Document:

Exhibit 10.8

FIRST RELIANCE BANCSHARES, INC. 
 2006 EQUITY INCENTIVE PLAN

FIRST RELIANCE BANCSHARES, INC.
 2006 EQUITY INCENTIVE PLAN

TABLE OF CONTENTS

	
  
SECTION 1  DEFINITIONS
  	
  
1
  
	
   
 	
  
 
  	
   
 
	
  
    1.1
  	
  
    DEFINITIONS
  	
  
    1
  
	
  
 
  	
   
 
	
  
SECTION 2  THE EQUITY   INCENTIVE PLAN
  	
  
3
  
	
   
 	
   
  	
   
 
	
  
    2.1
  	
  
    PURPOSE OF THE PLAN
  	
  
    3
  
	
  
    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   INCENTEIVES
  	
  
4
  
	
   
 	
   
  	
   
 
	
  
    3.1
  	
  
    TERMS AND CONDITIONS OF ALL STOCK   INCENTIVES
  	
  
    4
  
	
  
    3.2
  	
  
    TERMS AND CONDITIONS OF OPTIONS
  	
  
    5
  
	
  
    3.3
  	
  
    TERMS AND CONDITIONS OF STOCK   APPRECIATION RIGHTS
  	
  
    6
  
	
  
    3.4
  	
  
    TERMS AND CONDITIONS OF STOCK   AWARDS
  	
  
    7
  
	
  3.5
  	
  
    TERMS AND CONDITIONS OF DIVIDEND EQUIVALENT   RIGHTS
  	
  
    7
  
	
  
    3.6
  	
  
    TERMS AND CONDITIONS OF PERFORMANCE UNIT   AWARDS
  	
  
    8
  
	
  
    3.7
  	
  
    TERMS AND CONDITIONS OF PHANTOM SHARES
  	
  
    8
  
	
  
    3.8
  	
  
    TREATMENT OF AWARDS   UPON TERMINATION OF EMPLOYMENT
  	
  
    8
  
	
  3.9
  	
  
    SECTION 409A CONSIDERATIONS
  	
  
    9
  
	
  
 
  	
   
 
	
  
SECTION 4  RESTRICTIONS ON   STOCK
  	
  
9
  
	
   
 	
  
 
  	
   
 
	
  
    4.1
  	
  
    ESCROW OF SHARES
  	
  
    9
  
	
  
    4.2
  	
  
    RESTRICTIONS ON   TRANSFER
  	
  
    9
  
	
  
 
  	
   
 
	
  
SECTION 5  GENERAL PROVISIONS
  	
  
9
  
	
   
 	
   
  	
   
 
	
  
    5.1
  	
  
    WITHHOLDING
  	
  
    9
  
	
  
    5.2
  	
  
    CHANGES IN CAPITALIZATION; MERGER; LIQUIDATION
  	
  
    10
  
	
  
    5.3
  	
  
    CASH AWARDS
  	
  
    11
  
	
  
    5.4
  	
  
    RIGHT TO TERMINATE   EMPLOYMENT OR SERVICE   RELATIONSHIP
  	
  
    11
  
	
  
    5.5
  	
  
    NON-ALIENATION   OF BENEFITS
  	
  
    11
  
	
  5.6
  	
  
    RESTRICTIONS ON   DELIVERY AND SALE OF   SHARES; LEGENDS
  	
  
    11
  
	
  
    5.7
  	
  
    LISTING AND LEGAL   COMPLIANCE
  	
  
    12
  
	
  
    5.8
  	
  
    TERMINATION AND AMENDMENT OF THE PLAN
  	
  
    12
  
	
  
    5.9
  	
  
    CHOICE OF LAW
  	
  
    12
  
	
  
    5.10
  	
  
    EFFECTIVE DATE
  	
  
    12
  

FIRST RELIANCE BANCSHARES, INC.
 2006 EQUITY 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 corporation (other than the Company) in an unbroken chain of corpora-tions ending with the Company if, at the time of the granting of the Option, each of the corporations other than the Company own stock possessing 50% or more of the total combined voting power of all classes of stock in one of the corporations in such chain; 

                          (2)          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 the total combined voting power of all classes of stock in one of the other corporations in the chain;

                          (3)          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

                          (4)          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 or, in lieu of any such appointment, the full membership of the Board of Directors. 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 “non-employee directors” as defined in Rule 16b-3(b)(3) as promulgated under the Exchange Act and who satisfy the requirements of the national securities exchange or Nasdaq quotation or market system on which the Stock is then traded (the “applicable exchange”). In the event the Committee appointed by the Board of Directors is not comprised solely of members who are “non-employee directors” and who satisfy the requirements of the applicable exchange, the
Committee shall have the authority to establish a subcommittee of the Committee which shall be comprised solely of members of the Committee who are and “non-employee directors” and who satisfy the requirements of the applicable exchange, and to delegate to such subcommittee any or all of the powers of the Committee. References herein to the Committee shall be deemed to mean the subcommittee with respect to those matters within the power of the subcommittee.

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          (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, 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” refers to the determination of the value of a share of Stock as of a date, determined as follows:

                          (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 any Nasdaq quotation or market system;

                          (2)          if the Stock is not then actively traded, the price of Stock in the over-the-counter market on that date or the last trading day prior to that date as reported by any Nasdaq quotation or market system or, if not so reported, by a generally accepted reporting service; or

                          (3)          if Stock is not publicly traded as contemplated under Paragraphs (1) or (2) above, the price determined in good faith by the Committee.

Notwithstanding the foregoing, in applying the requirements of Paragraphs (1), (2), or (3) above, the Committee may use the closing price as of the applicable date or for a period certain ending on such 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 of the Stock.  In determining Fair Market Value in accordance with this Section 1.1(i), the Committee shall consider the advisability of determining Fair Market Value in a manner consistent with Code Section 422 in the case of any grant of Incentive Stock Options and in a manner consistent with Code Section 409A in the case of the grant of Stock Incentives generally.  

          (j)          “Option” means an option that is not designated as, or otherwise intended to be, an incentive stock option that is contemplated by Section 422 of the Code.

          (k)          “Participant” means an individual who receives a Stock Incentive hereunder.

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          (l)          “Performance Unit Award” refers to a performance unit award as described in Section 3.6.

          (m)          “Phantom Shares” refers to the rights described in Section 3.7.

          (n)          “Plan” means the First Reliance Bancshares, Inc. 2006 Equity Incentive Plan.

          (o)          “Stock” means the Company’s common stock, $0.01 par value.

          (p)          “Stock Appreciation Right” means a stock appreciation right described in Section 3.3.

          (q)          “Stock Award” means a stock award described in Section 3.4.

