Exhibit 10.6

DIRECTOR SUPPLEMENTAL RETIREMENT

PLAN

This is the Waccamaw Bankshares, Inc. Director Supplemental Retirement Plan (the
“Plan”), as adopted effective October 30, 2007. The Plan is intended to provide
directors of Waccamaw Bankshares, Inc. (the “Company”) with supplemental
retirement benefits that are reflective of their special contributions to the
success of the Company and that are competitive with the compensation of
similarly-situated directors.

This Plan is intended to be an unfunded plan maintained by the Company primarily
for the purpose of providing deferred compensation for a select group of
management or highly compensated employees as described in sections 201(2),
301(3) and 401(1) of the Employee Retirement Income Security Act of 1974, as
amended (“ERISA”). This Plan is also intended to comply with section 409A of the
Internal Revenue Code of 1986, as amended (the “Code”).

ARTICLE I. DEFINITIONS

When used herein, the following terms shall have the meanings set forth below,
unless the context clearly indicates otherwise:

(A) “Account” means the bookkeeping account maintained for each Participant on
the books of the Company to which Company Allocations, and earnings and losses,
thereon, are credited.

(B) “Beneficiary” means the Participant’s spouse or other person or persons
designated by the Participant in the manner prescribed by the Plan Administrator
to receive his Account balance under the Plan, in the event of his death prior
to full payment of his Account balance. If a Participant has no spouse and makes
no effective Beneficiary designation, then the Participant’s Beneficiary shall
be the Participant’s estate.

(C) “Board” means the Board of Directors of Waccamaw Bankshares, Inc.

(D) “Cause” means any of the following:

(1) commission by a Participant of a felony or crime of moral turpitude;

(2) (i) conduct by a Participant in the performance of his duties which is
illegal, dishonest, fraudulent or disloyal, (ii) the violation by a Participant
of any applicable federal or state law, or any applicable rule, regulation,
order or statement of policy promulgated by any governmental agency or authority
having jurisdiction over the Company or any of its affiliates or subsidiaries (a
“Regulatory Authority,” including without limitation the Board of Governors of
the Federal Reserve, Federal Reserve Bank of Richmond, the Federal Deposit
Insurance Corporation and the North Carolina Commissioner of Banks), which
results from the Participant’s gross negligence, willful misconduct, or
intentional disregard of such law, rule, regulation, order, or policy

 

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statement and results in any substantial damage, monetary or otherwise, to the
Company or any of its affiliates or subsidiaries or to the reputation of the
Company, or (iii) the occurrence of any event described in section 19 of the
Federal Deposit Insurance Act or any other event or circumstance which
disqualifies the Participant from serving as a Director of, or a party
affiliated with, the Company;

(3) the breach by a Participant of any fiduciary duty the Participant owes to
the Company;

(4) gross neglect of duty or poor performance by the Participant which is not
cured to the reasonable satisfaction of the Company within 30 days of the
Participant’s receipt of written notice from the Company advising the
Participant of said gross neglect or poor performance;

(5) the Participant becomes unacceptable to, or is removed, suspended or
prohibited from participating in the Company’s affairs (or if proceedings for
that purpose are commenced) by any Regulatory Authority; or,

(6) the occurrence of any event to have resulted in the Participant being
excluded from coverage, or having coverage limited as to the Participant as
compared to other covered directors, under the Company’s then current “blanket
bond” or other fidelity bond or insurance policy covering its directors,
officers or employees.

(E) “Change in Control” means:

(1) Change in ownership: a change in ownership of the Company occurs on the date
any one person or group accumulates ownership of the Company’s stock
constituting more than 50% of the total fair market value or total voting power
of the Company’s stock,

(2) 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 stock of the
Company possessing 35% or more of the total voting power of the Company’s stock,
or (y) a majority of the Company’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 the Company’s board of directors, or

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

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(F) “Code” means the Internal Revenue Code of 1986, as amended, including any
rules or regulations thereunder.

(G) “Company” means Waccamaw Bankshares, Inc., Waccamaw Bank and any successor
thereto.

(H) “Company Allocation” means an amount allocated to the Participant’s Account
in accordance with Section 3.1.

(I) “Date of Participation” means the date a Director becomes a Participant in
the Plan, as set forth in Section 2.1.

