Document:

EXHIBIT 10.9

SEVERANCE AGREEMENT WITH V. BURTON BRINSON, JR.

        This SEVERANCE AGREEMENT (this "Agreement") is entered into as of this
17th day of May, 2004, by and between Citizens South Banking Corporation, a
Delaware corporation (the "Corporation"), and V. Burton Brinson, Jr., Executive
Vice President (the "Executive") of Citizens South Bank, a federally chartered
savings bank and wholly owned subsidiary of the Corporation.

        WHEREAS, the Executive is employed by Citizens South Bank and the
Executive has made and is expected to continue to make major contributions to
the profitability, growth, and financial strength of the Corporation and its
subsidiaries,

        WHEREAS, the Corporation recognizes that, as is the case for most
companies, the possibility of a Change in Control (as defined in Section 1(c))
exists,

        WHEREAS, the Corporation desires to assure itself of the current and
future continuity of management and desires to establish minimum severance
benefits for certain of its officers, including the Executive, if a Change in
Control occurs,

        WHEREAS, the Corporation 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 occurs,

        WHEREAS, the Corporation desires to provide additional inducement for
the Executive to continue to remain in the ongoing employ of the Corporation and
subsidiary, 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 the Corporation, is
contemplated insofar as either of the Corporation or any of its subsidiaries is
concerned.

        NOW THEREFORE, in consideration of these premises 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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1.      CHANGE IN CONTROL COMBINED WITH EMPLOYMENT TERMINATION

        (a) Termination of Executive Within 12 Months After a Change in Control.
If a Change in Control occurs during the term of this Agreement and if either of
the following occurs, the Executive shall be entitled to severance benefits
specified in Section 2 of this Agreement -

    1)  Termination by Citizens South Banking Corporation or Subsidiary: the
        Executive's employment with the Corporation or its Subsidiary(ies) is
        involuntarily terminated within 12 months after a Change in Control,
        except for termination under Section 4 of this Agreement. For purposes
        of this Agreement, "Subsidiary" means an entity in which the Corporation
        directly or indirectly beneficially owns 50% or more of the outstanding
        voting securities, or

    2)  Termination by the Executive for Good Reason: the Executive terminates
        his employment with the Corporation or Subsidiary(ies) for Good Reason
        (as defined in Section 3) within 12 months after a Change in Control.

        If the Executive is removed from office or if his or her employment
terminates 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 Agreement the removal of the Executive or termination
of employment shall be deemed to have occurred after the Change in Control.

        (b) Definition of Change in Control. For purposes of this Agreement,
"Change in Control" means any of the following events occur -

        1)      Merger: the Corporation merges into or consolidates with another
                corporation, or merges another corporation into the Corporation,
                and as a result less than 50% of the combined voting power of
                the resulting corporation immediately after the merger or
                consolidation is held by persons who were the holders of the
                Corporation's voting securities immediately before the merger or
                consolidation. For purposes of this Agreement, the term person
                means an individual, corporation, partnership, trust,
                association, joint venture, pool, syndicate, sole
                proprietorship, unincorporated organization or other entity, or

        2)      Acquisition of Significant Share Ownership: 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 a class of the Corporation's voting securities (but
                this clause (2) shall not apply to beneficial ownership of
                voting shares held by a Subsidiary in a fiduciary capacity), or

        3)      Change in Board Composition: during any period of two
                consecutive years, individuals who constitute the 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 clause (3) - 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

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        4)      Sale of Assets: The Corporation sells to a third party
                substantially all of the Corporation's assets. For purposes of
                this Agreement, sale of substantially all of the Corporation's
                assets includes sale of Citizens South Bank alone.