          (r)          “Stock Incentive Agreement” means an agreement between the Company and a Participant or other documentation evidencing an award of a Stock Incentive.

          (s)          “Stock Incentive Program” means a written program established by the Committee, pursuant to which Stock Incentives, other than Options or Stock Appreciation Rights, are awarded under the Plan under uniform terms, conditions and restrictions set forth in such written program.

          (t)          “Stock Incentives” means, collectively, Dividend Equivalent Rights, Options, Performance Unit Awards, Phantom Shares, Stock Appreciation Rights and Stock Awards.

          (u)          “Termination of Employment” means the termination of the employment 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 as it affects a Stock Incentive, including, but not by way of limitation, the question of whether a leave of absence constitutes a Termination of Employment.

SECTION 2
 The Equity Incentive Plan

          2.1          Purpose of the Plan. The Plan is intended to (a) provide incentive to officers, employees, directors, consultants 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 officers, employees, directors, consultants 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; (c) align the long-term interests of Participants with those of shareholders; (d) heighten the desire of Participants to continue in working toward and
contributing to the success of the Company; (e) assist the Company in competing effectively with other enterprises for the services of new employees necessary for the continued improvement of operations; and (f) to attract and retain qualified individuals for service as directors of the Company. This Plan permits the grant of Dividend Equivalent Rights, Options, Performance Unit Awards, Phantom Shares, Stock Appreciation Rights and Stock Awards, each of which shall be subject to such conditions based upon continued employment, passage of time or satisfaction of performance criteria or other criteria as permitted by the Plan.

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          2.2          Stock Subject to the Plan. Subject to adjustment in accordance with Section 5.2, 350,000 shares of Stock (the “Maximum Plan Shares”) are hereby reserved exclusively for issuance pursuant to Stock Incentives. At no time may the Company have outstanding under the Plan Stock Incentives and shares of Stock issued in respect of Stock Incentives under the Plan in excess of the Maximum Plan Shares. 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 officers, employees, directors, consultants 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 determina-tions 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.

          As to any matter involving a Participant who is not a “reporting person” for purposes of Section 16 of the Exchange Act, the Committee may delegate to any member of the Board of Directors or officer of the Company the administrative authority to (a) interpret the provisions of the Participant’s Stock Incentive Agreement and (b) determine the treatment of Stock Incentives upon a Termination of Employment, as contemplated by Plan Section 3.8.

          2.4          Eligibility and Limits. Stock Incentives may be granted only to officers, employees, directors, consultants and other service providers of the Company, or any Affiliate of the Company.  

SECTION 3
 Terms of Stock Incentives

          3.1          Terms and Conditions of All Stock Incentives.

                          (a)          The number of shares of Stock, if any, 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 and subject to the limits on Options and Stock Appreciation Rights and other Stock Incentives in Section 2.4.

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                         (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.  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 on which 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, if any, 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)          Unless otherwise permitted by the Committee, 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.

          3.2          Terms and Conditions of Options. Each Option granted under the Plan must be evidenced by a Stock Incentive Agreement. 

                          (a)          Option Price. Subject to adjustment in accordance with Plan 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. 

                          (b)          No Repricing. Other than in connection with a change in the Company’s capitalization as contemplated by Plan Section 5.2, the exercise price of an Option may not be reduced without approval by the Company’s shareholders.

                          (c)          Option Term. The term of any Option shall be as specified in the applicable Stock Incentive Agreement but shall in no event exceed ten (10) years.

                          (d)          Payment. Payment for all shares of Stock purchased pursuant to the 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:

                                         (1)          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;

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                                         (2)          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

                                         (3)          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.

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 shareholder.

                          (e)          Conditions to the Exercise of an Option. Each Option granted under the Plan is exercisable by whom, 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 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. 

                          (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 may provide for an exercise price 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.

                          (g)          No Reload Grants. Options shall not be granted under the Plan in consideration for and shall not be conditioned upon the delivery of shares of Stock to the Company in payment of the exercise price and/or tax withholding obligation under any other option held by a Participant.

          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 may not in any event be less than the Fair Market Value of the Stock at the time of the award, and, 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. 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 shall 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.

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                         (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.

                         (c)          No Repricing. Other than in connection with a change in the Company’s capitalization as contemplated by Plan Section 5.2, the price of a Stock Appreciation Right as specified in accordance with Clause (2) in the head language of Section 3.3 may not be reduced, without shareholder approval.

          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 dividends paid on a specified number of shares of Stock to Company shareholders 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 on the date of payment) 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.

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          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 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 factors applicable to the determination of the ultimate payment value of the Performance Unit Award and the period over which Company performance shall be measured. 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 on the date of payment) 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 may 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 rights 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 on the date of payment) 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 may 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. Any award under this Plan to a Participant who has experienced a Termination of Employment or termination of some other service relationship with the Company and its Affiliates 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 other service relationship or such other factors as the Committee determines are relevant
to its decision to continue the award.

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          3.9          Section 409A Considerations.  In making any award of Stock Incentives or subsequent modifications to any outstanding award for a Stock Incentive, the Committee shall consider the impact of any adverse tax consequences that may affect the Participant under Code Section 409A and any adverse financial accounting consequences that may affect the Company.  To the extent the mere reservation of powers to the Committee to modify a Stock Incentive subsequent to its grant under this Plan might create adverse tax consequences to a Participant under Code Section 409A, the Committee shall be deemed not to have such powers to the extent that the mere possession (as opposed to the exercise) of any such power would result in such adverse tax consequences.

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 Incentive Program, applicable to shares of Stock not so held. Any dividends declared on shares of Stock held by the Custodian must as provided 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

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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 the minimum required federal, state and local, if any, withholding taxes 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, Performance Unit Award, Phantom Share and Stock Appreciation Right and upon vesting or grant, as applicable, of each Stock Award; and the Exercise Price of each outstanding Option and, to the extent applicable, the value of other Stock Incentives may 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 any merger, consolidation, extraordinary dividend (including a spin-off), reorganiza-tion, recapitalization, sale of substantially all of the Company’s assets, other change in the capital structure of the Company, tender offer for shares of Stock, or a change in control of the Company, the Committee, in its sole discretion, may make such adjustments with respect to awards and take such other action as it deems necessary or appropriate, including without limitation, the 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. In making any such adjustment, the Committee shall consider the impact of any adverse tax consequences that may affect the Participant under Code Section 409A and any adverse financial accounting consequences that may affect the Company.

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                         (c)          The existence of the Plan and the Stock Incentives granted pursuant to the Plan shall 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.  In considering any such cash award, the Committee shall consider the impact of any adverse tax consequences that may affect the Participant under Code Section 409A and any adverse financial accounting consequences that may affect the Company.

