EMPLOYMENT AGREEMENT
(DAVID ZABRISKIE)

THIS EMPLOYMENT AGREEMENT (this “Agreement”), dated as of December 31, 2008, by
and between First National Bank of the South (d.b.a First National Bank of
Spartanburg) (“Employer”), having its principal office at 215 North Pine Street,
Spartanburg, South Carolina 29304, and David Zabriskie (“Employee”).

Employer presently employs Employee as its Executive Vice-President and Senior
Lending Officer.  Employer recognizes that Employee's contributions to the
growth and success of Employer is substantial.  Employer has previously entered
into an Employment Agreement with Employee as of January 31, 2005, which
Employer and Employee now desire to restate principally to reflect changes in
tax laws.  Employee is willing to continue to serve Employer on the terms and
conditions herein provided.  Certain terms used in this Agreement are defined in
Section 28 hereof.
 
In consideration of the foregoing, the mutual covenants contained herein, and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto, intending to be legally bound, hereby
agree as follows:

1.           Employment.  Employer hereby continues to employ Employee and
Employee continues to accept employment on the terms and conditions hereafter
set forth.

2.           Term.  Unless earlier terminated as hereinafter provided in Section
16, Employee's employment under this Agreement shall commence on the date hereof
and be for a term (the “Term”) of two years.  At the end of each year of the
Term, the Term shall be extended for an additional year so that the remaining
term shall continue to be two years; provided that the Employee or the Employer
may at any time, by written notice, fix the Term to a finite term of two years
commencing with the year of the notice.

3.           Duties.  Employee shall continue to serve as an Executive
Vice-President and Senior Lending Officer of Employer and in such capacity shall
perform such duties as are consistent with that position, and as Employer from
time to time may direct.  Such duties shall be performed at Employer’s principal
corporate offices or subsidiary office as agreed upon by Employer and
Employee.  Employer reserves the right from time to time to extend, curtail or
change the title and duties of Employee.

4.           Extent of Services.  Employee shall, during normal working hours,
devote his best efforts as well as his full time, attention and energies to the
business of Employer and shall diligently perform to the best of his ability
such duties as may be reasonable assigned to Employee.

Employee shall not, during the term of this Agreement, be engaged in any other
business activity whether or not such business activity is pursued for gain,
profit or pecuniary advantage and whether or not such activity is carried on
outside normal working hours, but this prohibition shall not be construed as
preventing Employee from investing his assets in such form or manner as will not
require any services on the part of Employee in the operation of the affairs of
the companies in which investments are made.  Employee hereby confirms that he
is under no contractual commitments inconsistent with his obligations set forth
in this Agreement, and that, during the term of this Agreement, he will not
render or perform services, or enter into any contract to do so, for any of the
corporation, firm, entity or person which are inconsistent with the provisions
of this Agreement.
 
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5.           Base Salary.  For all services rendered by Employee under this
Agreement, Employer shall pay Employee a base salary of $180,000.00 per year,
payable in accordance with the salary payment practices of Employer, which for
purposes of this Agreement shall mean no less frequently than monthly.  Employer
shall have the right to increase the compensation provided by this Agreement,
but any such increase shall not affect any of the other terms and conditions of
this Agreement.  Employee’s base salary and performance will be reviewed
annually.  The base salary may be increased, but will not decrease, in the
Employer’s sole discretion as a result of the review.

6.           Benefits.

(a)           Employee shall be entitled, to the extent that Employee’s
position, title, tenure, salary, age, health, performance, and other
qualifications make him eligible, to participate in all employee benefit plans
or programs of Employer currently in existence on the date hereof including but
not limited to any executive management incentive plans.  Employee’s
participation in any such plan or program shall be subject to the provisions,
rules and regulations applicable thereto.

(b)           At Employer’s election, Employer shall provide Employee with an
automobile owned or leased by Employer of a make and model appropriate to the
Employee’s status, or a monthly automobile allowance, which shall be paid no
less frequently than monthly.  If Employer provides the Employee with an
automobile, Employer shall provide for reasonable expenses associated with the
automobile, including, but not limited to insurance, taxes, mileage,
maintenance, etc.  Employer shall reimburse Employee for such expenses no later
than the last day of the calendar year following the calendar year in which the
expense was incurred.

(c)           Employer shall pay the annual dues for Employee’s membership at
the Piedmont Club for so long as Employee remains an Executive Vice President of
Employer and this Agreement remains in force.

7.           Working Facilities.  Employee shall be furnished with an office and
such other facilities and services as may be necessary or suitable to his
position and adequate for the performance of his duties.

