Exhibit 10-3

                               GUARANTEE AGREEMENT

                           Community Bankshares, Inc.

                           Dated as of March 10, 2004


<PAGE>


                                TABLE OF CONTENTS
                                                                            Page

                                    ARTICLE I
                         DEFINITIONS AND INTERPRETATION
SECTION 1.1.   Definitions and Interpretation..................................1

                                   ARTICLE II
               POWERS, DUTIES AND RIGHTS OF THE GUARANTEE TRUSTEE
SECTION 2.1.   Powers and Duties of the Guarantee Trustee......................4
SECTION 2.2.   Certain Rights of the Guarantee Trustee.........................5
SECTION 2.3.   Not Responsible for Recitals or Issuance of Guarantee...........7
SECTION 2.4.   Events of Default; Waiver.......................................7
SECTION 2.5.   Events of Default; Notice.......................................8

                                   ARTICLE III
                              THE GUARANTEE TRUSTEE
SECTION 3.1.   The Guarantee Trustee; Eligibility..............................8
SECTION 3.2.   Appointment, Removal and Resignation
                of the Guarantee Trustee.......................................9

                                   ARTICLE IV
                                    GUARANTEE
SECTION 4.1.   Guarantee.......................................................9
SECTION 4.2.   Waiver of Notice and Demand....................................10
SECTION 4.3.   Obligations Not Affected.......................................10
SECTION 4.4.   Rights of Holders..............................................11
SECTION 4.5.   Guarantee of Payment...........................................11
SECTION 4.6.   Subrogation....................................................11
SECTION 4.7.   Independent Obligations........................................12
SECTION 4.8.   Enforcement....................................................12

                                    ARTICLE V
                    LIMITATION OF TRANSACTIONS; SUBORDINATION
SECTION 5.1.   Limitation of Transactions.....................................12
SECTION 5.2.   Ranking........................................................13

                                   ARTICLE VI

                                   TERMINATION
SECTION 6.1.   Termination....................................................13
                                   ARTICLE VII
                                 INDEMNIFICATION
SECTION 7.1.   Exculpation....................................................14
SECTION 7.2.   Indemnification................................................14
SECTION 7.3.   Compensation; Reimbursement of Expenses........................15

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                                TABLE OF CONTENTS
                                   (continued)
                                                                            Page

                                  ARTICLE VIII
                                  MISCELLANEOUS
SECTION 8.1.   Successors and Assigns.........................................16
SECTION 8.2.   Amendments.....................................................16
SECTION 8.3.   Notices........................................................16
SECTION 8.4.   Benefit........................................................17
SECTION 8.5.   Governing Law..................................................17
SECTION 8.6.   Counterparts...................................................17



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<PAGE>

         This GUARANTEE AGREEMENT (the "Guarantee"), dated as of March 10, 2004,
is executed and delivered by Community Bankshares,  Inc.,  incorporated in South
Carolina  (the  "Guarantor"),  and Wells Fargo  Bank,  National  Association,  a
national  banking  association with its principal place of business in the State
of  Delaware,  as trustee  (the  "Guarantee  Trustee"),  for the  benefit of the
Holders (as defined  herein)  from time to time of the  Capital  Securities  (as
defined  herein)  of SCB  Capital  Trust  I, a  Delaware  statutory  trust  (the
"Issuer").

         WHEREAS,  pursuant to an Amended and Restated Declaration of Trust (the
"Declaration"),  dated as of March 10, 2004, among the trustees named therein of
the Issuer, Community Bankshares, Inc., as sponsor, and the Holders from time to
time of undivided  beneficial  interests in the assets of the Issuer, the Issuer
is issuing on the date hereof securities, having an aggregate liquidation amount
of up to $10,000,000,  designated the TP Securities (the "Capital  Securities");
and

         WHEREAS,   as  incentive  for  the  Holders  to  purchase  the  Capital
Securities,  the Guarantor desires  irrevocably and unconditionally to agree, to
the  extent  set  forth in this  Guarantee,  to pay to the  Holders  of  Capital
Securities the Guarantee  Payments (as defined herein) and to make certain other
payments on the terms and conditions set forth herein.

         NOW, THEREFORE,  in consideration of the purchase by each Holder of the
Capital Securities, which purchase the Guarantor hereby agrees shall benefit the
Guarantor, the Guarantor executes and delivers this Guarantee for the benefit of
the Holders.

                                    ARTICLE I
                         DEFINITIONS AND INTERPRETATION

SECTION 1.1.  Definitions and Interpretation.

         In this Guarantee, unless the context otherwise requires:

          (a)  capitalized  terms used in this  Guarantee but not defined in the
     preamble  above  have  the  respective  meanings  assigned  to them in this
     Section 1.1;

          (b) a term  defined  anywhere in this  Guarantee  has the same meaning
     throughout;

          (c) all references to "the Guarantee" or "this  Guarantee" are to this
     Guarantee as modified, supplemented or amended from time to time;

          (d) all  references in this  Guarantee to Articles and Sections are to
     Articles and Sections of this Guarantee, unless otherwise specified;

          (e) terms  defined in the  Declaration  as of the date of execution of
     this Guarantee have the same meanings when used in this  Guarantee,  unless
     otherwise  defined  in this  Guarantee  or  unless  the  context  otherwise
     requires; and

          (f) a reference to the singular includes the plural and vice versa.

<PAGE>

         "Beneficiaries"  means any  Person to whom the  Issuer is or  hereafter
becomes indebted or liable.

         "Corporate  Trust Office" means the office of the Guarantee  Trustee at
which the  corporate  trust  business of the  Guarantee  Trustee  shall,  at any
particular  time,  be  principally  administered,  which  office  at the date of
execution  of this  Guarantee  is  located  at 919  Market  Street,  Suite  700,
Wilmington, DE 19801.

         "Covered Person" means any Holder of Capital Securities.

         "Debentures"  means the junior  subordinated  debentures  of  Community
Bankshares,  Inc.,  designated the Junior Subordinated Debt Securities due 2034,
held by the Institutional Trustee (as defined in the Declaration) of the Issuer.

         "Event of Default" has the meaning set forth in Section 2.4.