          5.4          Right to Terminate Employment or Service Relationship. Nothing in the Plan or in any Stock Incentive Agreement confers upon any Participant the right to continue as an officer, employee, director, consultant or other service provider 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 service relationship at any time.

          5.5          Non-alienation of Benefits Other than as specifically 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.

          5.6          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.

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          5.7          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.

          5.8          Termination and Amendment of the Plan. The Board of Directors at any time may amend or terminate the Plan without shareholder approval; provided, however, that the Board of Directors shall consider the appropriateness of shareholder approval for any amendment to the Plan that increases the number of shares of Stock available under the Plan, materially expands the classes of individuals eligible to receive Stock Incentives, materially expands the type of awards available for issuance under the Plan, or would otherwise require shareholder approval under the rules of the applicable exchange. 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.

          5.9          Choice of Law. The laws of the State of South Carolina govern the Plan, to the extent not preempted by federal law, without reference to the principles of conflict of laws.

          5.10          Effective Date. The Plan shall become effective upon the date the Plan is approved by the Board of Directors.

          IN WITNESS WHEREOF, the Company has executed this Plan on this ____ day of January, 2006.

	
   
  	
  FIRST   RELIANCE BANCSHARES, INC.
  
	
   
  	
   
  	
   
  
	
   
  	
  By:
  	
   
  
	
   
  	
   
  	
  

  
	
   
  	
  Title:
  	
   
  
	
   
  	
   
  	
  

  

12Exhibit 10.9

	
  
STATE OF SOUTH CAROLINA
  	
  
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LEASE AGREEMENT
  
	
  
COUNTY OF FLORENCE
  	
  
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          This LEASE AGREEMENT (the “Lease”) made and entered into this 24 day of March, 2005, by and between SP FINANCIAL, LLC, a South Carolina limited liability company (hereinafter called “Landlord”), and FIRST RELIANCE BANK, a South Carolina banking corporation (hereinafter called “Tenant”).

          WITNESSETH, THAT FOR AND IN CONSIDERATION of the rents and of the mutual covenants and agreements of the parties hereto, as are hereinafter set forth and made a part of this Lease, Landlord and Tenant do hereby agree as follows:

          1.          The Leased Property. The property hereby leased to the Tenant is 5.31 acres of land (the “Land”) located at 2211 West Palmetto Street in Florence, South Carolina, more particularly described in Exhibit “A” attached hereto, together with the buildings and other improvements located thereon (collectively the “Improvements”). The
Land and Improvements leased hereunder, together with all Landlord’s right, title and interest, if any, in and to all easements and other appurtenances thereto, hereinafter sometimes collectively referred to as the “Leased Property”, are demised and let to Tenant subject to the herein stated terms and conditions.

          2.          Title Representation by Landlord and Use of Leased Property. Landlord has good, marketable and indefeasible title to the Leased Property free and clear, to the best of Landlord’s knowledge, of all liens, mortgages, security interests and other encumbrances of any kind that could be damaging to Tenant. The Leased Property is a portion of a 5.31 acres tract of land owned by Landlord (the “Landlord Property”). Landlord understands and acknowledges that Tenant intends to use the Leased Property as general banking and office space and for no other purpose without Landlord’s prior written approval, which approval shall not be unreasonably withheld. Landlord acknowledges that it is responsible for assuring that the Leased Property has all appropriate zoning and other regulatory approvals for Tenant’s intended use.
Tenant
agrees not to use the Leased Property or any part thereof for any disorderly or unlawful purpose and agrees to comply with all governmental laws, ordinances, rules and regulations applicable to its use, possession and operation of the Leased Property. Tenant agrees not to use the Leased Property in such a way as to diminish its value, reasonable wear and tear expected. Tenant makes no representations, warranties or guaranties as to the market value of the Leased Property.

          3.          Lease Term. The term of this Lease shall begin on April 1, 2005 (the “Commencement Date”) and shall end on March 31, 2044 for a total lease term of thirty-nine (39) years.

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          4.          Base Rent.

          a)          Initial Lease Period. The annual rent for the Leased Property for the first five (5) years beginning April 1, 2005 shall be Two Hundred Eighty Eight Thousand Dollars ($288,000.00) payable in monthly
installments of Twenty Four Thousand Dollars ($24,000.00) due and payable on or before the fifth day of each month. The parties agree that the phrase “ground rent period” shall mean the period from the Lease commencement date to the date prior to irrevocable commitments having been made by the Landlord for the construction of buildings and related amenities on the Leased Property, specifically designed for Tenant. Notwithstanding the foregoing, upon the occurrence of a triggering event during the initial term of this lease, the base annual rent shall be adjusted to the then market rent rate which shall be an amount arrived at by using the
then prevailing capitalization rate in the locale for such land and improvements as determined by an M.A.I. appraiser mutually agreeable to Landlord and Tenant. A triggering event shall be (a) a change in the “control” of the Tenant’s holding company, as defined by the South Carolina Bank Holding Company Act or (b) the mutual written agreement of the Landlord and Tenant to increase the base rent to market rent.

          b)          Rent for Land And Improvements. Tenant acknowledges that the annual rent for the Leased Property and any improvements built to Tenant’s specifications shall be the then market rent rate as determined under subsection (a) of this paragraph. The annual rent so determined shall be the annual rent for five (5) years and shall be payable in monthly
installments on or before the fifth day of each month. The annual rent for the next five (5) year term shall be the annual rent for the prior five (5) years as adjusted by the cumulative changes in the Consumer Price Index, Bureau of Labor Statistics, for all United States urban consumers up to the end of the month in the prior lease term. Upon the expiration of two successive five (5) year terms, the rent for the next five (5) year term shall be adjusted to the then market rent rate as determined
under subsection (a) of this paragraph. Thereafter rent adjustments shall continue seriatim until the end of the complete lease term of thirty-nine (39) years with (5) years at the market rate and then five (5) years at the prior five (5) year base rate adjusted for cumulative changes in the C.P.I. over the prior lease term.

          5.          Additional Rent.

          a)          It is the purpose and intent of the Landlord and Tenant that the rent payable hereunder shall be absolutely net to the Landlord so that this Lease shall yield, net to the Landlord, the Base Rent due with respect to each year during the term of this Lease.

          b)          The Tenant shall be responsible for the payment of all property taxes for the Leased Property during the term hereof, including the building and all other improvements thereon. Landlord represents and warrants that there are no other taxes or other assessments affecting the Leased Property, other than those of a normal and recurring nature on property substantially similar to the Leased Property, 
at the time of the execution of this Lease. All such other taxes or assessments affecting the Leased Property accruing after the Commencement Date but prior to the termination of this Lease shall be the responsibility of the Tenant, and Tenant shall pay to appropriate utility companies, when due, all charges for utility services furnished to the
Leased Property during the term of this Lease (all of the foregoing, together with any and all penalties, fines and/or interest thereon, being hereinafter sometimes collectively referred to as “Impositions”).

          c)          Landlord shall furnish to Tenant, promptly after receipt of same, copies of any notices, statements or invoices with respect to any Impositions.