8.           Expenses.  Employee is authorized to incur reasonable expenses for
promoting the business of Employer, including expenses for entertainment, travel
and similar items, but only to the extent that such expenses are allowable
deductions to Employer on its Federal income tax return.  Employer shall
promptly reimburse Employee for all such expenses upon the presentation by
Employee, from time to time, of an itemized account of such expenditures.   In
no event shall any reimbursement be paid after the last day of the calendar year
following the calendar year in which the expense was incurred, nor shall the
amount of reimbursable expenses incurred in one taxable year affect the expenses
eligible for reimbursement in any other taxable year.  Employee shall repay to
Employer the amounts of any expenses claimed which, for lack of proper
documentation or otherwise, are not allowed to Employer as deductions for
Federal income tax purposes.
 
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9.           Vacations.  Employee shall be entitled each fiscal year to 20 paid
days off, which number of days is granted by Employer to employees of similar
tenure and compensation rank, pursuant to Employer’s paid days off
policy.  Employer reserves the right to modify this and any other personnel
policy from time to time.  Any payments made by Employer to Employee as
compensation for paid vacation leave shall be paid in accordance with Employer's
salary payment practices.

10.           Stock Options.  Employee shall have the opportunity to participate
in Employer’s long-term equity incentive program and be eligible for the grant
of stock options, restricted stock, and other awards thereunder or under any
similar plan adopted by Employer.  Any options or similar awards shall be issued
to Employee (i) at an exercise price of not less than the stock's current fair
market value as of the date of grant and (ii) the number of shares subject to
such grant shall be fixed on the date of grant.  Awards under this plan are in
the discretion of the board of directors and shall be made pursuant to a
separate agreement.

11.           Ownership of Work Product.

(a)           Employee shall diligently disclose to Employer as soon as it is
created or conceived by Employee, and Employer shall own, all Work Product (as
defined below).  To the extent permitted by law, all Work Product shall be
considered work made for hire by Employee and owned by Employer.

(b)           If any of the work Product may not, by operation of law, be
considered work made for hire by Employee for Employer (or if ownership of all
right, title and interest of the intellectual property rights therein shall not
otherwise vest exclusively in Employer), Employee agrees to assign, and upon
creation thereof automatically assigns, without further consideration, the
ownership of all Work Product to Employer, its successors and assigns.

(c)           Employer, and its successors and assigns, shall have the right to
obtain and hold in its or their own name copyrights, registrations, and any
other protection available in the foregoing.

(d)           Employee agrees to perform upon the reasonable request of
Employer, during or after Employee’s employment, such further acts as may be
necessary or desirable to transfer, perfect and defend Employer’s ownership of
the Work Product.  When requested, Employee will

(i)           Execute, acknowledge and deliver any requested affidavits and
documents of assignment and conveyance;

(ii)           Obtain and aid in the enforcement of copyrights (and, if
applicable, patents) with respect to the Work Product in any countries.

(iii)           Provide testimony in connection with any proceeding affecting
the right, title or interest of Employer in any Work Product; and

(iv)           Perform any other acts deemed necessary or desirable to carry out
the purposes of this Agreement.
 
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Employer shall reimburse all reasonable out-of-pocket expenses incurred by
Employee at Employer’s request in connection with the foregoing.  Any
reimbursements made pursuant to this Section 11(d) shall be paid as soon as
administratively practicable, but in no event shall any reimbursement be paid
after the last day of the calendar year following the calendar year in which the
expense was incurred.

(e)           For purposes hereof, “Work Product” shall mean all intellectual
property rights, including all Trade Secrets, U.S. and international copyrights,
patentable inventions, discoveries and improvements, and other intellectual
property rights, in any programming, documentation, technology or other work
product that relates to the business and interest of Employer and that Employee
conceives, develops, or delivers to Employer at any time during the term of
Employee’s employment.  “Work Product” shall also include all intellectual
property rights in any programming, documentation, technology or other work
product that is now contained in any of the products or systems (including
development and support systems) of Employer prior to the date of this Agreement
while Employee was engaged as an independent contractor or employee of
Employer.  Employee hereby irrevocably relinquishes for the benefit of Employer
and its assigns any moral rights in the Work Product recognized by applicable
law.