         "Guarantee  Payments"  means the following  payments or  distributions,
without duplication,  with respect to the Capital Securities,  to the extent not
paid or made by the Issuer: (i) any accrued and unpaid Distributions (as defined
in the Declaration)  which are required to be paid on such Capital Securities to
the extent the Issuer has funds available in the Property Account (as defined in
the Declaration) therefor at such time, (ii) the Redemption Price (as defined in
the  Indenture)  to the extent the Issuer has funds  available  in the  Property
Account therefor at such time, with respect to any Capital Securities called for
redemption by the Issuer,  (iii) the Special Redemption Price (as defined in the
Indenture) to the extent the Issuer has funds available in the Property  Account
therefor at such time, with respect to Capital  Securities called for redemption
upon the occurrence of a Special Event (as defined in the  Indenture),  and (iv)
upon  a  voluntary  or  involuntary  liquidation,   dissolution,  winding-up  or
termination  of the Issuer (other than in connection  with the  distribution  of
Debentures  to the Holders of the  Capital  Securities  in exchange  therefor as
provided in the Declaration), the lesser of (a) the aggregate of the liquidation
amount and all accrued and unpaid Distributions on the Capital Securities to the
date of payment,  to the extent the Issuer has funds  available  in the Property
Account  therefor  at such  time,  and (b) the  amount of  assets of the  Issuer
remaining  available for  distribution  to Holders in  liquidation of the Issuer
after  satisfaction  of  liabilities  to  creditors of the Issuer as required by
applicable law (in either case, the "Liquidation Distribution").

         "Guarantee Trustee" means Wells Fargo Bank, National Association, until
a  Successor  Guarantee  Trustee  has  been  appointed  and  has  accepted  such
appointment  pursuant to the terms of this Guarantee and  thereafter  means each
such Successor Guarantee Trustee.

         "Holder"  means any holder,  as  registered on the books and records of
the Issuer, of any Capital Securities;  provided,  however, that, in determining
whether the holders of the requisite percentage of Capital Securities have given
any request, notice, consent or waiver hereunder, "Holder" shall not include the
Guarantor or any Affiliate of the Guarantor.



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<PAGE>

         "Indemnified  Person"  means the  Guarantee  Trustee  (including in its
individual  capacity),  any Affiliate of the Guarantee Trustee, or any officers,
directors,   shareholders,   members,  partners,   employees,   representatives,
nominees, custodians or agents of the Guarantee Trustee.

         "Indenture"  means the Indenture,  dated as of March 10, 2004,  between
the Guarantor and Wells Fargo Bank, National Association,  not in its individual
capacity but solely as trustee, and any indenture  supplemental thereto pursuant
to which the  Debentures  are to be issued to the  Institutional  Trustee of the
Issuer.

         "Liquidation  Distribution" has the meaning set forth in the definition
of "Guarantee Payments" herein.

         "Majority  in  liquidation  amount  of the  Capital  Securities"  means
Holder(s) of outstanding  Capital  Securities,  voting together as a class,  but
separately  from the  holders  of  Common  Securities,  of more  than 50% of the
aggregate  liquidation amount (including the stated amount that would be paid on
redemption,  liquidation or otherwise, plus accrued and unpaid Distributions to,
but excluding, the date upon which the voting percentages are determined) of all
Capital Securities then outstanding.

         "Obligations"  means  any  costs,  expenses  or  liabilities  (but  not
including liabilities related to taxes) of the Issuer, other than obligations of
the  Issuer to pay to  holders  of any Trust  Securities  the  amounts  due such
holders pursuant to the terms of the Trust Securities.

         "Officer's   Certificate"   means,   with  respect  to  any  Person,  a
certificate  signed by one  Authorized  Officer of such  Person.  Any  Officer's
Certificate  delivered  with respect to compliance  with a condition or covenant
provided for in this Guarantee shall include:

          (a) a statement  that each officer  signing the Officer's  Certificate
     has read the covenant or condition and the definitions relating thereto;

          (b) a brief  statement of the nature and scope of the  examination  or
     investigation  undertaken  by  each  officer  in  rendering  the  Officer's
     Certificate;

          (c) a statement  that each such officer has made such  examination  or
     investigation  as, in such officer's  opinion,  is necessary to enable such
     officer to express an informed  opinion as to whether or not such  covenant
     or condition has been complied with; and

          (d) a statement  as to whether,  in the opinion of each such  officer,
     such condition or covenant has been complied with.

         "Person" means a legal person,  including any individual,  corporation,
estate, partnership,  joint venture,  association,  joint stock company, limited
liability  company,  trust,  unincorporated  association,  or  government or any
agency or political subdivision thereof, or any other entity of whatever nature.



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<PAGE>

         "Responsible Officer" means, with respect to the Guarantee Trustee, any
officer within the Corporate  Trust Office of the Guarantee  Trustee with direct
responsibility for the administration of any matters relating to this Guarantee,
including any vice president,  any assistant vice president,  any secretary, any
assistant secretary,  the treasurer,  any assistant treasurer, any trust officer
or  other  officer  of the  Corporate  Trust  Office  of the  Guarantee  Trustee
customarily  performing functions similar to those performed by any of the above
designated officers and also means, with respect to a particular corporate trust
matter,  any other  officer  to whom such  matter is  referred  because  of that
officer's knowledge of and familiarity with the particular subject.

         "Successor  Guarantee  Trustee"  means a  successor  Guarantee  Trustee
possessing the qualifications to act as Guarantee Trustee under Section 3.1.

         "Trust   Securities"  means  the  Common  Securities  and  the  Capital
Securities.

                                   ARTICLE II
               POWERS, DUTIES AND RIGHTS OF THE GUARANTEE TRUSTEE

SECTION 2.1.  Powers and Duties of the Guarantee Trustee.

          (a) This  Guarantee  shall be held by the  Guarantee  Trustee  for the
     benefit of the Holders of the Capital Securities, and the Guarantee Trustee
     shall not transfer this  Guarantee to any Person except a Holder of Capital
     Securities  exercising his or her rights pursuant to Section 4.4(b) or to a
     Successor  Guarantee  Trustee on  acceptance  by such  Successor  Guarantee
     Trustee of its  appointment  to act as  Successor  Guarantee  Trustee.  The
     right, title and interest of the Guarantee Trustee shall automatically vest
     in any Successor Guarantee Trustee, and such vesting and cessation of title
     shall be effective whether or not conveyancing documents have been executed
     and  delivered  pursuant to the  appointment  of such  Successor  Guarantee
     Trustee.

