Exhibit 10.6
EXECUTIVE EMPLOYMENT AGREEMENT
THIS EXECUTIVE EMPLOYMENT AGREEMENT ("Agreement"), made this ____ day of August,
2001, by and between First Reliance Bank and First Reliance BancShares Corp., a
South Carolina banking corporation with principal offices located at 0000 Xxxx
Xxxxxxxx Xxxxxx, Xxxxxxxx, Xxxxx Xxxxxxxx 00000 (collectively "the Bank"), and
Xxxx X. Xxxxxxxx, of Florence, South Carolina ("the Executive").
WHEREAS the Executive is, as of the date hereof, employed by the Bank as Senior
Vice-President of the Bank, and the Bank desires to insure the Executive's
continued employment; and
WHEREAS the Bank and the Executive mutually desire that their employment
relationship be set forth under the terms of a written employment agreement;
NOW, THEREFORE, in consideration of the foregoing and of the promises and mutual
agreements set forth below, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto do
hereby agree as follows:
1. Employment. The Bank agrees to employ the Executive, and the Executive agrees
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to serve the Bank, on the terms and conditions set forth herein.
2. Term. Unless earlier terminated as provided herein, the Executive's
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employment hereunder shall be for a term of three years ("Term") commencing on
March 1, 2001 and ending on March 1, 2004. This Agreement shall be deemed to
extend each month for an additional month automatically without any action on
behalf of either party hereto; provided, however, that either party may, by
written notice to the other, cause this Agreement to cease to extend
automatically, and upon such notice the Term of this Agreement shall be the
three years following the date of such notice, and this Agreement shall
terminate upon the expiration of such Term. Notwithstanding the foregoing, no
extension shall be granted that would extend the Term of this Agreement beyond
the last day of the month during which the Executive attains age 65.
3. Position and Duties. The Executive shall serve as Senior Vice-President, and
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shall perform all duties, authorities, and responsibilities as set forth in the
Bylaws of the Bank, and shall assume such additional responsibilities and
authority as may from time to time be assigned to him by the Board of Directors
of the Bank ("Board of Directors"). The Executive shall perform his
responsibilities and duties in the best interest of the Bank and its
stockholders. The Board of Directors may in its sole discretion reassign the
Executive to an alternative position as long as his compensation and benefits
remain consistent with paragraphs a. and b. of Section 5 and apply to the
Executive's position assigned by the Board.
4. Place of Performance. The Executive shall be based in Florence, South
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Carolina, subject to reasonable travel necessary to the business of the Bank.
5. Compensation and Benefits. In consideration of the Executive's performance
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of his duties hereunder, the Bank shall provide the Executive with the following
compensation and benefits during the Term hereof.
a. Base Salary. The Bank shall pay the Executive a base salary at the
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rate of $82,000 per annum ("Base Salary") in accordance with the
salary payment practices of the Bank. The Compensation Committee of
the Board of Directors ("Compensation Committee") shall review the
Executive's salary at the beginning of each of its fiscal years and,
at the sole discretion of the Committee, may increase or decrease the
Executive's Base Salary for such year, provided that at no time shall
the Bank pay the Executive less than the median base salary of
comparable executive officers of banks in the Southeastern United
States with similar total assets (currently $50,000,000 to
$100,000,000) based on the then-current Sheshunoff Information
Services Survey (or, for any year in which Sheshunoff does not provide
a survey, the then-current surveys by the American Bankers Association
and the Independent Bankers of America). Annual performance reviews
will be conducted and will include evaluation of forward-thinking,
supervisory, and team skills, and the effort necessary to keep the
Bank competitive. The Compensation Committee reserves the right to
decrease the Executive's Base Salary if a CAMEL rating of at least "2"
is not maintained.
b. Incentive Bonus. If mutually agreeable individual and team performance
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criteria and budgeted profit targets are met, the Compensation
Committee will approve, within 90 days of the close of each calendar
year, an incentive bonus for the Executive.
c. Stock Options. In the event that the Bank obtains additional capital
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in a public offering, the Bank will issue additional options to the
Executive to ensure that the Executive's options for 5% of the Bank's
outstanding shares are not diluted by the additional capitalization.
d. Business Expenses. The Bank shall reimburse the Executive for all
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reasonable and necessary expenses incurred by the Executive in his
performance of services hereunder, including but not limited to
expenses for business travel, upon presentation of itemized accounts
and receipts for any single expense in excess of $50. Business mileage
shall be reimbursed at the approved IRS rate. Reimbursement for
airfare other than coach class shall require the prior written
approval of an officer of the Board of Directors.
e. Health and Disability Insurance. The Bank shall provide full health
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insurance coverage for the Executive, his spouse, and his dependents
until the Executive reaches age 65. The Bank shall provide disability
insurance coverage for the Executive until the Executive reaches age
65.