2.      SEVERANCE BENEFITS

        (a) Severance Benefits. The severance benefits to which the Executive is
entitled under Section 1 are as follows -

        1)      Lump Sum Payment: The Corporation shall make or cause to be made
                a lump sum payment to the Executive in an amount in cash equal
                to 1.5 times the Executive's annual compensation. For purposes
                of this Agreement, annual compensation means (a) the Executive's
                annual base salary on the date of the Change in Control or the
                Executive's termination of employment, whichever amount is
                greater, plus (b) any cash bonuses or cash incentive
                compensation earned for the calendar year immediately before the
                year in which the Change in Control occurred or immediately
                before the year in which termination of employment occurred,
                whichever amount is greater, regardless of when the bonus or
                incentive compensation is or was paid. The Corporation
                recognizes that the bonus and incentive compensation earned by
                the Executive for a particular year's service might be paid in
                the year after the calendar year in which the bonus or incentive
                compensation is earned. 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 Section 2(a)(1) is payable no later than 5 business days
                after the date the Executive's employment terminates. If the
                Executive terminates employment for Good Reason, the date of
                termination shall be the date specified by the Executive in his
                notice of termination.

        2)      Retirement Benefit Plans: The Corporation shall 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. The Corporation
                also shall contribute or cause a Subsidiary to contribute to any
                account of the Executive under a 401(k) plan, retirement plan,
                or profit-sharing plan the matching and voluntary contributions,
                if any, that would have been made had the Executive's employment
                not terminated before the end of the plan year.

        3)      Other Benefit Plans: The Corporation shall cause to be continued
                life, medical and dental coverage substantially identical to the
                coverage maintained by the Corporation for the Executive prior
                to his severance. Such coverage and payments shall cease after
                18 months, or sooner if the Executive becomes employed
                elsewhere.

(c) Mitigation Is Not Required. The Corporation hereby acknowledges that it will
be difficult and could be impossible (1) for the Executive to find reasonably
comparable employment after his employment terminates, and (2) to measure the
amount of damages the Executive suffers as a result of termination.
Additionally, the Corporation acknowledges that its general severance pay plans
do not provide for mitigation, offset or reduction of any severance payment
received thereunder. Accordingly, the Corporation further acknowledges that the
payment of severance benefits by the Corporation under this

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Agreement is reasonable and will be liquidated damages, and the Executive shall
not be required to mitigate the amount of any payment provided for in this
Agreement by seeking other employment or otherwise, nor will any profits,
income, earnings or other benefits from any source whatsoever create any
mitigation, offset, reduction or any other obligation on the part of the
Executive hereunder or otherwise.

3.      GOOD REASON

        For purposes of this Agreement, "Good Reason" means the occurrence of
any of the events or conditions without the Executive's express written consent
-

        (a) Reduction in Base Salary: involuntary reduction in the Executive's
base salary, or

        (b) Reduced Participation in Bonus, Incentive, Compensation, and Other
Plans: involuntary reduction in the Executive's bonus, incentive, and other
compensation award opportunities under the Corporation's or Subsidiary(ies)'s
benefit plans, unless a company-wide reduction of all officers' award
opportunities occurs simultaneously, or

        (c) Participation in Benefit Plans: involuntary discontinuance of the
Executive's participation in any officer or employee benefit plans maintained by
the Corporation or Subsidiary(ies), unless such plans are discontinued by reason
of law or loss of tax deductibility to the Corporation with respect to
contributions to such plans, or are discontinued as a matter of policy applied
equally to all participants in such plans, or

        (d) Reduction in Responsibilities or Status: assignment to the Executive
of duties or responsibilities that are materially inconsistent with the
Executive's duties and responsibilities immediately before the Change in
Control; any other action by the Corporation or its successor that results in a
material reduction or material adverse change in the Executive's position,
authority, duties or responsibilities; failure to nominate the Executive as a
director of the Corporation if the Executive shall have been a director
immediately before the Change in Control; or 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 if the Executive shall have been a director
immediately before the Change in Control, or

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

        (f) Material Breach: a material breach of this Agreement by the
Corporation that is not corrected within a reasonable time, or

        (g) Relocation of the Executive: relocation of the Corporation's
principal executive offices, or requiring the Executive to change his principal
work location, to any location that is more than 50 miles from the location of
the Corporation's principal executive offices on the date of this Agreement.

4.      TERMINATION FOR WHICH NO SEVERANCE BENEFITS ARE PAYABLE

        (a) No Severance for Termination for Cause. The Bank may terminate the
Executive's employment at any time. Anything in this Agreement to the contrary
notwithstanding, under no circumstance shall the Executive be entitled to
severance benefits if his employment terminates for Cause.