          (b) If an Event of Default actually known to a Responsible  Officer of
     the Guarantee Trustee has occurred and is continuing, the Guarantee Trustee
     shall enforce this  Guarantee for the benefit of the Holders of the Capital
     Securities.

          (c) The  Guarantee  Trustee,  before  the  occurrence  of any Event of
     Default  and after the curing or waiving of all Events of Default  that may
     have  occurred,  shall  undertake  to  perform  only  such  duties  as  are
     specifically set forth in this Guarantee, and no implied covenants shall be
     read into this Guarantee against the Guarantee Trustee. In case an Event of
     Default has occurred (that has not been cured or waived pursuant to Section
     2.4(b)) and is actually  known to a  Responsible  Officer of the  Guarantee
     Trustee, the Guarantee Trustee shall exercise such of the rights and powers
     vested in it by this  Guarantee,  and use the same degree of care and skill
     in its exercise  thereof,  as a prudent  person would exercise or use under
     the circumstances in the conduct of his or her own affairs.



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<PAGE>

          (d) No provision of this  Guarantee  shall be construed to relieve the
     Guarantee  Trustee from  liability  for its own negligent  action,  its own
     negligent failure to act, or its own willful misconduct, except that:

               (i) prior to the occurrence of any Event of Default and after the
          curing or waiving of all Events of Default that may have occurred:

                    (A) the  duties and  obligations  of the  Guarantee  Trustee
               shall be  determined  solely by the  express  provisions  of this
               Guarantee,  and the Guarantee  Trustee shall not be liable except
               for  the  performance  of  such  duties  and  obligations  as are
               specifically  set  forth  in  this  Guarantee,   and  no  implied
               covenants  or  obligations  shall  be read  into  this  Guarantee
               against the Guarantee Trustee; and

                    (B) in the absence of bad faith on the part of the Guarantee
               Trustee,  the Guarantee Trustee may conclusively  rely, as to the
               truth  of the  statements  and the  correctness  of the  opinions
               expressed therein, upon any certificates or opinions furnished to
               the Guarantee  Trustee and conforming to the requirements of this
               Guarantee;  but in the case of any such  certificates or opinions
               furnished to the Guarantee  Trustee,  the Guarantee Trustee shall
               be under a duty to examine the same to  determine  whether or not
               on their face they conform to the requirements of this Guarantee;

               (ii) the  Guarantee  Trustee shall not be liable for any error of
          judgment made in good faith by a Responsible  Officer of the Guarantee
          Trustee,  unless it shall be proved that such  Responsible  Officer of
          the  Guarantee  Trustee or the  Guarantee  Trustee  was  negligent  in
          ascertaining the pertinent facts upon which such judgment was made;

               (iii) the  Guarantee  Trustee shall not be liable with respect to
          any  action  taken  or  omitted  to be  taken  by it in good  faith in
          accordance with the written  direction of the Holders of not less than
          a Majority in liquidation amount of the Capital Securities relating to
          the time, method and place of conducting any proceeding for any remedy
          available to the Guarantee  Trustee,  or exercising any trust or power
          conferred upon the Guarantee Trustee under this Guarantee; and

               (iv) no provision of this  Guarantee  shall require the Guarantee
          Trustee to expend or risk its own funds or  otherwise  incur  personal
          financial  liability in the performance of any of its duties or in the
          exercise  of any of its rights or  powers,  if the  Guarantee  Trustee
          shall have reasonable grounds for believing that the repayment of such
          funds  is not  reasonably  assured  to it  under  the  terms  of  this
          Guarantee,  or security and indemnity,  reasonably satisfactory to the
          Guarantee  Trustee,  against such risk or liability is not  reasonably
          assured to it.



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<PAGE>


SECTION 2.2.  Certain Rights of the Guarantee Trustee.

          (a) Subject to the provisions of Section 2.1:

               (i) The Guarantee  Trustee may  conclusively  rely,  and shall be
          fully  protected  in  acting  or  refraining  from  acting  upon,  any
          resolution,   certificate,  statement,  instrument,  opinion,  report,
          notice, request,  direction,  consent,  order, bond, debenture,  note,
          other evidence of indebtedness or other paper or document  believed by
          it to be genuine and to have been  signed,  sent or  presented  by the
          proper party or parties.

               (ii) Any direction or act of the Guarantor  contemplated  by this
          Guarantee shall be sufficiently evidenced by an Officer's Certificate.

               (iii) Whenever,  in the  administration  of this  Guarantee,  the
          Guarantee  Trustee shall deem it desirable  that a matter be proved or
          established before taking, suffering or omitting any action hereunder,
          the Guarantee  Trustee  (unless other evidence is herein  specifically
          prescribed) may, in the absence of bad faith on its part,  request and
          conclusively  rely  upon an  Officer's  Certificate  of the  Guarantor
          which,  upon receipt of such request,  shall be promptly  delivered by
          the Guarantor.

               (iv)  The  Guarantee  Trustee  shall  have  no duty to see to any
          recording,  filing or  registration of any instrument or other writing
          (or any rerecording, refiling or reregistration thereof).

               (v)  The  Guarantee  Trustee  may  consult  with  counsel  of its
          selection,  and the advice or opinion of such  counsel with respect to
          legal matters shall be full and complete  authorization and protection
          in respect of any action taken, suffered or omitted by it hereunder in
          good faith and in accordance with such advice or opinion. Such counsel
          may be  counsel  to the  Guarantor  or any of its  Affiliates  and may
          include any of its  employees.  The  Guarantee  Trustee shall have the
          right at any time to seek instructions  concerning the  administration
          of this Guarantee from any court of competent jurisdiction.

