Exhibit 10.4

            NOTICE: THIS AGREEMENT IS SUBJECT TO ARBITRATION PURSUANT
                  TO THE SOUTH CAROLINA UNIFORM ARBITRATION ACT

           AMENDED NONCOMPETITION, SEVERANCE AND EMPLOYMENT AGREEMENT

         THIS AMENDED  NONCOMPETITION,  SEVERANCE AND EMPLOYMENT  AGREEMENT (the
"Agreement")  is made and entered into as of this 17th day of October,  2007, by
and  among  Ronald K.  Earnest,  an  individual  (the  "Executive"),  GrandSouth
Bancorporation,  a South Carolina corporation (the "Company"), and the Company's
wholly-owned  subsidiary,  GrandSouth  Bank, a South Carolina  corporation  (the
"Bank").

         WHEREAS,  the  Company,  the  Bank  and the  Executive  entered  into a
Noncompetition,  Severance and Employment Agreement dated as of January 18, 2006
(the "Original Agreement"); and

         WHEREAS,  the Company,  the Bank and the Executive  desire to amend the
Original Agreement in compliance with the recently enacted Internal Revenue Code
Section 409A and associated federal regulations; and

         WHEREAS,  the Boards of Directors of the Company and the Bank  continue
to  believe  that the  Executive  has been  instrumental  in the  success of the
Company and the Bank since his employment in 1998; and

         WHEREAS,  the Company  desires to continue to employ the  Executive  as
President and Chief  Operating  Officer of the Company,  and the Bank desires to
continue to employ the Executive as President and Chief Executive Officer of the
Bank; and

         WHEREAS,  the Executive is willing to continue to accept the employment
contemplated herein under the terms and conditions set forth herein.

         NOW,  THEREFORE,  in  consideration  of the  premises  and  the  mutual
covenants  and  agreements   contained   herein  and  other  good  and  valuable
consideration,  the receipt of which is hereby acknowledged,  the parties hereto
agree to amend and restate the Original Agreement as follows:

         1. Employment.  Subject to the terms and conditions hereof, the Company
hereby employs the Executive and the Executive hereby accepts such employment as
the President and Chief  Operating  Officer of the Company,  and the Bank hereby
employs the Executive and the Executive  hereby  accepts such  employment as the
President  and Chief  Executive  Officer  of the Bank,  having  such  duties and
responsibilities as are set forth in Section 3 below.

         2.  Definitions.  For purposes of this  Agreement,  the following terms
shall have the meanings specified below.

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                  2.1 "Change of Control" shall mean the  occurrence  during the
Term of any of the following events:

                  (a) An  acquisition  (other than directly from the Company) of
         any voting  securities of the Company (the "Voting  Securities") by any
         one  Person,  or more than one  Person  acting as a group,  immediately
         after which such Person or group has  ownership of more than 50% of the
         combined  voting  power  of  the  Company's  then  outstanding   Voting
         Securities;  provided, however, that in determining whether a Change of
         Control  has  occurred,  Voting  Securities  which  are  acquired  in a
         "Non-Control Acquisition" (as hereinafter defined) shall not constitute
         an  acquisition  which would cause a Change of Control.  A "Non-Control
         Acquisition"  shall mean an acquisition by (i) an employee benefit plan
         (or a trust  forming a part  thereof)  maintained by (x) the Company or
         (y) any corporation or other Person or group of which a majority of its
         voting  power or its  equity  securities  or equity  interest  is owned
         directly  or  indirectly  by the  Company  (a  "Subsidiary"),  (ii) the
         Company or any  Subsidiary,  or (iii) any Person or group in connection
         with a "Non-Control Transaction" (as hereinafter defined); or

                  (b) The date a majority of the individuals who, as of the date
         of this Agreement, are members of the Board of Directors of the Company
         (the  "Incumbent  Board") are replaced for any reason during any twelve
         month period;  provided,  however,  that if the election, or nomination
         for  election by the  Company's  stockholders,  of any new director was
         approved by a vote of at least a majority of the Incumbent Board,  such
         new director shall, for purposes of this Agreement,  be considered as a
         member of the Incumbent Board; or