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f. Life Insurance. The Bank shall purchase and maintain term life
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insurance coverage providing a death benefit of $500,000 payable to
any beneficiary or beneficiaries designated by the Executive. The
policy will be convertible to an Executive-owned policy at the
Executive's discretion and, (A) at the Executive's expense, if his
employment with the Bank is terminated for the reasons described in
Section 6.b. below, or (B) at the Bank's expense, if his employment
with the Bank terminated for the reasons described in Sections 6.c. or
6.d. below. The policy shall not be required to be paid-up after such
conversion, and the Executive shall be solely responsible for paying
premiums on the policy after such conversion.
g. Other Benefits. The Executive shall be entitled to participate in all
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other benefits accorded to Bank employees.
h. Withholding. The Bank may deduct from each payment of compensation
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hereunder all amounts required to be deducted and withheld in
accordance with applicable federal and state income, FICA, and other
withholding requirements.
6. Compensation and Benefits in the Event of Termination. In the event of the
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termination of the Executive's employment by the Bank or by the Executive during
the Term of this Agreement, compensation and benefits shall be paid as set forth
below.
a. Definitions. For purposes of this Agreement, the following terms shall
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have the meanings indicated:
(1) "Cause" shall mean (A) the breach by the Executive of any
material provision of this Agreement, provided that the Bank
gives the Executive written notice of such failure and such
failure is not cured within 30 days thereafter; (B) the willful
and continued failure by the Executive to substantially perform
his duties under this Agreement (other than the Executive's
inability to perform, with or without reasonable accommodation,
resulting from his incapacity due to physical or mental illness
or impairment), after a written demand for substantial
performance is delivered to him by the Board of Directors, which
demand specifically identifies the manner in which the Executive
is alleged to have not substantially performed his duties; (C)
the willful engaging by the Executive in misconduct which is
materially injurious to the Bank, its officers, directors,
shareholders, employees, or customers; (D) the Executive's
conviction of a felony; or (E) the commission in the course of
the Executive's employment of an act of fraud, embezzlement,
theft or proven dishonesty, or any other illegal act or practice,
which would constitute a felony (whether or not resulting in
criminal prosecution or conviction), or any act or practice which
the Bank shall, in good faith, deem to have resulted in the
Executive becoming unbondable under the Bank's "banker's blanket
bond." Notwithstanding the foregoing, the Executive shall
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not be deemed to have been terminated for Cause unless and until
the Executive has been afforded a reasonable opportunity,
together with his counsel, to be heard before the Board of
Directors, and a written finding has been delivered to him to the
effect that in the good faith opinion of the Board of Directors,
the Executive is guilty of conduct as set forth under clause (A),
(B), (C), (D), or (E) of the first sentence of this
sub-paragraph, specifying in writing the particulars thereof in
detail.
(2) "Change in Control" shall mean either:
(a) the acquisition, directly or indirectly, by any "person" (as
such term is defined for purposes of Section 13(d) and 14(d)
of the Securities Exchange Act of 1934 ("Exchange Act")), of
the "beneficial ownership" (as such Term is defined for
purposes of section 13(d) (1) of the Exchange Act) of shares
in the Bank which, when added to any other shares
"beneficially owned," such acquirer shall have 50% or more
of the combined voting power of the Bank's then outstanding
voting securities; or
(b) the occurrence of any merger, consolidation or
reorganization to which the Bank is a party and to which the
Bank is not a surviving entity, or the sale of all or
substantially all of the assets of the Bank.
(3) "Date of Termination" shall mean: (A) if the Executive's
employment is terminated by reason of his death, his date of
death; (B) if the Executive's employment is terminated for
Disability, 30 days after Notice of Termination is given
(provided that the Executive shall not have returned to the
performance of his duties as provided under sub-paragraph (4) of
this paragraph a.); or (C) if the Executive's employment is
terminated for Cause, the date specified in the Notice of
Termination; provided, however, that if within 30 days after any
Notice of Termination is given, the Executive notifies the Bank
that a dispute exists concerning the termination, the Date of
Termination shall be the date on which the dispute is finally
resolved, either by mutual written agreement of the parties, or
by a final judgment, order, or decree of a court of competent
jurisdiction (the time for appeal therefrom having expired and no
appeal having been perfected).