               (vi) The  Guarantee  Trustee  shall be  under  no  obligation  to
          exercise any of the rights or powers vested in it by this Guarantee at
          the request or direction of any Holder,  unless such Holder shall have
          provided  to  the  Guarantee  Trustee  such  security  and  indemnity,
          reasonably  satisfactory to the Guarantee Trustee,  against the costs,
          expenses  (including  attorneys' fees and expenses and the expenses of
          the  Guarantee   Trustee's   agents,   nominees  or  custodians)   and
          liabilities  that  might be  incurred  by it in  complying  with  such
          request or direction,  including  such  reasonable  advances as may be
          requested by the Guarantee Trustee;  provided,  however,  that nothing
          contained  in this  Section  2.2(a)(vi)  shall be taken to relieve the
          Guarantee Trustee,  upon the occurrence of an Event of Default, of its
          obligation  to  exercise  the rights  and powers  vested in it by this
          Guarantee.



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<PAGE>

               (vii)  The  Guarantee  Trustee  shall  not be  bound  to make any
          investigation  into the facts or  matters  stated  in any  resolution,
          certificate,  statement, instrument, opinion, report, notice, request,
          direction,  consent,  order, bond, debenture,  note, other evidence of
          indebtedness or other paper or document, but the Guarantee Trustee, in
          its discretion,  may make such further inquiry or  investigation  into
          such facts or matters as it may see fit.

               (viii) The  Guarantee  Trustee  may  execute any of the trusts or
          powers hereunder or perform any duties hereunder either directly or by
          or  through  agents,  nominees,   custodians  or  attorneys,  and  the
          Guarantee  Trustee  shall not be  responsible  for any  misconduct  or
          negligence  on the part of any agent or  attorney  appointed  with due
          care by it hereunder.

               (ix) Any  action  taken by the  Guarantee  Trustee  or its agents
          hereunder  shall bind the Holders of the Capital  Securities,  and the
          signature  of the  Guarantee  Trustee  or its  agents  alone  shall be
          sufficient  and  effective to perform any such action.  No third party
          shall be  required  to inquire as to the  authority  of the  Guarantee
          Trustee  to so act or as to its  compliance  with any of the terms and
          provisions  of this  Guarantee,  both of which  shall be  conclusively
          evidenced  by the  Guarantee  Trustee's  or its  agent's  taking  such
          action.

               (x)  Whenever  in  the   administration  of  this  Guarantee  the
          Guarantee Trustee shall deem it desirable to receive instructions with
          respect to  enforcing  any remedy or right or taking any other  action
          hereunder, the Guarantee Trustee (A) may request instructions from the
          Holders of a Majority in liquidation amount of the Capital Securities,
          (B) may  refrain  from  enforcing  such remedy or right or taking such
          other  action  until such  instructions  are received and (C) shall be
          protected in conclusively relying on or acting in accordance with such
          instructions.

               (xi) The  Guarantee  Trustee  shall not be liable  for any action
          taken,  suffered,  or  omitted  to be  taken by it in good  faith  and
          reasonably believed by it to be authorized or within the discretion or
          rights or powers conferred upon it by this Guarantee.

     (b) No  provision of this  Guarantee  shall be deemed to impose any duty or
obligation on the  Guarantee  Trustee to perform any act or acts or exercise any
right, power, duty or obligation conferred or imposed on it, in any jurisdiction
in which it  shall  be  illegal  or in  which  the  Guarantee  Trustee  shall be
unqualified or incompetent in accordance with applicable law to perform any such
act or acts or to  exercise  any  such  right,  power,  duty or  obligation.  No
permissive  power or  authority  available  to the  Guarantee  Trustee  shall be
construed to be a duty.


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<PAGE>

SECTION 2.3. Not Responsible for Recitals or Issuance of Guarantee.

         The  recitals  contained  in  this  Guarantee  shall  be  taken  as the
statements  of the  Guarantor,  and the  Guarantee  Trustee  does not assume any
responsibility   for  their   correctness.   The  Guarantee   Trustee  makes  no
representation as to the validity or sufficiency of this Guarantee.

SECTION 2.4. Events of Default; Waiver.

     (a) An Event of Default under this Guarantee will occur upon the failure of
the Guarantor to perform any of its payment or other obligations hereunder.

     (b)  The  Holders  of a  Majority  in  liquidation  amount  of the  Capital
Securities may, voting or consenting as a class, on behalf of the Holders of all
of the Capital Securities, waive any past Event of Default and its consequences.
Upon such waiver,  any such Event of Default shall cease to exist,  and shall be
deemed to have been  cured,  for every  purpose of this  Guarantee,  but no such
waiver shall extend to any  subsequent  or other  default or Event of Default or
impair any right consequent thereon.

SECTION 2.5.  Events of Default; Notice.

     (a) The Guarantee Trustee shall,  within 90 days after the occurrence of an
Event of Default,  transmit by mail, first class postage prepaid, to the Holders
of the Capital Securities,  notices of all Events of Default actually known to a
Responsible  Officer of the  Guarantee  Trustee,  unless such defaults have been
cured before the giving of such notice,  provided,  however,  that the Guarantee
Trustee  shall be  protected  in  withholding  such  notice  if and so long as a
Responsible  Officer of the Guarantee  Trustee in good faith determines that the
withholding  of such  notice is in the  interests  of the Holders of the Capital
Securities.

     (b) The Guarantee  Trustee shall not be charged with knowledge of any Event
of Default  unless the  Guarantee  Trustee shall have  received  written  notice
thereof  from  the  Guarantor  or a  Holder  of  the  Capital  Securities,  or a
Responsible  Officer of the Guarantee Trustee charged with the administration of
this Guarantee shall have actual knowledge thereof.

                                   ARTICLE III
                              THE GUARANTEE TRUSTEE

SECTION 3.1. The Guarantee Trustee; Eligibility.

     (a) There shall at all times be a Guarantee Trustee which shall:

          (i) not be an Affiliate of the Guarantor; and



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<PAGE>

          (ii) be a  corporation  or national  association  organized  and doing
     business  under the laws of the  United  States of  America or any state or
     territory  thereof or of the  District of  Columbia,  or Person  authorized
     under  such laws to  exercise  corporate  trust  powers,  having a combined
     capital and surplus of at least 50 million U.S. dollars ($50,000,000),  and
     subject to supervision or  examination  by federal,  state,  territorial or
     District of Columbia authority. If such corporation or national association
     publishes reports of condition at least annually, pursuant to law or to the
     requirements of the supervising or examining  authority  referred to above,
     then, for the purposes of this Section 3.l(a)(ii), the combined capital and
     surplus of such corporation or national  association  shall be deemed to be
     its combined  capital and surplus as set forth in its most recent report of
     condition so published.