                  (c) A merger,  consolidation or  reorganization  involving the
         Company, unless

                  (i) the stockholders of the Company,  immediately  before such
                  merger,  consolidation  or  reorganization,  own,  directly or
                  indirectly,  immediately following such merger,  consolidation
                  or reorganization,  at least a majority of the combined voting
                  power of the outstanding  voting securities of the corporation
                  resulting from such merger or consolidation or  reorganization
                  (the "Surviving Corporation"), and

                  (ii) the  individuals  who were members of the Incumbent Board
                  immediately prior to the execution of the agreement  providing
                  for such merger, consolidation or reorganization constitute at
                  least a majority of the members of the board of  directors  of
                  the Surviving Corporation.

                  (A  transaction  described  in  clauses  (c)(i) and (ii) shall
                  herein be referred to as a "Non-Control Transaction"); or

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                  (d) The sale or other  disposition of all or substantially all
         of the assets of the Company to any Person  (other than a transfer to a
         related person as set forth in 26 C.F.R. 1.409A-3(i)(5)(vii)(B)) over a
         consecutive 12-month period.

                  2.2      "Cause" shall mean:

                  (a)  any  act  that  (i)  constitutes,  on  the  part  of  the
         Executive, fraud, dishonesty,  willful failure to follow the directives
         or  implement  the policies of the Board of Directors of the Company or
         the Bank,  willful  violation of any state or federal law or regulation
         applicable  to the  Company  or the Bank,  gross  malfeasance  of duty,
         conduct grossly  inappropriate to the Executive's office, or a material
         willful violation of this Agreement, and (ii) is demonstrably likely to
         lead to  material  injury to the Company or the Bank or resulted or was
         intended to result in direct or indirect gain to or personal enrichment
         of the Executive at the expense,  direct or indirect, of the Company or
         the Bank; or

                  (b) the  conviction  (from which no appeal may be or is timely
         taken) of the Executive of a felony; or

                  (c) the  suspension  or removal of the Executive by federal or
         state  banking  regulatory  authorities  acting under lawful  authority
         pursuant to provisions of federal or state law or regulation  which may
         be in effect from time to time;

         provided,  however,  that in the case of clause (a) above, such conduct
         shall not constitute Cause:

                  (i)  unless  (x)  there  shall  have  been  delivered  to  the
                  Executive a written notice setting forth with  specificity the
                  reasons that the Board of the Company or the Bank believes the
                  Executive's  conduct  meets the  criteria  set forth in clause
                  (a);  (y)  the   Executive   shall  have  been   provided  the
                  opportunity  to be heard in person by the Board of the Company
                  or the Bank, as applicable (with assistance of the Executive's
                  counsel  if the  Executive  so  desires);  and (z) after  such
                  opportunity  to be heard,  the  termination  is evidenced by a
                  resolution  adopted in good faith by two-thirds of the members
                  of the Board of the Company or the Bank, as applicable  (other
                  than the Executive); or

                  (ii) if such conduct (x) was believed by the Executive in good
                  faith to have been in, or not opposed to, the interests of the
                  Company  and the Bank,  and (y) was not  intended  to, and did
                  not,  result in the  direct or  indirect  gain to or  personal
                  enrichment of the Executive.

                  2.3  "Confidential  Information"  shall mean all  business and
other information relating to the business of the Company or the Bank, including
without  limitation,   technical  or  non-technical  data,  programs,   methods,
techniques, processes, financial data, financial plans, product plans, and lists


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of actual or potential  customers,  which (a) derives economic value,  actual or
potential,   from  not  being   generally   known  to,  and  not  being  readily
ascertainable  by proper  means by,  other  Persons,  and (b) is the  subject of
efforts that are reasonable  under the  circumstances to maintain its secrecy or
confidentiality.  Such  information  and  compilations  of information  shall be
contractually  subject to protection  under this  Agreement  whether or not such
information  constitutes a trade secret and is separately  protectable at law or
in equity as a trade secret.

