EXHIBIT 10.1

EMPLOYMENT AGREEMENT WITH KIM S. PRICE

        This EMPLOYMENT AGREEMENT is entered into effective as of this 17th day
of May, 2004, by and among Citizens South Banking Corporation, a Delaware
corporation, Citizens South Bank, a federally chartered savings bank and wholly
owned subsidiary of Citizens South Banking Corporation, and Kim S. Price,
President and Chief Executive Officer (the Executive). Citizens South Banking
Corporation and Citizens South Bank are hereinafter sometimes referred to
together or individually as Citizens South.

        WHEREAS, the Executive is the President and Chief Executive Officer of
Citizens South, possessing unique skills, knowledge, and experience relating to
Citizens South's business, and the Executive has made and is expected to
continue to make major contributions to the profitability, growth and financial
strength of Citizens South and affiliates,

        WHEREAS, Citizens South desires to assure itself of the continuity of
management and desires to establish minimum severance benefits for certain of
its officers and other key employees, including the Executive, if a Change in
Control (as defined herein) occurs,

        WHEREAS, Citizens South wishes to ensure that officers and other key
employees are not practically disabled from discharging their duties if a
proposed or actual transaction involving a Change in Control arises,

        WHEREAS, Citizens South desires to provide additional inducement for the
Executive to remain in the employ of Citizens South as President and Chief
Executive Officer,

        WHEREAS, Citizens South and the Executive desire to set forth in this
Employment Agreement the terms and conditions of the Executive's employment,

        WHEREAS, the Executive and Citizens South Bank are parties to a 1998
employment agreement, but the Executive and Citizens South intend that this
Employment Agreement supersede and replace the previous employment agreement in
its entirety, and

        WHEREAS, none of the conditions or events included in the definition of
the term golden parachute payment that is set forth in Section 18(k)(4)(A)(ii)
of the Federal Deposit Insurance Act [12 U.S.C. 1828(k)(4)(A)(ii)] and in
Federal Deposit Insurance Corporation Rule 359.1(f)(1)(ii) [12 CFR
359.1(f)(1)(ii)] exists or, to the best knowledge of Citizens South, is
contemplated insofar as Citizens South or any affiliates are concerned.

        NOW THEREFORE, in consideration of these premises, the mutual covenants
contained herein, and other good and valuable consideration the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows.

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                                    ARTICLE 1
                                   EMPLOYMENT

        1.1 EMPLOYMENT. Citizens South Banking Corporation and Citizens South
Bank hereby employ the Executive to serve as President and Chief Executive
Officer according to the terms and conditions of this Employment Agreement and
for the period stated in Article 3. The Executive hereby accepts employment
according to the terms and conditions of this Employment Agreement and for the
period stated in Article 3. The Executive also agrees to serve as an officer or
director of any subsidiary or affiliate of Citizens South, if elected. For
purposes of this Employment Agreement, the term affiliate means any entity that
directly or indirectly through one or more intermediaries controls, is
controlled by, or is under common control with Citizens South Bank.

        1.2 SERVICE ON THE BOARD OF DIRECTORS. (a) Board of Directors of
Citizens South Banking Corporation. The Executive is currently serving as a
director of Citizens South Banking Corporation. Citizens South Banking
Corporation shall nominate the Executive for election as a director at such
times as necessary so that the Executive will, if elected by stockholders,
remain a director of Citizens South Banking Corporation throughout the term of
this Employment Agreement. The Executive hereby consents to serve as a director
of Citizens South Banking Corporation, and the Executive hereby consents to
being named as a director of Citizens South Banking Corporation in documents
filed by Citizens South Banking Corporation with the Securities and Exchange
Commission. The Executive shall be deemed to have resigned as a director of
Citizens South Banking Corporation effective immediately after termination of
the Executive's employment under Article 5 of this Employment Agreement,
regardless of whether the Executive submits a formal, written resignation as
director.

        (b) Board of Directors of Citizens South Bank. The Executive is
currently serving as a director of Citizens South Bank. The board of directors
of Citizens South Banking Corporation and the board of directors of Citizens
South Bank shall undertake every lawful effort to ensure that the Executive
continues throughout the term of his employment to be elected or reelected as a
director of Citizens South Bank. The Executive shall be deemed to have resigned
as a director of Citizens South Bank effective immediately after termination of
the Executive's employment under Article 5 of this Employment Agreement,
regardless of whether the Executive submits a formal, written resignation as
director.

                                    ARTICLE 2
                                     DUTIES

        As President and Chief Executive Officer of Citizens South Banking
Corporation, the Executive shall serve under the direction of Citizens South
Banking Corporation's board of directors and in accordance with Citizens South
Banking Corporation's Articles of Incorporation and Bylaws, as each may be
amended or restated from time to time. As President and Chief Executive Officer
of Citizens South Bank, the Executive shall serve under the direction of
Citizens South Bank's board of directors and in accordance with Citizens South
Bank's Charter and Bylaws, as each may be amended or restated from time to time.
The Executive shall report directly to the board of directors. He shall serve
Citizens South faithfully, diligently, competently, and to the best of his
ability, and he shall exclusively devote his full time, energy, and attention to
the business of Citizens South and to the promotion of Citizens South's
interests throughout the term of this Employment Agreement. Without the written
consent of Citizens South Banking Corporation's board of directors, the
Executive shall not render services to or for any person, firm, corporation, or
other entity or organization in exchange for compensation, regardless of the
form in which such compensation is paid and regardless of whether it is paid
directly or indirectly to the Executive. Nothing in this Article 2 shall prevent
the Executive from managing his personal investments and affairs, provided that
doing so does not interfere with the proper performance of his duties and
responsibilities as President and Chief Executive Officer.

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                                    ARTICLE 3
                               TERM OF EMPLOYMENT

        The initial term of this Employment Agreement shall be for a period of
three years, commencing May 17, 2004. On the first anniversary of the May 17,
2004 effective date of this Employment Agreement and on each anniversary
thereafter, this Employment Agreement shall be extended automatically for one
additional year unless Citizens South's board of directors determines that the
term shall not be extended.

        If the board of directors determines not to extend the term, it shall
notify the Executive in writing at least ten days before the anniversary date.
If the board decides not to extend the term of this Employment Agreement, this
Employment Agreement shall nevertheless remain in force until its term expires.
The board's decision not to extend the term of this Employment Agreement shall
not - by itself - give the Executive any rights under this Employment Agreement
to claim an adverse change in his position, compensation, or circumstances or
otherwise to claim entitlement to severance or termination benefits under
Articles 6 or 7 of this Employment Agreement. References herein to the term of
this Employment Agreement shall refer to the initial term, as the same may be
extended. Unless sooner terminated, the Executive's employment shall terminate
when he attains age 65.