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          d)          Contesting of Tax Assessments

          (i)          Tenant shall have the right, at its sole cost and expense, to contest the amount or validity, in whole or in part, of any Imposition of any kind by appropriate proceedings diligently conducted in good faith. Upon the termination of any such proceedings, it shall be the obligation of Tenant
to pay the amount of such Imposition or part thereof, as finally determined in such proceedings, the payment of or compliance with which may have been deferred during the prosecution of such proceedings, together with any costs, fees (including counsel fees), interest, penalties or other liabilities in connection therewith.

          (ii)        Tenant shall have the right, at its cost and expense, to seek a reduction in the valuation of the Leased Property as assessed for tax purposes and to prosecute any action or proceeding in connection therewith. Provided Tenant is not in default hereunder (i) Tenant shall be authorized to collect any tax refund of any tax paid by Tenant obtained by reason thereof and to retain the same, and (ii) Landlord shall not, without Tenant’s prior approval, make or agree to any settlement, compromise or other disposition of any proceedings or discontinue or withdraw from any such proceedings or accept any refund or other adjustment of or credit for any tax, assessment or other item above mentioned as a result of any such proceedings.

          (iii)       Landlord agrees that whenever Landlord’s cooperation is required in any of the proceedings brought by Tenant as aforesaid, Landlord will reasonably cooperate therein (including, to the extent necessary, appointing Tenant as Landlord’s attorney-in-fact), provided same shall not entail any cost, liability or expense to Landlord. No such contest shall subject
Landlord or any mortgagee to the risk of any civil liability, criminal liability, or other liability.

          (iv)       In the event any person or entity to whom or to which any sum is directly payable by Tenant under any of the provisions of this Lease shall refuse to accept payment of such sum from Tenant and, provided such refusal is not due to the fault of Tenant, Tenant shall thereupon give written notice of such fact to Landlord and may, at its option, pay such sum to Landlord in full satisfaction of Tenant’s obligations with respect to such obligation. Both at the commencement and at the expiration of the term of this Lease, all Impositions provided to be paid by Tenant pursuant to this Lease, whether accrued or prepaid, as the case may be, shall be apportioned between Landlord and Tenant on the basis of a 30-day month and a 360-day year. Notwithstanding the foregoing, Tenant shall not be obligated to reimburse Landlord for any special assessments for
improvements other than the Improvements constructed by Landlord.

          6.          Security Deposit. Intentionally deleted.

          7.          Maintenance
And Repair. Tenant shall, at its risk, cost, and expense, during the term of
this Lease or any extension thereof, pay for the maintenance and repair of all
components of the Leased Property including, but not limited to, (i)
all permanent, non-removable improvements or additions made by Tenant, (ii) all interior repairs and improvements including, but not limited to paint, redecoration and renovation, (iii) utility systems, including, but not limited to fixtures, equipment, lines and connections associated with the heating, air conditioning, ventilating, electrical, plumbing, and sprinkler systems, (iv) all windows, doors (including operational mechanisms and door mountings), (v) floors, (vi) grass, landscaping, and fences, etc., as same become necessary and are required to maintain the Leased Property in as good and proper
condition, and in good appearance, as at the date of the Commencement Date, subject to normal wear and tear for the uses permitted herein. Tenant shall be required to have the HVAC systems kept under a maintenance service contract, which is reasonably satisfactory to Landlord. Tenant shall keep sidewalks and personnel entraceways free from obstruction of all nature, properly swept, and snow and ice removed therefrom.

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          8.          Utilities. Tenant agrees to arrange for and pay all services and charges for any and all utilities used on the Leased Property, including, but not limited to water and sewer, electricity, gas, waste disposal, telephone and security related services, which may be charged or assessed by a utility or service company or political or utility subdivision. In no event shall Landlord be liable for any interruption or failure in the supply of any utilities or services to the Leased Property, unless caused by the
willful acts or misconduct of the Landlord.

          9.          Real Estate Taxes. During the term of this Lease, or the extension thereof, Tenant shall promptly pay, when due and prior to delinquency, directly to the appropriate government or municipal agency or authority, all real estate taxes and assessments (“Real Estate Taxes”) levied upon or assessed against the Leased Property. Landlord is to promptly forward said Real Estate Tax bills to Tenant and Tenant shall promptly send to Landlord copies of said paid receipts.

          10.        Casualty Insurance. Tenant shall, at all times, have and maintain adequate fire and extended casualty coverage insurance (“Casualty Insurance”) on the Leased Property. It is understood and agreed that such insurance carried by the Tenant shall at all times cover the full replacement value and costs of the Improvements.

          Said
insurance coverage shall name the Landlord as an additional insured party, Landlord’s mortgagee as a loss payee, shall be subject to approval of Landlord and its mortgagee, and shall provide that the coverage not be canceled for any reason unless and until Landlord and its mortgagee are given thirty (30) days notice in writing by the insurance company of the pending cancellation.

          Upon request, and prior to the Commencement Date, Tenant’s insurance company shall provide Landlord with a certificate of insurance indicating the terms and conditions of the policy.

          Tenants agrees that it will not do or permit anything to be done on the Leased Property which may prevent the obtaining of any insurance on the Leased Property including, but without limitation, fire, extended coverage and public liability insurance.

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          11.       Liability Insurance. During the full term of this Lease or any renewal or extension thereof, Tenant shall, at its sole expense, procure and maintain in full force Public Liability Insurance (Comprehensive General Liability or Commercial General Liability) including Contractual Liability Insurance, with a combined personal injury and property damage limit of not less than One Million Dollars ($1,000,000.00) for each occurrence and not less than Two Million Dollars ($2,000,000.00) in the aggregate, insuring against all liability of Tenant and its representatives arising out of and in connection with Tenant’s use or occupancy of the Leased Property. Said insurance policy shall name the Landlord as an additional insured, and the policy shall provide that it not be canceled for any reason unless and until Landlord is given thirty (30) days notice in
writing by
the insurance company of the pending cancellation. Tenant’s insurance company shall provide Landlord with a certificate of insurance indicating the terms and conditions of the policy.