                  2.4 "Disability" or "Disabled" shall mean (a) the Executive is
unable to engage in any substantial  gainful activity by reason of any medically
determinable  physical  or mental  impairment  that can be expected to result in
death or can be  expected  to last for a  continuous  period of not less than 12
months;  or (b) the  Executive  is,  by  reason  of any  medically  determinable
physical or mental  impairment that can be expected to result in death or can be
expected to last for a continuous  period of not less than 12 months,  receiving
income replacement  benefits for a period of not less than three months under an
accident and health plan  covering  employees of the Company or the Bank; or (c)
the Executive has been determined to be totally  disabled by the Social Security
Administration  or Railroad  Retirement  Board;  or (d) the  Executive  has been
determined  to be disabled in  accordance  with a disability  insurance  program
provided  by the  Company  or the  Bank  and in  which  Executive  participates,
provided  that the  definition  of  disability  applied  under  such  disability
insurance program complies with the requirements of (a) or (b) listed above.

                  2.5  A  voluntary   termination  by  the  Executive  shall  be
considered an involuntary termination with "Good Reason" if any of the following
occurs,  following a Change of Control,  without the Executive's advance written
consent,  and the term "Good  Reason"  shall mean the  occurrence,  following  a
Change of  Control,  of any of the  following  without the  Executive's  advance
written consent: (a) a material diminution of the Executive's base compensation;
(b)  a  material   diminution  of  the   Executive's   authority,   duties,   or
responsibilities;  (c) a  material  diminution  in  the  authority,  duties,  or
responsibilities  of the supervisor to whom the Executive is required to report;
(d) a  material  diminution  in the  budget  over  which the  Executive  retains
authority;  (e) a  material  change  in the  geographic  location  at which  the
Executive  must perform  services for the Company or the Bank;  or (f) any other
action or inaction that constitutes a material breach by the Company or the Bank
of this  Agreement.  In order to qualify  as a  voluntary  termination  for Good
Reason,  (x) the  Executive  must give  notice to the  Company  or the Bank,  as
applicable, of the existence of one or more of the conditions described in (a) -
(f) above within 90 days after the initial  existence of the condition,  and the
Company or the Bank, as applicable,  shall have 30 days thereafter to remedy the
condition,  and (y) the  termination  of employment  must occur within 24 months
following a Change of Control.

                  2.6 "Person"  shall mean any  individual,  corporation,  bank,
partnership,   joint   venture,   association,   joint-stock   company,   trust,
unincorporated organization or other entity.

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         3. Duties. During the Term hereof, the Executive shall have such duties
and  authority  as are typical of a  President  and Chief  Operating  Officer of
companies such as the Company and the Bank, including, without limitation, those
specified in the Company's and the Bank's Bylaws.  Executive  agrees that during
the Term  hereof,  he will devote his full time,  attention  and energies to the
diligent  performance of his duties.  Executive shall not, without prior written
consent of the  Company  and the Bank,  at any time  during the Term  hereof (a)
accept  employment  with,  or render  services  of a business,  professional  or
commercial nature to, any Person other than the Company and the Bank, (b) engage
in any  venture  or  activity  which the  Company  or the Bank may in good faith
consider to be competitive  with or adverse to the business of the Company,  the
Bank or of any other affiliate of the Company,  whether alone, as a partner,  or
as an officer, director,  employee or shareholder or otherwise,  except that the
ownership  of not more  than 5% of the  stock or other  equity  interest  of any
publicly  traded  corporation or other entity shall not be deemed a violation of
this  Section,  or (c)  engage in any  venture  or  activity  which the Board of
Directors  of the Company or the Bank may in good faith  consider  to  interfere
with Executive's performance of his duties hereunder.

         4. Term. Unless earlier  terminated as provided herein, the Executive's
employment  hereunder  shall be for a rolling term of three years (the  "Term"),
which commenced on the date of the Original  Agreement,  with compensation to be
effective as of the date of this  Agreement.  This Agreement  shall be deemed to
extend each day for an additional  day  automatically  and without any action on
behalf of any party hereto; provided,  however, that any party may, by notice to
the others, cause this Agreement to cease to extend automatically and, upon such
notice, the "Term" of this Agreement shall be the three years following the date
of such notice,  and this Agreement  shall terminate upon the expiration of such
Term. If no such notice is given and this  Agreement is  terminated  pursuant to
Section 5 hereof,  for the purposes of  calculating  any amounts  payable to the
Executive as a result of such termination,  the remaining Term of this Agreement
shall be deemed to be three years from the date of such termination.