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        1)      Cause Means Commission of Any of the Following Acts: For
                purposes of this Agreement, "Cause" means the Executive shall
                have committed any of the following acts -

                a)      Fraud, Embezzlement, Theft or Other Crime: an act of
                        fraud, embezzlement, or theft in connection with his
                        duties or in the course of his employment with the
                        Corporation or a Subsidiary, or commission of a felony
                        or commission of a misdemeanor involving moral
                        turpitude, or

                b)      Damage to Property: intentional wrongful damage to the
                        business or property of the Corporation or
                        Subsidiary(ies), which, in the Corporation's sole
                        judgment, causes material harm to the Corporation or
                        Subsidiary(ies), or

                c)      Negligence and Other Actions: gross negligence,
                        insubordination, disloyalty, or dishonesty in the
                        performance of his duties as an officer of the
                        Corporation or Subsidiary(ies), or

                d)      Violation of Law or Policy: intentional violation of any
                        law or significant policy of the Corporation or
                        Subsidiary(ies) committed in connection with the
                        Executive's employment, which, in the Corporation's sole
                        judgment, has an adverse effect on the Corporation or
                        Subsidiary(ies), or

                e)      Disclosure of Trade Secrets: intentional wrongful
                        disclosure of secret processes or confidential
                        information of the Corporation or a Subsidiary, which,
                        in the Corporation's sole judgment, causes material harm
                        to the Corporation or the Subsidiary, or

                f)      Competing with the Corporation: intentional wrongful
                        engagement in any competitive activity. For purposes of
                        this Agreement, competitive activity means the
                        Executive's participation, without the written consent
                        of a senior executive officer of the Corporation, in the
                        management of any business enterprise if (1) the
                        enterprise engages in substantial and direct competition
                        with the Corporation, (2) the enterprise's revenues
                        derived from any product or service competitive with any
                        product or service of the Corporation or Subsidiary(ies)
                        amounted to 10% or more of the enterprise's revenues for
                        its most recently completed fiscal year, and (3) the
                        Corporation's revenues from the product or service
                        amounted to 10% of the Corporation's revenues for its
                        most recently completed fiscal year. A competitive
                        activity does not include mere ownership of securities
                        in an enterprise and the exercise of rights appurtenant
                        thereto, provided the Executive's share ownership does
                        not give his practical or legal control of the
                        enterprise. For this purpose, ownership of less than 5%
                        of the enterprise's outstanding voting securities shall
                        conclusively be presumed to be insufficient for
                        practical or legal control, and ownership of more than
                        50% shall conclusively be presumed to constitute
                        practical and legal control.

                        If the Executive is now or hereafter becomes subject to
                        an agreement not to compete with the Corporation or
                        Subsidiary(ies), a breach by the Executive of that other
                        non-competition agreement shall be grounds for denial of

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                        severance benefits for Cause under this clause (f) of
                        Section 4(a)(1). But if the Executive engages in a
                        competitive activity under circumstances justifying
                        denial of severance benefits for Cause under this clause
                        (f), that shall not necessarily be grounds for
                        concluding that the Executive has also breached the
                        other non-competition agreement to which he is or may
                        become subject. This clause (f) is not intended to and
                        shall not be construed to supersede or amend any
                        provision of an employment or non-competition agreement
                        to which the Executive is or may become subject. This
                        clause (f) does not grant to the Executive any right or
                        privilege to engage in other activities or enterprises,
                        whether in competition with the Corporation or
                        otherwise, or

                g)      Termination for Cause under an Employment Agreement: any
                        actions that have caused the Executive to be terminated
                        for cause under any employment agreement existing on the
                        date hereof or hereafter entered into between the
                        Executive and the Corporation or a Subsidiary.

        2)      Definition of "Intentional": For purposes of this 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 the
                Corporation or a Subsidiary.

        (b) The Executive's Right to Severance Is Subject to Regulatory
Considerations. Payments made to the Executive under this Agreement or otherwise
are subject to and conditioned upon their compliance with 12 USC section 1828(k)
and any regulations promulgated thereunder. Anything in this Agreement to the
contrary notwithstanding, the Executive's entitlement to severance benefits
under this Agreement is subject to the following regulatory considerations.