          All insurance required under this Lease shall be issued by insurance companies licensed to do business in the jurisdiction where the Leased Property is located. Such companies shall have a policyholder rating of at least “A” and be assigned a financial size category of at least “Class X” as rated in the most recent edition of “Best’s Key Rating Guide” for insurance companies. Each policy shall contain an endorsement requiring thirty (30) days written notice
from the insurance company to Landlord before cancellation or any change in the coverage, scope or amount of any policy. Each policy, or a certificate showing it is in effect, together with evidence of payment of premiums, shall be deposited with Landlord on or before the Commencement Date, and renewal certificates or copies of renewal policies shall be delivered to Landlord at least thirty (30) days prior to the
expiration date of any policy.

          12.       Tenant’s Licenses, Personal Property Taxes and Insurance. Tenant shall be responsible for the payment of its business license fees and costs, and any and all taxes and assessments on its Leasehold improvements and all personal property, which it locates within the Leased Property, including, but not limited to furniture, fixtures, equipment and merchandise.

          Tenant shall carry, at its own expense, insurance to cover all of its leasehold interest in the Leased Property, and personal property, including, but not limited to, trade fixtures and equipment, and merchandise located on the Leased Property. All of Tenant’s Leasehold interest in the Leased Property and personal property on the Leased Property shall be and remain at Tenant’s sole risk, and Landlord shall not be liable whatsoever for any damages, loss, or casualty of such personal property or Leasehold, unless caused by the willful acts or misconduct of the Landlord.

          13.       Tenant’s Improvements. Tenant shall be allowed to make any alterations, additions, or improvements (“Tenant’s Improvements”) to the Leased Property, without first obtaining the written consent of the Landlord provided same are consistent with the use of the Leased Property described herein and provided that same do not diminish the market value of the Leased Property. All Tenant Improvements shall be constructed at Tenant’s expense and shall be and remain the property of Tenant, until the termination of this Lease, at which time the Tenant Improvements shall become the property of Landlord. Provided, however, at the option of the Landlord, Landlord may require Tenant, at the termination of this Lease, to remove any and all of the Tenant Improvements. Tenant shall be responsible for payment of the cost of repairing any damage
arising from such removal. The provisions of this section shall not require Tenant to obtain Landlord’s permission for Tenant to remove Tenant’s fixtures and equipment form the Leased Property before or after the termination of this Lease.

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          14.       Surrender Upon Termination. At the expiration of
the term of this Lease the Tenant shall surrender the Leased Property in as good condition and repair as it was as of the Commencement Date, normal and ordinary wear and tear excepted. Extraordinary wear and tear shall include, but not be limited to items such as (i) damaged walls (other than small penetrations for purposes of hanging photographs, diplomas, art and similar decorations), ceilings, roofs, structural components or insulation (ii) damaged or malfunctioning doors, (iii) broken concrete walls or floors, (iv) malfunctioning or disconnected components
of utility systems, and (v) damaged fences or gates.

          Tenant agrees that no waste of  any
kind, solid or liquid, shall remain on the Leased Property upon termination of the Lease. Any personal property of Tenant which shall remain on the Leased Property after the termination of this Lease may, at the option of the Landlord, be deemed to have been abandoned by Tenant and, may either be retained by Landlord as its property or be disposed of without accountability. The provisions of this section shall survive the termination of this Lease.

          15.       Tenant’s Default. Tenant agrees to pay the Base Rent and the Additional Rent at the time, in the amount and in the manner herein described. Any one of the following events shall be deemed  a default by Tenant and a breach of this Lease, namely:

          a)         If Tenant fails to pay any installment of Base Rent or to pay
any Additional Rent (except where non-payment is authorized by Section 5); or

          b)        If Tenant fails to observe or perform any of the other terms,  covenants
or conditions of this Lease other than paying rents when due, and such failure continues after the expiration of thirty (30) days from the date Landlord gives written notice to Tenant calling attention to the existence of such failure, provided however, that if Tenant cannot reasonably correct the default (other than non-payment) within said thirty (30) day period, Tenant shall be given a reasonable period of time to correct the default; or

          c)         If Tenant is declared bankrupt or insolvent by judicial decree; or

          d)         If Tenant takes the benefit of any federal reorganization or composition proceedings; or

          e)         If Tenant makes a general assignment for benefit of creditors; or

          f)          If Tenant’s Leasehold interest in this Lease is sold under any process of law, or

          g)         If a trustee in bankruptcy or a receiver is appointed or elected for the Tenant; or

          h)         If Tenant abandons the Leased Property and fails to pay any installment of Base Rent or to pay any Additional Rent (except where non-payment is authorized by Section 5); or

          i)         If any materialman’s,
mechanic’s or other lien is filed against the Leased Property in connection with any improvements, alterations or additions made by Tenant, and Tenant permits the lien or liens to stand against the Leased Property, not securing the discharge of the Leased Property from such liens by filing an appropriate bond within
thirty (30) days from date of lien filing, pursuant to applicable law. Should Tenant file a bond and elect to contest the lien or liens, no default shall be in effect pending final legal determination of the disputed lien.

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          16.       Landlord’s Rights in Event of Default by Tenant. In the event of any default by Tenant as herein provided, Landlord at any time thereafter, shall have the following rights:

          a)        The right to terminate this Lease by giving Tenant written notice of such termination, whereupon, this Lease shall be regarded as canceled as of the date of Landlord’s termination notice and Tenant shall then quit and surrender the Leased Property to Landlord, however, Tenant shall remain liable to Landlord for all rentals, charges, payments and other obligations which have accrued prior to the time of such termination; and

          b)        Upon such termination by Landlord as described herein, Landlord shall have the right to immediately re-enter and take possession of the Leased Property and to hold said Leased Property and upon re-entry, may remove all persons and personal property of the Tenant from the Leased Property; and

          c)        The right to declare the full rental amounts for the entire remaining term of this Lease immediately due and payable; and

          d)        The full right to recover from
the Tenant all past due rents and any and all damages, including reasonable court costs and attorneys fees, as a result of the default; and

          e)        Upon such re-entering and taking of possession of the Leased Property by Landlord, Landlord shall attempt to re-let said Leased Property. Landlord’s only responsibility shall be to offer the Leased Property for rent and make the usual and normal best efforts to re-let said Leased Property. Tenant shall be liable to Landlord for any deficiency between the amount of rental received, if any, and the amount which Tenant is obligated to pay under the terms of this Lease and for any other reasonable damages, including reasonable court costs and attorneys fees and real estate commissions, incurred by Landlord in its attempt to re-let the Leased Property. Tenant shall be entitled to a credit against the amounts owed by it hereunder of the net proceeds from such
reletting, or in the event Tenant has paid all such amounts, such net proceeds shall be paid over to

Tenant.

          Landlord may utilize and pursue such other actions and rights as it may have to protect its interests under the terms of this Lease, the laws of the United States and the State of South Carolina
as may be applicable. The mention in this Lease of any specific right or remedy of Landlord, or the waiver thereof, shall not preclude Landlord from exercising any other right or from having any other remedy or from maintaining any action to which it may otherwise be entitled in law or in equity.

