend the response period by an additional sixty (60) days by
notifying the claimant in writing before the end of the initial sixty (60) -
day period that an additional period is required.  The notice of extension must
state the special circumstances and the date by which the Bank expects to render
its decision.

 

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

 

                                                            6.2.5.1
            the specific reason for the denial,

 

                                                            6.2.5.2
            a reference to the specific provisions of the Agreement on which
the denial is based,

 

                                                            6.2.5.3
            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

 

                                                            6.2.5.4
            a statement of the claimant’s right to bring a civil action under ERISA
section 502(a).

 

12

 

 

Article 7

Miscellaneous

 

 

 

 

 

            7.1       Amendments
and Termination.  Subject to section 7.15 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 the 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.

 

13

 

 

 

 

 

 

            7.10     Severability. 
If for any reason 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, Southern First Bank, 100 Verdae Blvd.,

Greenville,
South Carolina 29607, 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.

 

14

 

 

 

 

 

 

            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.  It is the intention of the Bank
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
intention of the Bank 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 expense of the Bank as provided in this
section 7.13, to represent the Executive in connection with 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.  Notwithstanding 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
such counsel in accordance with such counsel’s customary practices, up to a
maximum aggregate amount of Five Hundred Thousand & No/100 ($500,000)
Dollars, 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.  Anything in this section 7.13 to the contrary
notwithstanding 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     Internal
Revenue Code Section 280G.  If
as the result of a Change in Control the Executive becomes entitled to
acceleration of benefits under this Agreement or under any other plan or
agreement of or with the Bank or its affiliates (together, the “Total
Benefits”), and if any of the Total Benefits will be subject to the Excise Tax
as set forth in sections 280G and 4999 of the Internal Revenue Code of 1986
(the “Excise Tax”), the Bank shall reduce any payment pursuant to this
Agreement to the least extent necessary so that no portion of the payment shall
be subject to the Excise Tax, but only if, by reason of such reduction, the net
after-tax benefit received by the Executive as a result of such reduction will
exceed the net after-tax benefit that would have been received by the Executive
if no such reduction were made.  If, however, such payment is not reduced as
described above, then such payment hereunder shall be paid in full to the
Executive and the Executive shall be responsible for payment of any Excise
Taxes relating to the payment. 

 

            7.15     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 7.15 shall become null and void effective immediately upon a Change in
Control.

 

 

15

 

 

Article 8

Administration of Agreement

 

 

 

 

            8.1       Plan Administrator
Duties.  This Agreement shall be administered by a Plan Administrator
consisting of the Bank’s board of directors or such committee or person(s) as
the board shall appoint.  The Executive may be a member of the Plan
Administrator.  The Plan Administrator shall also 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, including interpretations of this
Agreement, as may arise in connection with the 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 with
respect to any question arising out of or in connection with 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.

 

            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.

 

 

 

[SIGNATURES APPEAR ON THE FOLLOWING
PAGE]

            

 

 

 

16

 

 

 

 

 

 

In Witness Whereof, the Executive and a duly authorized officer of the
Bank have executed this Salary Continuation Agreement this 30th day of
September, 2013, to be effective as of the date first written above.

 

Executive:                                                                                                                                            Bank:

                                                                                                                                                             Southern
First Bank

 

     /s/Michael
D. Dowling                                                                                                                   By:       /s/R.
Arthur Seaver, Jr.           

Michael D.
Dowling                                                                                                                                        R. Arthur Seaver, Jr.

                                                                                                                                                            Its:       Chief
Executive Officer

 

                                                                                                                                                            And
By: /s/James B. Orders, III           

                                                                                                                                                                        James
B. Orders III

                                                                                                                                                            Its:
      Chairman of the Board

 

 

17

 

 

 

 

 

 

Beneficiary
Designation

Southern
First Bank

Salary
Continuation Agreement

 

            I,
Michael D. Dowling, designate the following as beneficiary of any death
benefits under this 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:
                                                                   

                                                                                                             
Michael D. Dowling

 

                                                                                    Date:
                                                          , 2013

 

 

            Accepted
by the Bank this              day of                                            ,
2013.