     (b) If at any time the  Guarantee  Trustee shall cease to be eligible to so
act under Section 3.1(a),  the Guarantee Trustee shall immediately resign in the
manner and with the effect set forth in Section 3.2(c).

     (c)  If the  Guarantee  Trustee  has  or  shall  acquire  any  "conflicting
interest'  within the meaning of Section 310(b) of the Trust  Indenture Act, the
Guarantee  Trustee shall either  eliminate such interest or resign to the extent
and in the manner provided by, and subject to, this Guarantee.

SECTION 3.2.  Appointment, Removal and Resignation of the Guarantee Trustee.

     (a) Subject to Section  3.2(b),  the Guarantee  Trustee may be appointed or
removed  without  cause at any time by the  Guarantor  except during an Event of
Default.

     (b) The Guarantee  Trustee shall not be removed in accordance  with Section
3.2(a) until a Successor  Guarantee  Trustee has been appointed and has accepted
such  appointment by written  instrument  executed by such  Successor  Guarantee
Trustee and delivered to the Guarantor.

     (c) The  Guarantee  Trustee  appointed  to office shall hold office until a
Successor  Guarantee  Trustee shall have been  appointed or until its removal or
resignation.  The  Guarantee  Trustee may resign from office  (without  need for
prior or subsequent  accounting)  by an  instrument  in writing  executed by the
Guarantee  Trustee and delivered to the Guarantor,  which  resignation shall not
take effect  until a Successor  Guarantee  Trustee  has been  appointed  and has
accepted such appointment by an instrument in writing executed by such Successor
Guarantee  Trustee and delivered to the  Guarantor  and the resigning  Guarantee
Trustee.

     (d) If no  Successor  Guarantee  Trustee  shall  have  been  appointed  and
accepted  appointment  as  provided  in this  Section  3.2  within 60 days after
delivery of an  instrument  of removal or  resignation,  the  Guarantee  Trustee
resigning or being removed may petition any court of competent  jurisdiction for
appointment of a Successor  Guarantee Trustee.  Such court may thereupon,  after


                                       9
<PAGE>

prescribing  such  notice,  if any, as it may deem  proper,  appoint a Successor
Guarantee Trustee.

     (e) No Guarantee  Trustee  shall be liable for the acts or omissions to act
of any Successor Guarantee Trustee.

     (f) Upon  termination  of this  Guarantee or removal or  resignation of the
Guarantee  Trustee  pursuant to this Section 3.2, the Guarantor shall pay to the
Guarantee  Trustee all amounts owing to the Guarantee Trustee under Sections 7.2
and 7.3 accrued to the date of such termination, removal or resignation.

                                   ARTICLE IV
                                    GUARANTEE

SECTION 4.1.  Guarantee.

     (a) The Guarantor irrevocably and unconditionally  agrees to pay in full to
the Holders the Guarantee Payments (without  duplication of amounts  theretofore
paid by the  Issuer),  as and when due,  regardless  of any  defense  (except as
defense of payment by the  Issuer),  right of set-off or  counterclaim  that the
Issuer  may have or  assert.  The  Guarantor's  obligation  to make a  Guarantee
Payment  may be  satisfied  by direct  payment  of the  required  amounts by the
Guarantor  to the  Holders or by causing  the Issuer to pay such  amounts to the
Holders.

     (b) The Guarantor  hereby also agrees to assume any and all  Obligations of
the Issuer and in the event any such  Obligation  is not so assumed,  subject to
the  terms  and  conditions   hereof,   the  Guarantor  hereby  irrevocably  and
unconditionally  guarantees to each  Beneficiary  the full payment,  when and as
due,  of any and  all  Obligations  to such  Beneficiaries.  This  Guarantee  is
intended to be for the Beneficiaries who have received notice hereof.

SECTION 4.2.  Waiver of Notice and Demand.

         The Guarantor  hereby waives notice of acceptance of this Guarantee and
of any  liability  to which it  applies or may  apply,  presentment,  demand for
payment, any right to require a proceeding first against the Issuer or any other
Person before proceeding against the Guarantor,  protest,  notice of nonpayment,
notice of dishonor, notice of redemption and all other notices and demands.

SECTION 4.3.  Obligations Not Affected.

         The  obligations,  covenants,  agreements  and duties of the  Guarantor
under this  Guarantee  shall in no way be  affected or impaired by reason of the
happening from time to time of any of the following:



                                       10
<PAGE>

     (a) the  release  or  waiver,  by  operation  of law or  otherwise,  of the
performance  or  observance  by the Issuer of any express or implied  agreement,
covenant,  term or condition  relating to the Capital Securities to be performed
or observed by the Issuer;

     (b) the  extension  of time for the  payment  by the  Issuer  of all or any
portion  of the  Distributions,  Redemption  Price,  Special  Redemption  Price,
Liquidation  Distribution  or any  other  sums  payable  under  the terms of the
Capital  Securities  or the extension of time for the  performance  of any other
obligation under,  arising out of, or in connection with, the Capital Securities
(other  than  an  extension  of  time  for  the  payment  of the  Distributions,
Redemption Price,  Special Redemption Price,  Liquidation  Distribution or other
sums payable that results from the extension of any interest  payment  period on
the Debentures or any extension of the maturity date of the Debentures permitted
by the Indenture);

     (c) any  failure,  omission,  delay or lack of diligence on the part of the
Holders to enforce,  assert or exercise  any right,  privilege,  power or remedy
conferred on the Holders pursuant to the terms of the Capital Securities, or any
action on the part of the Issuer granting indulgence or extension of any kind;

     (d) the  voluntary or  involuntary  liquidation,  dissolution,  sale of any
collateral, receivership,  insolvency, bankruptcy, assignment for the benefit of
creditors, reorganization,  arrangement, composition or readjustment of debt of,
or other similar proceedings  affecting,  the Issuer or any of the assets of the
Issuer;

     (e) Any invalidity of, or defect or deficiency in, the Capital Securities;

     (f) the  settlement or compromise of any  obligation  guaranteed  hereby or
hereby incurred; or

     (g) any other  circumstance  whatsoever that might  otherwise  constitute a
legal or equitable  discharge or defense of a guarantor,  it being the intent of
this  Section  4.3 that the  obligations  of the  Guarantor  hereunder  shall be
absolute and unconditional under any and all circumstances.