        For one full year after expiration of the term of this Employment
Agreement or termination of the Executive's employment, the Executive shall
furnish information and assistance to Citizens South as may reasonably be
required by Citizen South in any litigation in which Citizens South or any of
subsidiary or affiliate is or may become a party, upon reasonable notice to the
Executive.

                                    ARTICLE 4
                         COMPENSATION AND OTHER BENEFITS

        4.1 BASE SALARY. In consideration of the Executive's performance of his
obligations under this Employment Agreement, Citizens South Banking Corporation
shall pay or cause to be paid to the Executive a salary at the annual rate of
not less than $196,658.00, payable in semi-monthly installments. The Executive's
salary shall be reviewed annually by the Compensation Committee of Citizens
South's board of directors or by such other board committee as has jurisdiction
over executive compensation. The Executive's salary may be increased at the
discretion of the committee having jurisdiction over executive compensation.
However, the Executive's salary shall not be reduced. The Executive's salary, as
the same may be increased from time to time, is referred to in this Employment
Agreement as the Base Salary. Nothing in this Employment Agreement is intended
to govern or restrict the kind or amount of compensation the Executive may
receive in his capacity as a director of Citizens South.

        4.2 BENEFIT PLANS AND PERQUISITES. The Executive shall be entitled
throughout the term of this Employment Agreement to participate in any and all
officer or employee compensation, bonus, incentive, and benefit plans in effect
from time to time, including without limitation plans providing pension,
medical, dental, disability, and group life benefits, including Citizens South's
401(k) Plan, and to receive any and all other fringe benefits provided from time
to time, provided that the Executive satisfies the eligibility requirements for
any such plans or benefits. Without limiting the generality of the foregoing -

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        (a) Participation in Stock Plans. The Executive shall be eligible to
participate in Citizens South's stock option plans and other stock-based
compensation, incentive, bonus, or purchase plans existing on the date of this
Employment Agreement or adopted during the term of this Employment Agreement.

        (b) Club Dues. During the term of this Employment Agreement, Citizens
South shall pay or cause to be paid the Executive's membership assessments and
dues in civic clubs.

        (c) Reimbursement of Business Expenses. The Executive shall be entitled
to reimbursement of all reasonable business expenses incurred in performing his
obligations under this Employment Agreement, including but not limited to all
reasonable business travel and entertainment expenses incurred while acting at
the request of or in the service of Citizens South and reasonable expenses for
attendance at annual and other periodic meetings of trade associations.

        (d) Use of Automobile. The Executive shall have the use of an automobile
titled in Citizens South's name for use by the Executive in carrying out his
duties for Citizens South, the insurance and maintenance expenses of which shall
be paid by Citizens South. As additional compensation, the Executive may use
such automobile for personal purposes, provided that the Executive renders an
accounting of his business and personal use to Citizens South in accordance with
regulations under the Internal Revenue Code of 1986, as amended.

        4.3 VACATION. The Executive shall be entitled to paid annual vacation
and sick leave in accordance with the policies established from time to time by
Citizens South. The Executive shall not be entitled to any additional
compensation for failure to use allotted vacation or sick leave, nor shall the
Executive be entitled to accumulate unused sick leave from one year to the next
unless authorized by Citizens South's board of directors to do so. Vacation days
not used in a given year may not be carried over from one calendar year to the
next.

        4.4 INDEMNIFICATION AND INSURANCE. (a) Indemnification. Citizens South
Banking Corporation shall indemnify the Executive or cause the Executive to be
indemnified with respect to his activities as a director, officer, employee, or
agent of Citizens South Banking Corporation or Citizens South Bank or as a
person who is serving or has served at the request of Citizens South Banking
Corporation (a representative) as a director, officer, employee, agent, or
trustee of an affiliated corporation, joint venture trust or other enterprise,
domestic or foreign, in which Citizens South Banking Corporation has a direct or
indirect ownership interest against expenses (including without limitation
attorneys' fees, judgments, fines, and amounts paid in settlement) actually and
reasonably incurred by him (Expenses) in connection with any claim against the
Executive that is the subject of any threatened, pending, or completed action,
suit, or other type of proceeding, whether civil, criminal, administrative,
investigative, or otherwise and whether formal or informal (a Proceeding), to
which the Executive was, is, or is threatened to be made a party by reason of
the Executive being or having been such a director, officer, employee, agent, or
representative.

        The indemnification provided herein shall not be exclusive of any other
indemnification or right to which the Executive may be entitled and shall
continue after the Executive has ceased to occupy a position as an officer,
director, employee, agent or representative with respect to Proceedings relating
to or arising out of the Executive's acts or omissions during his service in
such position. The benefits provided to the Executive under this Employment
Agreement for the Executive's service as a representative shall be payable if
and only if and only to the extent that reimbursement to the Executive by the
affiliated entity with which the Executive has served as a representative,
whether pursuant to

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agreement, applicable law, articles of incorporation or association, by-laws or
regulations of the entity, or insurance maintained by such affiliated entity, is
insufficient to compensate the Executive for Expenses actually incurred and
otherwise payable by Citizens South under this Employment Agreement. Any
payments in fact made to or on behalf of the Executive directly or indirectly by
the affiliated entity with which the Executive served as a representative shall
reduce the obligation of Citizens South hereunder.

        (b) Exclusions. Anything herein to the contrary notwithstanding,
however, nothing in this section 4.4 requires indemnification, reimbursement, or
payment by Citizens South Banking Corporation or Citizens South Bank, and the
Executive shall not be entitled to demand indemnification, reimbursement or
payment hereunder

                (1) if and to the extent indemnification, reimbursement, or
        payment constitutes a prohibited indemnification payment within the
        meaning of Federal Deposit Insurance Corporation Rule 359.1(l)(1) [12
        CFR 359.1(l)(1)], or

                (2) for any claim or any part thereof as to which the Executive
        shall have been determined by a court of competent jurisdiction, from
        which no appeal is or can be taken, by clear and convincing evidence, to
        have acted with deliberate intent to cause injury to Citizens South
        Banking Corporation or Citizens South Bank or with reckless disregard
        for the best interests of Citizens South Banking Corporation, or

                (3) for any claim or any part thereof arising under Section
        16(b) of the Securities Exchange Act of 1934 as a result of which the
        Executive is required to pay any penalty, fine, settlement, or judgment,
        or

                (4) for any obligation of the Executive based upon or
        attributable to the Executive gaining in fact any personal gain, profit,
        or advantage to which he was not entitled, or

                (5) any proceeding initiated by the Executive without the
        consent or authorization of Citizens South Banking Corporation's board
        of directors, but this exclusion shall not apply with respect to any
        claims brought by the Executive (a) to enforce his rights under this
        Employment Agreement, or (b) in any Proceeding initiated by another
        person or entity whether or not such claims were brought by the
        Executive against a person or entity who was otherwise a party to such
        proceeding.

