Document:

Exhibit 10.8

 Exhibit 10.8 
  
 EMPLOYMENT AGREEMENT 
  

THIS AGREEMENT, entered into as of the 1st day of April, 1998, by and between MARATHON FINANCIAL CORPORATION, a Virginia corporation,
(the “Corporation”), and DONALD L. UNGER (the “Executive”). 
  
 WITNESSETH: 
  
 WHEREAS, the Corporation desires to retain the services of Executive on the terms and conditions set forth herein and, for purpose of effecting the same, the Board of Directors of the Corporation has approved this Employment
Agreement and authorized its execution and delivery on the Corporation’s behalf to the Executive; and 
  
 WHEREAS, the Executive is presently the duly elected and acting President and Chief Executive Officer of the Corporation and, as such, is a key
executive officer of the Corporation whose continued dedication, availability, advice and counsel to the Corporation is deemed important to the Board of Directors of the Corporation, the Corporation and its stockholders; 
  
 WHEREAS, the services of the Executive, his experience and knowledge
of the affairs of the Corporation, and his reputation and contacts in the industry are extremely valuable to the Corporation; and 
  
 WHEREAS, the Corporation wishes to attract and retain such well-qualified executives and it is in the best interests of the Corporation and of the
Executive to secure the continued services of the Executive; and 
  
 WHEREAS, the Corporation considers the establishment and maintenance of a sound and vital management to be part of its overall corporate strategy and to be essential to protecting and enhancing the best interests of the Corporation
and its stockholders; 
  
 NOW, THEREFORE, to assure the
Corporation of the Executive’s continued dedication, the availability of his advice and counsel to the Board of Directors of the Corporation, and to induce the Executive to remain and continue in the employ of the Corporation and for other good
and valuable consideration, the receipt and adequacy whereof each party hereby acknowledges, the Corporation and the Executive hereby agrees as follows: 
  
 1. EMPLOYMENT: The Corporation agrees to, and does hereby, employ Executive, and Executive agrees to, and does hereby, accept such
employment, for the period beginning as of the date hereof and ending on March 31, 1999, which period of employment may be extended or terminated only upon the terms and conditions hereinafter set forth. 
  
 2. RENEWAL TERM: This Agreement may be renewed and extended for
successive terms of 12 months each by an appropriate written instrument executed by the Executive and on behalf of the Corporation. Any decision by the Corporation to renew and 

 extend this Agreement shall not bind the Corporation unless such decision is reviewed and approved by the Board of
Directors of the Corporation. If this Agreement is neither renewed and extended in writing before the end of its term or any renewal term nor expressly terminated, it shall automatically renew for successive one year periods. 
  
 3. EXECUTIVE DUTIES: Executive agrees that, during the term of
his employment under this Agreement and in his capacity as President and Chief Executive Officer, he will devote his full business time and energy to the business, affairs and interests of the Corporation and serve it diligently and to the best of
his ability. The services and duties to be performed by Executive shall be those appropriate to his office and title as currently and from time to time hereafter specified in the Corporation’s by-laws or otherwise specified by its Board of
Directors. 
  
 4. COMPENSATION: (a) The
Corporation agrees to pay Executive, and Executive agrees to accept, as compensation for all services rendered by him to the Corporation during the period of his employment under this Agreement, base salary at the annual rate of One Hundred Eight
Thousand Dollars ($108,000.00), which shall be payable in monthly, semi-monthly or bi-weekly installments in conformity with Corporation’s policy relating to salaried employees. Such salary may be increased in the sole and absolute discretion
of the Corporation’s Board of Directors or Committee thereof duly authorized by the Board to so act; provided, however, that said annual salary after being so increased, shall not be decreased without prior written consent of Executive.

  
 (b) The Board of Directors from time to time may
authorize the payment of cash bonuses to the Executive. In lieu of cash payments, the Board of Directors shall select a bonus value and the Corporation may grant to the Executive an option to purchase common stock of the Corporation at the fair
market value per share of such stock at the date of grant. The duration of any such stock option shall be not less than five (5) years or more than (10) years in the discretion of the Board of Directors. The value of any such option shall be equal
or approximately equal to the bonus value selected by the Board of Directors. After the Board of Directors has selected the bonus value and the duration of the option, the independent certified public accountants regularly engaged by the Corporation
shall compute the number of shares of Corporation common stock to be covered by the option, employing the same method used by the Corporation to value the stock options for financial accounting purposes. 
  
 (c) The Executive may elect to defer a portion of his annual salary
and/or bonus into a deferred compensation plan other than the 401K. The Board of Directors would approve such a plan prior to implementation. 
  
 5. PARTICIPATION IN BENEFIT PLANS, REIMBURSEMENT OF BUSINESS EXPENSES AND MOVING EXPENSES: (i) During the term of employment under this
Agreement, Executive shall be entitled to participate in any pension, group insurance, hospitalization, deferred compensation or other benefit, bonus or incentive plans of the Corporation presently in effect (including, without limitation, the
Corporation’s stock option plans) according to the terms of the applicable plan documents or hereafter adopted by the Corporation and generally available to any employees of senior executive status, and, 
  

 2 

 additionally, Executive shall be entitled to have the use of Corporation’s facilities and executive benefits as are
customarily made available by the Corporation to its executive officers. The Corporation shall continue to provide Executive a motor vehicle for personal and business use. 
  
 (ii) During the term of this Agreement, to the extent that such expenditures are substantiated by the Executive as required
by the Internal Revenue Service and policies of the Corporation, the Corporation shall reimburse the Executive promptly for all expenditures (including travel, entertainment, parking, business meetings, and the monthly costs, including dues, of
maintaining memberships at appropriate clubs) made in accordance with rules and policies established from time to time by the Board of Directors of the Corporation in pursuance and furtherance of the Corporation’s business and good will.

  
 6. ILLNESS: In the event Executive is unable to
perform his duties under this Agreement on a full-time basis for a period of six (6) consecutive months by reason of illness or other physical or mental disability, and at or before the end of such period he does not return to work on a full-time
basis, the Corporation may terminate this Agreement without further or additional compensation payment being due the Executive from the Corporation pursuant to this Agreement, except benefits accrued through the date of such termination under
employee benefit plans of the Corporation. These benefits shall include long-term disability and other insurance or other benefits then regularly provided by the Corporation to disabled employees, as well as any other insurance benefits so provided.

  
 7. DEATH: In the event of Executive’s death
during the term of this Agreement, his estate, legal representatives or named beneficiaries (as directed by Executive in writing) shall be paid Executive’s compensation from the Corporation at the rate in effect at the time of Executive’s
death for a period of one (1) month from the date of Executive’s death. 
  
 8. TERMINATION WITHOUT CAUSE/RESIGNATION FOR GOOD REASON: 
  
 (a) Notwithstanding the provisions of Section 1 hereof, the Board of Directors of the Corporation may, without Cause (as hereafter defined),
terminate the Executive’s employment under this Agreement at any time in any lawful manner by giving not less than thirty (30) days written notice to the Executive. The Executive may resign for Good Reason (as hereafter defined) at any time by
giving not less than thirty (30) days written notice to the Corporation. If the Corporation terminates the Executive’s employment without Cause or the Executive resigns for Good Reason, then in either event: 
  
 (i) The Executive shall be paid for the remainder of the then current term
of this Agreement, at such times as payment was theretofore made, the salary required under Section 4 that the Executive would have been entitled to receive during the remainder of the then current term of this Agreement had such termination not
occurred; and 
  
 (ii) The Corporation shall maintain in full
force and effect for the continued benefit of the Executive for the remainder of the then current term of this Agreement, all employee benefit plans and programs or arrangements in which the Executive was entitled to 
  

 3 

 participate immediately prior to such termination, provided that continued participation is possible under the general
terms and provisions of such plans and programs. In the event that Executive’s participation in any such plan or program is barred by the eligibility provisions of the applicable plan, the Corporation shall arrange to provide the Executive with
benefits substantially similar to those which the Executive was entitled to receive under such plans and program, and 
  
 (b) For purposes of this Agreement, “Good Reason” shall mean: 
  
 (i) The assignment of duties to the Executive by the Corporation which (A) are materially different from the
Executive’s duties on the date hereof, or (B) result in the Executive having significantly less authority and/or responsibility than he has on the date hereof, without his express written consent; 
  
 (ii) The removal of the Executive from or any failure to re-elect him to the
position of President and Chief Executive Officer of the Corporation, except in connection with a termination of his employment by the Corporation for Cause or by reason of the Executive’s disability; 
  
 (iii) A reduction by the Corporation of the Executive’s base salary, as
the same may have been increased from time to time; 
  
 (iv) The
failure of the Corporation to provide the Executive with substantially the same or comparable fringe benefits (including paid vacations) that were provided to him immediately prior to the date hereof; or 
  
 (v) The failure of the Corporation to obtain the assumption of and agreement
to perform this Agreement by any successor as contemplated in Section 11(c) hereof. 
  