         5. Termination. This Agreement may be terminated as follows:

            5.1 By the  Company or the Bank.  The Company or the Bank shall have
the right to terminate the Executive's  employment  hereunder at any time during
the Term hereof for any reason or for no reason, including,  without limitation,
(a)  for  Cause,  (b)  if the  Executive  becomes  Disabled,  or  (c)  upon  the
Executive's death.

                  5.1.1  If the  Company  or  the  Bank  terminates  Executive's
employment  under  this  Agreement  for  Cause  or as a  result  of  Executive's
Disability or death,  the Company's and the Bank's  obligations  hereunder shall
cease as of the date of  termination  without  prejudice to any vested rights to
benefits provided hereunder.

                  5.1.2  If the  Company  or  the  Bank  terminates  Executive's
employment  other  than for  Cause and  other  than as a result  of  Executive's
Disability or death,  and such termination is within 24 months after a Change of
Control, Executive shall be entitled to receive, as severance,  immediately upon


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such  termination,  the compensation  and benefits  provided in Section 6 hereof
that  would  otherwise  be  payable  over the  three  years  subsequent  to such
termination.

                  5.1.3  If  the  Company  or the  Bank  terminates  Executive's
employment  other  than for  Cause and  other  than as a result  of  Executive's
Disability or death, and in the absence of a Change of Control,  Executive shall
be entitled to receive,  as severance,  immediately upon such  termination,  the
compensation  and benefits  provided in Section 6 hereof that would otherwise be
payable for the remaining Term of this Agreement.

                  5.1.4  If the  Company  or  the  Bank  terminates  Executive's
employment  other  than for  Cause and  other  than as a result  of  Executive's
Disability  or death,  (a) all rights of  Executive  pursuant to awards of share
grants or  options  granted  by the  Company or the Bank shall be deemed to have
vested and shall be released from all  conditions and  restrictions,  except for
restrictions on transfer pursuant to the Securities Act of 1933, as amended, and
(b) the  Executive  shall be deemed to be credited with service with the Company
and the Bank for such  remaining  Term for the purposes of the Company's and the
Bank's benefit  plans,  including,  without  limitation,  any  restricted  stock
agreements hereafter entered into with Executive.

                  5.1.5 For purposes of determining  severance payments pursuant
to Sections  5.1.2,  5.1.3 and 5.2.2,  (a) the amount of annual  salary shall be
deemed  to be  the  annualized  salary  being  paid  immediately  prior  to  the
termination,  (b) the annual  amount of unfixed  compensation  (such as a bonus)
shall be deemed to be equal to the average of such  compensation  over the three
year period  immediately prior to the termination,  and (c) the annual amount of
benefits  shall be deemed to be the sum of the costs to the Company and the Bank
of providing  the benefits to the  Executive  for the twelve month period ending
immediately prior to the termination.

            5.2 By  Executive.  Executive  shall have the right to terminate his
employment hereunder at any time during the Term hereof for any reason or for no
reason, including,  without limitation,  (a) voluntarily for Good Reason, or (b)
in the event of a material  breach of this Agreement by the Company or the Bank;
provided,  however,  in the event of a material  breach of this Agreement by the
Company or the Bank,  the Executive  shall have given the Bank written notice of
the breach  within 90 days thereof and the Company or the Bank shall have failed
to cure the  breach  within 30 days  after  such  notice  is given (a  "Material
Breach").

                  5.2.1 If Executive  terminates his employment  hereunder other
than for Good  Reason  and other  than as a result  of a  Material  Breach,  the
Company's and the Bank's  obligations under this Agreement shall cease as of the
date of such  termination  and, unless there shall have been a Change of Control
within the prior 24 months,  Executive  shall be subject to the  non-competition
provisions set forth in section 10 hereof.