 
12.
Protection of Trade Secrets and Confidential Information.

(a)           Through exercise of his rights and performance of his obligations
under this Agreement, Employee will be exposed to “Trade Secrets” and
“Confidential Information” (as those terms are defined below).  “Trade Secrets”
shall mean information or data of or about Employer or any affiliated entity,
including, but not limited to, technical or non-technical data, formulas,
patterns, compilations, programs, devices, methods, techniques, drawings,
processes, financial data, financial plans, product plans, or lists of actual or
potential customers, clients, distributors, or licensees, that: (i) derive
economic value, actual or potential, from not being generally known to, and not
being readily ascertainable by proper means by, other persons who can obtain
economic value from their disclosure or use; and (ii) are the subject of efforts
that are reasonable under the circumstances to maintain their secrecy.  To the
extent that the foregoing definition is inconsistent with the definition of
“trade secret” mandated under applicable law, the latter definition shall govern
for purposes of interpreting Employee’s obligations under this
Agreement.  Except as required to perform his obligations under this Agreement,
or except with Employer’s prior written permission, Employee shall not use,
redistribute, market, publish, disclose or divulge to any other person or entity
any Trade Secrets of Employer.  Employee’s obligations under this provision
shall remain in force (during and after the term) for so long as such
information or data shall continue to constitute a Trade Secret under applicable
law.  Employee agrees to cooperate with any and all confidentiality requirements
of Employer, and Employee shall immediately notify Employer of any unauthorized
disclosure or use of any Trade Secrets which Employee becomes aware.

(b)           Employee will abide by Employer’s policies and regulations, as
established from time to time, for the protection of its Confidential
Information.  Employee acknowledges that all records, files, data, documents,
and the like relating to suppliers, customers, costs, prices, systems, methods,
personnel, technology and other materials relating to Employer or its affiliated
entities shall be and remain the sole property of Employer and/or such
affiliated entity.  Employee agrees, upon the request of Employer, and in any
event upon termination of his employment, to turn over all copies of all media,
records, documentation, etc., pertaining to Employer (together with a written
statement certifying as to his compliance with the foregoing.)
 
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13.           Non-Solicitation of Customers.  During the term of his employment
with Employer, and for a period of one year thereafter, Employee shall not
directly or indirectly solicit any individual or entity which was a customer or
client of Employer for the purpose of providing a service or product to such
customer or client which is the same type of service or product offered or
provided by Employer, provided, however, that this restriction shall apply only
to those customers or clients with whom Employee had contact in connection with
services or products provided by Employer within two years prior to the date of
termination of such employment.

14.           Non-Solicitation of Employees.  During the term of Employee’s
employment with Employer, and for a period of one year thereafter, Employee
shall not, directly or indirectly, induce or solicit for employment any employee
of Employer for the purpose of providing services that are the same or similar
to the types of services offered or engaged in by Employer at the time of
termination of Employee’s employment with Employer.

15.           Non-Competition Agreement.  During Employee’s employment with
Employer and for a period of one year thereafter, Employee shall not (without
the prior written consent of Employer) compete with Employer of any of its
subsidiaries, directly or indirectly, engage in forming, serving as an
organizer, director, officer of, employee or agent, or consultant to, or
acquiring or maintaining more than a 1% passive investment in, a depository
financial institution or holding company therefor if such depository institution
or holding company has one or more offices or branches located within 30 miles
of any office or branch of Employee in existence at the time Employee’s
employment with Employer is terminated (the "Territory").  Notwithstanding the
foregoing, Employee may serve as an officer of or consultant to a depository
institution or holding company therefor even though such institution operates
one or more offices or branches in the Territory, if Employee’s employment does
not directly involve, in whole or in part, the depository financial
institution’s or holding company’s operations in the Territory.

16.           Termination.

(a)           Death or Disability.  Employee’s employment hereunder shall
terminate upon Employee’s death.  Employer may, in accordance with applicable
state and federal laws and regulations, terminate Employee’s employment
hereunder in the event of Employee’s disability for a continuous period of 180
days for which no reasonable accommodation is available.  For purposes of this
subsection 16(a), “disability” means as defined by Treasury Regulation §
1.409A-3(i)(4), and “reasonable accommodation” means an accommodation that does
not cause an undue hardship on the Employer.

(b)           Termination Without Cause.  Either party may terminate this
Agreement without Cause upon 30 days’ written notice to the other party.  If
Employer terminates this Agreement without Cause, Employer shall pay Employee in
cash a lump sum severance payment in the amount of twelve month’s salary within
fifteen days after the date of termination, subject to the provisions of Section
31.
 
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(c)           Termination With Cause.  Employer may terminate this Agreement for
Cause upon delivery of a Notice of Termination to the Employee.  The Termination
of Employee’s employment shall be for "Cause" if it is:

(i)           the result of the commission or omission of an act by Employee of
a willful or negligent nature which causes harm to Employer;

(ii)           the conviction of Employee for the commission or perpetration by
Employee of any felony or any act of fraud;

(iii)           the failure of Employee to devote his full time and attention to
the business, as provided in Section 4;

(iv)           or the failure of Employee to perform his duties hereunder.