 (c) Resignation by the Executive for Good Reason shall be communicated by a written Notice of Resignation to the Corporation. A “Notice of Resignation” shall mean a notice, which shall indicate the
specific provision(s) in this Agreement, relied upon and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for a resignation for Good Reason. 
  
 (d) If within thirty (30) days after any Notice of Resignation is given the Corporation notifies the Executive that a
dispute exists concerning the resignation for Good Reason, the Corporation shall continue to pay the Executive his full salary and benefits as described in Sections 4 and 5, as and when due and payable, until such time as such dispute is settled or
a final decision is reached by a court of competent jurisdiction. If Good Reason for termination by the Executive is ultimately determined not to exist, then all sums paid by the Corporation to the Executive, including but not limited to the cost to
the Corporation of providing the Executive such fringe benefits, from the date of such resignation to the date of the resolution of such dispute shall be promptly repaid by the Executive to the Corporation with interest at the rate charged from time
to time by the Corporation to its most substantial customers for unsecured extensions of credit. 
  

 4 

 A failure by the Corporation to notify the Executive that a dispute exists concerning the resignation for
Good Reason within thirty (30) days after any Notice of Resignation is given shall constitute a final waiver by the Corporation of its right to contest either that such resignation was for Good Reason or its obligations to the Executive under
Section 8(a) hereof. 
  
 9. RESIGNATION - TERMINATION FOR
CAUSE: 
  
 (a) Notwithstanding the provisions of
Section 1 of this Agreement, the Board of Directors of the Corporation may, in its sole discretion, terminate the Executive’s employment for Cause. 
  
 “Termination for cause” shall mean termination because of: (1) Executive’s act or acts of dishonesty which are intended to result in the
Executive’s substantial personal gain at the expense of Employer; (2) the willful and repeated failure by Executive to substantially perform his duties with Employer after a written demand for substantial performance is delivered to Executive
by Employer which specifically identifies the manner in which Employer believes that Executive has not substantially performed his duties; (3) Executive’s deliberate violation of a company rule reasonably designed to protect the legitimate
business interest of Employer; or (4) Executive’s unprofessional or unethical acts, or conduct which actually has, or has the significant likelihood of, discrediting Employer or damaging Employer’s reputation, character and standing; or
(5) a material breach of any provision of this Agreement; or (6) a knowing violation by Executive of any banking law or regulation that results in material damage to the Corporation or any bank controlled by the Corporation. 
  
 No act or omission to act on the Executive’s behalf in reliance upon an
opinion of counsel to the Corporation or counsel to the Executive shall be deemed to be willful. Notwithstanding the foregoing, the Executive shall not be deemed to have been terminated for Cause unless and until there shall have been delivered to
him a copy of a certification by a majority of the non-officer members of the Board of Directors of the Corporation finding that, in the good faith opinion of such majority, the Executive was guilty of conduct which is deemed to be Cause and
specifying the particulars thereof in detail, after reasonable notice to the Executive and an opportunity for him, together with his counsel, to be heard before such majority. 
  
 (b) Termination of the Executive’s employment by the Corporation for Cause pursuant to Section 9(a) shall be
communicated by written Notice of Termination to the Executive. A “Notice of Termination” shall mean a notice, which shall indicate the specific termination provision(s) in this Agreement, relied upon and shall set forth with particularity
the facts and circumstances claimed to provide a basis for termination of employment for Cause under the provision so indicated. 
  

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 If within ninety (90) days after any Notice of Termination is given the Executive notifies the
Corporation that a dispute exists concerning the termination for Cause, the Corporation shall continue to pay the Executive his full salary and benefits as described in Sections 4 and 5, as and when due and payable, until such time as such dispute
is settled or a final decision is reached by a court of competent jurisdiction. If a termination for Cause by the Corporation is challenged by the Executive and the termination is ultimately determined to be justified, then all sums paid by the
Corporation to the Executive pursuant to this Section 9(b), plus the cost to the Corporation of providing the Executive such fringe benefits from the date of such termination to the date of the resolution of such dispute, shall be promptly repaid by
the Executive to the Corporation with interest at the rate charged from time to time by the Corporation to its most substantial customers for unsecured extensions of credit. Should it ultimately be determined that a termination by the Corporation
pursuant Section 9(a) was not justified, then the Executive shall be entitled to retain all sums paid to him pending the resolution of such dispute and he shall be entitled to receive, in addition, the payments and other benefits provided for in
Section 8(a). 
  
 A failure by the Executive to notify the
Corporation that a dispute exists concerning the termination for Cause within ninety (90) days after the Notice of Termination is given shall constitute a final waiver by the Executive of his right to contest that such termination was for Cause.

  
 (c) In the event that Executive resigns from or
otherwise voluntarily terminates his employment by the Corporation at any time (except a termination for Good Reason pursuant to Section 8 hereof), or if the Corporation rightfully terminates the Executive’s employment for Cause, this Agreement
shall terminate upon the date of such resignation or termination of employment for Cause, and (subject to Section 9(b)) the Corporation thereafter shall have no obligation to make any further payments under this Agreement, provided that the
Executive shall be entitled to receive any benefits, insured or otherwise, that he would otherwise be eligible to receive under any benefit plans of the Corporation or any affiliate of the Corporation. 
  
 10. CHANGE OF CONTROL: (a) If the Executive’s
employment terminates for any reason other than for Cause during the term of this Agreement and any renewal term following a Change of Control, on or before the Executive’s last day of employment with the Corporation (in addition to all other
payments to which the Executive is entitled under this Agreement) the Corporation shall pay to the Executive as compensation for services rendered to it a cash amount (subject to any applicable payroll or other taxes required to be withheld) equal
to the greater of: 
  
 (i) the amounts to which the Executive
would be entitled under Section 8(a), even if Executive resigns without Good Reason after a Change of Control; or 
  
 (ii) the product of his annual salary and the multiple of the book value per share of the Corporation’s common stock received by the
Corporation’s shareholders in connection with such change of control, provided such multiple shall not exceed three (3.0). For example, if the Corporation is acquired by another corporation and the exchange ratio for the Corporation’s
common stock is based on a calculation which values the Corporation at one and one-half times its book value, the executive’s payment pursuant to this Section 10(a) would be 150% of his then current annual salary. 
  

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 For purposes of this Agreement, a Change of Control occurs if, after the date of this Agreement, (i) any
person, including a “group” as defined in Section 13(d)(3) of the Securities Exchange Act of 1934 (but excluding any group of which the Executive is a member), becomes the owner or beneficial owner of Corporation securities having 20% or
more of the combined voting power of the then outstanding Corporation securities that may be cast for the election of the Corporation’s directors other than as a result of an issuance of securities initiated by the Corporation, or open market
purchases approved by the Board of Directors, as long as the majority of the Board of Directors approving the purchases is a majority at the time the purchases are made; or (ii) as the direct or indirect result of, or in connection with, a tender or
exchange offer, a merger or other business combination, a sale of assets, a contested election, or any combination of these events, the persons who were directors of the Corporation before such events cease to constitute a majority of the
Corporation’s Board, or any successor’s board, within two years of the last of such transactions. 
  