        1)      If the Executive is suspended from office or temporarily
                prohibited from participating in the Bank's affairs by a notice
                served under section 8(e)(3) (12 USC 1818(e)(3)) or 8(g) (12 USC
                1818(g)) of the Federal Deposit Insurance Act, as amended by the
                Financial Institutions Reform, Recovery and Enforcement Act of
                1989, the Bank's obligations under this Agreement shall be
                suspended as of the date of service, unless stayed by
                appropriate proceedings. If the charges in the notice are
                dismissed, the Bank may in its discretion (a) pay the Executive
                all or part of the compensation withheld while the obligations
                under this Agreement were suspended and (b) reinstate in whole
                or in part any of the obligations that were suspended.

        2)      If the Executive is removed or permanently prohibited from
                participating in the Bank's affairs by an order issued under
                section 8(e) (12 USC 1818(e)) or 8(g) (12 USC 1818(g)) of the
                Federal Deposit Insurance Act, as amended by the Financial
                Institutions Reform, Recovery and Enforcement Act of 1989, all
                obligations of the Bank under this Agreement shall terminate as
                of the effective date of the order, but vested rights of the
                parties shall not be affected.

        3)      If the Bank is in default as defined in section 3(x) (12 USC
                1813(x)(1)) of the Federal Deposit Insurance Act, as amended by
                the Financial Institutions Reform, Recovery and Enforcement Act
                of 1989, all obligations of the Bank under this Agreement shall
                terminate as of the date of default, but vested rights of the
                parties shall not be affected.

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        4)      All obligations of the Bank under this Agreement shall be
                terminated, except to the extent determined that continuation of
                the Agreement is necessary for the continued operation of the
                Bank, (a) by the Federal Deposit Insurance Corporation when the
                FDIC enters into an agreement to provide assistance to or on
                behalf of the Bank under the authority contained in section
                13(c) (12 USC 1823(c)) of the Federal Deposit Insurance Act, as
                amended by the Financial Institutions Reform, Recovery and
                Enforcement Act of 1989, or (b) when the Bank is determined by
                the FDIC to be in an unsafe or unsound condition. Vested rights
                of the parties shall not be affected, however.

        (c) No Severance under this Agreement for the Executive's Death or
Disability. Anything in this Agreement to the contrary notwithstanding, under no
circumstance shall the Executive be entitled to severance benefits under this
Agreement if -

        1) Death: the Executive dies while actively employed by the Corporation
        or a Subsidiary, or

        2) Disability: the Executive becomes totally disabled while actively
        employed by the Corporation or a Subsidiary. For purposes of this
        Agreement, the term "totally disabled" means that because of injury or
        sickness the Executive is unable to perform his duties.

        The benefits, if any, payable to the Executive or his beneficiary(ies)
or estate relating to his death or disability shall be determined solely by such
benefit plans or arrangements as the Corporation or Subsidiary may have with the
Executive relating to death or disability, not by this Agreement.

5.      TERM OF AGREEMENT

        The initial term of this 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 Agreement, and on each anniversary thereafter, this Agreement shall
be extended automatically for one additional year unless the Corporation's board
of directors gives notice to the Executive in writing at least 90 days before
the anniversary that the term of this Agreement will not be extended. If the
board of directors determines not to extend the term, it shall promptly notify
the Executive. References herein to the term of this Agreement mean the initial
term and extensions of the initial term. Unless terminated earlier, this
Agreement shall terminate when the Executive reaches age 65. If the board of
directors decides not to extend the term of this Agreement, this Agreement shall
nevertheless remain in force until its term expires. The board's decision not to
extend the term of this Agreement shall not - by itself - give the Executive any
rights under this Agreement to claim an adverse change in his position,
compensation or circumstances or otherwise to claim entitlement to severance
benefits under this Agreement.

6.      THIS AGREEMENT IS NOT AN EMPLOYMENT CONTRACT

        The parties hereto acknowledge and agree that (a) this Agreement is not
a management or employment agreement and (b) nothing in this Agreement shall
give the Executive any rights or impose any obligations to continued employment
by the Corporation or any Subsidiary or successor of the Corporation, nor shall
it give the Corporation any rights or impose any obligations for the continued
performance of duties by the Executive for the Corporation or any Subsidiary or
successor of the Corporation.