(J) “Director” means a director of the Company or a previously retired director
that has been designated a “director emeritus” by the Board of Directors of the
Company.

(K) “Disability” means the Director suffers a sickness, accident or injury
determined by the carrier of any individual or group disability insurance policy
covering the Director, or by the Social Security Administration, to be a
disability rendering the Director totally and permanently disabled. The Director
must submit proof to the plan administrator (Article V) of the carrier’s or
Social Security Administration’s determination upon the request of the plan
administrator.

(L) “Effective Date” means October 30, 2007.

(M) “ERISA” means the Employee Retirement Income Security Act of 1974, as
amended from time to time.

(N) “Participant” means a Director who becomes a Participant as provided in
Section 2.1.

(O) “Plan” means the Waccamaw Bankshares, Inc. Director Supplemental Retirement
Plan, as set forth herein and as it may be amended from time to time.

(P) “Plan Administrator” means Waccamaw Bank.

(Q) “Plan Year” means a calendar year from January 1st to December 31st. In the
first year of implementation, the “Plan Year” shall mean the period from the
“Effective Date” to December 31, 2007.

(R) “Normal Retirement Age” means age 70.

(S) “Retirement Date” means retirement from service with the Company that
becomes effective on the first day of the calendar month after the month in
which the Director attains the Normal Retirement Age or such later dates as the
Director actually retires.

(T) “Termination of Service” means the Director’s voluntary resignation from
service with the Company, the Director’s failure to be elected at any annual
meeting of shareholders of the Company before the Normal Retirement Age or the
Director’s removal from office for Cause by the shareholders of the Company at a
meeting of shareholders held for such purpose. If there is a

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dispute about the status of the Director or the date of the Director’s
Termination of Service, the Company shall have the sole and absolute right to
decide the dispute unless a Change in Control shall have occurred.

ARTICLE II. ELIGIBILITY AND PARTICIPATION

(A) Participation: A Director shall become a Participant upon his designation
and approval for participation by the Board. Directors who have been designated
and approved as Participants and their Dates of Participation are listed in
Appendix A.

(B) Cessation of Participation: A Participant shall cease to be a Participant on
the earlier of the following dates: (a) the date of the Director’s Termination
of Service, or (b) the date the Board determines that he shall no longer be a
Participant. A Participant whose participation is terminated shall nevertheless
remain entitled to receive the vested balance of his Account in accordance with
Article V, unless the termination of employment was due to a dismissal for
Cause.

ARTICLE III. PARTICIPANTS’ ACCOUNTS

(A) Company Allocation: The Company shall allocate to each Participant’s
Account, as of the date or dates set out in Appendix A, the amount described in
Appendix A.

(B) Crediting of Accounts: Company Allocations under Section 3.1 shall be
credited to the respective Accounts of the Participants for whom they are made
as soon as practicable, as the Committee, in its discretion determines.

ARTICLE IV. FUNDING

(A) Funding: The Company shall establish a grantor trust for the purpose of
maintaining Participant Accounts. The trust so created shall conform to the
basic terms of the model trust provided by the Internal Revenue Service as
described in Revenue Procedure 92-64. Investment allocations shall be determined
and maintained in accordance with Section 3.3. Notwithstanding the establishment
of such trust, it is the intention of the Company and the Participants that the
Plan shall be unfunded for tax purposes and for purposes of Title I of ERISA.
The Plan constitutes a mere promise by the Company to pay benefits in the
future. To the extent that any Participant or any other person acquires a right
to receive benefits under this Plan, such right shall be no greater than the
right of any unsecured general creditor of the Company.

If the Company elects to invest in a life insurance, disability, or annuity
policy upon the life of the Participant, the Participant shall assist the
Company by freely submitting to a physical exam and supplying such additional
information necessary to obtain such insurance or annuities.

The Company shall account for the benefit provided herein using the regulatory
accounting principles of the Company’s primary federal regulator. The Company
shall establish

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an accrued liability retirement account for the Participant into which
appropriate reserves shall be accrued.