 (b) Upon a Change of Control, all stock options granted to the Executive under any of the Corporation’s stock option plans, or any successor
thereto, shall become immediately exercisable with respect to all or any portion of the shares covered thereby regardless of whether such options are otherwise exercisable or vested; provided, however, if the meaning of the term “Change of
Control” hereunder differs from the meaning of the same term or a similar term under any of the Corporation’s stock option plans, for purposes of this Section 10(b) only, the meaning set forth in the stock option plan shall control.

  
 11. LITIGATION - OBLIGATIONS - SUCCESSORS:

  
 (a) If litigation shall be brought to challenge,
enforce or interpret any provision of this Agreement, and such litigation does not end with judgment in favor of the Corporation, the Corporation hereby agrees to indemnify the Executive for his reasonable attorney’s fees and disbursements
incurred in such litigation, and hereby agrees to pay post-judgment interest on any money judgment obtained by the Executive calculated at the rate charged from time to time by the Corporation, to its most substantial customers for unsecured
extensions of credit from the date that payment(s) to him should have been made under the judgment to date of payment. 
  
 (b) The Corporation’s obligation to pay the Executive the compensation and benefits and to make the arrangements provided herein shall be
absolute and unconditional and shall not be affected by any circumstances, including, without limitation, any set-off, counterclaim, recoupment, defense or other right which the Corporation may have against him or anyone else. All amounts payable by
the Corporation hereunder shall be paid without notice or demand. Except as expressly provided in Sections 8(d) and 9(b), each and every payment made hereunder by the Corporation shall be final and the Corporation will not seek to recover all or any
part of such payment from the Executive or from whosoever may be entitled thereto, for any reason whatsoever. The Executive shall not be required to mitigate the amount of any payment provided for in this Agreement by seeking other employment or
otherwise. 
  

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 (c) The Corporation will require any successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the business and/or assets of the Corporation, or either one of them, by agreement in form and substance satisfactory to the Executive, to expressly assume and agree to perform this
Agreement in its entirety. Failure of the Corporation to obtain such agreement prior to the effectiveness of any such succession shall be a breach of this Agreement by the Corporation. As used in this Agreement, “Corporation” shall mean
Marathon Financial Corporation and any successor to its respective business and/or assets as aforesaid which executes and delivers the agreement provided for in this Section 11(c) or which otherwise becomes bound by all the terms and provisions of
this Agreement by operation of law. 
  
 12. LIMITATION OF
BENEFITS: 
  
 If the independent accountants serving as
auditors for the Corporation on the date of a Change of Control (or the Internal Revenue Service upon examination of the tax returns of the Corporation or the Executive) determine that some or all of the payments or benefits scheduled under this
Agreement, as well as any other payments or benefits contingent on a Change of Control, constitute an “excess parachute payment” within the meaning of Section 280G of the Internal Revenue Code of 1986, as amended (the Code) and any
regulations thereunder, thereby resulting in a loss of an income tax deduction by the Corporation or the imposition of an excise tax on the Executive under Section 4999 of the Code (the “Excise Tax”), then at the election of the Executive,
the payments scheduled under this Agreement may be reduced to one dollar less than the maximum amount which may be paid without causing any such payment or benefit to be nondeductible and subject to the Excise Tax. If the Executive elects to reduce
his payments or benefits, he may designate which payments or benefits will be reduced. 
  
 13. NOTICES: For the purposes of this Agreement, notices and all other communications provided for in the Agreement shall be in writing and shall be deemed to have been duly given when delivered or
mailed by United States registered or certified mail, return receipt requested, postage prepaid, addressed as follows: 
  

			
	 If to the Executive:
	 	 120 Rugby Place

	 	 	 Winchester, Virginia 22603

		
	 If to the Corporation:
	 	 Marathon Financial Corporation

	 	 	 4095 Valley Pike

	 	 	 Winchester, Virginia 22602

  
 or at such other address as any party
may have furnished to the other in writing in accordance herewith, except that notices of change of address shall be effective only upon receipt. 
  
 14. MODIFICATION - WAIVERS - APPLICABLE LAW: No provisions of this Agreement may be modified, waived or discharged unless such waiver,
modification or discharge is agreed to in writing, signed by the Executive and on behalf of the Corporation by such officer as may be specifically designated by the Board of Directors of the Corporation. No waiver by either party hereto at any time
of any breach by the other party hereto of, or compliance with, any 
  

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 condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or
dissimilar provision 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 set
forth expressly in this Agreement. The validity, interpretation, construction and performance of this Agreement shall be governed by the laws of the State of Virginia. 
  
 15. INVALIDITY - ENFORCEABILITY: The invalidity or unenforceability of any provisions of this Agreement shall
not affect the validity or enforceability of any other provision of this Agreement, which shall remain in full force and effect. Any provision in this Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective only to the extent of such prohibition or unenforceability without invalidating or affecting the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction. 
  
 16.
SUCCESSOR RIGHTS: 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 Executive
should die while any amounts would still be payable to him hereunder, all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this Agreement to his devisee, legatee or other designee or, if there is no such
designee, to his estate. 
  
 17. HEADINGS:
Descriptive headings contained in this Agreement are for convenience only and shall not control or affect the meaning or construction of any provision hereof. 
  

18. CONFIDENTIALITY-NONSOLICITATION-NONCOMPETITION: (a) The Executive acknowledges that the Corporation may disclose certain confidential
information to the Executive during the term of this Agreement to enable him to perform his duties hereunder. The Executive hereby covenants and agrees that he will not, without the prior written consent of the Corporation, during the term of this
Agreement or at any time thereafter, disclose or permit to be disclosed to any third party by any method whatsoever any of the confidential information of the Corporation. For purposes of this Agreement, “confidential information” shall
include, but not be limited to, any and all records, notes, memoranda, data, ideas, processes, methods, techniques, systems, formulas, patents, models, devices, programs, computer software, writings, research, personnel information, customer
information, the Corporation’s financial information, plans, or any other information of whatever nature in the possession or control of the Corporation which has not been published or disclosed to the general public, or which gives to the
Corporation an opportunity to obtain an advantage over competitors who do not know of or use it. The Executive further agrees that if his employment hereunder is terminated for any reason, he will leave with the Corporation and will not take
originals or copies of any and all records, papers, programs, computer software and documents and all matter of whatever nature which bears secret or confidential information of the Corporation. 
  
 The foregoing paragraph shall not be applicable if and to the extent the
Executive is required to testify in a judicial or regulatory proceeding pursuant to an order of a judge or administrative law judge issued after the Executive and his legal counsel urge that the aforementioned confidentiality be preserved.

  

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 The foregoing covenants will not prohibit the Executive from disclosing confidential or other information
to other employees of the Corporation or any third parties to the extent that such disclosure is necessary to the performance of his duties under this Agreement. 
  
 (b) Subject to Section 18(d), during the term of his employment with the Corporation, and for a period of two years
following the termination thereof for any reason or for a period of two years from the date of entry by a court of competent jurisdiction of a final judgment enforcing this covenant or any portion thereof, whichever is later, Executive covenants and
agrees: 
  
 (i) Executive shall not, without the prior written
consent of the Corporation, directly or indirectly engage or be interested in any bank, bank holding company or other enterprise which engages, anywhere within a radius of fifty (50) miles of an office maintained by the Corporation, in a business
which markets, distributes, sells or otherwise provides products or services which are competitive with those products or services marketed, distributed, sold or provided by the Corporation or any of its subsidiaries. Executive shall be deemed to be
directly or indirectly interested in a corporation, firm or other enterprise if he is engaged or interested in the business as an owner, principal, agent, employee, partner, consultant, investor, stockholder, trustee, creditor, director or officer.
This restriction shall not preclude Executive from merely becoming the holder of any publicly traded stock provided Executive does not acquire a stock interest in excess of five percent. Executive further covenants and agrees that during such time
and within such area he will not solicit any existing or former customer of the Corporation for any competing business. 
  
 (ii) Executive shall not, without the prior written consent of the Corporation, directly or indirectly, employ or solicit any of the employees of the
Corporation, who were employed by the Corporation during the time when the Executive was employed by the Corporation, to leave the Corporation. Further, during the same period Executive shall not induce, solicit, or advise any other person or
entity, or encourage or contribute to the efforts of any such person or entity, to employ or solicit the employment of any person employed by the Corporation during the time when the Executive was employed by the Corporation. 
  