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7.      WITHHOLDING OF TAXES

        The Corporation may withhold from any benefits payable under this
Agreement all Federal, state, local or other taxes as may be required by law,
governmental regulation or ruling.

8.      SUCCESSORS AND ASSIGNS

        (a) This Agreement Is Binding on the Corporation's Successors. This
Agreement shall be binding upon the Corporation and any successor to the
Corporation, including any persons acquiring directly or indirectly all or
substantially all of the business or assets of the 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 Agreement. But this Agreement and the Corporation's obligations under this
Agreement are not otherwise assignable, transferable or delegable by the
Corporation. By agreement in form and substance satisfactory to the Executive,
the Corporation shall require any successor to all or substantially all of the
business or assets of the Corporation expressly to assume and agree to perform
this Agreement in the same manner and to the same extent the Corporation would
be required to perform if no such succession had occurred.

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

        (c) This Agreement Is Personal in Nature and Is Not Assignable. This
Agreement is personal in nature. Without written consent of the other party,
neither party shall assign, transfer, or delegate this Agreement or any rights
or obligations under this Agreement except as expressly provided in this Section
8. 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 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 8, the
Corporation shall have no liability to pay any amount to the assignee or
transferee.

9.      NOTICES

        All notices, requests, demands and other communications hereunder shall
be in writing and shall be deemed to have been duly given if delivered by hand
or mailed, certified or registered mail, return receipt requested, with postage
prepaid (a) to the Corporation at 519 South New Hope Road, P.O. Box 2249,
Gastonia, North Carolina 28053-2249, Attn: Corporate Secretary, (b) to the
Executive at the address appearing on the Corporation's records, or (c) to such
other address as the party may designate by like notice.

10.     CAPTIONS AND COUNTERPARTS

        The headings and subheadings used in this Agreement are included solely
for convenience and shall not affect the interpretation of this Agreement. This
Agreement may be executed in one or more counterparts, each of which shall be
deemed to be an original, but all of which together shall constitute one and the
same agreement.

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11.     AMENDMENTS AND WAIVERS

        No provision of this Agreement may be modified or amended except in a
writing signed by the Executive and by the Corporation. No waiver by either
party of any breach by the other or waiver of compliance with any condition or
provision of this Agreement shall be deemed a waiver of similar provisions or
conditions at the same time or at any other time.

12.     SEVERABILITY

        The provisions of this Agreement shall be deemed severable. The
invalidity or unenforceability of any provision shall not affect the validity or
enforceability of the other provisions of this Agreement. Any provision held to
be invalid or unenforceable shall be reformed to the extent (and only to the
extent) necessary to make it valid and enforceable.

13.     GOVERNING LAW

        The validity, interpretation, construction and performance of this
Agreement shall be governed by and construed in accordance with the substantive
laws of the State of North Carolina, without giving effect to the principles of
conflict of laws of such State.

14.     ENTIRE AGREEMENT

        This Agreement constitutes the entire agreement between the Corporation
and the Executive concerning the subject matter hereof. No rights are granted to
the Executive under this Agreement other than those specifically set forth
herein. No agreements or representations, oral or otherwise, expressed or
implied concerning the subject matter of this Agreement have been made by either
party that are not set forth expressly in this Agreement.

        Without limiting the generality of the foregoing, the parties hereto
acknowledge and agree that this Agreement supersedes in its entirety any prior
Merger/Acquisition Protection Agreement entered into by the Executive and the
Corporation or by the Executive and Citizens South Bank, as amended or
supplemented. Any Merger/Acquisition Protection Agreement entered into prior to
this Agreement shall hereafter be void and of no force or effect.

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

CITIZENS SOUTH BANKING CORPORATION

By:  /s/ Kim S. Price
     -------------------------------------
Its: President and Chief Executive Officer

EXECUTIVE

/s/ V. Burton Brinson, Jr.

                                       135EXHIBIT 10.10

SALARY CONTINUATION AGREEMENT WITH KIM S. PRICE

        THIS SALARY CONTINUATION AGREEMENT (this Agreement) is made and entered
into as of this 1st day of January, 2004, by and between Citizens South Bank, a
federally chartered savings bank (the Bank), and Kim S. Price, its President and
Chief Executive Officer (the Executive).