ARTICLE V. PAYMENT OF BENEFITS

(A) Normal Retirement Age Benefits: Subject to Article V(D) hereinafter, a
Participant who remains in the service of the Company until the Normal
Retirement Age shall be entitled to receive an annual benefit amount equal to
the amount set forth in Exhibit A. Said payments shall be made monthly (1/12th
of annual benefit) beginning 30 days after the Participant attains the Normal
Retirement Age and shall continue for ten years. For purposes of Section 409A of
the Code, the benefit under this Article V(A) shall be deemed a single payment
and not a series of separate payments.

(B) Benefits for Termination of Service Before Normal Retirement Age: If the
Participant suffers a Termination of Service, the Participant shall be entitled
to receive an annual benefit amount equal to the balance accrued for the
Participant’s retirement benefit hereunder as of the date of his/her Termination
of Service, or a percentage (indicated below) of that accrual balance amount if
the Participant has not had ten full years of service with the Company,
including full years of service with the Company or any predecessor prior to the
Effective Date of this Plan. Payment of benefits under this Article V(B) shall
commence in the seventh month after the month in which the Participant’s
Termination of Service occurs and shall continue for ten years. For purposes of
Section 409A of the Code, the benefit under this Article V(B) shall be deemed a
single payment and not a series of separate payments.

 

Number of Full Years

of Service

  

Vested Percentage
(to a maximum of 100%)

Less than 1    0% 1    0% 2    0% 3    0% 4    0% 5    0% 6    20% 7    20% 8   
20% 9    20% 10    20%

(C) Death: If the Participant dies while there is a balance in the Participant’s
accrued liability retirement account, 90 days after the Participant’s death the
unpaid balance shall be paid in a single lump sum to the Beneficiary.

(D) Discharge for Cause: Notwithstanding any provision of this Plan to the
contrary, the

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Company shall not pay any benefit under this Plan if Termination of Service is a
result of removal from office for Cause.

(E) Disability Benefit: If the Participant’s service is terminated because of
Disability before Normal Retirement Age, the Participant shall be entitled to
receive the balance accrued for the Participant’s retirement benefit as of the
date of Disability upon submission to the Company of written documentation and
verification of Disability. Payment of the accrued balance shall be made monthly
(1/12th of annual benefit) beginning in the seventh month after the month in
which the Participant’s Termination of Service for Disability occurs and shall
continue for ten years.

(F) Change in Control: After a Change in Control that occurs before the
Participant attains Normal Retirement Age, the Participant shall be entitled to
receive the unpaid accrued balance in a single lump sum. Said payment shall be
made on the 30th day following the Change in Control.

VI. MISCELLANEOUS

(A) Alienability and Assignment Prohibition: Neither the Participant nor the
Participant’s Beneficiary under this Participant Plan shall have any power or
right to transfer, assign, anticipate, hypothecate, mortgage, commute, modify,
or otherwise encumber in advance any of the benefits payable hereunder, nor
shall any of said benefits be subject to seizure for the payment of any debts,
judgments, alimony, or separate maintenance owed by the Participant or the
Participant’s Beneficiary, nor be transferable by operation of law in the event
of bankruptcy, insolvency, or otherwise. If the Participant or any beneficiary
attempts assignment, commutation, hypothecation, transfer, or disposal of the
benefits hereunder, the Company’s liabilities hereunder shall forthwith cease
and terminate.

(B) Binding Obligation of the Company and any Successor in Interest: No sale,
merger, or consolidation of the Company or the Company shall occur unless the
new or surviving entity expressly acknowledges the obligations under this Plan
and agrees in writing to assume and discharge the duties and obligations of the
Company under this Plan. This Plan shall be binding upon the parties hereto,
their successors, beneficiaries, heirs, and personal representatives.

(C) Amendment or Revocation: Subject to Articles VIII and IX, it is agreed by
and between the parties hereto that, during the lifetime of the Participant,
this Plan may be amended or revoked at any time or times, in whole or in part,
by the mutual written consent of the Participant and the Company.

(D) Gender: Whenever in this Plan words are used in the masculine or neuter
gender, they shall be read and construed as in the masculine, feminine, or
neuter gender, whenever they should so apply.

(E) Effect on Other Bank Benefit Plans: Nothing contained in this Plan shall
affect the right of the Participant to participate in or be covered by any
qualified or non-qualified pension, profit-sharing, group, bonus or other
supplemental compensation or fringe benefit plan constituting a part of the
Company’s existing or future compensation structure.