        (c) Insurance. Citizens South Banking Corporation shall maintain or
cause to be maintained liability insurance covering the Executive throughout the
term of this Employment Agreement.

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                                    ARTICLE 5
                            TERMINATION OF EMPLOYMENT

        5.1 TERMINATION BY THE EMPLOYER. (a) Death or Disability. The
Executive's employment shall terminate automatically on the date of the
Executive's death. If the Executive dies in active service to Citizens South,
his estate, legal representatives, or named beneficiaries (as directed by
Executive in writing) shall for one year after the date of the Executive's death
be paid the Base Salary at the rate in effect at the time Executive's death, and
Citizens South shall continue to provide medical, dental, family, and other
benefits normally provided for an executive's family for one year after the
Executive's death.

        By delivery of written notice 30 days in advance to the Executive,
Citizens South may terminate the Executive's employment if the Executive is
disabled. For purposes of this Employment Agreement, the Executive shall be
deemed to be disabled if an independent physician selected by Citizens South and
reasonably acceptable to the Executive or his legal representative determines
that, because of illness or accident, the Executive is unable to perform his
duties and will be unable to perform his duties for a period of 180 consecutive
days. The Executive shall not be deemed to be disabled, however, if he returns
to work on a full-time basis within 30 days after Citizens South gives him
notice of termination due to disability. If the Executive is terminated by
either of Citizens South Banking Corporation or Citizens South Bank because of
disability, his employment with the other shall also terminate at the same time.

        (b) Termination Without Cause. With written notice to the Executive 60
days in advance, Citizens South may terminate the Executive's employment without
Cause. If the Executive is terminated without Cause by either of Citizens South
Banking Corporation or Citizens South Bank, he shall be deemed also to have been
terminated without Cause by the other.

        (c) Termination with Cause. Effective on the date on which termination
notice is given to the Executive and without the requirement of advance notice
to the Executive, Citizens South may terminate the Executive's employment with
Cause. If the Executive is terminated for Cause by either of Citizens South
Banking Corporation or Citizens South Bank, he shall be deemed also to have been
terminated for Cause by the other. The Executive shall not be deemed to have
been terminated for Cause under this Employment Agreement unless and until there
is delivered to him a copy of a resolution duly adopted at a meeting of the
board of directors called and held for such purpose, which resolution shall (1)
contain findings that, in the good faith opinion of the board, the Executive has
committed an act constituting Cause, and (2) specify the particulars thereof.
The resolution shall be deemed to have been duly adopted if and only if it is
adopted by the affirmative vote of at least 75% of the directors of Citizens
South Banking Corporation then in office or 75% of the directors of Citizens
South Bank then in office, in either case excluding the Executive, at a meeting
duly called and held for that purpose. Notice of the meeting and the proposed
termination for Cause shall be given to the Executive a reasonable amount of
time before the board's meeting. The Executive and his counsel (if the Executive
chooses to have counsel present) shall have a reasonable opportunity to be heard
by the board at the meeting. Nothing in this Employment Agreement limits the
Executive's or his beneficiaries' right to contest the validity or propriety of
the board's determination of Cause.

        (d) Definition of Cause. For purposes of this Employment Agreement,
Cause means any of the following

        (1) an intentional act of fraud, embezzlement, or theft by the Executive
in the course of his employment with Citizens South Banking Corporation or
Citizens South Bank. For purposes of this Employment Agreement, no act or
failure to act on the part of the Executive shall be deemed to have been
intentional if it was due primarily to an error in judgment or negligence. An
act or failure to act on the Executive's part shall be considered intentional if
it is not in good faith and if it is without a reasonable belief that the action
or failure to act is in the best interests of Citizens South, or

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        (2) intentional violation of any law or significant policy of Citizens
South Banking Corporation or Citizens South Bank committed in connection with
the Executive's employment, which, in Citizens South Banking Corporation's or
Citizens South Bank's sole judgment, has an adverse effect on Citizens South
Banking Corporation or Citizens South Bank, or

        (3) the Executive's gross negligence or gross neglect of duties in the
performance of his duties as an officer of Citizens South Banking Corporation or
Citizens South Bank, or

        (4) intentional wrongful damage by the Executive to the business or
property of Citizens South Banking Corporation or Citizens South Bank, including
without limitation the reputation of Citizens South Banking Corporation or
Citizens South Bank, which in Citizens South's sole judgment causes material
harm to Citizens South Banking Corporation or Citizens South Bank, or

        (5) a breach by the Executive of his fiduciary duties to Citizens South
Banking Corporation and its stockholders or misconduct involving dishonesty, in
either case whether in his capacity as an officer or as a director of Citizens
South Banking Corporation or Citizens South Bank, or

        (6) a breach by the Executive of this Employment Agreement that, in the
sole judgment of Citizens South Banking Corporation or Citizens South Bank, is a
material breach of this Agreement, which breach is not corrected by the
Executive within 10 days after receiving written notice of the breach, or

        (7) conviction of the Executive for or plea of nolo contendere to a
felony or conviction of or plea of nolo contendere to a misdemeanor involving
moral turpitude, or the actual incarceration of the Executive for 45 consecutive
days or more.