 (c) The parties hereto agree that given the nature of the position
held by Executive with the Corporation, the covenants and restrictions set forth in Sections 18(a) and 18(b) above are reasonable and necessary for the protection of the significant investment of the Corporation in developing, maintaining and
expanding its business. Accordingly, the parties hereto agree, notwithstanding any other provision of this Agreement, that in the event of any breach by Executive of any of the provisions of Sections 18(a) and 18(b) above, that monetary damages
alone will not adequately compensate the Corporation for its losses and, therefore, that it may seek any and all legal or equitable relief available to it, specifically including, but not limited to, injunctive relief, without the necessity of bond,
and may hold Executive liable for all damages, including actual and consequential damages, costs and expenses, including legal costs and reasonable attorneys’ fees incurred by the Corporation as a result of such breach. Should a 
  

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 court of competent jurisdiction determine that any provision of the covenants and restrictions set forth in Section 18(b)
above is invalid or unenforceable under applicable law by reason of the geographic or temporal scope of such provision or the extent of any restriction imposed thereby, then the geographic or temporal scope of such provision may be deemed modified
by the court to reduce said geographic or temporal scope of such provision, or the extent of any unenforceable restriction, by such amount as is minimally necessary to render such provision, as so amended, not invalid or unenforceable under
applicable law. The parties further acknowledge their intention that this Agreement shall be enforceable to the fullest extent permitted by law. 
  
 (d) Section 18(b) shall not apply and shall not be enforceable against Executive by the Corporation or any successor of the Corporation after any
Change of Control (as defined in Section 10 of this Agreement). 
  
 IN WITNESS WHEREOF, the parties have executed this Agreement effective as of the date first above written. 
  

									
	 	 	 	 	 	 	 “EXECUTIVE”

				
	 ATTEST:
	 	  

	 	 	 	  

	 	 	 	 	 	 	 Donald L. Unger

				
	 	 	 	 	 	 	 MARATHON FINANCIAL

	 	 	 	 	 	 	 CORPORATION (“CORPORATION”)

					
	 ATTEST:
	 	  

	 	 	 	 By:
	 	  

	 	 	 	 	 	 	 	 	 AUTHORIZED OFFICER

  

 11First Reliance Bancshares, Inc. 2003 Stock Incentive Plan

 EXHIBIT 10.6 
  
 FIRST RELIANCE BANCSHARES, INC. 
 2003 STOCK INCENTIVE PLAN 

 FIRST RELIANCE BANCSHARES, INC. 
 2003 STOCK INCENTIVE PLAN 
  
 TABLE OF CONTENTS 
  

					
	 	 	 	 	Page

	 SECTION 1 DEFINITIONS
	 	2
			
	 1.1
	 	 DEFINITIONS
	 	2
		
	 SECTION 2 THE STOCK INCENTIVE PLAN
	 	4
			
	 2.1
	 	 PURPOSE OF THE PLAN
	 	4
	 2.2
	 	 STOCK SUBJECT TO THE PLAN
	 	4
	 2.3
	 	 ADMINISTRATION OF THE PLAN
	 	4
	 2.4
	 	 ELIGIBILITY AND LIMITS
	 	4
		
	 SECTION 3 TERMS OF STOCK INCENTIVES
	 	5
			
	 3.1
	 	 TERMS AND CONDITIONS OF ALL STOCK
INCENTIVES
	 	5
	 3.2
	 	 TERMS AND CONDITIONS OF OPTIONS.
	 	5
	   (a)
	 	 Option Price
	 	6
	   (b)
	 	 Option Term
	 	6
	   (c)
	 	 Payment.
	 	6
	   (d)
	 	 Conditions to the Exercise of an Option.
	 	6
	   (e)
	 	 Termination of Incentive Stock Option.
	 	6
	   (f)
	 	 Special Provisions for Certain Substitute Options.
	 	7
	 3.3
	 	 TERMS AND CONDITIONS OF STOCK APPRECIATION
RIGHTS.
	 	7
	   (a)
	 	 Settlement.
	 	7
	   (b)
	 	 Conditions to Exercise.
	 	7
	 3.4
	 	 TERMS AND CONDITIONS OF STOCK
AWARDS.
	 	7
	 3.5
	 	 TERMS AND CONDITIONS OF DIVIDEND EQUIVALENT
RIGHTS.
	 	7
	   (a)
	 	 Payment.
	 	7
	   (b)
	 	 Conditions to Payment.
	 	7
	 3.6
	 	 TERMS AND CONDITIONS OF PERFORMANCE UNIT
AWARDS.
	 	7
	   (a)
	 	 Payment.
	 	8
	   (b)
	 	 Conditions to Payment.
	 	8
	 3.7
	 	 TERMS AND CONDITIONS OF PHANTOM
SHARES.
	 	8
	   (a)
	 	 Payment.
	 	8
	   (b)
	 	 Conditions to Payment.
	 	8
	 3.8
	 	 TREATMENT OF AWARDS UPON TERMINATION OF
EMPLOYMENT
	 	8
		
	 SECTION 4 RESTRICTIONS ON STOCK
	 	8
			
	 4.1
	 	 ESCROW OF SHARES.
	 	8
	 4.2
	 	 RESTRICTIONS ON TRANSFER.
	 	9
		
	 SECTION 5 GENERAL PROVISIONS
	 	9
			
	 5.1
	 	 WITHHOLDING.
	 	9
	 5.2
	 	 CHANGES IN CAPITALIZATION; MERGER;
LIQUIDATION.
	 	9
	 5.3
	 	 CASH AWARDS
	 	10
	 5.4
	 	 COMPLIANCE WITH CODE.
	 	10
	 5.5
	 	 RIGHT TO TERMINATE EMPLOYMENT.
	 	10
	 5.6
	 	 NON-ALIENATION OF BENEFITS.
	 	10
	 5.7
	 	 RESTRICTIONS ON DELIVERY AND SALE OF
SHARES; LEGENDS.
	 	10
	 5.8
	 	 LISTING AND LEGAL COMPLIANCE
	 	10
	 5.9
	 	 TERMINATION AND AMENDMENT OF THE
PLAN.
	 	11
	 5.10
	 	 STOCKHOLDER APPROVAL.
	 	11
	 5.11
	 	 CHOICE OF LAW.
	 	11
	 5.12
	 	 EFFECTIVE DATE OF PLAN
	 	11

 FIRST RELIANCE BANCSHARES, INC. 
 2003 STOCK INCENTIVE PLAN 
  
 SECTION 1 DEFINITIONS 
  
 1.1 Definitions. Whenever used herein, the masculine pronoun will be deemed to include the feminine, and the singular to include the plural, unless the context clearly indicates otherwise, and the following capitalized words and
phrases are used herein with the meaning thereafter ascribed: 
  
 (a) “Affiliate” means: 
  
 (1) Any Subsidiary or Parent, 
  
 (2) An entity that directly or through one or more intermediaries controls, is controlled by, or is under common control with the Company, as determined by the Company, or 
  
 (3) Any entity in which the Company has such a significant
interest that the Company determines it should be deemed an “Affiliate”, as determined in the sole discretion of the Company. 
  
 (b) “Board of Directors” means the board of directors of the Company. 
  
 (c) “Code” means the Internal Revenue Code
of 1986, as amended. 
  
 (d)
“Committee” means the committee appointed by the Board of Directors to administer the Plan. The Board of Directors shall consider the advisability of whether the members of the Committee shall consist solely of at least two members
of the Board of Directors who are both “outside directors” as defined in Treas. Reg. § 1.162-27(e) as promulgated by the Internal Revenue Service and “non-employee directors” as defined in Rule 16b-3(b)(3) as promulgated
under the Exchange Act. If the Committee has not been appointed, the Board of Directors in their entirety shall constitute the Committee. 
  
 (e) “Company” means First Reliance Bancshares, Inc., a South Carolina corporation. 
  