 

                                                                                                                By:                                                                   

 

                                                                                                                Print
Name:                                                     

 

                                                                                                                Title:
                                                               

 

 

 

 

 

 

 

 

Schedule
A

Southern
First Bank

Salary
Continuation Agreement

 

Michael D. Dowling

 

SCHEDULE A ASSUMPTIONS:

 

1.    Please Note:  The Schedule A calculations
     below are for illustrative and informational purposes only and are subject
     to change due to changes in the assumptions from time to time, such as
     changes in the assumed discount rate, variations between the assumed
     timing of certain payments and the eventual actual timing of such
     payments, and other factors.  The below calculations assume a Four and
     One-Quarter percent (4.25%) discount rate and an August 1, 2013 SERP
     Effective Date.  If there is a contradiction between the terms of the
     Agreement and this Schedule A concerning the actual amount of a particular
     benefit amount due to the Executive, then the actual amount of the benefit
     set forth in the Agreement shall control.  If the Plan Administrator
     changes the discount rate employed for purposes of calculating the Accrual
     Balance, the Plan Administrator shall prepare or cause to be prepared a
     revised Schedule A for the Executive, which shall supersede and replace
     any and all Schedules A previously prepared under or attached to this Agreement.

2.    The
     Schedule A calculations below assume a benefit payable for the Executive’s
     lifetime after age sixty-five (65), with a minimum benefit for a fifteen
     (15) – year term certain period.

3.    The
     change-in-control benefit for the Executive is his normal retirement age
     Accrual Balance, without any additional discount for the time value of
     money.    

4.    The
     Schedule A calculations assume that payment of the early termination and
     disability benefits begins immediately after the Executive attains age
     sixty-five (65).  The possible six (6) – month delay because of Internal
     Revenue Code section 409A is ignored for calculation purposes.

5.    The
     early termination and disability benefits are actually based on the
     Executive’s Accrual Balance existing at the end of the month immediately
     before early termination occurs or immediately before the month in which
     termination because of disability occurs, compounding this Accrual Balance
     forward to the Executive’s Normal Retirement Age taking into account
     interest at the discount rate or rates established by the Plan
     Administrator, and amortizing this resulting amount over the Executive’s
     lifetime for a fifteen (15) – year term certain period beginning with the
     Executive’s Normal Retirement Age.  For clarity, Schedule A shows early
     termination and disability benefits based on the Executive’s end-of-year
     Accrual Balances.  For example, Executive's $81,552 early termination and
     disability benefit at age 54 is based on his December 31, 2025 Accrual
     Balance, as compounded and amortized as discussed above.    

 

 

 

 

 

 

 

 

Schedule A

Southern
First Bank

Salary
Continuation Agreement

 

                                                                              

SCHEDULE A ASSUMPTIONS (continued):

 

        Accordingly, the $81,552 early
termination and disability benefit assumes his termination occurs in January
2026. 

 

6.    The
     Schedule A calculations assume that the Executive is not entitled to an
     early termination benefit unless the Executive remains in the active
     employment of Southern First Bank until at least March 17, 2016.

21Exhibit 10.2

 

 

Exhibit
10.2

FIRST
AMENDMENT

TO

SOUTHERN FIRST
BANK

SALARY
CONTINUATION AGREEMENT

 

 

            THIS FIRST AMENDMENT TO SALARY
CONTINUATION AGREEMENT (this “Amendment”) is executed by the
undersigned to be effective September 30, 2013.  Capitalized terms used but not otherwise defined herein
shall have the meanings ascribed to such terms in the Salary Continuation
Agreement (the “Agreement”) by and between Southern First Bank,
N.A. (the “Bank”) and F. Justin Strickland
(the “Executive”) dated October 1, 2008.