         There  shall be no  obligation  of the  Holders  to give  notice to, or
obtain  consent of, the  Guarantor  with respect to the  happening of any of the
foregoing.

SECTION 4.4.  Rights of Holders.

     (a)  The  Holders  of a  Majority  in  liquidation  amount  of the  Capital
Securities have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the Guarantee  Trustee in respect of this
Guarantee  or to direct the  exercise of any trust or power  conferred  upon the
Guarantee  Trustee under this  Guarantee;  provided,  however,  that (subject to
Sections 2.1 and 2.2) the  Guarantee  Trustee shall have the right to decline to
follow any such  direction if the  Guarantee  Trustee shall  determine  that the
actions so directed would be unjustly prejudicial to the Holders not taking part


                                       11
<PAGE>

in such  direction or if the  Guarantee  Trustee  being advised by legal counsel
determines  that the action or  proceeding so directed may not lawfully be taken
or if the Guarantee Trustee in good faith by its board of directors or trustees,
executive  committee  or a trust  committee  of  directors  or  trustees  and/or
Responsible  Officers shall  determine that the action or proceeding so directed
would involve the Guarantee Trustee in personal liability.

     (b) Any Holder of  Capital  Securities  may  institute  a legal  proceeding
directly  against the Guarantor to enforce the Guarantee  Trustee's rights under
this Guarantee, without first instituting a legal proceeding against the Issuer,
the  Guarantee  Trustee or any other Person.  The Guarantor  waives any right or
remedy to require that any such action be brought first against the Issuer,  the
Guarantee Trustee or any other Person before so proceeding  directly against the
Guarantor.

SECTION 4.5.  Guarantee of Payment.

         This Guarantee creates a guarantee of payment and not of collection.

SECTION 4.6. Subrogation.

         The Guarantor shall be subrogated to all (if any) rights of the Holders
of Capital  Securities against the Issuer in respect of any amounts paid to such
Holders by the  Guarantor  under this  Guarantee;  provided,  however,  that the
Guarantor shall not (except to the extent  required by applicable  provisions of
law) be entitled to enforce or exercise  any right that it may acquire by way of
subrogation or any indemnity,  reimbursement or other agreement, in all cases as
a result of payment  under this  Guarantee,  if, after giving effect to any such
payment,  any amounts  are due and unpaid  under this  Guarantee.  If any amount
shall be paid to the  Guarantor  in  violation of the  preceding  sentence,  the
Guarantor  agrees to hold such  amount in trust for the  Holders and to pay over
such amount to the Holders.

SECTION 4.7.  Independent Obligations.

         The  Guarantor   acknowledges   that  its  obligations   hereunder  are
independent  of the  obligations  of the  Issuer  with  respect  to the  Capital
Securities  and that the  Guarantor  shall be liable as principal  and as debtor
hereunder to make  Guarantee  Payments  pursuant to the terms of this  Guarantee
notwithstanding  the  occurrence  of any event  referred to in  subsections  (a)
through (g), inclusive, of Section 4.3 hereof.

SECTION 4.8.  Enforcement.

         A Beneficiary may enforce the Obligations of the Guarantor contained in
Section 4.1 (b) directly  against the  Guarantor,  and the Guarantor  waives any
right or remedy to require that any action be brought  against the Issuer or any
other person or entity before proceeding against the Guarantor.

         The  Guarantor  shall  be  subrogated  to all  rights  (if  any) of any
Beneficiary   against  the  Issuer  in  respect  of  any  amounts  paid  to  the


                                       12
<PAGE>

Beneficiaries by the Guarantor under this Guarantee; provided, however, that the
Guarantor shall not (except to the extent  required by applicable  provisions of
law) be entitled to enforce or exercise any rights that it may acquire by way of
subrogation or any indemnity,  reimbursement or other agreement, in all cases as
a result of payment  under  this  Guarantee,  if,  after  giving  effect to such
payment, any amounts are due and unpaid under this Guarantee.

                                    ARTICLE V
                    LIMITATION OF TRANSACTIONS; SUBORDINATION

SECTION 5.1. Limitation of Transactions.

         So long as any  Capital  Securities  remain  outstanding,  if (a) there
shall have  occurred and be  continuing an Event of Default or (b) the Guarantor
shall have selected an Extension  Period as provided in the Declaration and such
period, or any extension thereof,  shall have commenced and be continuing,  then
the Guarantor may not (x) declare or pay any dividends or  distributions  on, or
redeem, purchase, acquire, or make a liquidation payment with respect to, any of
the  Guarantor's  capital  stock or (y)  make any  payment  of  principal  of or
interest  or  premium,  if any,  on or  repay,  repurchase  or  redeem  any debt
securities of the  Guarantor  that rank pan passu in all respects with or junior
in interest to the  Debentures  (other than (i) payments  under this  Guarantee,
(ii) repurchases,  redemptions or other  acquisitions of shares of capital stock
of the Guarantor (A) in connection with any employment contract, benefit plan or
other  similar  arrangement  with or for the  benefit of one or more  employees,
officers,   directors,  or  consultants,  (B)  in  connection  with  a  dividend
reinvestment  or stockholder  stock purchase plan or (C) in connection  with the
issuance of capital stock of the Guarantor (or  securities  convertible  into or
exercisable  for  such  capital  stock),  as  consideration  in  an  acquisition
transaction  entered into prior to the occurrence of the Event of Default or the
applicable   Extension   Period,   (iii)   as  a   result   of   any   exchange,
reclassification,  combination  or  conversion  of any  class or  series  of the
Guarantor's  capital  stock  (or  any  capital  stock  of a  subsidiary  of  the
Guarantor)  for any class or series of the  Guarantor's  capital stock or of any
class or series of the Guarantor's  indebtedness  for any class or series of the
Guarantor's  capital stock, (iv) the purchase of fractional  interests in shares
of the  Guarantor's  capital  stock  pursuant  to  the  conversion  or  exchange
provisions of such capital stock or the security  being  converted or exchanged,
(v) any  declaration of a dividend in connection with any  stockholder's  rights
plan, or the issuance of rights, stock or other property under any stockholder's
rights plan, or the redemption or repurchase of rights pursuant thereto, or (vi)
any dividend in the form of stock,  warrants,  options or other rights where the
dividend stock or the stock issuable upon exercise of such warrants,  options or
other  rights is the same stock as that on which the  dividend  is being paid or
ranks purl passu with or junior to such stock).