        5.2 TERMINATION BY THE EXECUTIVE. The Executive may terminate his
employment with written notice to Citizens South Banking Corporation 60 days in
advance, whether with or without Good Reason. If the Executive terminates with
Good Reason, the termination will take effect at the conclusion of the 60-day
period unless the event or circumstance constituting Good Reason is cured by
Citizens South or unless the notice of termination for Good Reason is revoked by
the Executive within the 60-day period. For purposes of this Agreement, Good
Reason means any of the following events occur

        (a) Reduced Base Salary: involuntary reduction of the Executive's Base
Salary,

        (b) Participation in Benefit Plans Reduced or Terminated: involuntary
reduction of the Executive's bonus, incentive, and other compensation award
opportunities under Citizens South Banking Corporation's benefit plans and
Citizens South Bank's benefit plans, unless in the case of either company a
company-wide reduction of all officers' award opportunities occurs
simultaneously, or involuntary termination of the Executive's participation in
any officer or employee benefit plan maintained by Citizens South Banking
Corporation or by Citizens South Bank, unless the plan is terminated because of
changes in law or loss of tax deductibility to Citizens South with respect to
contributions to the plan, or unless the plan is terminated as a matter of
Citizens South Banking Corporation policy or Citizens South Bank policy applied
equally to all participants in the plan,

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        (c) Reduced Responsibilities or Status:

                (1) assignment to the Executive of duties that are materially
        inconsistent with the Executive's position as Citizens South Banking
        Corporation's principal executive officer or that represent a reduction
        of his authority,

                (2) failure to appoint or reappoint the Executive as President
        and Chief Executive Officer of Citizens South Banking Corporation,

                (3) failure to nominate the Executive as a director of Citizens
        South Banking Corporation, or

                (4) failure to elect or reelect the Executive or cause the
        Executive to be elected or reelected to the board of directors of
        Citizens South Bank in accordance with Section 1.2(b) of this Employment
        Agreement, without the Executive's written consent,

        (d) Failure to Obtain Assumption Agreement: failure to obtain an
assumption of Citizens South's obligations under this Employment Agreement by
any successor to Citizens South Banking Corporation, regardless of whether such
entity becomes a successor to Citizens South Banking Corporation as a result of
a merger, consolidation, sale of assets, or other form of reorganization,

        (e) Material Breach: a material breach of this Employment Agreement by
Citizens South that is not corrected within a reasonable time, or

        (f) Relocation of the Executive: relocation of Citizens South Banking
Corporation's principal executive offices, or requiring the Executive to change
his principal work location, to any location that is more than 15 miles from the
location of Citizens South Banking Corporation's principal executive offices on
the date of this Employment Agreement.

        5.3 NOTICE. Any purported termination by Citizens South or by the
Executive shall be communicated by written notice of termination to the other.
The notice must state the specific termination provision of this Employment
Agreement relied upon. The notice must also state the date on which termination
shall become effective, which shall be a date not earlier than the date of the
termination notice. If termination is for Cause or with Good Reason, the notice
must state in reasonable detail the facts and circumstances forming the basis
for termination of the Executive's employment.

                                    ARTICLE 6
                   COMPENSATION AND BENEFITS AFTER TERMINATION

        6.1 CAUSE. If the Executive's employment terminates for Cause, the
Executive shall receive the salary to which he was entitled through the date on
which termination became effective and any other benefits that may be available
to him under Citizens South's benefit plans and policies in effect on the date
of termination. All unvested stock options held by the Executive shall become
null and void effective immediately upon the Executive's receipt of notice of
termination for Cause.

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        6.2 TERMINATION BY THE EXECUTIVE OTHER THAN FOR GOOD REASON. If the
Executive terminates employment other than for Good Reason, the Executive shall
receive the salary to which he is entitled through the date on which his
termination becomes effective and any other benefits that may be available to
him under Citizens South's benefit plans and policies.

        6.3 CONTINUED BASE SALARY IN THE CASE OF TERMINATION BECAUSE OF
DISABILITY. If the Executive's employment terminates because of disability, the
Executive shall continue to receive his Base Salary for the remaining term of
this Employment Agreement or for one year, whichever is longer. Amounts actually
paid to the Executive under any disability insurance or other similar such
program that Citizens South provides on behalf of employees or under any
workman's or social security disability program shall reduce by a like amount
the compensation to be paid to the Executive under this Section 6.3.

        6.4 TERMINATION WITHOUT CAUSE AND TERMINATION FOR GOOD REASON. (a)
Continued Salary. If Citizens South terminates the Executive's employment
without Cause or if the Executive terminates employment for Good Reason, the
Executive shall continue to receive the Base Salary for the unexpired term of
this Employment Agreement, but he shall not be entitled to continued
participation in Citizens South's or a subsidiary's 401(k) retirement plan or
any stock-based plans. Payments of Base Salary under this Section 6.4(a) shall
not be reduced or offset by any other compensation the Executive receives
through other employment after termination of his employment with Citizens
South. If Citizens South Bank is not in compliance with its minimum capital
requirements or if payments under this Section 6.4(a) would cause Citizens South
Bank's capital to be reduced below minimum capital requirements, payments under
this Section 6.4(a) shall be deferred until such time as Citizens South Bank is
in capital compliance. The provisions of this Section 6.4 are subject to Article
9 of this Employment Agreement.

        Citizens South and the Executive acknowledge and agree that the
compensation and benefits under this Section 6.4 shall not be payable if
compensation and benefits are payable or shall have been previously paid to the
Executive under Article 7 of this Agreement. That is, the parties acknowledge
and agree that the Executive shall not be entitled to duplicative compensation
and benefit payments under this Section 6.4 and under Article 7 if the
Executive's employment is terminated without Cause or if the Executive
terminates employment with Good Reason.

        (b) Cash-out of Value of Unvested Stock Options. If Citizens South
terminates the Executive's employment without Cause or if the Executive
terminates employment with Good Reason before full vesting of stock options then
held by him, the Executive shall be entitled to receive from Citizens South an
amount in cash equal to the value of the unvested stock options as of the
effective date of termination. Amounts payable under this paragraph (b) shall be
paid in a single lump sum within 90 days after termination of the Executive's
employment.

        (c) Cash-out of the Executive's 401(k) Retirement Plan Account. If
Citizens South terminates the Executive's employment without Cause or if the
Executive terminates employment with Good Reason before full vesting of the
amounts credited to his account as a result of matching or discretionary
contributions by Citizens South under Citizens South's 401(k) Plan, the
Executive shall be entitled to receive from Citizens South an amount in cash
equal to the value of any unvested contributions as of the effective date of
termination.

        6.5 POST-TERMINATION LIFE AND MEDICAL COVERAGE. If the Executive's
employment terminates involuntarily but without Cause, or voluntarily but with
Good Reason, or because of disability, until expiration of the remaining term of
this Employment Agreement Citizens South shall continue or cause to be continued
at Citizens South's expense life, medical, dental, and disability coverage
substantially identical to the coverage maintained by the Bank for Executive
prior to his termination; provided, however, that such benefits shall not be
provided if they would constitute an unsafe or unsound banking practice relating
to executive compensation and employment contracts according to 12 CFR 563.39
and 12 CFR 563.161, as in effect currently or as in effect hereafter.