 (f) “Disability” has the same meaning as
provided in the long-term disability plan or policy maintained or, if applicable, most recently maintained, by the Company or, if applicable, any Affiliate of the Company for the Participant. If no long-term disability plan or policy was ever
maintained on behalf of the Participant or, if the determination of Disability relates to an Incentive Stock Option, Disability means that condition described in Code Section 22(e)(3), as amended from time to time. In the event of a dispute, the
determination of Disability will be made by the Committee and will be supported by advice of a physician competent in the area to which such Disability relates. 
  
 (g) “Dividend Equivalent Rights” means certain rights to receive cash payments as described
in Section 3.5. 
  
 (h) “Exchange
Act” means the Securities Exchange Act of 1934, as amended from time to time. 
  
 (i) “Fair Market Value” with regard to a date means: 
  
 (1) the price at which Stock shall have been sold on that date or the last trading date prior to that date
as reported by the national securities exchange selected by the Committee on which the shares of Stock are then actively traded or, if applicable, as reported by the NASDAQ Stock Market; 
  
 (2) if such market information is not published on a regular basis, the price of Stock in the
over-the-counter market on that date or the last business day prior to that date as reported by the NASDAQ Stock Market or, if not so reported, by a generally accepted reporting service; or 
  

 2 

 (3) if Stock is not publicly traded, as determined in good faith by the Committee with
due consideration being given to (i) the most recent independent appraisal of the Company, if such appraisal is not more than twelve months old and (ii) the valuation methodology used in any such appraisal. 
  
 For purposes of Paragraphs (1), (2), or (3) above, the
Committee may use the closing price as of the applicable date, the average of the high and low prices as of the applicable date or for a period certain ending on such date, the price determined at the time the transaction is processed, the tender
offer price for shares of Stock, or any other method which the Committee determines is reasonably indicative of the fair market value. 
  
 (j) “Incentive Stock Option” means an incentive stock option within the meaning of Section 422 of the Internal Revenue
Code. 
  
 (k) “Nonqualified Stock
Option” means a stock option that is not an Incentive Stock Option. 
  
 (l) “Option” means a Nonqualified Stock Option or an Incentive Stock Option. 
  
 (m) “Over 10% Owner” means an individual who at the time an Incentive Stock Option is granted owns Stock possessing more
than 10% of the total combined voting power of the Company or one of its Subsidiaries, determined by applying the attribution rules of Code Section 424(d). 
  
 (n) “Parent” means any corporation (other than the Company) in an unbroken chain of corporations ending with the Company
if, with respect to Incentive Stock Options, at the time of the granting of the Option, each of the corporations other than the Company owns stock possessing 50% or more of the total combined voting power of all classes of stock in one of the other
corporations in such chain. A Parent shall include any entity other than a corporation to the extent permissible under Section 424(f) or regulations and rulings thereunder. 
  
 (o) “Participant” means an individual who receives a Stock Incentive hereunder. 

 
 (p) “Performance Unit Award” refers to a
performance unit award as described in Section 3.6. 
  
 (q) “Phantom Shares” refers to the rights described in Section 3.7. 
  
 (r) “Plan” means the First Reliance Bancshares, Inc. 2003 Stock Incentive Plan. 
  
 (s) “Stock” means the Company’s common
stock, $.01 par value per share. 
  
 (t)
“Stock Appreciation Right” means a stock appreciation right described in Section 3.3. 
  
 (u) “Stock Award” means a stock award described in Section 3.4. 
  
 (v) “Stock Incentive Agreement” means an
agreement between the Company and a Participant or other documentation evidencing an award of a Stock Incentive. 
  
 (w) “Stock Incentive Program” means a written program established by the Committee, pursuant to which Stock Incentives
are awarded under the Plan under uniform terms, conditions and restrictions set forth in such written program. 
  
 (x) “Stock Incentives” means, collectively, Dividend Equivalent Rights, Incentive Stock Options, Nonqualified Stock
Options, Phantom Shares, Stock Appreciation Rights, Stock Awards and Performance Unit Awards. 
  
 (y) “Subsidiary” means any corporation (other than the Company) in an unbroken chain of corporations beginning with the
Company if, at the time of the granting of the Option, each of the corporations other than the last corporation in the unbroken chain owns stock possessing 50% or more of 
  

 3 

 the total combined voting power of all classes of stock in one of the other corporations in the chain. A
“Subsidiary” shall include any entity other than a corporation to the extent permissible under Section 424(f) or regulations or rulings thereunder. 
  

(z) “Termination of Employment” means the termination of the employee-employer relationship between a Participant and
the Company and its Affiliates, regardless of whether severance or similar payments are made to the Participant for any reason, including, but not by way of limitation, a termination by resignation, discharge, death, Disability or retirement. The
Committee will, in its absolute discretion, determine the effect of all matters and questions relating to a Termination of Employment, including, but not by way of limitation, the question of whether a leave of absence constitutes a Termination of
Employment. 
  
 SECTION 2 THE STOCK INCENTIVE PLAN

  
 2.1 Purpose of the Plan. The Plan is intended to
(a) provide incentive to organizers, directors, officers, key employees and other service providers of the Company and its Affiliates to stimulate their efforts toward the continued success of the Company and to operate and manage the business in a
manner that will provide for the long-term growth and profitability of the Company; (b) encourage stock ownership by organizers, directors, officers, key employees and other service providers by providing them with a means to acquire a proprietary
interest in the Company, acquire shares of Stock, or to receive compensation which is based upon appreciation in the value of Stock; and (c) provide a means of obtaining, rewarding and retaining organizers, directors, officers, key employees and
other service providers. 
  
 2.2 Stock Subject to the Plan.
Subject to adjustment in accordance with Section 5.2, TWO HUNDRED FIFTY THOUSAND (250,000) shares of Stock (the “Maximum Plan Shares”) are hereby reserved exclusively for issuance upon exercise or payment pursuant to Stock Incentives. The
shares of Stock attributable to the nonvested, unpaid, unexercised, unconverted or otherwise unsettled portion of any Stock Incentive that is forfeited or cancelled or expires or terminates for any reason without becoming vested, paid, exercised,
converted or otherwise settled in full will again be available for purposes of the Plan. 
  
 2.3 Administration of the Plan. The Plan is administered by the Committee. The Committee has full authority in its discretion to determine the organizers, directors, officers, employees and service providers of
the Company or its Affiliates to whom Stock Incentives will be granted and the terms and provisions of Stock Incentives, subject to the Plan. Subject to the provisions of the Plan, the Committee has full and conclusive authority to interpret the
Plan; to prescribe, amend and rescind rules and regulations relating to the Plan; to determine the terms and provisions of the respective Stock Incentive Agreements and to make all other determinations necessary or advisable for the proper
administration of the Plan. The Committee’s determinations under the Plan need not be uniform and may be made by it selectively among persons who receive, or are eligible to receive, awards under the Plan (whether or not such persons are
similarly situated). The Committee’s decisions are final and binding on all Participants. Each member of the Committee shall serve at the discretion of the Board of Directors and the Board of Directors may from time to time remove members from
or add members to the Committee. Vacancies on the Committee shall be filled by the Board of Directors. 
  
 2.4 Eligibility and Limits. Stock Incentives may be granted only to organizers, directors, officers, employees and other service providers of the
Company, or any Affiliate of the Company; provided, however, that an Incentive Stock Option may only be granted to an employee of the Company or any Subsidiary. In the case of Incentive Stock Options, the aggregate Fair Market Value (determined as
at the date an Incentive Stock Option is granted) of stock with respect to which stock options intended to meet the requirements of Code Section 422 become exercisable for the first time by an individual during any calendar year under all plans of
the Company and its Subsidiaries may not exceed $100,000; provided further, that if the limitation is exceeded, the Incentive Stock Option(s) which cause the limitation to be exceeded will be treated as Nonqualified Stock Option(s). 
  