          Tenant shall be liable for all reasonable court costs and attorneys fees and other reasonable expenses incurred by Landlord in enforcing any of the obligations of this Lease.

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          Tenant’s delinquent payments hereunder shall bear interest at a rate four percent higher than the average rate announced from time
to time by major United States banks in the  Wall Street Journal as a prime rate (the “Prime Rate”) (but in no event higher than the maximum rate allowed by law) until paid in full, which interest shall be deemed Additional Rent.

          17.       Right of Entry. The Landlord and its agents may, after giving Tenant’s site manager prior notice and provided they are, at Tenant’s option, accompanied by a representative of Tenant, enter the Leased Property at any reasonable time for the purpose of inspecting the Leased Property, for performing any work which the Landlord elects to undertake made necessary by reason of the Tenant’s default, or to show the Leased Property to prospective purchasers, tenants and lenders.

          During the last year of the Lease, the Landlord or its agent may at any time place on or about the Leased Property a “For Sale” or “For Lease” sign as Landlord may deem in Landlord’s best interest without any rebate of rents or liability to the Tenant.

          Except for gross negligence on the part of Landlord, Landlord shall not be liable for inconvenience, annoyance, disturbance, loss of business or other damage of Tenant by reason of making such inspections, visits, repairs or the performance of any such work, so long as such actions on Landlord’s part are not unreasonable.

          18.        Fire or Other Casualty.

          a)          If at any time during this Lease Term, all or any portion of the Leased Property shall be damaged or destroyed by fire or other casualty, then either party may elect to terminate this Lease by giving
thirty (30) days prior written notice to the other; provided,
however, that Landlord may elect, by giving written notice to Tenant
within thirty (30) days of such damage or desolation, to repair and reconstruct
the Leased Property to the condition in which it existed immediately prior to
such damage or destruction, in which case any notice of termination already
given by Tenant shall be null and void, and, provided that if such repair and
reconstruction proceeds as provided in subdivision (b) below, then Tenant may
not terminate this Lease. Insurance proceeds payable with respect to such fire
or other casualty, pursuant to the insurance provided by Tenant pursuant to
Section 10, shall be payable to Landlord and Tenant, as their interests may
appear, and, in the ordinary course of events, be used, in part for repairs
and/or replacements to the Leased Property as required.

          b)         In
any of the aforesaid circumstances, and except in the case of casualty due to
willful negligence or misconduct by Tenant, rental shall abate proportionately
or, if destroyed in its entirety, in whole, during the period and to the extent
that the Leased Property is unfit for use by Tenant in the ordinary conduct of
its business; and provided that the Leased Property is repaired and
reconstructed by Landlord as provided in this Section, the term of this Lease
shall be amended by such period of time as will allow Landlord, assuming no
breach of this Lease by Landlord or Tenant, to recover the amount of rent abated
pursuant to this Section. If Landlord has elected to repair and restore the
Leased Property with the insurance proceeds, this Lease shall continue in full
force and effect and such repairs will be made within a reasonable time
thereafter but in no event to exceed six (6) months thereafter, subject to
delays arising from shortages of labor or material, governmental laws or
regulations, acts of God, war or other conditions beyond Landlord’s
reasonable control and rent shall not be increased after the date of the
completion of such repairs as a result of such repairs.  If Landlord has
elected to repair and reconstruct the Leased Property, then the Lease Term shall
be extended by a period of time equal to the period of such repair and
reconstruction, unless Tenant has been able to utilize more than 50% of the
Leased Property during such period.

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          c)          It
is agreed that if said Leased Property is damaged only slightly due to fire or
other casualty and is still fit for occupancy and Tenant’s business
operations are not substantially or materially affected by the casualty, then
Landlord or Tenant, as their interests may appear, shall repair the damage with
the insurance proceeds with due diligence and as soon as practicable and Tenant
shall continue to pay rent and uphold all other provisions of this
Lease.

          d)          Tenant shall notify Landlord without delay in the event of any fire or other casualty to the Leased Property. Tenant agrees not to claim any compensation from Landlord because of any inconvenience, annoyances or business interruption arising from the damage, destruction, repair, re-building or alteration of any portion of the Leased Property, provided Landlord fully complies with the reconstruction requirements of this section.

          19.        Condemnation. If all of the Leased Property is taken by condemnation, this Lease shall terminate on the date when the Leased Property shall be so taken; and the  rent shall be apportioned as of that date. If part of the Leased Property is taken by condemnation and the Leased Property is thereby rendered not reasonably suitable for the continued  conduct of Tenant’s business, taking into consideration the nature, size and scope of such business immediately prior to the taking, then either party may elect by giving written notice to the other, to terminate this Lease,
and in the event of such termination, all charges and rentals shall be
apportioned as of the date of taking.  If the taking involves a part of the
Leased Property and if neither party elects to terminate this Lease, then, with respect to the part not taken, the rent shall be reduced by the value that the condemned part bears to the total value of the Leased Property, in which event the Landlord shall restore the Leased Property to an architecturally-complete unit. Both Landlord and
Tenant shall have the right to assert a separate claim in any condemnation proceedings, as their interests may appear. Landlord shall have the right to assert a claim for, but not be limited to, the loss of the Leased Property and the rental thereof, Tenant shall have the right to assert a claim for, but not be limited to, the loss of use of the Leased
Property moving expenses and any personal property erected on the Leased
Property by Tenant. Tenant and Landlord shall each bear their own cost and expense in prosecuting their separate claims. Any award made to either the Tenant or the Landlord shall belong entirely to the Tenant or Landlord, respectively.

          20.        Assignment and Subletting. Tenant shall not assign this Lease. Tenant shall not mortgage or encumber this Lease or sublet the Leased Property or any part thereof to others without the Landlord’s prior written consent, such consent not to be unreasonably withheld or delayed. In the event of any assignment or sublease, Tenant shall remain fully liable for the payment of all rent required to be paid hereunder and the performances of all terms, covenants and conditions herein undertaken by Tenant. A consent of Landlord shall not be a consent for a subsequent assignment or subletting. The interest of the Tenant in this Lease is not assignable by operation of law, without the written consent of Landlord.

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          21.        Liability, Indemnity and Hold Harmless. Except in the case of injury or damage due to the negligent actions, omissions or willful misconduct of, or breach of any representation, warranty, or obligation hereunder by Landlord, its agents, employees or invitees, Tenant shall indemnify Landlord and Landlord’s agents and hold them harmless from and against any and all claims, actions, damages, liability and expense, including reasonable court costs and attorneys fees, in connection with loss of life, personal injury and/or damage to Leased Property arising from or out of the occupancy or use by Tenant of the Leased Property or occasioned wholly or in part by any act or omission of Tenant, its agents, contractors, visitors, customers, vendors, invitees, or employees.

