First Reliance Bank First Amendment of the Salary Continuation Agreement
First
Reliance Bank
First
Amendment of the
This First
Amendment of the Salary Continuation Agreement (this “Amendment”) is
entered into as of this day
of , 2008, by and
between First Reliance Bank, a South Carolina-chartered bank (the “Bank”), and
Xxxxxxx X. Xxxxxxxx, its Senior Vice President and Chief Financial Officer (the
“Executive”).
Whereas,
the Executive and the Bank entered into a Salary Continuation Agreement dated as
of November 24, 2006 (the “SERP”), and
Whereas,
the Executive and the Bank desire now to amend the SERP to ensure that it
complies in form and in operation with Internal Revenue Code section 409A and
the rules and regulations of the Internal Revenue Service promulgated
thereunder.
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.
1. Amended
definition of Change in Control. The definition of the term
“Change in Control” in section 1.4 shall be replaced by the following revised
section 1.4 definition –
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.
2. Amended
definition of Separation from Service. The definition of the
term “Separation from Service” in section 1.13 shall be replaced by the
following revised section 1.13 definition –
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.
3. Revision
of section 2.5. Section 2.5 provides that the entire remaining
SERP benefit shall be paid in a single lump sum after a Change in Control if the
Change in Control occurs while the Executive is receiving SERP benefits or if
the Executive has separated from service and is awaiting commencement of benefit
payments at Normal Retirement Age. To clarify that a six-month
payment delay could potentially apply because of section 409A, section 2.5 shall
be replaced by the following revised section 2.5 –
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.
4. The SERP
remains in full force and effect. As amended by this
Amendment, the SERP shall remain in full force and effect.
In Witness
Whereof, the Executive and a duly authorized officer of the Bank have
executed this Amendment of the Salary Continuation Agreement as of the date
first written above.
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Executive:
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Bank:
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First
Reliance Bank
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By:
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Xxxxxxx
X. Xxxxxxxx
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F.R.
Xxxxxxxx Jr.
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Its:
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President
and CEO
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And By:
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Xxxxxxx
Xxxxxxxxxx
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Its:
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Chairman
of the Board
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