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(F) Headings: Headings and subheadings in this Plan are inserted for reference
and convenience only and shall not be deemed a part of this Plan.

(G) Applicable Law: The laws of the State of North Carolina shall govern the
validity and interpretation of this Plan.

(H) 12 U.S.C. § 1828(k): Any payments made to the Participant under this Plan or
otherwise are subject to and conditioned upon their compliance with 12 U.S.C. §
1828(k) or any regulations promulgated thereunder.

(I) Partial Invalidity: If any term, provision, covenant, or condition of this
Plan is determined by an arbitrator or a court, as the case may be, to be
invalid, void, or unenforceable, such determination shall not render any other
term, provision, covenant, or condition invalid, void, or unenforceable, and the
Plan shall remain in full force and effect notwithstanding such partial
invalidity.

VII. NAMED FIDUCIARY AND PLAN ADMINISTRATOR

(A) Named Fiduciary and Plan Administrator: The “Named Fiduciary and Plan
Administrator” of this Plan shall be Waccamaw Bank until its resignation or
removal by the Board. As Named Fiduciary and Plan Administrator, the Company
shall be responsible for the management, control and administration of the Plan.
The Named Fiduciary may delegate to others certain aspects of the management and
operation responsibilities of the Plan including the employment of advisors and
the delegation of ministerial duties to qualified individuals.

(B) Claims Procedure and Arbitration: If a dispute arises over benefits under
this Plan and benefits are not paid to the Participant (or to the Participant’s
Beneficiary in the case of the Participant’s death) and such claimants feel they
are entitled to receive such benefits, then a written claim must be made to the
Named Fiduciary and Plan Administrator named above within 90 days from the date
payments are refused. The Named Fiduciary and Plan Administrator shall review
the written claim and if the claim is denied, in whole or in part, they shall
provide in writing within 90 days of receipt of such claim the specific reasons
for such denial, reference to the provisions of this Plan upon which the denial
is based and any additional material or information necessary to perfect the
claim. Such written notice shall further indicate the additional steps to be
taken by claimants if a further review of the claim denial is desired. A claim
shall be deemed denied if the Named Fiduciary and Plan Administrator fail to
take any action within the 90-day period.

If claimants desire a second review they shall notify the Named Fiduciary and
Plan Administrator in writing within 90 days of the first claim denial.
Claimants may review this Plan or any documents relating thereto and submit any
written issues and comments they may feel appropriate. In its sole discretion,
the Named Fiduciary and Plan Administrator shall then review the second claim
and provide a written decision within 90 days of receipt of such claim. This
decision shall likewise state the specific reasons for the decision and shall
include reference to specific provisions of the Plan upon which the decision is
based.

 

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If claimants continue to dispute the benefit denial based upon completed
performance of this Plan or the meaning and effect of the terms and conditions
thereof, then claimants may submit the dispute to an arbitrator for final
arbitration. The arbitrator shall be selected by mutual agreement of the Company
and the claimants. The arbitrator shall operate under any generally recognized
set of arbitration rules. The parties hereto agree that they and their heirs,
personal representatives, successors and assigns shall be bound by the decision
of such arbitrator with respect to any controversy properly submitted to it for
determination.

VIII. TERMINATION OR MODIFICATION OF PLAN BY REASON OF CHANGES

IN THE LAW, RULES OR REGULATIONS

The Company is entering into this Plan upon the assumption that certain existing
tax laws, rules and regulations will continue in effect in their current form.
If any said assumptions should change and said change has a detrimental effect
on this Plan, then the Company reserves the right to terminate or modify this
Plan accordingly. Upon a Change in Control, this paragraph shall become null and
void effective immediately upon the Change in Control.