 4 

 SECTION 3 TERMS OF STOCK INCENTIVES 
  
 3.1 Terms and Conditions of All Stock Incentives. 
  
 (a) The number of shares of Stock as to which a Stock Incentive may be granted will be determined by the
Committee in its sole discretion, subject to the provisions of Section 2.2 as to the total number of shares available for grants under the Plan. To the extent required under Section 162(m) of the Code and the regulations thereunder, subject to
adjustment in accordance with Section 5.2, the maximum number of shares of Stock with respect to which Options or Stock Appreciation Rights may be granted during any calendar year to any employee may not exceed 100,000. If, after grant, an Option is
cancelled, the cancelled Option shall continue to be counted against the maximum number of shares for which options may be granted to an employee as described in this Section 3.1. If, after grant, the exercise price of an Option is reduced or the
base amount on which a Stock Appreciation Right is calculated is reduced, the transaction shall be treated as the cancellation of the Option or the Stock Appreciation Right, as applicable, and the grant of a new Option or Stock Appreciation Right,
as applicable. If an Option or Stock Appreciation Right is deemed to be cancelled as described in the preceding sentence, the Option or Stock Appreciation Right that is deemed to be canceled and the Option or Stock Appreciation Right that is deemed
to be granted shall both be counted against the maximum number of shares for which Options or Stock Appreciation Rights may be granted to an employee as described in this Section 3.1. 
  
 (b) Each Stock Incentive will either be evidenced by a Stock Incentive Agreement in such form and containing
such terms, conditions and restrictions as the Committee may determine to be appropriate, including without limitation, performance goals that must be achieved as a condition to vesting or payment of the Stock Incentive, or be made subject to the
terms of a Stock Incentive Program, containing such terms, conditions and restrictions as the Committee may determine to be appropriate, including without limitation, performance goals that must be achieved as a condition to vesting or payment of
the Stock Incentive. Each Stock Incentive Agreement or Stock Incentive Program is subject to the terms of the Plan and any provisions contained in the Stock Incentive Agreement or Stock Incentive Program that are inconsistent with the Plan are null
and void. 
  
 (c) The date a Stock Incentive is
granted will be the date on which the Committee has approved the terms and conditions of the Stock Incentive and has determined the recipient of the Stock Incentive and the number of shares covered by the Stock Incentive, and has taken all such
other actions necessary to complete the grant of the Stock Incentive. 
  
 (d) Any Stock Incentive may be granted in connection with all or any portion of a previously or contemporaneously granted Stock Incentive. Exercise or vesting of a Stock Incentive granted in connection with another
Stock Incentive may result in a pro rata surrender or cancellation of any related Stock Incentive, as specified in the applicable Stock Incentive Agreement or Stock Incentive Program. 
  
 (e) Stock Incentives are not transferable or assignable except by will or by the laws of descent and
distribution and are exercisable, during the Participant’s lifetime, only by the Participant; or in the event of the Disability of the Participant, by the legal representative of the Participant; or in the event of death of the Participant, by
the legal representative of the Participant’s estate or if no legal representative has been appointed, by the successor in interest determined under the Participant’s will; provided, however, that the Committee may waive any of the
provisions of this Section or provide otherwise as to any Stock Incentives other than Incentive Stock Options. 
  
 3.2 Terms and Conditions of Options. Each Option granted under the Plan must be evidenced by a Stock Incentive Agreement. At the time any Option is
granted, the Committee will determine whether the Option is to be an Incentive Stock Option described in Code Section 422 or a Nonqualified Stock Option, and the Option must be clearly identified as to its status as an Incentive Stock Option or a
Nonqualified Stock Option. Incentive Stock Options may only be granted to employees of the Company or any Subsidiary or Parent. At the time any Incentive Stock Option granted under the Plan is exercised, the Company will be entitled to legend the
certificates representing the shares of Stock purchased pursuant to the Option to clearly identify them as representing the shares purchased upon the exercise of an Incentive Stock Option. An Incentive Stock Option may only be granted within ten
(10) years from the earlier of the date the Plan is adopted or approved by the Company’s stockholders. 
  

 5 

 (a) Option Price. Subject to adjustment in accordance with Section 5.2 and the
other provisions of this Section 3.2, the exercise price (the “Exercise Price”) per share of Stock purchasable under any Option must be as set forth in the applicable Stock Incentive Agreement, but in no event may it be less than the Fair
Market Value on the date the Option is granted with respect to an Incentive Stock Option. With respect to each grant of an Incentive Stock Option to a Participant who is an Over 10% Owner, the Exercise Price may not be less than 110% of the Fair
Market Value on the date the Option is granted. 
  
 (b) Option Term. Any Incentive Stock Option granted to a Participant who is not an Over 10% Owner is not exercisable after the expiration of ten (10) years after the date the Option is granted. Any Incentive Stock Option granted to
an Over 10% Owner is not exercisable after the expiration of five (5) years after the date the Option is granted. The term of any Nonqualified Stock Option must be as specified in the applicable Stock Incentive Agreement. 
  
 (c) Payment. Payment for all shares of Stock
purchased pursuant to exercise of an Option will be made in any form or manner authorized by the Committee in the Stock Incentive Agreement or by amendment thereto, including, but not limited to, cash or, if the Stock Incentive Agreement provides:

  
 (i) by delivery to the Company of a number of
shares of Stock which have been owned by the holder for at least six (6) months prior to the date of exercise having an aggregate Fair Market Value of not less than the product of the Exercise Price multiplied by the number of shares the Participant
intends to purchase upon exercise of the Option on the date of delivery; 
  
 (ii) in a cashless exercise through a broker provided, however, that any such cashless exercise is consistent with the restrictions of Section 13(k) of the Exchange Act (Section 402 of the Sarbanes-Oxley Act of 2002);
or 
  
 (iii) by having a number of shares of
Stock withheld, the Fair Market Value of which as of the date of exercise is sufficient to satisfy the Exercise Price. 
  
 In its discretion, the Committee also may authorize (at the time an Option is granted or thereafter) Company financing to assist the Participant as to
payment of the Exercise Price on such terms as may be offered by the Committee in its discretion. Payment must be made at the time that the Option or any part thereof is exercised, and no shares may be issued or delivered upon exercise of an option
until full payment has been made by the Participant. The holder of an Option, as such, has none of the rights of a stockholder. 
  
 (d) Conditions to the Exercise of an Option. Each Option granted under the Plan is exercisable by the Participant or any other
designated person, at such time or times, or upon the occurrence of such event or events, and in such amounts, as the Committee specifies in the Stock Incentive Agreement; provided, however, that subsequent to the grant of an Option, the Committee,
at any time before complete termination of such Option, may accelerate the time or times at which such Option may be exercised in whole or in part, including, without limitation, upon a Change in Control as defined in the Stock Incentive Agreement
and may permit the Participant or any other designated person to exercise the Option, or any portion thereof, for all or part of the remaining Option term, notwithstanding any provision of the Stock Incentive Agreement to the contrary. 

 
 (e) Termination of Incentive Stock Option. With
respect to an Incentive Stock Option, in the event of Termination of Employment of a Participant, the Option or portion thereof held by the Participant which is unexercised will expire, terminate, and become unexercisable no later than the
expiration of three (3) months after the date of Termination of Employment; provided, however, that in the case of a holder whose Termination of Employment is due to death or Disability, one (1) year will be substituted for such three (3) month
period; provided, further that such time limits may be exceeded by the Committee under the terms of the grant, in which case, the Incentive Stock Option will be a Nonqualified Option if it is exercised after the time limits that would otherwise
apply. For purposes of this Subsection (e), Termination of Employment of the Participant will not be deemed to have occurred if the Participant is employed by another corporation (or a parent or subsidiary corporation of such other corporation)
which has assumed the Incentive Stock Option of the Participant in a transaction to which Code Section 424(a) is applicable. 
  

 6 

 (f) Special Provisions for Certain Substitute Options. Notwithstanding anything to
the contrary in this Section 3.2, any Option issued in substitution for an option previously issued by another entity, which substitution occurs in connection with a transaction to which Code Section 424(a) is applicable, may provide for an exercise
price computed in accordance with such Code Section and the regulations thereunder and may contain such other terms and conditions as the Committee may prescribe to cause such substitute Option to contain as nearly as possible the same terms and
conditions (including the applicable vesting and termination provisions) as those contained in the previously issued option being replaced thereby. 
  