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                  5.2.2 If Executive  terminates  his  employment  hereunder for
Good Reason or as a result of a Material Breach,  Executive shall be entitled to
receive, as severance,  immediately upon such termination,  the compensation and
benefits  provided in Section 6 hereof that would  otherwise be payable over the
three years subsequent to such termination.

                  5.2.3 In addition,  in the event of such  termination for Good
Reason or as a result of a Material Breach, (a) all rights of Executive pursuant
to awards of share grants or options granted by the Company or the Bank shall be
deemed  to  have  vested  and  shall  be  released  from  all   conditions   and
restrictions, except for restrictions on transfer pursuant to the Securities Act
of 1933, as amended,  and (b) the Executive  shall be deemed to be credited with
service with the Company and the Bank for the remaining Term for the purposes of
the Company's and the Bank's benefit plans.

            5.3 Timing of Payments.  Any payments required to be made under this
Section 5 shall be made within five days after termination of employment, except
to the extent Section 21 of this Agreement applies.

            5.4   Termination   in   Anticipation   of  a  Change  of   Control.
Notwithstanding  anything  contained in this  Agreement to the contrary,  if the
Executive's  employment  is  terminated by the Company or the Bank without Cause
prior to a Change of Control and the Executive reasonably demonstrates that such
termination  (a) was at the  request  of a third  party  who  has  indicated  an
intention or taken steps reasonably calculated to effect a Change of Control and
who  effectuates a Change of Control,  or (b)  otherwise  occurred in connection
with, or in anticipation of, a Change of Control which actually occurs, then for
all  purposes  of this  Agreement,  such  termination  shall be  deemed  to be a
termination  within 24 months after a Change of Control and the date of a Change
of Control with respect to the Executive shall mean the date  immediately  prior
to the date of such termination of the Executive's employment.

         6. Compensation. In consideration of Executive's services and covenants
hereunder,  the Company or the Bank shall pay to Executive the  compensation and
benefits  described below (which  compensation  shall be paid in accordance with
the  normal  compensation  practices  of the  Company  or the Bank and  shall be
subject to such  deductions and  withholdings as are required by law or policies
of the  Company  and the Bank in  effect  from time to time,  provided  that his
salary  pursuant  to  section  6.1 shall be  payable  not less  frequently  than
monthly):

            6.1 Annual Salary.  During the Term  hereof, the Company or the Bank
shall pay to  Executive  a salary at a rate of $265,000  per annum.  Executive's
salary will be reviewed by the Board of  Directors of the Company or the Bank at
the  beginning  of each of its fiscal years and, in the sole  discretion  of the
Board of Directors of the Company or the Bank, may be increased for such year.

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            6.2 Annual Incentive Bonus. During the Term hereof,  Executive shall
also be eligible for additional  performance based compensation as determined by
the Board of Directors of the Company or the Bank.

            6.3 Stock Options. During the Term hereof, the Board of Directors of
the Company may grant  Executive  options to purchase  Company  common  stock in
accordance with the terms of the Company's stock option plan.

            6.4 Other  Benefits.  Executive  shall be  entitled  to share in any
other employee benefits  generally provided by the Company and the Bank to their
most highly  ranking  executives for so long as the Company or the Bank provides
such  benefits.  The  Company or the Bank shall also  provide  Executive  with a
Company-paid automobile and reasonable club dues for one country club. Executive
shall also be entitled to participate in all other benefits  accorded  generally
to Company and Bank employees.

            6.5  Executive's  Right  To  Benefits  Absolute.  The  right  of the
Executive to receive the benefits set forth in this Agreement  shall be absolute
and not subject to any right of set-off or counterclaim  the Company or the Bank
may have against Executive.

            6.6 Discharge of Payment  Obligation.  The  Company's  obligation to
make any payments owed to the Executive under this Agreement shall be discharged
to the extent such payments are made by the Bank,  and the Bank's  obligation to
make any payments owed to the Executive under this Agreement shall be discharged
to the extent such payments are made by the Company.