 

W I T N E S S
E T H :

 

            WHEREAS, on April 1, 2013, the Bank
converted from a national bank charter to a South Carolina state bank charter
and the Bank’s name was changed from Southern First Bank, N.A. to Southern
First Bank;

 

            WHEREAS, on September 13, 2013, in
recognition of his expanding responsibilities with the Bank as its president,
the Board of Directors of the Bank approved and authorized the Bank to amend
Section 2.4.1 and Schedule A of the Agreement to reflect an increase in the
amount of the Change in Control benefit to be paid to the Executive if a Change
in Control occurs after the date of the Agreement but before Normal Retirement
Age and before Separation from Service; 

 

            WHEREAS, in addition, on September
13, 2013, the Board of Directors of the Bank approved and authorized the Bank
to amend Section 7.14 of the Agreement to reflect the Board of Directors’
determination that it is no longer in the best interests of the Bank to provide
to the Executive the Gross-Up Payment Amount in the event the Total Benefits to
be paid to the Executive under the Agreement become subject to the Excise Tax
under Section 280G of the Internal Revenue Code of 1986 as further described in
Section 7.14 of the Agreement; and

 

            WHEREAS, the parties now desire to
enter into this Amendment to (i) reflect the name change of the Bank; (ii)
change the amount of the Change in Control benefit under Section 2.4.1 of the
Agreement and revise Schedule A to reflect such change; (iii) amend Section
7.14 of the Agreement to eliminate the potential Gross-Up Payment Amount; and
(iv) amend Schedule A to reflect the amended benefits as well as revise any
other sections of the Agreement related thereto.

 

            NOW THEREFORE, in consideration of
the matters set forth
above, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties hereto agree as follows:

            

            1.    Any and all references in the
Agreement to Southern First Bank, N.A. shall now be references to Southern
First Bank. 

 

	
  1

  

 

 

 

 

 

 

2.    Section
2.4.1 Amount of Benefit. of Article 2 of the Agreement is hereby amended
by deleting it in its entirety and replacing it with the following Section
2.4.1:

 

“2.4.1 Amount
of Benefit.  The benefit under this section 2.4 is the amount equal to the
Executive’s Accrual Balance at the Executive’s Normal Retirement Age, without
additional discount for the time value of money.”

 

            3.  Schedule A of the Agreement is hereby
amended by deleting it in its entirety and replacing it with the First Amended
Schedule A attached hereto and made a part hereof.

 

            4.    Section 7.14 Internal Revenue Code
Section 280G. of Article 7 of the Agreement is hereby amended by deleting
it in its entirety and replacing it with the following Section 7.14:

 

“7.14   Internal
Revenue Code Section 280G.  If
as the result of a Change in Control the Executive becomes entitled to
acceleration of benefits under this Agreement or under any other plan or
agreement of or with the Bank or its affiliates (together, the “Total
Benefits”), and if any of the Total Benefits will be subject to the Excise Tax
as set forth in sections 280G and 4999 of the Internal Revenue Code of 1986
(the “Excise Tax”), the Bank shall reduce
any payment pursuant to this Agreement to the least extent necessary so that no
portion of the payment shall be subject to the Excise Tax, but only if, by
reason of such reduction, the net after-tax benefit received by the Executive
as a result of such reduction will exceed the net after-tax benefit that would
have been received by the Executive if no such reduction were made.  If,
however, such payment is not reduced as described above, then such payment
hereunder shall be paid in full to the Executive and the Executive shall be
responsible for payment of any Excise Taxes relating to the payment.”

 

            5.    Section 2.4.2 Payment of Benefit. of
Article 2 of the Agreement is hereby amended as follows:

 

            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 (3) days
after the Change in Control.  Payment of the Change-in-Control benefit shall
fully discharge the Bank from all obligations under this Agreement, except the
legal fee reimbursement obligation under section 7.13 and the obligation to
make section 280G excise-tax gross-up payments under section 7.14.” [changes
marked].