        WHEREAS, the Executive has contributed substantially to the success of
the Bank, and the Bank desires that the Executive continue in its employ,

        WHEREAS, to encourage the Executive to remain an employee of the Bank,
the Bank is willing to provide salary continuation benefits to the Executive.
The Bank will pay the benefits from its general assets,

        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 the Bank, is contemplated
insofar as the Bank is concerned,

        WHEREAS, the parties hereto intend that this Agreement shall be
considered an unfunded arrangement maintained primarily to provide supplemental
retirement benefits for the Executive, and to be considered a non-qualified
benefit plan for purposes of the Employee Retirement Income Security Act of
1974, as amended ("ERISA). The Executive is fully advised of the Bank's
financial status,

        WHEREAS, the Bank and the Executive are parties to an Executive
Supplemental Retirement Plan Executive Agreement dated as of June 25, 2001, and

        WHEREAS, the Bank and the Executive intend that this Agreement shall
amend and restate in its entirety the June 25, 2001 Executive Supplemental
Retirement Plan Executive Agreement, and from and after the Effective Date (as
hereinafter defined) of this Agreement the June 25, 2001 Executive Supplemental
Retirement Plan Executive Agreement shall be of no further force or effect.

        NOW THEREFORE, in consideration of these premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Executive and the Bank hereby agree as follows.

                                    ARTICLE 1
                                   DEFINITIONS

        The following words and phrases used in this Agreement have the meanings
specified.

        1.1     Accrual Balance means the liability that should be accrued by
the Bank under generally accepted accounting principles (GAAP) for the Bank's
obligation to the Executive under this Agreement, by applying Accounting
Principles Board Opinion No. 12, as amended by Statement of Financial Accounting
Standards No. 106, and the calculation method and discount rate specified
hereinafter. The Accrual Balance shall be calculated assuming a level principal
amount and interest as the discount rate is

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accrued each period. The principal accrual is determined such that when it is
credited with interest each month, the Accrual Balance at Normal Retirement Age
equals the present value of the normal retirement benefits. The discount rate
means the rate used by the Plan Administrator for determining the Accrual
Balance. The rate is based on the yield on a 20-year corporate bond rated Aa by
Moody's, rounded to the nearest 1/4%. The initial discount rate is 8.50%. In its
sole discretion, the Plan Administrator may adjust the discount rate to maintain
the rate within reasonable standards according to GAAP.

        1.2     Beneficiary means each designated person, or the estate of the
deceased Executive, entitled to benefits, if any, upon the death of the
Executive, determined according to Article 4.

        1.3     Beneficiary Designation Form means the form established from
time to time by the Plan Administrator that the Executive completes, signs, and
returns to the Plan Administrator to designate one or more Beneficiaries.

        1.4     Change in Control shall have the same meaning specified in any
severance or employment agreement existing on the date hereof or hereafter
entered into between the Executive and the Bank or between the Executive and
Citizens South Banking Corporation, a Delaware corporation of which the Bank is
a wholly owned subsidiary. If the Executive is not a party to a severance or
employment agreement containing a definition of Change in Control, Change in
Control means any of the following events occur

        (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 stockholders of Citizens South
Banking Corporation immediately before the merger or consolidation,

        (b)     Acquisition of Significant Share Ownership: after the date of
this 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 clause (b)
shall not apply to beneficial ownership of voting shares held by a subsidiary in
a fiduciary capacity or beneficial ownership of voting shares held by an
employee benefit plan of Citizens South Banking Corporation or any subsidiary.
For purposes of this Agreement, subsidiary means an entity in which Citizens
South Banking Corporation beneficially owns 50% or more of the outstanding
voting securities, whether Citizens South Banking Corporation owns the shares
directly or owns the shares indirectly through an intermediate subsidiary,

        (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 clause (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

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        (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 the shares or assets of the Bank
alone.

        1.5     Disability means the Executive suffers a sickness, accident or
injury that is determined by the carrier of any individual or group disability
insurance policy covering the Executive, or by the Social Security
Administration, to be a disability rendering the Executive totally and
permanently disabled. At the Bank's request, the Executive must submit to the
Bank proof of the carrier's or Social Security Administration's determination.