(4) "Disability" shall mean the Executive's failure to satisfactorily
perform the essential functions of his office on a full-time
basis for 180 consecutive days, with or without accommodation, by
reason of the Executive's incapacity resulting from physical or
mental illness or impairment, except where within 15 days after
Notice of Termination is given following such absence, the
Executive shall have returned to the satisfactory, full-time
performance of such duties. Any
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determination of Disability hereunder shall be made by the Board
of Directors in good faith and on the basis of the certificates
of at least three qualified physicians chosen by it for such
purpose, one of whom shall be the Executive's regular attending
physician.
(5) "Good Reason" shall mean either:
(a) Failure by the Bank to comply with any material provision of
this Agreement, provided that the Executive gives the Bank
written notice of such failure and such failure is not cured
within 30 days thereafter;
(b) Failure by the Bank to obtain the assumption of its
obligations under this Agreement by any successor;
(c) The occurrence of any of the following:
(i) Without the Executive's express written consent, a
reduction in the Executive's position that results in
the Executive no longer being in an executive officer
position, except in connection with the termination of
his employment for Cause, Disability, or Retirement,
or as a result of his death;
(ii) Without the Executive's express written consent, the
Bank's requiring him to be based anywhere other than
in Florence, South Carolina except for required travel
on the Bank's business consistent with his business
travel obligations immediately prior to such Change in
Control; or
(iii) The failure by the Bank to comply with Section 5 of
this Agreement; or
(d) Any purported termination of the Executive's employment by
action of the Bank which is not effected pursuant to a
Notice of Termination.
(6) "Notice of Termination" shall mean a written notice which shall
include the specific termination provision under this Agreement
relied upon, and shall set forth in reasonable detail the facts
and circumstances claimed to provide a basis for termination of
the Executive's employment.
(7) "Retirement" shall mean termination of the Executive's employment
pursuant to the Bank's regular retirement policy applicable to
the position held by the Executive at the time of such
termination.
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b. Termination For Cause, For Other Than For Good Reason, Or For
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Disability, Death, Or Retirement. In the event the Executive's
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employment hereunder is terminated (A) by action of the Bank for
Cause; (B) by action of the Executive not for Good Reason; or (C) by
reason of the Executive's death, Disability, or Retirement, the
following compensation and benefits shall be paid and provided the
Executive (or his beneficiary or beneficiaries):
(1) The Executive's Base Salary provided for under paragraph a. of
Section 5 through the last day of the month in which the Date of
Termination occurs, at the annual rate in effect at the time
Notice of Termination is given (or death occurs), to the extent
unpaid prior to such Date of Termination;
(2) Any incentive bonus under paragraph b. of Section 5 which has
been awarded prior to the Date of Termination, to the extent
unpaid prior to such date;
(3) Any benefits to which the Executive (or his beneficiary or
beneficiaries) may be entitled as of the Date of Termination
under the insurance coverages or benefits identified in
paragraphs e. f. and i. of Section 5; and
(4) Any amounts due the Executive with respect to paragraph d. of
Section 5 as of the Date of Termination.
c. Termination For Good Reason Or For Other Than Cause Not Following a
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Change In Control. In the event the Executive's employment hereunder
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is terminated (A) by action of the Executive not following a Change in
Control and for Good Reason, or (B) by action of the Bank not
following a Change in Control and other than for Cause, the Bank shall
pay and provide the Executive the compensation and benefits stipulated
under paragraph b. immediately above; provided, however, in addition
thereto and without set-off, the following compensation shall be paid
and provided the Executive:
(1) The Bank shall continue to pay the Executive the Base Salary
provided for in Section 5.a. above at the annual rate in effect
at the time Notice of Termination is given, plus the Executive's
incentive bonus for the calendar year immediately prior to the
Date of Termination, for a period of three years from the Date of
Termination, on a monthly basis.
(2) In addition, the Bank will continue to provide the Executive with
the insurance coverages he would have had had he remained as an
employee of the Bank at the Executive's expense at COBRA rates.
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d. Termination For Good Reason Or For Other Than Cause Following A Change
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In Control. In the event the Executive's employment hereunder is
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terminated (A) by action of the Executive following a Change in
Control and for Good Reason, or (B) by action of the Bank following a
Change in Control and other than for Cause, the Bank shall pay and
provide the Executive the compensation and benefits stipulated under
paragraph b. above; provided, however, in addition thereto and without
set-off, the compensation provided in subparagraphs (1), (2), (3), and
(4) of this paragraph d. shall be paid to the Executive. However, the
Bank may prospectively terminate payments under this paragraph d. if
the Executive accepts employment by or acquires a meaningful ownership
position in a community, commercial, or consumer bank within a 25-mile
radius of any branch of the Bank.