         7.  Accelerated  Vesting of  Executive's  Stock  Options . Anything set
forth herein to the contrary  notwithstanding,  Executive's  stock options shall
vest  immediately  upon the  occurrence  of a  Change  of  Control,  even if the
Executive  remains  employed  with the  Company  or the Bank  after a Change  of
Control.  However,  to the extent that this Agreement is  inconsistent  with the
Company's  Stock Option Plan,  the terms of the Stock Option Plan shall control.
Moreover,  anything set forth herein to the contrary notwithstanding,  Executive
shall have a minimum of one (1) year from the date of vesting to  exercise  such
stock option rights.

         8.  Parachute  Payments.  Notwithstanding  any other  provision of this
Agreement,  if any  payment  provided  for in this  Agreement  would,  if  paid,
constitute a "golden parachute payment" as defined in 12 C.F.R. Section 359.1(f)
as in effect on the date of this Agreement, the obligation of the Company or the
Bank to make such payment shall be subject to an additional  condition  that the
circumstances  which cause the payment to be a "golden parachute  payment" shall
have ceased to exist but such payment  will become  payable in full at such time
as the  condition is met together  with  interest at the prime rate,  compounded
annually,  from the date  such  payment  would  have  been due had it not been a
"golden parachute payment" until paid.



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         9. Confidentiality.

            9.1   Company   and   Bank   Confidential   Information.   Executive
acknowledges  that, prior to and during the term of this Agreement,  the Company
and the Bank have  furnished  and will furnish to  Executive,  and the Executive
will  develop  for  the  benefit  of the  Company  and  the  Bank,  Confidential
Information  which could be used by Executive  on behalf of a competitor  of the
Company  or the  Bank to the  Company's  or the  Bank's  substantial  detriment.
Executive acknowledges that Confidential Information is the sole property of the
Company  and the Bank.  In view of the  foregoing,  Executive  acknowledges  and
agrees that the restrictive covenants contained in this Agreement are reasonably
necessary to protect the Company's and the Bank's legitimate  business interests
and  goodwill.  Executive  agrees that he shall  protect the  Company's  and the
Bank's  Confidential  Information  and  shall not  disclose  to any  Person,  or
otherwise use, except in connection with his duties performed in accordance with
this Agreement, any Confidential Information;  provided, however, that Executive
may make disclosures  required by a valid order or subpoena issued by a court or
administrative agency of competent jurisdiction,  in which event Executive will,
if permitted to do so under applicable law,  promptly notify the Company and the
Bank of  such  order  or  subpoena  to  provide  the  Company  and  the  Bank an
opportunity to protect its interests.  Upon the termination or expiration of his
employment  hereunder,  the Executive  agrees to deliver promptly to the Company
and the Bank all of their respective files, customer lists,  management reports,
memoranda,  research,  forms,  financial  data and reports  and other  documents
supplied  to or  created  by him in  connection  with his  employment  hereunder
(including  all copies of the foregoing) in his possession or control and all of
the Company's  and Bank's  equipment  and other  materials in his  possession or
control.  This  provision  shall  survive  for 24  months  after  the  later  of
termination of employment of Executive with the Bank or the Company.

            9.2 Third Party Confidential Information.  Executive shall also hold
in the strictest confidence all confidential or proprietary information that the
Company  or the  Bank  has  received  from  any  third  party to which it is the
Company's  or the Bank's  obligation  to maintain  the  confidentiality  of such
information and to use it only for certain limited purposes, and Executive shall
not disclose  such  information  to any person,  firm or  corporation  or use it
except as necessary in carrying out Executive's work for the Company or the Bank
consistent with the Company's or the Bank's agreement with such third party.

         10.  Noncompetition.  In the event that Executive's employment with the
Company or the Bank is terminated before a Change of Control  voluntarily by the
Executive or by the Board of Directors for Cause,  then Executive shall not, for
a period of one (1) year following such termination of employment:

         (i)      become employed by any insured depository institution that has
                  customers or does business as follows:

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                  (a)      has an  office  situated  in or an  agent  or  agents
                           regularly  working  in any city in which the Bank has
                           an  office  in which an agent or  agents  of the Bank
                           regularly work, or

                  (b)      has a significant  number of offices situated in or a
                           significant number of agents regularly working in any
                           city in which  the Bank has a  significant  number of
                           offices or in which a significant number of agents of
                           the Bank regularly work, or

                  (c)      has a significant  number of customers located in any
                           county  of  South  Carolina  where  the  Bank  has  a
                           significant number of customers, or

                  (d)      shares a  significant  number of  customers  with the
                           Bank.