          Except in the case of injury or damage due to the negligent actions, omissions or willful misconduct of, or breach of any representation, warranty, or obligation hereunder by Tenant, its agents, employees or invitees, Landlord shall indemnify Tenant and Tenant’s agents and hold them harmless from and against any and all claims, actions, damages, liability, and expense, including reasonable court costs and attorneys fees, in connection with loss of life, personal injury and/or damage to the Leased Property arising from, or out of, or occasioned wholly or in part by any act or omission of Landlord, its agents, contractors, visitors, customers, vendors, invitees or employees.

          22.        Environmental Hazards.  Tenant agrees that it shall not, nor shall it permit others, in violation of environmental laws and regulations, to use, release, store, or dispose of any Hazardous Materials (as defined by environmental law and regulations) on the Leased Property nor shall Tenant contaminate the Leased Property or the environment.

          If Tenant or its agents, contractors, or employees, have actual knowledge of any release of any Hazardous Materials on the Leased Property, or of any inquiry or action by a government agency regarding such materials, Tenant shall immediately notify Landlord. Tenant agrees to abide by all applicable environmental laws and regulations as they apply to Tenant’s possession, operation and use of the Leased Property.

          In the event that the Leased Property or the environment becomes contaminated with Hazardous Materials as a result of Tenant’s use, occupation, or possession of the Leased Property, it shall be Tenant’s sole responsibility and cost to remediate and take from the Leased Property said contamination. Further, Tenant shall indemnify and hold harmless Landlord from all reasonable claims, costs and damages as a result of any environmental problems which are the result of Tenant’s use, occupation, or possession of the Leased Property.

          Landlord gives Tenant the right, at Tenant’s expense and prior to possession, to perform an environmental audit of the Leased Property.

          Landlord specifically prohibits Tenant from installing, or allowing others to install, any underground bulk storage tanks on the Leased Property.

          All representations, warranties and indemnification provisions of this Section shall survive the termination of this Lease.

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          23.        Notice. A notice which may or shall be given under the terms of this Lease shall be either delivered by facsimile, by hand or by Federal Express or another similar national, reputable, overnight courier or sent by United States Registered or Certified Mail, postage prepaid; if for Landlord, to the address given below, or if for Tenant, to the Leased Property.
Such address may be changed from time to time by either party by giving notice as provided herein. Notice shall be deemed given when received (if by facsimile), when delivered (if delivered by hand) or one (1) day after sending it via overnight courier or
three (3) days after depositing in the mails, return receipt requested (if delivered by mail).

Notice to Landlord:  ______________________________________________________________

                                 ______________________________________________________________

                                 Facsimile #: ____________________________________________________

Notice to Tenant:     _______________________________________________________________

                                 _______________________________________________________________

                                 Facsimile #: ____________________________________________________

          24.        Severability: If any clause or provision of this Lease is illegal, invalid
or unenforceable, under present or future laws effective during the term hereof,
then it is the intention of the parties hereto that the remainder of this Lease
shall not be affected thereby and it is also the intention of both parties that
in lieu of each clause or provision that is illegal, invalid or unenforceable,
there be added, as a part of this Lease, a clause or provision as similar in
terms to such illegal, invalid or unenforceable clause or provision as may be
possible and be legal, valid and enforceable; provided however, that both
parties must agree in writing to such substitute language and provisions before
such will become binding on either party.

          25.        Compliance with Laws, Ordinances and Regulations. Tenant shall, except as herein required by Landlord, and at Tenant’s sole expense, promptly comply with and carry out all orders, requirements, or conditions now or hereafter imposed upon Tenant by the ordinances, laws and/or regulations of any Governmental authorities, as may apply to a Tenant of the Leased Property, insofar as they are occasioned by or required in the conduct of Tenant’s business or Tenant’s possession and use of the Leased Property.

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          26.        Right of Refusal. Except with regard to a sale or transfer to an affiliate of Landlord, if Landlord receives a binding offer to purchase
its interest in the Leased Property, Landlord shall notify Tenant in writing
(“Landlord’s Sale Notice”) of the person who desires to purchase
Landlord’s interest in the Leased Property and the purchase price and
financing terms of such sale. Such notice shall also include a copy of such
offer. Tenant, in lieu of consenting to such sale, may, within 30 days after
receipt of the Landlord’s Sale Notice, elect in writing to purchase
Landlord’s interest in the Leased Property at the price and on the
financing terms stated in the Landlord’s Sale Notice. If Tenant elects to
purchase the Leased Property, Landlord and Tenant shall close the purchase of
the Leased Property for cash or on the financing terms set forth in
Landlord’s Sale Notice within 120 days after the date of Tenant’s
election. If within such 30-day period, Tenant does not elect in writing to so
purchase the Leased Property, Landlord shall thereafter have the right to sell
and convey its interest in the Leased Property to the person or entity at the
price and on the terms stated in the Landlord’s Sale Notice. If Landlord
does not so sell and convey its interest in the Leased Property within 6 months
of  Tenant’s election not to purchase the Leased Property, any later
proposed sale by the Landlord shall be deemed a new determination by Landlord to
sell and convey its interest in the Leased Property and shall again be subject
to the provisions of this Section. The rights of Tenant contained in this
Section shall continue with respect to the Leased Property and shall be binding
upon any new owner of the Leased Property after any sale of the Leased Property
in compliance with this Section or any sale or transfer to an affiliate of
Landlord.

          27.        Successors and Assigns. The covenants, conditions and agreements contained in this Lease shall be binding upon and inure to the benefit of the parties hereto and their respective heirs, executors, administrators, successors and assigns; but this provision shall in no way alter the restrictions and requirements herein in connection with assignment and subletting by Tenant.

          28.        Whole Contract. This Lease, together with all exhibits which are attached hereto and by reference made a part hereof, constitutes the sole and entire contract between the parties relative to the Leased Property. No prior written or contemporaneous oral promises or representations shall be binding. No subsequent alteration, amendment, change or addition to this Lease shall be binding upon Landlord or Tenant unless reduced to writing and signed by both parties.

          29.        Waiver. Neither acceptance of rent by Landlord nor failure by Landlord to complain of any action, non-action or default of Tenant shall constitute a waiver of any of Landlord’s rights hereunder. Waiver by Landlord of any right for any default
of Tenant shall not constitute a waiver of any right for either a subsequent default of the same obligation or any other default. Receipt by Landlord of Tenant’s keys to the Leased Property shall not constitute an acceptance of surrender of the Leased Property.