SECTION 5.2. Ranking.

         This Guarantee will constitute an unsecured obligation of the Guarantor
and will rank  subordinate  and junior in right of payment  to all  present  and
future Senior  Indebtedness  (as defined in the Indenture) of the Guarantor.  By
their  acceptance  thereof,  each  Holder of  Capital  Securities  agrees to the
foregoing provisions of this Guarantee and the other terms set forth herein.



                                       13
<PAGE>

         The right of the Guarantor to participate in any distribution of assets
of  any  of  its  subsidiaries  upon  any  such   subsidiary's   liquidation  or
reorganization  or otherwise is subject to the prior claims of creditors of that
subsidiary,  except to the extent the  Guarantor  may itself be  recognized as a
creditor of that subsidiary. Accordingly, the Guarantor's obligations under this
Guarantee  will  be  effectively   subordinated   to  all  existing  and  future
liabilities of the Guarantor's  subsidiaries,  and claimants should look only to
the assets of the Guarantor for payments  thereunder.  This  Guarantee  does not
limit the  incurrence  or issuance  of other  secured or  unsecured  debt of the
Guarantor,  including Senior Indebtedness of the Guarantor,  under any indenture
or agreement that the Guarantor may enter into in the future or otherwise.

                                   ARTICLE VI
                                   TERMINATION

SECTION 6.1.  Termination.

         This Guarantee  shall  terminate as to the Capital  Securities (i) upon
full payment of the Redemption  Price or the Special  Redemption  Price,  as the
case  may  be,  of all  Capital  Securities  then  outstanding,  (ii)  upon  the
distribution  of all of the  Debentures  to the  Holders  of all of the  Capital
Securities or (iii) upon full payment of the amounts  payable in accordance with
the Declaration upon dissolution of the Issuer.  This Guarantee will continue to
be  effective  or will be  reinstated,  as the case  may be,  if at any time any
Holder of Capital  Securities  must  restore  payment of any sums paid under the
Capital Securities or under this Guarantee.

                                   ARTICLE VII
                                 INDEMNIFICATION

SECTION 7.1.  Exculpation.

                  (a) No  Indemnified  Person  shall be liable,  responsible  or
         accountable  in damages or  otherwise  to the  Guarantor or any Covered
         Person for any loss,  damage or claim  incurred by reason of any act or
         omission of such  Indemnified  Person in good faith in accordance  with
         this Guarantee and in a manner that such Indemnified  Person reasonably
         believed  to be within  the scope of the  authority  conferred  on such
         Indemnified  Person  by  this  Guarantee  or by  law,  except  that  an
         Indemnified  Person shall be liable for any such loss,  damage or claim
         incurred by reason of such Indemnified  Person's  negligence or willful
         misconduct with respect to such acts or omissions.

                  (b) An Indemnified  Person shall be fully protected in relying
         in good faith upon the records of the Issuer or the  Guarantor and upon
         such  information,  opinions,  reports or  statements  presented to the
         Issuer or the  Guarantor  by any Person as to matters  the  Indemnified
         Person reasonably believes are within such other Person's  professional
         or expert  competence and who, if selected by such Indemnified  Person,
         has been  selected with  reasonable  care by such  Indemnified  Person,
         including information,  opinions, reports or statements as to the value
         and amount of the assets,  liabilities,  profits,  losses, or any other


                                       14
<PAGE>

         facts  pertinent  to the  existence  and  amount of assets  from  which
         Distributions to Holders of Capital Securities might properly be paid.

SECTION 7.2. Indemnification.

     (a) The Guarantor agrees to indemnify each  Indemnified  Person for, and to
hold each  Indemnified  Person harmless  against,  any and all loss,  liability,
damage,  claim or expense incurred without  negligence or willful  misconduct on
the part of the  Indemnified  Person,  arising out of or in connection  with the
acceptance or administration of the trust or trusts hereunder, including but not
limited to the costs and expenses (including reasonable legal fees and expenses)
of the Indemnified Person defending itself against, or investigating,  any claim
or  liability  in  connection  with the  exercise or  performance  of any of the
Indemnified Person's powers or duties hereunder.  The obligation to indemnify as
set forth in this Section 7.2 shall  survive the  resignation  or removal of the
Guarantee Trustee and the termination of this Guarantee.

     (b) Promptly after receipt by an Indemnified  Person under this Section 7.2
of notice of the commencement of any action,  such Indemnified Person will, if a
claim in respect  thereof is to be made against the Guarantor under this Section
7.2,  notify  the  Guarantor  in writing of the  commencement  thereof;  but the
failure so to notify the  Guarantor  (i) will not  relieve  the  Guarantor  from
liability  under paragraph (a) above unless and to the extent that the Guarantor
did  not  otherwise  learn  of such  action  and  such  failure  results  in the
forfeiture  by the  Guarantor of  substantial  rights and defenses and (ii) will
not, in any event, relieve the Guarantor from any obligations to any Indemnified
Person  other than the  indemnification  obligation  provided in  paragraph  (a)
above.  The Guarantor  shall be entitled to appoint  counsel of the  Guarantor's
choice at the  Guarantor's  expense to represent the  Indemnified  Person in any
action for which  indemnification  is sought (in which case the Guarantor  shall
not thereafter be responsible for the fees and expenses of any separate  counsel
retained  by the  Indemnified  Person or  Persons  except  as set forth  below);
provided,  however,  that such counsel shall be  satisfactory to the Indemnified
Person. Notwithstanding the Guarantor's election to appoint counsel to represent
the  Indemnified  Person in any action,  the  Indemnified  Person shall have the
right to employ separate counsel  (including  local counsel),  and the Guarantor
shall bear the reasonable fees, costs and expenses of such separate counsel (and
local  counsel),  if (i) the use of counsel chosen by the Guarantor to represent
the  Indemnified  Person would present such counsel with a conflict of interest,
(ii) the  actual or  potential  defendants  in, or targets  of, any such  action
include both the Indemnified Person and the Guarantor and the Indemnified Person
shall have reasonably concluded that there may be legal defenses available to it
and/or other Indemnified Persons which are different from or additional to those
available to the Guarantor,  (iii) the Guarantor shall not have employed counsel
satisfactory  to the  Indemnified  Person to represent  the  Indemnified  Person
within a reasonable  time after notice of the institution of such action or (iv)
the Guarantor shall authorize the Indemnified  Person to employ separate counsel
at the  expense of the  Guarantor.  The  Guarantor  will not,  without the prior
written consent of the Indemnified  Persons,  settle or compromise or consent to
the entry of any  judgment  with  respect to any  pending or  threatened  claim,
action,  suit or proceeding in respect of which  indemnification or contribution