        1.6     Early Termination means Termination of Employment before Normal
Retirement Age for reasons other than death, Disability, Termination for Cause
or following a Change in Control.

        1.7     Early Termination Date means the date on which Early Termination
occurs.

        1.8     Effective Date means January 1, 2004.

        1.9     Good Reason shall have the same meaning specified in any
employment or severance agreement existing on the date hereof or entered into
hereafter by the Executive and the Bank or by the Executive and Citizens South
Banking Corporation. If the term Good Reason is not defined in an employment
agreement or severance agreement, it means

                (a)     a material reduction in Executive's title or
        responsibilities,

                (b)     a reduction in base salary as in effect on the date of a
        Change in Control,

                (c)     relocation of the Bank'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 the Bank's
        principal executive offices on the date of this Agreement,

                (d)     the adverse and substantial alteration in the nature and
        quality of the office space within which the Executive performs his
        duties, including the size and location thereof, as well as the
        secretarial and administrative support provided to the Executive,

                (e)     the failure by the Bank to continue to provide the
        Executive with compensation and benefits substantially similar to those
        provided to the Executive under any of the employee benefit plans in
        which the Executive becomes a participant, or the taking of any action
        by the Bank which would directly or indirectly materially reduce any of
        such benefits or deprive the Executive of any material fringe benefit to
        which the Executive was entitled at the time of the Change in Control,
        or

                (f)     the failure of the Bank to obtain a satisfactory
        agreement from any successor or assign of the Bank to assume and agree
        to perform this Agreement, as contemplated in Section 7.5 hereof.

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        1.10    Intentional, for purposes of this 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 the Bank.

        1.11    Normal Retirement Age means the Executive's 65th birthday.

        1.12    Normal Retirement Date means the later of the Normal Retirement
Age or Termination of Employment.

        1.13    Plan Administrator means the plan administrator described in
Article 8.

        1.14    Plan Year means a twelve-month period commencing on January 1
and ending on December 31 of each year. The initial Plan Year shall commence on
the effective date of this Agreement.

        1.15    Termination for Cause and Cause shall have the same definition
specified in any severance or employment agreement existing on the date hereof
or entered into hereafter between the Executive and the Bank or between the
Executive and Citizens South Banking Corporation. If the Executive is not a
party to a severance or employment agreement containing a definition of
termination for cause, Termination for Cause means the Bank terminates the
Executive's employment for any of the following reasons

        (a)     the Executive's gross negligence or gross neglect of duties or
intentional and material failure to perform stated duties after written notice
thereof, or

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        (b)     disloyalty or dishonesty by the Executive in the performance of
his duties, or a breach of the Executive's fiduciary duties for personal profit,
in any case whether in his capacity as a director or officer, or

        (c)     intentional wrongful damage by the Executive to the business or
property of the Bank or its affiliates, including without limitation the
reputation of the Bank, which in the judgement of the Bank causes material harm
to the Bank or affiliates, or

        (d)     a willful violation by the Executive of any applicable law or
significant policy of the Bank or an affiliate that, in the Bank's judgement,
results in an adverse effect on the Bank or the affiliate, regardless of whether
the violation leads to criminal prosecution or conviction. For purposes of this
Agreement, applicable laws include any statute, rule, regulatory order,
statement of policy, or final cease-and-desist order of any governmental agency
or body having regulatory authority over the Bank, or

        (e)     the occurrence of any event that results in the Executive being
excluded from coverage, or having coverage limited for the Executive as compared
to other executives of the Bank, under the Bank's blanket bond or other fidelity
or insurance policy covering its directors, officers, or employees, or

        (f)     the Executive is removed from office or permanently prohibited
from participating in the conduct of the Bank's affairs by an order issued under
section 8(e)(4) or section 8(g)(1) of the Federal Deposit Insurance Act, 12
U.S.C. 1818(e)(4) or (g)(1), or

        (g)     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.

        1.16    Termination of Employment means the Executive ceases to be
employed by the Bank for any reason whatsoever, other than because of a leave of
absence approved by the Bank. For purposes of this Agreement, if there is a
dispute about the employment status of the Executive or the date of the
Executive's Termination of Employment, the Bank shall have the sole and absolute
right to decide the dispute unless a Change in Control shall have occurred.