With respect to (iii) and (iv) above, Employer shall provide written notice to
Employee of Employee’s failure to devote his full time and attention to the
business or to perform his duties hereunder, and provide Employee 30 days to
cure such failure (if it can be cured) prior to terminating with Cause.

(d)           The Employee may terminate this Agreement for Good Reason upon
delivery of a Notice of Termination to the Employer within a 90-day period
beginning on the 30th day after the occurrence of a Change in Control.  If the
Employee's employment is terminated by the Employee pursuant to this provision,
in addition to other rights and remedies available in law or equity, the
Employee shall be entitled to the following:
 
(i)           the Employer shall pay the Employee in cash within fifteen days
(subject to the provisions of Section 31) of the date of termination severance
compensation in an amount equal to his then current monthly base salary
multiplied by 12, plus any bonus earned or accrued through the date of
termination (including any amounts awarded for previous years but which were not
yet vested);

(ii)           for a period of 12 months, the Employer shall at its expense
continue on behalf of the Employee and his dependents and beneficiaries the life
insurance, disability, medical, dental, and hospitalization benefits provided
(x) to the Employee at any time during the 90-day period prior to the Change in
Control or at any time thereafter or (y) to other similarly situated Employees
who continue in the employ of the Employer.  Such coverage and benefits
(including deductibles and costs) shall be no less favorable to the Employee and
his dependents and beneficiaries than the most favorable of such coverages and
benefits referred to above.  The Employer's obligation hereunder with respect to
the foregoing benefits shall be limited to the extent that the Employee obtains
any such benefits pursuant to a subsequent employer's benefit plans, in which
case the Employer may reduce the coverage of any benefits it is required to
provide the Employee hereunder as long as the aggregate coverages and benefits
of the combined benefit plans is no less favorable to the Employee than the
coverages and benefits required to be provided hereunder.  This subsection (ii)
shall not be interpreted so as to limit any benefits to which the Employee or
his dependents or beneficiaries may be entitled under any of the Employer's
employee benefit plans, programs, or practices following the Employee's
termination of employment, including, without limitation, retiree medical and
life insurance benefits; and
 
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(iii)           the restrictions on any outstanding incentive awards (including
restricted stock) granted to the Employee under the Company's or the Bank’s
long-term equity incentive program or any other incentive plan or arrangement
shall lapse and such awards shall become 100% vested, all stock options and
stock appreciation rights granted to the Employee shall become immediately
exercisable and shall become 100% vested, all performance units granted to the
Employee shall become 100% vested, and the restrictive covenants contained in
Sections 13-15 shall not apply to the Employee.

17.           Governing Law.  This Agreement has been entered into in the State
of South Carolina and shall be governed by the laws of such State.

18.           Remedies for Breach.  Employee recognizes and agrees that a breach
by Employee of any covenant contained in this Agreement would cause immeasurable
and irreparable harm to Employer.  In the event of a beach or threatened breach
of any covenant contained herein, Employer shall be entitled to temporary and
permanent injunctive relief, restraining Employee from violating or threatening
to violate any covenant contained herein, as well as all costs and fees incurred
by Employer, including attorneys’ fees, as a result of Employee’s breach or
threatened breach of the covenant.  Employer and Employee agree that the relief
described herein is in addition to such other and further relief as may be
available to Employer at equity or by law.  Nothing herein shall be construed as
prohibiting Employer from pursuing any other remedies available to it for such
breach of threatened breach, including the recovery of damages from Employee.

19.           Consideration.  Employee acknowledges and agrees that valid
consideration has been given to Employee by Employer in return for the promises
of Employee set forth herein.

20.           Covenants are Independent.  The covenants on the part of Employee
contained herein shall each be construed as agreements independent of each other
and of any other provisions in this Agreement and the unenforceability of one
shall not affect the remaining covenants.

21.           Severability and Substitution of Valid Provisions.  To the extent
that any provision or language of this Agreement is deemed unenforceable, by
virtue of the scope of the business activity prohibited or the length of time
the activity is prohibited, Employer and Employee agree that this Agreement
shall be enforced to the fullest extent permissible under the laws and public
policies of the State of South Carolina.

22.           Extension of Periods.  Each of the time periods described in this
Agreement shall be automatically extended by any length of time during which
Employee is in breach of the corresponding covenant contained herein.  The
provisions of this Agreement shall continue in full force and effect throughout
the duration of the extended periods.
 