(1) The Bank shall continue to pay to the Executive 110% of the Base
Salary provided for in Section 5.a. above at the annual rate in
effect at the time Notice of Termination is given for a period of
two years from the Date of Termination, on a monthly basis.
(2) In addition, the Bank shall pay to the Executive a severance
payment of the sum of two times the Base Salary provided for in
Section 5.a. above at the annual rate in effect at the time
Notice of Termination is given and two times the Executive's
incentive bonus for the calendar year immediately prior to the
Date of Termination. Such severance payment shall be payable over
four years from the Date of Termination at such frequencies and
in such amounts as the Executive shall dictate, but not more
frequently than monthly.
(3) In addition, at its sole cost and expense, the Bank will continue
to provide the Executive with the insurance coverages he would
have had had he remained as an employee of the Bank.
(4) If the payments due to the Executive under subparagraphs (1),
(2), and (3) of this paragraph d. would constitute a "parachute
payment," as defined in Section 280G of the Internal Revenue Code
of 1986, as amended (the "Code"), and would be subject to the
excise tax imposed by Section 4999 of the Code, then the Bank
shall pay to the Executive an additional "gross-up" payment in an
amount such that the net amount retained by the Executive, after
the deduction of the excise tax, shall equal the amount of the
payments due to the executive under subparagraphs (1), (2), and
(3) of this paragraph d.
7. Confidentiality.
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a. For the purposes of this Agreement, "Confidential Information" means
any data or information that is material to the Bank and not generally
known by the public.
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b. The Executive agrees to abide by all of the Bank's rules and
procedures designed to protect its Confidential Information and to
preserve and maintain all such information in strict confidence during
the Executive's employment with the Bank and as long thereafter as the
Confidential Information remains, in the sole opinion of the Bank,
proprietary and confidential to the Bank. The Executive agrees not to
use, disclose, or in any other way disseminate any Confidential
Information to any person not properly authorized by the Bank.
8. Return of Materials. Upon the request of the Bank, and in any event, upon
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the termination of the Executive's employment, the Executive must return to the
Bank and leave at the disposal of the Bank, all memoranda, notes, records, and
other documents pertaining to the business of the Bank (including all copies of
such materials). The Executive must also return to the Bank and leave at the
disposal of the Bank all materials involving any Confidential Information of the
Bank.
9. Restrictive Covenant. In consideration of the Bank's employment of the
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Executive, the Executive agrees that in addition to any other limitation, for a
period of one year after the termination of his employment hereunder, he will
not, within a 25-mile radius of any branch of the Bank, manage, operate, be
employed by, participate in, or be connected in any manner with the management,
operation, or control of any community, commercial, or consumer bank.
10. Remedies for Breach of Employment Contract. Irreparable harm shall be
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presumed if the Executive breaches the covenants contained in Sections 7, 8, or
9 of this Agreement. The faithful observance of such covenants is an essential
condition to the Executive's employment, and the Bank is depending upon absolute
compliance. Damages would be very difficult to ascertain if the Executive
breached any such covenant. This Agreement is intended to protect the
proprietary rights of the Bank. In light of these facts, the Executive agrees
that any court of competent jurisdiction may immediately enjoin any breach of
this Agreement, upon the request of the Bank, and the Executive specifically
releases the Bank from the requirement to post any bond in connection with any
temporary or interlocutory injunctive relief, to the extent permitted by law.
11. Notices. All notices, requests, demands and other communications provided
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for by this Agreement shall be in writing and shall be sufficiently given if and
when mailed in the continental United States by registered or certified mail, or
personally delivered to the party entitled thereto, at the address stated below
or to such changed address as the addressee may have given by a similar notice:
To the Bank: Xx. Xxxxxxx X. Xxxxxxxxxx
Chairman of the Board of Directors
First Reliance Bank
P. O. Xxx 0000
Xxxxxxxx, Xxxxx Xxxxxxxx 00000
With copy to: Xxxxx X. Xxxxxx, Xx., Esq.
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XxXxxx Law Firm, P.A.