         (ii)     interfere   or  attempt  to   interfere   with  any   business
                  relationship  of the Company or the Bank,  including,  without
                  limitation,  employee and customer  relationships,  whether by
                  lawful competition or otherwise; or

         (iii)    engage,  directly or  indirectly,  in any business or activity
                  which requires  Executive,  or any person or party employed by
                  him or whom he represents, to provide Confidential Information
                  or  other  data  obtained  by  Executive  as a  result  of his
                  employment with the Company or the Bank to any other person or
                  party who is then  engaged in  providing  similar  services to
                  those of the Company or the Bank for use in competing with the
                  Company or the Bank; or

         (iv)     solicit from any  customer of the Bank any business  that such
                  customer has customarily  done or contemplates  doing with the
                  Bank; or

         (v)      solicit any business  that could be done by the Company or the
                  Bank from any customer of the Bank with whom the Executive had
                  contact while employed by the Bank; or

         (vi)     solicit  any  business  on the  basis of,  or  advertise,  the
                  Executive's  former  affiliation with the Company or the Bank;
                  or

         (vii)    solicit,  encourage  or assist any other  person to solicit or
                  encourage any employee of the Company or the Bank to terminate
                  such employment; or

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         (viii)   otherwise compete against the Company or the Bank, directly or
                  indirectly, whether as principal, agent, employee, or owner of
                  any entity (if the percentage or ownership  exceeds 10% of the
                  entity).

         The  parties  hereto  intend  the   geographic   areas  and  all  other
restrictions set forth herein to be completely severable and independent; if any
of the restrictions  set forth above are determined to be either  unenforceable,
or  unenforceable  in any of the geographic  areas set forth above,  the parties
intend that the  restrictions  set forth  above  shall  continue to apply to the
remaining  geographic areas set forth above and that the other  restrictions set
forth above shall continue to apply.

         In the event that  Executive's  employment is terminated for any reason
following a Change of Control (whether by the Company or the Bank or Executive),
it  is  expressly  acknowledged  that  there  shall  be  no  limitation  on  any
competitive activity of Executive, including direct competition with the Company
or the Bank or their  successors,  and neither the Company nor the Bank shall be
entitled to injunctive relief with respect to any such competitive activities of
Executive.

         11. Trust. The Company shall establish an irrevocable trust to fund the
obligations  hereunder  (which  may  be a  "rabbi  trust"  if  so  requested  by
Executive),  which trust (a) shall have as trustee an  individual  acceptable to
Executive,  (b) shall be funded  upon the  earlier of a Change of Control or the
approval of any  regulatory  application  filed by a  potential  acquiror of the
Company seeking to acquire control of the Company, (c) shall comply with Section
409A of the Internal  Revenue  Code,  and (d) shall contain such other terms and
conditions as are reasonably  necessary in Executive's  determination  to ensure
the Company's and the Bank's compliance with its obligations hereunder.

         12.  Assignment.  The parties  acknowledge that this Agreement has been
entered into due to, among other things,  the special  skills of Executive,  and
agree that this Agreement may not be assigned or  transferred  by Executive,  in
whole or in part, without the prior written consent of the Company and the Bank.

         13. Notices. All notices,  requests,  demands, and other communications
required or permitted  hereunder shall be in writing and shall be deemed to have
been duly given if delivered or seven days after mailing if mailed, first class,
certified mail postage prepaid:

To the Bank:               GrandSouth Bank
                           P.O. Box 6548
                           Greenville, S.C. 29606
                           Attn:    Chairman of the Board

To the Company:            GrandSouth Bancorporation
                           P.O. Box 6548
                           Greenville, S.C. 29606
                           Attn:    Chairman of the Board



                                    11 of 13
<PAGE>

To Executive:              Ronald K. Earnest
                           105 Kenton Court
                           Simpsonville, S.C. 29681

Any party may change the address to which notices, requests,  demands, and other
communications  shall be  delivered  or mailed by giving  notice  thereof to the
other party in the same manner provided herein.