 3.3 Terms and Conditions of Stock Appreciation Rights. Each Stock Appreciation Right granted under the Plan must be evidenced by a Stock Incentive
Agreement. A Stock Appreciation Right entitles the Participant to receive the excess of (1) the Fair Market Value of a specified or determinable number of shares of the Stock at the time of payment or exercise over (2) a specified or determinable
price which, in the case of a Stock Appreciation Right granted in connection with an Option, may not be less than the Exercise Price for that number of shares subject to that Option. A Stock Appreciation Right granted in connection with a Stock
Incentive may only be exercised to the extent that the related Stock Incentive has not been exercised, paid or otherwise settled. 
  
 (a) Settlement. Upon settlement of a Stock Appreciation Right, the Company must pay to the Participant the appreciation in cash or
shares of Stock (valued at the aggregate Fair Market Value on the date of payment or exercise) as provided in the Stock Incentive Agreement or, in the absence of such provision, as the Committee may determine. 
  
 (b) Conditions to Exercise. Each Stock Appreciation
Right granted under the Plan is exercisable or payable at such time or times, or upon the occurrence of such event or events, and in such amounts, as the Committee specifies in the Stock Incentive Agreement; provided, however, that subsequent to the
grant of a Stock Appreciation Right, the Committee, at any time before complete termination of such Stock Appreciation Right, may accelerate the time or times at which such Stock Appreciation Right may be exercised or paid in whole or in part.

  
 3.4 Terms and Conditions of Stock Awards. The number of
shares of Stock subject to a Stock Award and restrictions or conditions on such shares, if any, will be as the Committee determines, and the certificate for such shares will bear evidence of any restrictions or conditions. Subsequent to the date of
the grant of the Stock Award, the Committee has the power to permit, in its discretion, an acceleration of the expiration of an applicable restriction period with respect to any part or all of the shares awarded to a Participant. The Committee may
require a cash payment from the Participant in an amount no greater than the aggregate Fair Market Value of the shares of Stock awarded determined at the date of grant in exchange for the grant of a Stock Award or may grant a Stock Award without the
requirement of a cash payment. 
  
 3.5 Terms and Conditions of
Dividend Equivalent Rights. A Dividend Equivalent Right entitles the Participant to receive payments from the Company in an amount determined by reference to any cash dividends paid on a specified number of shares of Stock to Company
stockholders of record during the period such rights are effective. The Committee may impose such restrictions and conditions on any Dividend Equivalent Right as the Committee in its discretion shall determine, including the date any such right
shall terminate and may reserve the right to terminate, amend or suspend any such right at any time. 
  
 (a) Payment. Payment in respect of a Dividend Equivalent Right may be made by the Company in cash or shares of Stock (valued at
Fair Market Value as of the date payment is owed) as provided in the Stock Incentive Agreement or Stock Incentive Program, or, in the absence of such provision, as the Committee may determine. 
  
 (b) Conditions to Payment. Each Dividend Equivalent
Right granted under the Plan is payable at such time or times, or upon the occurrence of such event or events, and in such amounts, as the Committee specifies in the applicable Stock Incentive Agreement or Stock Incentive Program; provided, however,
that subsequent to the grant of a Dividend Equivalent Right, the Committee, at any time before complete termination of such Dividend Equivalent Right, may accelerate the time or times at which such Dividend Equivalent Right may be paid in whole or
in part. 
  
 3.6 Terms and Conditions of Performance Unit
Awards. A Performance Unit Award shall entitle the Participant to receive, at a specified future date, payment of an amount equal to all or a portion of the value of a 
  

 7 

 specified or determinable number of units (stated in terms of a designated or determinable dollar amount per unit)
granted by the Committee. At the time of the grant, the Committee must determine the base value of each unit, the number of units subject to a Performance Unit Award, and the Performance goals applicable to the determination of the ultimate payment
value of the Performance Unit Award. The Committee may provide for an alternate base value for each unit under certain specified conditions. 
  
 (a) Payment. Payment in respect of Performance Unit Awards may be made by the Company in cash or shares of Stock (valued at Fair
Market Value as of the date payment is owed) as provided in the applicable Stock Incentive Agreement or Stock Incentive Program or, in the absence of such provision, as the Committee may determine. 
  
 (b) Conditions to Payment. Each Performance Unit
Award granted under the Plan shall be payable at such time or times, or upon the occurrence of such event or events, and in such amounts, as the Committee shall specify in the applicable Stock Incentive Agreement or Stock Incentive Program;
provided, however, that subsequent to the grant of a Performance Unit Award, the Committee, at any time before complete termination of such Performance Unit Award, may accelerate the time or times at which such Performance Unit Award may be paid in
whole or in part. 
  
 3.7 Terms and Conditions of Phantom
Shares. Phantom Shares shall entitle the Participant to receive, at a specified future date, payment of an amount equal to all or a portion of the Fair Market Value of a specified number of shares of Stock at the end of a specified period. At
the time of the grant, the Committee will determine the factors which will govern the portion of the phantom shares so payable, including, at the discretion of the Committee, any performance criteria that must be satisfied as a condition to payment.
Phantom Share awards containing performance criteria may be designated as performance share awards. 
  
 (a) Payment. Payment in respect of Phantom Shares may be made by the Company in cash or shares of Stock (valued at Fair Market
Value as of the date payment is owed) as provided in the applicable Stock Incentive Agreement or Stock Incentive Program, or, in the absence of such provision, as the Committee may determine. 
  
 (b) Conditions to Payment. Each Phantom Share granted
under the Plan is payable at such time or times, or upon the occurrence of such event or events, and in such amounts, as the Committee specify in the applicable Stock Incentive Agreement or Stock Incentive Program; provided, however, that subsequent
to the grant of a Phantom Share, the Committee, at any time before complete termination of such Phantom Share, may accelerate the time or times at which such Phantom Share may be paid in whole or in part. 
  
 3.8 Treatment of Awards Upon Termination of Employment. Except as
otherwise provided by Plan Section 3.2(e), any award under this Plan to a Participant who has experienced a Termination of Employment may be cancelled, accelerated, paid or continued, as provided in the applicable Stock Incentive Agreement or Stock
Incentive Program, or, in the absence of such provision, as the Committee may determine. The portion of any award exercisable in the event of continuation or the amount of any payment due under a continued award may be adjusted by the Committee to
reflect the Participant’s period of service from the date of grant through the date of the Participant’s Termination of Employment or such other factors as the Committee determines are relevant to its decision to continue the award.

  
 SECTION 4 RESTRICTIONS ON STOCK 
  
 4.1 Escrow of Shares. Any certificates representing the shares of
Stock issued under the Plan will be issued in the Participant’s name, but, if the applicable Stock Incentive Agreement or Stock Incentive Program so provides, the shares of Stock will be held by a custodian designated by the Committee (the
“Custodian”). Each applicable Stock Incentive Agreement or Stock Incentive Program providing for transfer of shares of Stock to the Custodian must appoint the Custodian as the attorney-in-fact for the Participant for the term specified in
the applicable Stock Incentive Agreement or Stock Incentive Program, with full power and authority in the Participant’s name, place and stead to transfer, assign and convey to the Company any shares of Stock held by the Custodian for such
Participant, if the Participant forfeits the shares under the terms of the applicable Stock Incentive Agreement or Stock Incentive Program. During the period that the Custodian holds the shares subject to this Section, the Participant is entitled to
all rights, except as provided in the applicable Stock Incentive Agreement or Stock 
  

 8 

 Incentive Program, applicable to shares of Stock not so held. Any dividends declared on shares of Stock held by the
Custodian shall, as the Committee may provide in the applicable Stock Incentive Agreement or Stock Incentive Program, be paid directly to the Participant or, in the alternative, be retained by the Custodian or by the Company until the expiration of
the term specified in the applicable Stock Incentive Agreement or Stock Incentive Program and shall then be delivered, together with any proceeds, with the shares of Stock to the Participant or to the Company, as applicable. 
  
 4.2 Restrictions on Transfer. The Participant does not have the right
to make or permit to exist any disposition of the shares of Stock issued pursuant to the Plan except as provided in the Plan or the applicable Stock Incentive Agreement or Stock Incentive Program. Any disposition of the shares of Stock issued under
the Plan by the Participant not made in accordance with the Plan or the applicable Stock Incentive Agreement or Stock Incentive Program will be void. The Company will not recognize, or have the duty to recognize, any disposition not made in
accordance with the Plan and the applicable Stock Incentive Agreement or Stock Incentive Program, and the shares so transferred will continue to be bound by the Plan and the applicable Stock Incentive Agreement or Stock Incentive Program.