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        6.6 SUPPLEMENTAL RETIREMENT PLAN. Citizens South and the Executive have
entered into a Salary Continuation Agreement dated as of January 1, 2004. Unless
the Salary Continuation Agreement explicitly provides otherwise, whether
benefits are properly payable to the Executive under the Salary Continuation
Agreement shall be determined solely by reference to that agreement.

                                    ARTICLE 7
                           CHANGE IN CONTROL BENEFITS

        7.1 CHANGE IN CONTROL TERMINATION BENEFITS. (a) Termination of Executive
Within One Year After a Change in Control. If a Change in Control occurs during
the term of this Employment Agreement, the Executive shall be entitled to the
lump sum payment specified in paragraph (b) below if the Executive's employment
is involuntarily terminated without Cause within 12 months after the Change in
Control or if the Executive terminates his employment with Good Reason within 12
months after the Change in Control. If the Executive is removed from office or
if his employment terminates before a Change in Control occurs but after
discussions with a third party regarding a Change in Control commence, and if
those discussions ultimately conclude with a Change in Control, then for
purposes of this Employment Agreement the removal of the Executive or
termination of his employment shall be deemed to have occurred after the Change
in Control. The Executive's rights under this Section 7.1 and under Section 7.4
are subject to Article 9 of this Employment Agreement.

        (b) Lump Sum Payment: Citizens South shall make or cause to be made a
lump-sum payment to the Executive in an amount in cash equal to three times the
Executive's annual compensation. For this purpose, annual compensation means (1)
the Executive's Base Salary at the time of the Change in Control or at the time
Executive's employment terminates, whichever is greater, plus (2) the average of
the cash bonuses and cash incentive compensation earned for the three calendar
years immediately preceding the year in which the Change in Control occurs,
regardless of when the bonus or incentive compensation is paid and regardless of
whether all or part of the bonus or incentive compensation is subject to
elective deferral. For this purpose bonus and incentive compensation includes
cash bonus and cash incentive compensation only and specifically excludes the
value of stock-based compensation, including stock options and restricted stock.
The amount payable to the Executive hereunder shall not be reduced to account
for the time value of money or discounted to present value. The payment required
under this paragraph (b) is payable no later than five business days after the
Executive's employment terminates.

        (c) Benefit Plans: In addition to life, medical, dental, and disability
coverage under Section 6.5 of this Employment Agreement and any benefits to
which the Executive may be entitled under the Salary Continuation Agreement
referred to in Section 6.6 of this Employment Agreement, if the Executive's
employment is terminated by Citizens South without Cause within 12 months after
a Change in Control or if the Executive terminates his employment with Good
Reason within 12 months after a Change in Control, Citizens South shall (1)
cause the Executive to become fully vested in any qualified and non-qualified
plans, programs, or arrangements in which the Executive participated if the
plan, program, or arrangement does not address the effect of a change in
control, and (2) contribute or cause to be contributed to the Executive's 401(k)
plan account the matching and profit-sharing contributions, if any, that would
have been made had the Executive's employment not terminated before the end of
the plan year.

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        7.2 DEFINITION OF CHANGE IN CONTROL. For purposes of this Employment
Agreement, Change in Control means any one of the following events occurs

        (a) Merger. Citizens South Banking Corporation merges into or
consolidates with another corporation, or merges another corporation into
Citizens South Banking Corporation, and as a result less than a majority of the
combined voting power of the resulting corporation immediately after the merger
or consolidation is held by persons who were holders of Citizens South Banking
Corporation's voting securities immediately before the merger or consolidation.
For purposes of this Employment Agreement, the term person means an individual,
corporation, partnership, trust, association, joint venture, pool, syndicate,
sole proprietorship, unincorporated organization, or other entity,

        (b) Acquisition of Significant Share Ownership: after the date of this
Employment Agreement a report on Schedule 13D, Schedule TO, or another form or
schedule (other than Schedule 13G) is filed or is required to be filed under
Sections 13(d) or 14(d) of the Securities Exchange Act of 1934, if the schedule
discloses that the filing person or persons acting in concert has or have become
the beneficial owner of 25% or more of the combined voting power of Citizens
South Banking Corporation's voting securities outstanding (but this paragraph
(b) shall not apply to beneficial ownership of voting shares held by Citizens
South Bank in a fiduciary capacity or beneficial ownership of voting shares held
by an employee benefit plan of Citizens South Bank),

        (c) Change in Board Composition. during any period of two consecutive
years, individuals who constitute Citizens South Banking Corporation's board of
directors at the beginning of the two-year period cease for any reason to
constitute at least a majority thereof; provided, however, that - for purposes
of this paragraph (c) - each director who is first elected by the board (or
first nominated by the board for election by stockholders) by a vote of at least
two-thirds (2/3) of the directors who were directors at the beginning of the
period shall be deemed to have been a director at the beginning of the two-year
period, or

        (d) Sale of Assets. Citizens South Banking Corporation sells to a third
party all or substantially all of Citizens South Banking Corporation's assets.
For this purpose, sale of all or substantially all of Citizens South Banking
Corporation's assets includes sale of Citizens South Bank alone.

        7.3 NO MULTIPLE SEVERANCE PAYMENTS. If the Executive receives payment
under Section 7.1 he shall not be entitled to any additional severance benefits
under Section 6.4 of this Employment Agreement.

        7.4 GROSS-UP FOR TAXES. (a) Additional Payment to Account for Excise
Taxes. If the Executive receives the lump sum payment under Section 7.1 of this
Employment Agreement and acceleration of benefits under any other benefit,
compensation, or incentive plan or arrangement with Citizens South
(collectively, the Total Benefits), and if any part of the Total Benefits is
subject to the Excise Tax under section 280G and section 4999 of the Internal
Revenue Code (the Excise Tax), Citizens South shall pay to the Executive the
following additional amounts, consisting of (1) a payment equal to the Excise
Tax payable by the Executive under section 4999 on the Total Benefits (the
Excise Tax Payment) and (2) a payment equal to the amount necessary to provide
the Excise Tax Payment net of all income, payroll, and excise taxes. Together,
the additional amounts described in clauses (1) and (2) are referred to in this
Employment Agreement as the Gross-Up Payment Amount. Payment of the Gross-Up
Payment Amount shall be made in addition to the amount set forth in Section 7.1.