         14.  Provisions  Severable.  If any provision or covenant,  or any part
thereof, of this Agreement should be held by any court to be invalid, illegal or
unenforceable,  either  in whole  or in part,  such  invalidity,  illegality  or
unenforceability  shall not affect the validity,  legality or  enforceability of
the remaining  provisions or covenants,  or any part thereof, of this Agreement,
all of which shall remain in full force and effect.

         15.  Remedies.  (a) The Executive  acknowledges  that if he breaches or
threatens to breach his  covenants  and  agreements in Sections 9 and 10 of this
Agreement,  such actions may cause irreparable harm and damage to the Company or
the Bank which could not be compensated by monetary damages alone.  Accordingly,
if Executive  breaches or  threatens  to breach  Section 9 or Section 10 of this
Agreement,  the Company and the Bank shall be entitled to injunctive  relief, in
addition to any other rights or remedies of the Company or the Bank.

                  (b) In the event that  Executive  is  reasonably  required  to
engage  legal  counsel to defend or enforce  his rights  hereunder  against  the
Company or the Bank, Executive shall be entitled to receive from the Company his
reasonable attorney's fees and costs.

         16.  Arbitration.  Any dispute or  controversy,  other than a claim for
injunctive  relief  pursuant  to  Section  15(a)  hereof,  arising  under  or in
connection  with this Agreement  shall be settled  exclusively by arbitration in
Greenville, South Carolina, by three arbitrators in accordance with the rules of
the American Arbitration  Association then in effect. Judgment may be entered on
the arbitrators' award in any court having jurisdiction; provided, however, that
Executive shall be entitled to seek specific performance of the right to be paid
until the Date of Termination  during the pendency of any dispute or controversy
arising under or in connection with this  Agreement.  The Company shall bear all
costs  and  expenses  arising  in  connection  with any  arbitration  proceeding
pursuant to this Section.

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<PAGE>

         17.  Waiver.  Failure  of  either  party  to  insist,  in one  or  more
instances,  on performance by the other in strict  accordance with the terms and
conditions of this Agreement shall not be deemed a waiver or  relinquishment  of
any right  granted in this  Agreement or of the future  performance  of any such
term or condition or of any other term or  condition of this  Agreement,  unless
such waiver is contained in a writing signed by the party making the waiver.

         18.  Amendments  and  Modifications.  This  Agreement may be amended or
modified only by a writing signed by the parties hereto.

         19.  Governing Law. The validity and effect of this Agreement  shall be
governed  by and  construed  in  accordance  with the laws of the State of South
Carolina.

         20.  Integration.  This Agreement  represents the entire  agreement and
understanding between the parties as to the subject matter herein and supersedes
all prior or contemporaneous agreements whether written or oral.

         21. Section 409A Savings Clause. Despite any contrary provision of this
Agreement,  if when the  Executive's  employment  terminates  the Executive is a
"specified  employee," as defined in section 409A of the Internal  Revenue Code,
and if any payments or benefits  under this  Agreement will result in additional
tax or interest to the Executive  because of section 409A,  the Executive  shall
not be entitled to the  payments or benefits  until the earliest of (a) the date
that is at least six months after termination of the Executive's  employment for
reasons other than the Executive's death, (b) the date of the Executive's death,
or (c) any earlier  date that does not result in  additional  tax or interest to
the Executive  under section 409A. As promptly as possible  after the end of the
period during which payments or benefits are delayed under this  provision,  the
entire  amount of delayed  payments  shall be paid to Executive in a single lump
sum.  References in this Agreement to Section 409A of the Internal  Revenue Code
of 1986 include rules, regulations and guidance of general application issued by
the Department of the Treasury under such Section 409A.

         IN WITNESS WHEREOF, the parties have executed this Amended Agreement as
of the day and year first above written.

                              [Signatures Omitted]