  
 SECTION 5 GENERAL PROVISIONS 
  
 5.1 Withholding. The Company must deduct from all cash distributions
under the Plan any taxes required to be withheld by federal, state or local government. Whenever the Company proposes or is required to issue or transfer shares of Stock under the Plan or upon the vesting of any Stock Award, the Company has the
right to require the recipient to remit to the Company an amount sufficient to satisfy any federal, state and local tax withholding requirements prior to the delivery of any certificate or certificates for such shares or the vesting of such Stock
Award. A Participant may pay the withholding obligation in cash, or, if the applicable Stock Incentive Agreement or Stock Incentive Program provides, a Participant may elect to have the number of shares of Stock he is to receive reduced by, or with
respect to a Stock Award, tender back to the Company, the smallest number of whole shares of Stock which, when multiplied by the Fair Market Value of the shares of Stock determined as of the Tax Date (defined below), is sufficient to satisfy
federal, state and local, if any, withholding obligation arising from exercise or payment of a Stock Incentive (a “Withholding Election”). A Participant may make a Withholding Election only if both of the following conditions are met:

  
 (a) The Withholding Election must be made on
or prior to the date on which the amount of tax required to be withheld is determined (the “Tax Date”) by executing and delivering to the Company a properly completed notice of Withholding Election as prescribed by the Committee; and

  
 (b) Any Withholding Election made will be
irrevocable except on six months advance written notice delivered to the Company; however, the Committee may in its sole discretion disapprove and give no effect to the Withholding Election. 
  
 5.2 Changes in Capitalization; Merger; Liquidation. 
  
 (a) The number of shares of Stock reserved for the grant of
Options, Dividend Equivalent Rights, Performance Unit Awards, Phantom Shares, Stock Appreciation Rights and Stock Awards; the number of shares of Stock reserved for issuance upon the exercise or payment, as applicable, of each outstanding Option,
Dividend Equivalent Right, Phantom Share and Stock Appreciation Right and upon vesting or grant, as applicable, of each Stock Award; the Exercise Price of each outstanding Option and the specified number of shares of Stock to which each outstanding
Dividend Equivalent Right, Phantom Share and Stock Appreciation Right pertains must be proportionately adjusted for any increase or decrease in the number of issued shares of Stock resulting from a subdivision or combination of shares or the payment
of a stock dividend in shares of Stock to holders of outstanding shares of Stock or any other increase or decrease in the number of shares of Stock outstanding effected without receipt of consideration by the Company. 
  
 (b) In the event of a merger, consolidation, reorganization,
extraordinary dividend, spin-off, sale of substantially all of the Company’s assets, other change in capital structure of the Company, tender offer for shares of Stock, or a change in control of the Company (as defined by the Committee in the
applicable Stock Incentive Agreement) the Committee may make such adjustments with respect to awards and take such other action as it deems necessary or appropriate, including, without limitation, the 
  

 9 

 assumption of other awards, the substitution of new awards, the adjustment of outstanding awards, the
acceleration of awards, the removal of restrictions on outstanding awards, or the termination of outstanding awards in exchange for the cash value determined in good faith by the Committee of the vested and/or unvested portion of the award, all as
may be provided in the applicable Stock Incentive Agreement or, if not expressly addressed therein, as the Committee subsequently may determine in its sole discretion. Any adjustment pursuant to this Section 5.2 may provide, in the Committee’s
discretion, for the elimination without payment therefor of any fractional shares that might otherwise become subject to any Stock Incentive, but except as set forth in this Section may not otherwise diminish the then value of the Stock Incentive.

  
 (c) The existence of the Plan and the Stock
Incentives granted pursuant to the Plan must not affect in any way the right or power of the Company to make or authorize any adjustment, reclassification, reorganization or other change in its capital or business structure, any merger or
consolidation of the Company, any issue of debt or equity securities having preferences or priorities as to the Stock or the rights thereof, the dissolution or liquidation of the Company, any sale or transfer of all or any part of its business or
assets, or any other corporate act or proceeding. 
  
 5.3 Cash
Awards. The Committee may, at any time and in its discretion, grant to any holder of a Stock Incentive the right to receive, at such times and in such amounts as determined by the Committee in its discretion, a cash amount which is intended to
reimburse such person for all or a portion of the federal, state and local income taxes imposed upon such person as a consequence of the receipt of the Stock Incentive or the exercise of rights thereunder. 
  
 5.4 Compliance with Code. All Incentive Stock Options to be granted
hereunder are intended to comply with Code Section 422, and all provisions of the Plan and all Incentive Stock Options granted hereunder must be construed in such manner as to effectuate that intent. 
  
 5.5 Right to Terminate Employment. Nothing in the Plan or in any Stock
Incentive confers upon any Participant the right to continue as an employee or officer of the Company or any of its Affiliates or affect the right of the Company or any of its Affiliates to terminate the Participant’s employment or services at
any time. 
  
 5.6 Non-Alienation of Benefits. Other than as
provided herein, no benefit under the Plan may be subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance or charge; and any attempt to do so shall be void. No such benefit may, prior to receipt by the
Participant, be in any manner liable for or subject to the debts, contracts, liabilities, engagements or torts of the Participant. 
  
 5.7 Restrictions on Delivery and Sale of Shares; Legends. Each Stock Incentive is subject to the condition that if at any time the Committee, in
its discretion, shall determine that the listing, registration or qualification of the shares covered by such Stock Incentive upon any securities exchange or under any state or federal law is necessary or desirable as a condition of or in connection
with the granting of such Stock Incentive or the purchase or delivery of shares thereunder, the delivery of any or all shares pursuant to such Stock Incentive may be withheld unless and until such listing, registration or qualification shall have
been effected. If a registration statement is not in effect under the Securities Act of 1933 or any applicable state securities laws with respect to the shares of Stock purchasable or otherwise deliverable under Stock Incentives then outstanding,
the Committee may require, as a condition of exercise of any Option or as a condition to any other delivery of Stock pursuant to a Stock Incentive, that the Participant or other recipient of a Stock Incentive represent, in writing, that the shares
received pursuant to the Stock Incentive are being acquired for investment and not with a view to distribution and agree that the shares will not be disposed of except pursuant to an effective registration statement, unless the Company shall have
received an opinion of counsel that such disposition is exempt from such requirement under the Securities Act of 1933 and any applicable state securities laws. The Company may include on certificates representing shares delivered pursuant to a Stock
Incentive such legends referring to the foregoing representations or restrictions or any other applicable restrictions on resale as the Company, in its discretion, shall deem appropriate. 
  
 5.8 Listing and Legal Compliance. The Committee may suspend the exercise or payment of any Stock Incentive so long as
it determines that securities exchange listing or registration or qualification under any securities laws is required in connection therewith and has not been completed on terms acceptable to the Committee. 
  

 10 

 5.9 Termination and Amendment of the Plan. The Board of Directors at any time may amend or
terminate the Plan without stockholder approval; provided, however, that the Board of Directors may condition any amendment on the approval of stockholders of the Company if such approval is necessary or advisable with respect to tax, securities or
other applicable laws. No such termination or amendment without the consent of the holder of a Stock Incentive may adversely affect the rights of the Participant under such Stock Incentive. 
  
 5.10 Stockholder Approval. The Plan must be submitted to the
stockholders of the Company for their approval within twelve (12) months before or after the adoption of the Plan by the Board of Directors of the Company. If such approval is not obtained, any Stock Incentive granted hereunder will be void.

  
 5.11 Choice of Law. The laws of the State of South
Carolina shall govern the Plan, to the extent not preempted by federal law, without reference to the principles of conflict of laws. 
  
 5.12 Effective Date of Plan. This Plan was approved by the Board of Directors on
                            , 2003. 
  

			
	FIRST RELIANCE BANCSHARES, INC.
		
	By:	 	  

	Title:	 	  

  

 11

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