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23.           Reasonable Restraint.  It is agreed by the parties that the
foregoing covenants in this agreement are necessary for the legitimate business
interests of Employer and impose a reasonable restraining on Employee in light
of the activities and business of Employer on the date of the execution of this
Agreement.

24.           Withholding of Taxes.  Employer may withhold from any amounts
payable to Employee under this Agreement all federal, state, city or other taxes
and withholdings as shall be required pursuant to any applicable law, rule or
regulation.

25.           Notices.  Any notice required or permitted to be given under this
Agreement shall be sufficient if given in writing and sent by registered or
certified mail to his residence in the case of Employee or to is principal
office in the case of Employer.

26.           Assignment.  The rights and obligations of the parties to this
Agreement shall inure to the benefit of and shall be binding upon the successors
and assigns of Employer.  This Agreement shall not be terminated by any merger
or consolidation whether or not Employer is the consolidated or surviving
corporation or by transfer of all or substantially all of the assets of Employer
to another corporation if there is a surviving or resulting corporation in such
transfer.

27.           Severability.  It is not the intent of any party hereto to violate
any public policy of any jurisdiction in which this Agreement may be
enforced.  If any provision of this Agreement or the application of any
provision hereof to any person or circumstances is held invalid, unenforceable
or otherwise unlawful, the remainder of this Agreement and the application of
such provision shall be reformed to the extent (and only to the extent)
necessary to make it valid, enforceable and legal.

28.           Certain Definitions.  For the purpose of this Agreement, the
following terms and phrases have the particular meaning given below:

(a)           “Change in Control” shall mean as defined by Treasury Regulation §
1.409A-3(i)(5).

(b)           “Good Reason” shall mean as defined by Treasury Regulation §
1.409A-1(n)(2).

(c)           “Notice of Termination” shall mean a written notice of termination
from Employer or Employee which specifies an effective date of termination,
indicates the specific termination provision in this Agreement relied upon, and
sets forth in reasonable detail the facts and circumstances claimed to provide a
basis for termination of Employee's employment under the provision so indicated.

(d)           "Terminate," "terminated," "termination," or "termination of
employment" shall mean separation from service as defined by Regulation
1.409A-1(h).

29.           Entire Agreement; Amendment.  This Agreement supersedes any other
agreements, oral or written, between the parties with respect to the subject
matter hereof, and contains all of the agreements and understandings between the
parties with respect to the employment of Employee by Employer.  Any waiver or
modification of any term of this Agreement shall be effective only if it is set
forth in writing signed by all parties hereto; provided, however, that
Employee’s compensation may be increased at any time by Employer without in any
way affecting any of the other terms and conditions of this Agreement, which in
all other respects shall remain in full force and effect.
 
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30.           Counterparts.  This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same Agreement.

31.           Compliance with Internal Revenue Code Section 409A.  Employer and
Employee intend that their exercise of authority or discretion under this
Agreement shall comply with section 409A of the Internal Revenue Code of
1986.  If any provision of this Agreement does not satisfy the requirements of
section 409A, such provision shall nevertheless be applied in a manner
consistent with those requirements. If any provision of this Agreement would
subject Employee to additional tax or interest under section 409A, Employer
shall reform the provision.  However, Employer shall maintain to the maximum
extent practicable the original intent of the applicable provision without
subjecting Employee to additional tax or interest, and Employer shall not be
required to incur any additional compensation expense as a result of the
reformed provision.  Notwithstanding any other provision in this Agreement, if
Employee is determined by the Employer, as of the date of termination of
employment with the Employer, to be a "specified employee," as such term is
defined in Treasury Regulation §1.409A-1(i), and if any benefits paid to
Employee hereunder would be considered deferred compensation under Section 409A,
and finally if an exemption from the six month delay requirement of Section
409A(a)(2)(B)(i) is not available, then all severance payments and other
payment, except for other payments of base salary at the normal payroll
schedule, reimbursement of expenses, and other than as a result of death, that
would normally be paid within six months and one day from the date of
termination of employment shall be paid on the first day of the seventh month
following termination of employment.

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first above written.

     
EMPLOYER:
                 
FIRST NATIONAL BANK OF THE SOUTH
           
[CORPORATE SEAL]
   
By: /s/ Jerry L. Calvert
 
 
   
    Name:  Jerry L. Calvert
 
Attest:
   
    Title:  President/CEO
                      Secretary              
EMPLOYEE:
 

               
DAVID ZABRISKIE
           
 
   
/s/ David Zabriskie
 
 
   
Print name: David Zabriskie
 
 
   
 
 

 

 
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