 

            6.    Schedule A of the Agreement is
hereby amended as shown on the Attachment:

 

            7.    Except as expressly herein modified
and amended, all terms, provisions, and conditions of the Agreement shall
remain in full force and effect.

 

            8.    This Amendment may be executed in
counterparts, each of which shall for all purposes be deemed an original, and
all of such counterparts shall together constitute one and the same amendment.

 

           
9.     This Amendment shall be binding upon
and inure to the benefit of the parties hereto, their respective heirs, legal
representatives and assigns.

 

 

[Signatures
appear on the following page.]

 

	
  2

  

 

  

      

            
IN WITNESS WHEREOF,
the undersigned have caused this Amendment to be duly executed the 30th day of
September, 2013, effective as of the date first written above.

            

 

EXECUTIVE:                                                                                                                                         BANK:

                                                                                                                                                            Southern
First Bank

 

 

/s/F.
Justin Strickland                                                                                                                          By:       /s/R. Arthur
Seaver, Jr.                       

F.
Justin Strickland                                                                                                                                          R.
Arthur Seaver, Jr.

 

                                                                                                                                                            Its:           
Chief Executive Officer                  

 

 

                                                                                                                                                            And
By:/s/James B. Orders, III                        

                                                                                                                                                                        
James B. Orders, III

 

                                                                                                                                                            Its:           
Chairman of the Board                  

 

                                                                                    

                                                                                    

	
  
	3

  

 

 

 

 

 

 

First
Amended Schedule A

Southern
First Bank

Salary
Continuation Agreement

 

F. Justin Strickland

 

SCHEDULE A ASSUMPTIONS:

 

1.    Please Note:  The Schedule A calculations
     below are for illustrative and informational purposes only and are subject
     to change due to changes in the assumptions from time to time, such as
     changes in the assumed discount rate, variations between the assumed
     timing of certain payments and the eventual actual timing of such
     payments, and other factors.  The below calculations assume a four and
     one-quarter percent (4.25%) discount rate and an August 1, 2013 Amended
     SERP Effective Date.  If there is a contradiction between the terms of the
     Agreement and this Schedule A concerning the actual amount of a particular
     benefit amount due to the Executive, then the actual amount of the benefit
     set forth in the Agreement shall control.  If the Plan Administrator
     changes the discount rate employed for purposes of calculating the Accrual
     Balance, the Plan Administrator shall prepare or cause to be prepared a
     revised Schedule A for the Executive, which shall supersede and replace
     any and all Schedules A previously prepared under or attached to this
     Agreement.

2.    The
     Schedule A calculations below assume a benefit payable for the Executive’s
     lifetime after age sixty-five (65), with a minimum benefit for a fifteen
     (15) – year term certain period.

3.    The
     change-in-control benefit for Mr. Strickland is his normal retirement age
     Accrual Balance, without any additional discount for the time value of
     money.  

4.    The
     Schedule A calculations assume that payment of the early termination and
     disability benefits begins immediately after the Executive attains age
     sixty-five (65).  The possible six (6) – month delay because of Internal
     Revenue Code section 409A is ignored for calculation purposes.

5.    The
     early termination and disability benefits are actually based on the
     Executive’s Accrual Balance existing at the end of the month immediately
     before early termination occurs or immediately before the month in which
     termination because of disability occurs, compounding this Accrual Balance forward to the
     Executive’s Normal Retirement Age taking into account interest at the
     discount rate or rates established by the Plan Administrator, and
     amortizing this resulting amount over the Executive’s lifetime for a
     fifteen (15) – year term certain period beginning with the Executive’s
     Normal Retirement Age. 
     For clarity, Schedule A shows early termination and disability benefits
     based on the Executive’s end-of-year Accrual Balances.  For example, Mr.
     Strickland’s $73,784 early termination and disability benefit at age 52 is
     based on his December 31, 2015 Accrual Balance, as compounded and
     amortized as discussed above.  Accordingly, the $73,784  early termination
     and disability benefit assumes his termination occurs in January  2016.

	
  
	4

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