          Neither a failure by Tenant to exercise any of its options hereunder, nor failure to enforce its rights or to seek its remedies upon any default, shall effect or constitute a waiver of Tenant’s right to exercise such option, to enforce such right, or to seek such remedy with respect to that default or to any prior or subsequent default.

          30.        Liens and Encumbrances. Tenant shall not encumber or subject the interest of the Landlord in the Leased Property to any mechanics’, materialmen’s or other liens of any nature whatsoever and shall indemnify Landlord against all such liens, charges and encumbrances, including reasonable court costs and attorneys fees incurred in any legal action brought in discharging the Leased Property from any liens, judgments or encumbrances caused by Tenant.

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          31.        Subordination. Tenant agrees that this Lease shall be subordinate and subject to any mortgages now or hereafter placed upon the Landlord’s interest in the Leased Property. Tenant shall, without charge, and from time to time, within fifteen (15) days after
request by Landlord, duly execute, acknowledge and deliver to Landlord, or any other person or firm specified by Landlord, a Lease Subordination Agreement or Estoppel Agreement as reasonably requested by Landlord. However, any such subordination shall be upon the express condition that this Lease shall be recognized by the mortgagee, that the rights of the Tenant shall remain in full force and effect during the term of this Lease and any renewal or extensions thereof, notwithstanding any default by Landlord with respect to said mortgage or any foreclosure thereof as long as Tenant shall
perform all of Tenant’s covenants and conditions of this Lease.

          32.        Attornment. In the event of sale or assignment of Landlord’s interest in the Leased Property, Tenant shall attorn to such successor of Landlord’s interest therein and recognize such successor as Landlord under this Lease and shall promptly execute and deliver any instrument that may be necessary to evidence such attornment. Such successor shall provide Tenant with an instrument recognizing Tenant’s rights under this Lease, including Tenant’s right of quiet enjoyment and non-disturbance.

          33.        Tenant Estoppel. The Tenant shall, from time to time, no later than fifteen (15) days following the written request of the Landlord, furnish Landlord a written statement, signed by Tenant concerning the status of any matter pertaining to the Lease.

          34.        Holding Over. In the event Tenant continues in possession after the end of the term or renewal or extension thereof, without any written agreement as to such possession, it is agreed that the tenancy thus created shall be month to month and can be terminated by either party giving to the other party not less than thirty (30) days written notice. In so continuing, Tenant agrees to pay a monthly rental equal to one hundred and fifty percent (150%) of the last rental payment made under the terms of this Lease or any renewal or extension thereof, and to keep and fulfill all the other covenants conditions and agreements of this Lease. There shall be no renewal of this Lease or exercise of any option by operation of law.

          35.        Quiet Possession. It is understood and agreed that subject to the terms of this Lease, and to all covenants, additions, easements, liens and mortgages of record, that Tenant, paying the rent hereby reserved, and performing and observing the covenants hereof, may peacefully hold and enjoy the said Leased Property throughout the duration of this Lease without any interruptions by the Landlord, its successors or assigns.

          36.        Landlord Not A Partner. It is expressly understood that Landlord shall not be construed or held to be a partner, joint venturer or associate of Tenant in the conduct of its business; it being expressly understood that the relationship between parties hereto is and shall remain at all times that of Landlord and Tenant.

          37.        Miscellaneous Provisions.

          a)          The captions appearing in this Lease are inserted only as a matter of convenience and in no way define, limit, or affect the scope or intent of such Paragraphs or Sections of this Lease. Any gender used herein shall be deemed to refer to any other gender. The use of singular herein shall be deemed to include the plural and, conversely the plural shall be deemed to include the singular.

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          b)          Time is of the essence in this agreement.

          c)          This agreement shall be construed and interpreted under the laws of the State of South Carolina.

          d)          Nothing herein contained shall be deemed to require the Tenant to pay or discharge any liens or mortgages of any character whatsoever which may be placed upon the Leased Property by the act of the Landlord, or to perform or pay for any of Landlord’s obligations herein.

          e)          Tenant may, during the term of this Lease, upon obtaining any and all necessary permits from governmental authorities, paint or erect and maintain, at its cost and expense, signs of such dimensions and materials as it may reasonably deem appropriate in or about the Leased Property. Such signs shall be removed by Tenant upon the termination of its occupancy of the Leased Property and Tenant shall repair any damage caused by such removal, all at Tenant’s sole cost and expense.

          f)          The parties agree to fully cooperate with each other with respect to securing any necessary approvals, permits or licenses necessary for the construction and operation of the Leased Property as contemplated hereby.

          38.        Authorization. Each individual executing this Lease on behalf of a corporation or partnership represents and warrants that he has been authorized to do so by such entity.

          IN WITNESS WHEREOF, the parties have hereunto set their hands and seals:

	
  IN THE   PRESENCE OF:
  	
  
 
  	
  
TENANT:
  
	
  
 
  	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
FIRST   RELIANCE BANK
  
	
  
 
  	
  
 
  	
  
 
  	
  
 
  
	
  
/s/ Corey Clark
  	
  
 
  	
  
BY:
  	
  
/s/ Leonard Hoogenboom
  
	
  

  	
  
 
  	
  
 
  	
  

  
	
   
  	
  
 
  	
  
 
  	
  
Its   Authorized Officer
  
	
  
/s/ Pam Brown
  	
  
 
  	
  
 
  	
  
 
  
	
  

  	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
LANDLORD:
  
	
  
 
  	
  
 
  	
  
 
  	
  
 
  
	
   
  	
  
 
  	
  
SP   FINANCIAL, LLC
  
	
  
 
  	
  
 
  	
  
 
  	
  
 
  
	
  
/s/ Pam Brown
  	
  
 
  	
  
By:
  	
  
/s/ FR Saunders Jr.
  
	
  

  	
  
 
  	
  
 
  	
  

  
	
  
 
  	
  
 
  	
  
 
  	
  
Its   Authorized Member
  
	
  
/s/ Thomas L. Drago Jr.
  	
  
 
  	
  
 
  	
  
 
  
	
  

  	
   
  	
   
  	
   
  
	
   
  	
   
  	
   
  	
   
  

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EXHIBIT “A”
 DESCRIPTION OF LEASED PROPERTY

          All those certain pieces, parcels and tracts of land lying, being and situate in the City and County of Florence, State of South Carolina, measuring 5.31 acres, more or less, and being shown as Tract A, being 2.04 acres, and Tract B, being 3.27 acres, on a Plat of 3 tracts of property located in Florence County, South Carolina, prepared for First Reliance Bank by Nesbitt Surveying Co., Inc., dated January 27, 2005. Reference to said plat for a more complete and accurate description.

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