                                       15
<PAGE>

may be sought  hereunder  (whether or not the Indemnified  Persons are actual or
potential parties to such claim or action) unless such settlement, compromise or
consent  includes an unconditional  release of each Indemnified  Person from all
liability arising out of such claim, action, suit or proceeding.

SECTION 7.3.  Compensation; Reimbursement of Expenses.

         The Guarantor agrees:

     (a) to pay to the Guarantee Trustee from time to time such compensation for
all services rendered by it hereunder as the parties shall agree to from time to
time (which  compensation shall not be limited by any provision of law in regard
to the compensation of a trustee of an express trust); and

     (b)  except as  otherwise  expressly  provided  herein,  to  reimburse  the
Guarantee  Trustee upon request for all reasonable  expenses,  disbursements and
advances  incurred  or made  by it in  accordance  with  any  provision  of this
Guarantee   (including  the  reasonable   compensation   and  the  expenses  and
disbursements of its agents and counsel), except any such expense,  disbursement
or advance as may be attributable to its negligence or willful misconduct.

         The  provisions  of this Section 7.3 shall survive the  resignation  or
removal of the Guarantee Trustee and the termination of this Guarantee.

                                  ARTICLE VIII
                                  MISCELLANEOUS

SECTION 8.1.  Successors and Assigns.

         All guarantees and  agreements  contained in this Guarantee  shall bind
the  successors,   assigns,  receivers,  trustees  and  representatives  of  the
Guarantor  and  shall  inure  to the  benefit  of  the  Holders  of the  Capital
Securities   then   outstanding.   Except  in  connection  with  any  merger  or
consolidation of the Guarantor with or into another entity or any sale, transfer
or lease of the Guarantor's assets to another entity, in each case to the extent
permitted  under the  Indenture,  the  Guarantor  may not  assign  its rights or
delegate its obligations  under this Guarantee without the prior approval of the
Holders  of not less  than a  Majority  in  liquidation  amount  of the  Capital
Securities.

SECTION 8.2.  Amendments.

         Except with  respect to any changes  that do not  adversely  affect the
rights of Holders of the Capital  Securities  in any material  respect (in which
case no consent of Holders will be required), this Guarantee may be amended only
with  the  prior  approval  of the  Holders  of not  less  than  a  Majority  in
liquidation amount of the Capital Securities.  The provisions of the Declaration
with  respect  to  amendments  thereof  shall  apply  equally  with  respect  to
amendments of the Guarantee.



                                       16
<PAGE>

SECTION 8.3.  Notices.

         All notices  provided for in this Guarantee  shall be in writing,  duly
signed by the party giving such notice,  and shall be  delivered,  telecopied or
mailed by first class mail, as follows:

     (a) If given to the Guarantee Trustee,  at the Guarantee  Trustee's mailing
address set forth below (or such other address as the Guarantee Trustee may give
notice of to the Holders of the Capital Securities):

                         Wells Fargo Bank, National Association
                         919 Market Street
                         Suite 700
                         Wilmington, DE 19801
                         Attention:  Corporate Trust Division
                         Telecopy:   302-575-2006
                         Telephone:  302-575-2005

     (b) If given to the Guarantor, at the Guarantor's mailing address set forth
below (or such other  address as the Guarantor may give notice of to the Holders
of the Capital Securities and to the Guarantee Trustee):

                         Community Bankshares, Inc.
                         791 Broughton Street
                         Orangeburg, SC 29115
                         Attention: William W. Traynham
                         Telecopy: (803) 535-1065
                         Telephone:(803) 535-1060

     (c) If given to any Holder of the  Capital  Securities,  at the address set
forth on the books and records of the Issuer.

         All such  notices  shall be deemed to have been given when  received in
person,  telecopied  with  receipt  confirmed,  or mailed by first  class  mail,
postage prepaid,  except that if' a notice or other document is refused delivery
or cannot be  delivered  because  of a changed  address  of which no notice  was
given,  such notice or other  document shall be deemed to have been delivered on
the date of such refusal or inability to deliver.

SECTION 8.4.  Benefit.

         This  Guarantee is solely for the benefit of the Holders of the Capital
Securities and, subject to Section 2.1(a),  is not separately  transferable from
the Capital Securities.


                                       17
<PAGE>

SECTION 8.5.  Governing Law.

         THIS GUARANTEE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE  WITH,
THE LAW OF THE STATE OF NEW YORK,  WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES
THEREOF.

SECTION 8.6.  Counterparts.

         This  Guarantee may contain more than one  counterpart of the signature
page and this  Guarantee may be executed by the affixing of the signature of the
Guarantor and the Guarantee Trustee to any of such counterpart  signature pages.
All of such  counterpart  signature  pages shall be read as though one, and they
shall have the same force and effect as though all of the  signers  had signed a
single signature page.


                              [SIGNATURES OMITTED]



                                       18
<PAGE>


        THIS GUARANTEE is executed as of the day and year first above written.

                              [SIGNATURES OMITTED]



                                       19