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        Calculating the Excise Tax. For purposes of determining whether any of
the Total Benefits will be subject to the Excise Tax and for purposes of
determining the amount of the Excise Tax,

        (1)     Determination of Parachute Payments Subject to the Excise Tax:
                any other payments or benefits received or to be received by the
                Executive in connection with a Change in Control or the
                Executive's termination of employment (whether under the terms
                of this Employment Agreement or any other agreement or any other
                benefit plan or arrangement with Citizens South, any person
                whose actions result in a Change in Control, or any person
                affiliated with Citizens South or such person) shall be treated
                as parachute payments within the meaning of section 280G(b)(2)
                of the Internal Revenue Code, and all excess parachute payments
                within the meaning of section 280G(b)(1) shall be treated as
                subject to the Excise Tax, unless in the opinion of the
                certified public accounting firm that is retained by Citizens
                South as of the date immediately before the Change in Control
                (the Accounting Firm) such other payments or benefits do not
                constitute (in whole or in part) parachute payments, or such
                excess parachute payments represent (in whole or in part)
                reasonable compensation for services actually rendered within
                the meaning of section 280G(b)(4) of the Internal Revenue Code
                in excess (as defined in section 280G(b)(3) of the Internal
                Revenue Code), or are otherwise not subject to the Excise Tax,

        (2)     Calculation of Benefits Subject to Excise Tax: the amount of the
                Total Benefits that shall be treated as subject to the Excise
                Tax shall be equal to the lesser of (a) the total amount of the
                Total Benefits reduced by the amount of such Total Benefits that
                in the opinion of the Accounting Firm are not parachute
                payments, or (b) the amount of excess parachute payments within
                the meaning of section 280G(b)(1) (after applying clause (1),
                above), and

        (3)     Value of Noncash Benefits and Deferred Payments: the value of
                any noncash benefits or any deferred payment or benefit shall be
                determined by the Accounting Firm in accordance with the
                principles of sections 280G(d)(3) and (4) of the Internal
                Revenue Code.

        Assumed Marginal Income Tax Rate. For purposes of determining the
Gross-Up Payment Amount, the Executive shall be deemed to pay federal income
taxes at the highest marginal rate of federal income taxation in the calendar
years in which the Gross-Up Payment Amount is to be made and state and local
income taxes at the highest marginal rate of taxation in the state and locality
of the Executive's residence on the date of termination of employment, net of
the reduction in federal income taxes that can be obtained from deduction of
such state and local taxes (calculated by assuming that any reduction under
section 68 of the Internal Revenue Code in the amount of itemized deductions
allowable to the Executive applies first to reduce the amount of such state and
local income taxes that would otherwise be deductible by the Executive, and
applicable federal FICA and Medicare withholding taxes).

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        Return of Reduced Excise Tax Payment or Payment of Additional Excise
Tax. If the Excise Tax is later determined to be less than the amount taken into
account hereunder when the Executive's employment terminated, the Executive
shall repay to Citizens South - when the amount of the reduction in Excise Tax
is finally determined - the portion of the Gross-Up Payment Amount attributable
to the reduction (plus that portion of the Gross-Up Payment Amount attributable
to the Excise Tax, federal, state and local income taxes and FICA and Medicare
withholding taxes imposed on the Gross-Up Payment Amount being repaid by the
Executive to the extent that the repayment results in a reduction in Excise Tax,
FICA and Medicare withholding taxes and/or a federal, state or local income tax
deduction).

        If the Excise Tax is later determined to be more than the amount taken
into account hereunder when the Executive's employment terminated (due, for
example, to a payment whose existence or amount cannot be determined at the time
of the Gross-Up Payment Amount), Citizens South shall make an additional payment
to the Executive for that excess (plus any interest, penalties or additions
payable by the Executive for the excess) when the amount of the excess is
finally determined.

        (b) Responsibilities of the Accounting Firm and Citizens South.
Determinations Shall Be Made by the Accounting Firm. Subject to the provisions
of Section 7.4(a), all determinations required to be made under this Section
7.4(b) - including whether and when a Gross-Up Payment Amount is required, the
amount of the Gross-Up Payment Amount and the assumptions to be used to arrive
at the determination (collectively, the Determination) shall be made by the
Accounting Firm, which shall provide detailed supporting calculations both to
Citizens South and the Executive within 15 business days after receipt of notice
from Citizens South or the Executive that there has been a Gross-Up Payment
Amount, or such earlier time as is requested by Citizens South.

        Fees and Expenses of the Accounting Firm and Agreement with the
Accounting Firm. All fees and expenses of the Accounting Firm shall be borne
solely by Citizens South. Citizens South shall enter into any agreement
requested by the Accounting Firm in connection with the performance of its
services hereunder.

        Accounting Firm's Opinion. If the Accounting Firm determines that no
Excise Tax is payable by the Executive, the Accounting Firm shall furnish the
Executive with a written opinion to that effect, and to the effect that failure
to report Excise Tax, if any, on the Executive's applicable federal income tax
return will not result in the imposition of a negligence or similar penalty.

        Accounting Firm's Determination Is Binding; Underpayment and
Overpayment. The Determination by the Accounting Firm shall be binding on
Citizens South and the Executive. Because of the uncertainty in determining
whether any of the Total Benefits will be subject to the Excise Tax at the time
of the Determination, it is possible that a Gross-Up Payment Amount that should
have been made will not have been made by Citizens South (Underpayment), or that
a Gross-Up Payment Amount will be made that should not have been made by
Citizens South (Overpayment). If, after a Determination by the Accounting Firm,
the Executive is required to make a payment of additional Excise Tax, the
Accounting Firm shall determine the amount of the Underpayment that has
occurred. The Underpayment (together with interest at the rate provided in
section 1274(d)(2)(B) of the Internal Revenue Code) shall be paid promptly by
Citizens South to or for the benefit of the Executive. If the Gross-Up Payment
Amount exceeds the amount necessary to reimburse the Executive for his Excise
Tax according to Section 7.4(a), the Accounting Firm shall determine the amount
of the Overpayment that has been made. The Overpayment (together with interest
at the rate provided in section 1274(d)(2)(B) of the Internal Revenue Code)
shall be paid promptly by the Executive to or for the benefit of Citizens South.
Provided that his expenses are reimbursed by Citizens South, the Executive shall
cooperate with any reasonable requests by Citizens South in any contests or
disputes with the Internal Revenue Service relating to the Excise Tax.

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        Accounting Firm Conflict of Interest. If the Accounting Firm is serving
as accountant or auditor for the individual, entity, or group effecting the
Change in Control, the Executive may appoint another nationally recognized
public accounting firm to make the Determinations required hereunder (in which
case the term Accounting Firm as used in this Employment Agreement shall be
deemed to refer to the accounting firm appointed by the Executive under this
paragraph).