IX. COMPLIANCE WITH INTERNAL REVENUE CODE SECTION 409A

The Company and the Participant intend that their exercise of authority or
discretion under this Plan shall comply with section 409A of the Internal
Revenue Code of 1986. If when the Participant’s service terminates the
Participant is a specified employee, as defined in section 409A of the Internal
Revenue Code of 1986, and if any payments under this Plan will result in
additional tax or interest to the Participant because of section 409A, then
despite any contrary provision of this Plan the Participant will not be entitled
to the payments until the earliest of (x) the date that is at least six months
after termination of the Participant’s service with the Company for reasons
other than the Participant’s death, (y) the date of the Participant’s death, or
(z) any earlier date that does not result in additional tax or interest to the
Participant under section 409A. As promptly as possible after the end of the
period during which payments are delayed under this provision, the entire amount
of the delayed payments shall be paid to the Participant in a single lump sum,
unless regular monthly installment payments beginning after a six-month delay
are specifically provided for in this Plan. If any provision of this Plan does
not satisfy the requirements of section 409A, such provision shall nevertheless
be applied in a manner consistent with those requirements. If any provision of
this Plan would subject the Participant to additional tax or interest under
section 409A, the Company shall reform the provision. However, the Company shall
maintain to the maximum extent practicable the original intent of the applicable
provision without subjecting the Participant to additional tax or interest, and
the Company shall not be required to incur any additional compensation expense
as a result of the reformed provision. References in this Plan to section 409A
of the Internal Revenue Code of 1986 include rules, regulations, and guidance of
general application issued by the Department of the Treasury under Internal
Revenue Code section 409A.

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To record its adoption of the Plan, the Company has caused its authorized
officers to affix its corporate name and seal this 18th day of October, 2007.

 

WACCAMAW BANKSHARES, INC. By:  

/s/ James G. Graham

Title:   President and Chief Executive Officer

 

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Exhibit A

 

Participant

   Age to
Retire    Annual
Retirement Benefit    Years of
Benefit

[Name]

   70    $ 10,000    10

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BENEFICIARY DESIGNATION FORM

 

I. PRIMARY DESIGNATION

(You may refer to the beneficiary designation information prior to completion of
this form)

 

  A. Person(s) as a Primary Designation:

(Please indicate the percentage for each beneficiary.)

 

Name:  

 

  Relationship:  

 

  /           % Address:  

 

  (Street)   (City)     (State)   (Zip) Name:  

 

  Relationship:  

 

  /           % Address:  

 

  (Street)   (City)     (State)   (Zip) Name:  

 

  Relationship:  

 

  /           % Address:  

 

  (Street)   (City)     (State)   (Zip) Name:  

 

  Relationship:  

 

  /          % Address:  

 

  (Street)   (City)     (State)   (Zip)

 

B. Estate as a Primary Designation:

My Primary Beneficiary is the Estate of                                         
as set forth in the last will and testament dated the          day of
                                         and any codicils thereto.

 

C. Trust as a Primary Designation:

 

Name of the Trust:  

 

Execution Date of the Trust:                        /                        /  

 

Name of the Trustee:  

 

Beneficiary(ies) of the Trust (please indicate the percentage for each
beneficiary):

 

 

Is this an Irrevocable Life Insurance Trust?                     
Yes                       No

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II SECONDARY (CONTINGENT) DESIGNATION

 

  A. Person(s) as a Secondary (Contingent) Designation:

(Please indicate the percentage for each beneficiary.)

 

Name:  

 

  Relationship:  

 

  /           % Address:  

 

  (Street)   (City)     (State)   (Zip) Name:  

 

  Relationship:  

 

  /           % Address:  

 

  (Street)   (City)     (State)   (Zip) Name:  

 

  Relationship:  

 

  /           % Address:  

 

  (Street)   (City)     (State)   (Zip) Name:  

 

  Relationship:  

 

  /          % Address:  

 

  (Street)   (City)     (State)   (Zip)

 

  B. Estate as a Secondary (Contingent) Designation:

My Secondary Beneficiary is the Estate of
                                         as set forth in the last will and
testament dated the          day of                     ,         and any
codicils thereto.

 

  C. Trust as a Secondary (Contingent) Designation:

 

Name of the Trust:  

 

Execution Date of the Trust:                        /                        /  

 

Name of the Trustee:  

 

Beneficiary(ies) of the Trust (please indicate the percentage for each
beneficiary):

 

 

All sums payable under the Director Supplemental Retirement Plan Plan by reason
of my death shall be paid to the Primary Beneficiary(ies), if he or she survives
me, and if no Primary Beneficiary(ies) shall survive me, then to the Secondary
(Contingent) Beneficiary(ies). This beneficiary designation is valid until the
participant notifies the Company in writing.

 

 

   

 

[Name]     Date