X.X. Xxx 00000
Xxxxxxxx, Xxxxx Xxxxxxxx 00000
To the Executive: Xx. Xxxx X. Xxxxxxxx
Senior Vice-President
First Reliance Bank
0000 Xxxx Xxxxxxxx Xxxxxx
Xxxxxxxx, Xxxxx Xxxxxxxx 00000
With copy to: Xxxxx X. Xxxxxxxx, Esq.
Nexsen, Pruet, Xxxxxx & Xxxxxxx, L.L.C.
X.X. Xxx 0000
Xxxxxxxx, Xxxxx Xxxxxxxx 00000
12. Successors; Binding Agreement. This Agreement shall be binding on any
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successors to the Bank, including any person or entity that may acquire all or
part of the ownership interest in the Bank through merger, consolidation,
reorganization, or otherwise. Upon acquisition of all or part of the ownership
interest in the Bank, the acquiring person or entity shall be deemed to be
substituted for the Bank for all purposes under this Agreement. This Agreement
shall inure to the benefit of and be enforceable by the Executive's personal or
legal representatives, executors, administrators, successors, heirs,
distributees, devisees, and legatees. If the Executive should die while any
amount would still be payable to him hereunder if he had continued to live, all
such amounts, except to the extent otherwise provided under this Agreement,
shall be paid in accordance with the terms of this Agreement to his devisee,
legatee, or other designee, or if there be no such designee, to the Executive's
estate.
13. Modification, Waiver, or Discharge. No provision of this Agreement may be
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modified, waived, or discharged unless such waiver, modification, or discharge
is agreed to in a writing signed by the Executive and an authorized officer of
the Bank. No waiver by either party hereto at any time of any breach by the
other party hereto of, or compliance with, any condition or provision of this
Agreement to be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at any prior or
subsequent time. No agreements or representations, oral or otherwise, express or
implied, with respect to the subject matter hereof have been made by either
party which are not expressly set forth in this Agreement; provided, however,
that this Agreement shall not supersede or in any way limit the right, duties,
or obligations that the Executive or the Bank may have under any other written
agreement between such parties, under any employee pension benefit plan or
employee welfare benefit plan as defined under the Employee Retirement Income
Security Act of 1974, as amended, and maintained by the Bank, or under any
established personnel practice or policy applicable to the Executive.
14. Governing Law. The validity, interpretation, construction, and performance
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of this Agreement shall be governed by the laws
of the State of South Carolina.
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15. Validity. The invalidity or unenforceability of any provision of this
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Agreement shall not affect the validity or enforceability of any other provision
of this Agreement, which latter shall remain in full force and effect.
16. No Right of Set-off or Counterclaim. There shall be no right of set-off or
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counterclaim, in respect of any claim (other than a claim for violation of this
Agreement), debt, or obligation against any payments to the Executive, his
beneficiaries, or estates provided for in this Agreement.
17. Non-Assignability. No right, benefit, or interest hereunder shall be
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subject to anticipation, alienation, sale, assignment, encumbrance, charge,
pledge, hypothecation, or set-off in respect of any claim, debt or obligation,
or to execution, attachment, levy, or similar process, or assignment by
operation of law. Any attempt, voluntary or involuntary, to effect any action
specified in the immediately preceding sentence shall, to the full extent
permitted by law, be null, void, and of no effect. Any of the foregoing to the
contrary notwithstanding, this provision shall not preclude the Executive from
designating one or more beneficiaries to receive any amount that may be payable
after his death, and shall not preclude the legal representative of the of the
Executive's estate from assigning any right hereunder to the person or persons
entitled thereto under his will or, in the case of intestacy applicable to his
estate.
18. Enforcement of Agreement; Attorneys' Fees. In the event litigation is
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commenced by the Executive against the Bank in seeking to obtain or enforce any
right, benefit or payment under this Agreement or to enforce any obligation of
the Bank described herein, then, provided the Executive shall prevail in such
litigation, the Bank shall be obligated to pay all reasonable expenses
(including without limitation all reasonable attorney's fees and court costs)
paid or incurred by the Executive in connection with such litigation.
19. Counterparts. This Agreement may be executed in one or more counterparts,
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each of which shall be deemed to be an original, but all of which together will
constitute one and the same instrument.
IN WITNESS WHEREOF, the Executive and the Bank have executed this Agreement
effective as of the date first above written.
ATTEST: _____________________ First Reliance Bank
By: ______________________________
Xxxxxxx X. Xxxxxxxxxx
Chairman of the Board of Directors
Xxxx X. Xxxxxxxx
ATTEST: _____________________ _________________________________
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