                                    ARTICLE 8
                                  MISCELLANEOUS

        8.1 SUCCESSORS AND ASSIGNS. (a) This Employment Agreement Is Binding on
Citizens South's Successors. This Employment Agreement shall be binding upon
Citizens South Banking Corporation and any successor to Citizens South Banking
Corporation, including any persons acquiring directly or indirectly all or
substantially all of the business or assets of Citizens South Banking
Corporation by purchase, merger, consolidation, reorganization, or otherwise.
Any such successor shall thereafter be deemed to be "Citizens South Banking
Corporation for purposes of this Employment Agreement. But this Employment
Agreement and Citizens South's obligations under this Employment Agreement are
not otherwise assignable, transferable, or delegable by Citizens South. By
agreement in form and substance satisfactory to the Executive, Citizens South
Banking Corporation shall require any successor to all or substantially all of
the business or assets of Citizens South Banking Corporation expressly to assume
and agree to perform this Employment Agreement in the same manner and to the
same extent Citizens South would be required to perform if no such succession
had occurred.

        (b) This Employment Agreement Is Enforceable by the Executive and His
Heirs. This Employment Agreement will enure to the benefit of and be enforceable
by the Executive's personal or legal representatives, executors, administrators,
successors, heirs, distributees, and legatees.

        (c) This Employment Agreement Is Personal in Nature and Is Not
Assignable. This Employment Agreement is personal in nature. Without written
consent of the other parties, no party shall assign, transfer, or delegate this
Employment Agreement or any rights or obligations under this Employment
Agreement, except as expressly provided herein. Without limiting the generality
or effect of the foregoing, the Executive's right to receive payments hereunder
is not assignable or transferable, whether by pledge, creation of a security
interest, or otherwise, except for a transfer by the Executive's will or by the
laws of descent and distribution. If the Executive attempts an assignment or
transfer that is contrary to this Section 9.1, Citizens South shall have no
liability to pay any amount to the assignee or transferee.

        8.2 GOVERNING LAW, JURISDICTION AND FORUM. This Employment Agreement
shall be construed under and governed by the internal laws of the State of North
Carolina, without giving effect to any conflict of laws provision or rule
(whether of the State of North Carolina or any other jurisdiction) that would
cause the application of the laws of any jurisdiction other than the State of
North Carolina. By entering into this Employment Agreement, the Executive
acknowledges that he is subject to the jurisdiction of both the federal and
state courts in the State of North Carolina. Any actions or proceedings
instituted under this Employment Agreement shall be brought and tried solely in
courts located in Gaston County, North Carolina or in the federal court having
jurisdiction in Gastonia, North Carolina. The Executive expressly waives his
rights to have any such actions or proceedings brought or tried elsewhere.

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        8.3 ENTIRE AGREEMENT. This Employment Agreement sets forth the entire
agreement of the parties concerning the employment of the Executive by Citizens
South, and any oral or written statements, representations, agreements, or
understandings made or entered into prior to or contemporaneously with the
execution of this Employment Agreement, are hereby rescinded, revoked, and
rendered null and void by the parties. The Salary Continuation Agreement and the
Split Dollar Agreement and Endorsement and the parties' rights and obligations
thereunder shall remain in full force and effect according to the terms thereof,
as the same may be amended and restated after the date of this Employment
Agreement. Benefits payable under this Employment Agreement shall not be reduced
by any benefits payable under the Salary Continuation Agreement, and benefits
payable under the Salary Continuation Agreement shall not be reduced by any
benefits payable under this Employment Agreement.

        Without limiting the generality of the foregoing, the parties hereto
acknowledge and agree that this Employment Agreement supersedes in its entirety
the 1998 employment agreement entered into by the Executive and Citizens South,
as amended or supplemented. The 1998 employment agreement shall hereafter be
void and of no force or effect.

        8.4 NOTICES. Any notice under this Employment Agreement shall be deemed
to have been effectively made or given if in writing and personally delivered,
delivered by mail properly addressed in a sealed envelope, postage prepaid by
certified or registered mail, delivered by a reputable overnight delivery
service, or sent by facsimile. Unless otherwise changed by notice, notice shall
be properly addressed to the Executive if addressed to the address of the
Executive on the books and records of Citizens South Banking Corporation at the
time of the delivery of such notice, and properly addressed to Citizens South
Banking Corporation if addressed to Citizens South Banking Corporation at 519
South New Hope Road, Gastonia, North Carolina 28054-4040, Attention: Corporate
Secretary.

        8.5 SEVERABILITY. In the case of conflict between any provision of this
Employment Agreement and any statute, regulation, or judicial precedent, the
latter shall prevail, but the affected provisions of this Employment Agreement
shall be curtailed and limited solely to the extent necessary to bring them
within the requirements of law. If any provision of this Employment Agreement is
held by a court of competent jurisdiction to be indefinite, invalid, void or
voidable, or otherwise unenforceable, the balance of this Employment Agreement
shall continue in full force and effect unless such construction would clearly
be contrary to the intentions of the parties or would result in an injustice.

        8.6 CAPTIONS AND COUNTERPARTS. The captions in this Employment Agreement
are solely for convenience. The captions in no way define, limit, or describe
the scope or intent of this Employment Agreement. This Employment Agreement may
be executed in several counterparts, each of which shall be deemed to be an
original but all of which together shall constitute one and the same instrument.

        8.7 NO DUTY TO MITIGATE. Citizens South hereby acknowledges that it will
be difficult and could be impossible (a) for the Executive to find reasonably
comparable employment after his employment terminates, and (b) to measure the
amount of damages the Executive may suffer as a result of termination.
Additionally, Citizens South acknowledges that its general severance pay plans
do not provide for mitigation, offset, or reduction of any severance payment
received thereunder. Accordingly, Citizens South further acknowledges that the
payment of severance and termination benefits under this Employment Agreement is
reasonable and shall be liquidated damages. The Executive shall not be required
to mitigate the amount of any payment provided for in this Employment Agreement
by seeking other employment. Moreover, the amount of any payment provided for in
this Employment Agreement shall not be reduced by any compensation earned or
benefits provided as the result of employment of the Executive or as a result of
the Executive being self-employed after termination of his employment.

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        8.8 AMENDMENT AND WAIVER. This Employment Agreement may not be amended,
released, discharged, abandoned, changed, or modified in any manner, except by
an instrument in writing signed by each of the parties hereto. The failure of
any party hereto to enforce at any time any of the provisions of this Employment
Agreement shall in no way be construed to be a waiver of any such provision, nor
in any way to affect the validity of this Employment Agreement or any part
thereof or the right of any party thereafter to enforce each and every such
provision. No waiver or any breach of this Employment Agreement shall be held to
be a waiver of any other or subsequent breach.

