<PAGE>

                                  [IBSS LOGO]

                                                                    EXHIBIT 10.2

                                September 1, 2002

George E. Mendenhall
122 Point Lane
Ridgeway, SC 29130

Re:      Deferred Compensation Agreement

Dear George:

         This letter will confirm the agreement between you and Integrated
Business Systems and Services, Inc. ("IBSS"), effective the date hereof,
pursuant to which you have agreed to voluntarily defer the receipt of a portion
of the regular periodic semi-monthly annual salary remuneration from IBSS
("Salary") that you would otherwise be entitled to receive at each date on which
you would otherwise be entitled to receive it under your existing posture as an
employee of IBSS.

         Specifically, in consideration of the covenants of IBSS to you as set
forth in this letter agreement, you hereby agree that on each date on which you
are entitled to receive the semi-monthly payment of your Salary covering any
period that is included in the period described below as the Deferral Period,
you shall defer the receipt by you, and IBSS shall be entitled to withhold the
payment to you, of the amount of your semi-monthly Salary compensation set forth
below as the Deferred Portion that would otherwise be due and payable to you on
each such pay date. You agree and understand that in withholding the Deferred
Portion, IBSS shall also not withhold any income or other withholding taxes
applicable to such withheld amount until the date upon which all or a portion of
such withheld amount is actually paid to you, and then only to the extent
applicable to such payment.

          Unless otherwise mutually agreed in writing between you and IBSS, and
in consideration of your assistance to IBSS in its cash flow posture by making
this voluntary election to defer the payment of a portion of your Salary, IBSS
hereby agrees that the aggregate amount of all Deferred Portions outstanding and
owing to you (the "Deferred Obligation") shall become an IBSS obligation to you
as of the date of the withholding of that Deferred Portion, and that during the
time that any amount of the Deferred Obligation remains outstanding and owing to
you, such obligation shall bear simple interest at the annual rate of ten
percent (10%) calculated on the basis of a 360-day year.

         In further consideration of your voluntary election hereunder, IBSS
hereby agrees that from time to time during the Deferral Period (described
below) you shall be granted IBSS common stock purchase options under one or more
of the qualified stock option plans of IBSS to purchase one (1) share of IBSS
common stock for every two dollars ($2.00) of Deferred

    Integrated Business Systems and Services, Inc., 1601 Shop Road, Suite E,
                               Columbia, SC 29201
                   Phone: (803) 736-5595 - Fax: (803) 736-7735

<PAGE>

Mr. George E. Mendenhall
September 1, 2002
Page 2

Obligation outstanding and owing to you, excluding for purposes of this
calculation: (a) the amount of any interest payable on the Deferred Obligation
as of any such grant date, and (b) any portion of such Deferred Obligation as to
which one or more grants of stock options have been made to you prior to such
grant date under the terms of this letter. The options shall be ten-year
incentive stock options with an exercise price per share equal to the fair
market value per share of IBSS common stock on the date of grant. The options
will fully vest on the date six (6) months and one day following the date of
grant, or earlier if provided for under the stock option plan of IBSS under
which such options are granted.

         IBSS agrees that it shall make the first of such stock option grants
effective pursuant to the authority of the IBSS Board of Directors within the
nine (9) month period following the first date of the withholding of any
Deferred Portion under the terms of this letter agreement, or if earlier, (x)
the date upon which your employment with IBSS is terminated by you or IBSS for
any reason, and (y) the effective date of a Change of Control of IBSS as defined
in the IBSS 2001 Stock Incentive Plan.

         It is agreed between you and IBSS that the Deferral Period shall
commence effective the date of this letter and terminate (the "Termination
Date") on the date six (6) months following the date of this letter; provided,
however, that in the event the IBSS Board of Directors determines that on the
Termination Date, the working capital of IBSS is not sufficient to commence the
payment to you of amounts owing to you under this letter agreement without
adversely affecting the continuing operations of IBSS, the Termination Date may
be extended by the IBSS Board of Directors in one-month increments (up to a
maximum of three (3) extensions); provided further, that the number of options
to be granted with respect to the Deferred Portion accrued during the time of
any such extension shall increase from one (1) share for every two dollars
($2.00) of Deferred Portion to one (1) share for every one dollar ($1.00) of
Deferred Portion. In no event shall the Termination Date extend beyond the first
anniversary of the date of this letter agreement.

         It is agreed between you and IBSS that (a) on the Termination date, you
shall be entitled to the payment in full of all of the unpaid Deferred
Obligation outstanding on your account with respect to this letter agreement,
including all interest accrued on such Deferred Obligation prior to the
Termination Date, and to the extent not already issued to you, the receipt by
you of all incentive stock options that IBSS is under obligation to issue to you
under the terms of this letter agreement, and (b) prior to the Termination Date,
you shall not be entitled to demand or otherwise have the right to receive from
IBSS the payment to you in cash or in kind of any amount of any Deferred Portion
or any interest payable thereon, except upon the earlier to occur of the events
described in clauses (x) and (y) in the paragraph immediately preceding the
preceding paragraph of this letter agreement.

         You and IBSS agree that the deferral arrangement set forth in this
letter agreement shall in no way operate to change, affect, or amend your
existing employment arrangement with IBSS,

<PAGE>

Mr. George E. Mendenhall
September 1, 2002
Page 3

or otherwise reduce the IBSS obligation to compensate you at the rate of your
current compensation as an employee of IBSS, or to hereafter increase or
decrease your compensation from IBSS, except as to the change in the timing of
the payment to you of such compensation as described above.

         Notwithstanding the provisions for monthly extensions set forth in the
Salary Deferral Agreement dated September 1, 2001 which provided for incremental
increases in the interest rate and the increased option coverage ratio, the
undersigned hereby waives the additional benefits granted to the undersigned by
operation of such extension(s), and agrees that the interest rate of 10% and the
option coverage ratio of one (1) share for every two dollars ($2.00) of Deferred
Portion shall be effective with respect to the undersigned for each of the
months June, July and August, 2002. In order to give effect to this waiver,
appropriate adjustments will be made in connection with future option grants
pursuant to this Agreement.

         To the extent that at any time during which IBSS has had an obligation
to the undersigned pursuant to this Agreement and the September 1, 2001 Salary
Deferral Agreement and the undersigned has had an obligation to IBSS under any
note payable or other debt instrument, the interest rate hereunder applicable to
the amount of the obligation hereunder equal to the amount of the undersigned's
obligation to IBSS shall be reduced to the interest rate payable by the
undersigned to IBSS pursuant to such note payable or other debt instrument.

         Please sign this letter where indicated below to signify your agreement
with the terms of the agreement described in this letter.

                                  Very truly yours,

                                  INTEGRATED BUSINESS SYSTEMS AND SERVICES, INC.

                                  /s/ William S. McMaster
                                  ----------------------------------------------
                                  William S. McMaster
                                  Chief Financial Officer and General Counsel

<TABLE>
<S>                                                                     <C>
Current Annual Compensation Rate:                                       $152,000
                                                                        --------
Deferred Portion (each semi-monthly period):                            $  2,111
                                                                        --------
</TABLE>

ACKNOWLEDGED AND AGREED
Effective the date first written above:

/s/ George E. Mendenhall
---------------------------

<PAGE>

Mr. George E. Mendenhall
September 1, 2002
Page 4

(Signature)