        8.9 PAYMENT OF LEGAL FEES. Citizens South is aware that after a Change
in Control management could cause or attempt to cause Citizens South to refuse
to comply with its obligations under this Employment Agreement, or could
institute or cause or attempt to cause Citizens South to institute litigation
seeking to have this Employment Agreement declared unenforceable, or could take
or attempt to take other action to deny Executive the benefits intended under
this Employment Agreement. In these circumstances, the purpose of this
Employment Agreement would be frustrated. It is Citizens South's intention that
the Executive not be required to incur the expenses associated with the
enforcement of his rights under this Employment Agreement, whether by litigation
or other legal action, because the cost and expense thereof would substantially
detract from the benefits intended to be granted to the Executive hereunder. It
is Citizens South's intention that the Executive not be forced to negotiate
settlement of his rights under this Employment Agreement under threat of
incurring expenses. Accordingly, if after a Change in Control occurs it appears
to the Executive that (a) Citizens South has failed to comply with any of its
obligations under this Employment Agreement, or (b) Citizens South or any other
person has taken any action to declare this Employment Agreement void or
unenforceable, or instituted any litigation or other legal action designed to
deny, diminish, or to recover from the Executive the benefits intended to be
provided to the Executive hereunder, Citizens South irrevocably authorizes the
Executive from time to time to retain counsel of his choice, at Citizens South's
expense as provided in this Section 8.9, to represent the Executive in
connection with the initiation or defense of any litigation or other legal
action, whether by or against Citizens South or any director, officer,
stockholder, or other person affiliated with Citizens South, in any
jurisdiction. Notwithstanding any existing or previous attorney-client
relationship between Citizens South and any counsel chosen by the Executive
under this Section 8.9, Citizens South irrevocably consents to the Executive
entering into an attorney-client relationship with that counsel, and Citizens
South and the Executive agree that a confidential relationship shall exist
between the Executive and that counsel. The fees and expenses of counsel
selected from time to time by the Executive as provided in this section shall be
paid or reimbursed to the Executive by Citizens South on a regular, periodic
basis upon presentation by the Executive of a statement or statements prepared
by such counsel in accordance with such counsel's customary practices, up to a
maximum aggregate amount of $500,000. Citizens South's obligation to pay the
Executive's legal fees provided by this Section 8.9 operates separately from and
in addition to any legal fee reimbursement obligation Citizens South Banking
Corporation or Citizens South Bank may have with the Executive under any
separate severance or other agreement.

                                    ARTICLE 9
                               REQUIRED PROVISIONS

        9.1 CITIZENS SOUTH'S RIGHT TO TERMINATE THE EXECUTIVE'S EMPLOYMENT.
Citizens South's board of directors may terminate the Executive's employment at
any time, but any termination by the board of directors, other than termination
for Cause, shall not prejudice the Executive's right to compensation or other
benefits under this Employment Agreement. The Executive shall not have the right
to receive compensation or other benefits for any period after termination for
Cause.

        9.2 SUSPENSION OF CITIZENS'S SOUTH OBLIGATIONS IF THE EXECUTIVE IS
SUSPENDED. If the Executive is suspended from office or temporarily prohibited
from participating in Citizens South Bank's affairs by a notice served under
section 8(e)(3) (12 U.S.C. 1818(e)(3)) or 8(g) (12 U.S.C. 1818(g)) of the
Federal Deposit Insurance Act, Citizens South's obligations under this
Employment Agreement shall be suspended as of the date of service, unless stayed
by appropriate proceedings. If the charges in the notice are dismissed, Citizens
South may in its discretion (1) pay the Executive all or part of the
compensation withheld while Citizens South's obligations were suspended and (2)
reinstate in whole or in part any of the obligations that were suspended.

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        9.3 TERMINATION OF CITIZENS SOUTH'S OBLIGATIONS IF THE EXECUTIVE IS
REMOVED. If the Executive is removed or permanently prohibited from
participating in Citizens South Bank's affairs by an order issued under section
8(e) (12 U.S.C. 1818(e)) or 8(g) (12 U.S.C. 1818(g)) of the Federal Deposit
Insurance Act, all obligations of Citizens South under this Employment Agreement
shall terminate as of the effective date of the order, but vested rights of the
parties shall not be affected.

        9.4 TERMINATION IF CITIZENS SOUTH BANK IS IN DEFAULT. If Citizens South
Bank is in default as defined in section 3(x) (12 U.S.C. 1813(x)(1)) of the
Federal Deposit Insurance Act, all obligations of Citizens South under this
Employment Agreement shall terminate as of the date of default, but this
paragraph (d) shall not affect any vested rights of the parties.

        9.5 TERMINATION ASSOCIATED WITH REGULATORY ACTION. All obligations of
Citizens South under this Employment Agreement shall terminate, except to the
extent determined that continuation of the contract is necessary for the
continued operation of the institution, (1) by the Director of the Office of
Thrift Supervision or the Director's designee, when the Federal Deposit
Insurance Corporation enters into an agreement to provide assistance to or on
behalf of Citizens South Bank under the authority contained in section 13(c) of
the Federal Deposit Insurance Act (12 USC 1823(c)), or (2) by the Director or
the Director's designee when the OTS approves a supervisory merger to resolve
problems related to the operations of Citizens South Bank or when Citizens South
Bank is determined by the OTS or by the FDIC to be in an unsafe or unsound
condition. Vested rights of the parties shall not be affected, however.

         9.6 PAYMENTS ARE SUBJECT TO COMPLIANCE WITH 12 USC 1828(k). Any
payments made to the Executive under this Employment Agreement or otherwise are
subject to and conditioned upon their compliance with section 18(k) of the
Federal Deposit Insurance Act (12 USC 1828(k)) and any regulations promulgated
thereunder.

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

WITNESSES                                CITIZENS SOUTH BANKING CORPORATION

/s/ Paul L. Teem, Jr.                    By:  /s/ Senator David W. Hoyle, Sr.
/s/ Gary F. Hoskins                      ---------------------------------------
                                         Its: Chairman of the Board of Directors

WITNESSES                                CITIZENS SOUTH BANK

/s/ Paul L. Teem, Jr.                    By:  /s/ Senator David W. Hoyle, Sr.
/s/ Gary F. Hoskins                      ---------------------------------------
                                         Its: Chairman of the Board of Directors

WITNESSES                                EXECUTIVE

/s/ Paul L. Teem, Jr.                    /s/ Kim S. Price
/s/ Gary F. Hoskins

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