                                    ARTICLE 2
                                LIFETIME BENEFITS

        2.1     Normal Retirement Benefit. For Termination of Employment on or
after the Normal Retirement Age for reasons other than death, the Bank shall pay
to the Executive the benefit described in this Section 2.1 instead of any other
benefit under this Agreement.

        2.1.1   Amount of Benefit. The annual benefit under this Section 2.1 is
$148,500. Beginning with the year after the year in which the Normal Retirement
Date occurs, the amount of the annual benefit under this Section 2.1.1 shall be
increased annually at a rate of 2% to offset inflation.

        2.1.2   Payment of Benefit. The Bank shall pay the annual benefit to the
Executive in 12 equal monthly installments payable on the first day of each
month, beginning in the month immediately after the Executive's Normal
Retirement Date. The Normal Retirement annual benefit shall be paid to the
Executive for his lifetime.

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        2.2     Early Termination Benefit. After Early Termination, the Bank
shall pay to the Executive the benefit described in this Section 2.2 instead of
any other benefit under this Agreement.

        2.2.1   Amount of Benefit. The benefit under this Section 2.2 is the
Early Termination annual benefit amount set forth on Schedule A for the Plan
Year ending immediately before the Early Termination Date (except during the
first Plan Year, the benefit is the amount set forth for Plan Year 1). Beginning
one year after payment of the Early Termination benefit commences, the amount of
the annual benefit under this Section 2.2.1 shall be increased annually at a
rate of 2% to offset inflation.

        2.2.2   Payment of Benefit. The Bank shall pay the annual benefit to the
Executive in 12 equal monthly installments payable on the first day of each
month, beginning with the month after the Normal Retirement Age. The annual
benefit shall be paid to the Executive for his lifetime.

        2.3     Disability Benefit. After Termination of Employment because of
Disability before Normal Retirement Age, the Bank shall pay to the Executive the
benefit described in this Section 2.3 instead of any other benefit under this
Agreement.

        2.3.1   Amount of Benefit. The benefit under this Section 2.3 is the
Disability annual benefit amount set forth on Schedule A for the Plan Year ended
immediately before the date on which Termination of Employment occurs (except
during the first Plan Year, the benefit is the amount set forth for Plan Year
1). Beginning one year after payment of the Disability benefit commences, the
amount of the annual benefit under this Section 2.3.1 shall be increased
annually at a rate of 2% to offset inflation.

        2.3.2   Payment of Benefit. Beginning with the month immediately after
the Executive's Normal Retirement Age, the Bank shall pay the Disability benefit
to the Executive in 12 equal monthly installments on the first day of each
month. The annual benefit shall be paid to the Executive for his lifetime.

        2.4     Change-in-Control Benefit. If the Executive's employment with
the Bank terminates involuntarily within 12 months after a Change in Control, or
if the Executive terminates employment voluntarily for Good Reason within 12
months after a Change in Control, the Bank shall pay to the Executive the
benefit described in this Section 2.4 instead of any other benefit under this
Agreement. However, no benefits shall be payable under this Agreement if the
Executive's employment is terminated under circumstances described in Article 5
of this Agreement.

        2.4.1   Amount of Benefit: The benefit under this Section 2.4 is the
Normal Retirement Age Accrual Balance required by Section 2.1, discounting the
Normal Retirement Age Accrual Balance to present value using a discount rate of
8.50%, or a discount rate selected by the Plan Administrator if the Plan
Administrator determines that a different discount rate is appropriate;
provided, however, that the discount rate selected shall not exceed the discount
rate employed at the time of the Change in Control for purposes of calculating
the Accrual Balance.

        2.4.2   Payment of Benefit: The Bank shall pay the Change-in-Control
benefit under Section 2.4 of this Agreement to the Executive in one lump sum
within three days after Termination of Employment.

        2.5     Change-in-Control Payout of Normal Retirement Benefit, Early
Termination Benefit, or Disability Benefit Being Paid to the Executive at the
Time of a Change in Control. If a Change in Control occurs at any time during
the salary continuation benefit payment period and if at the time of that Change

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in Control the Executive is receiving the benefit provided by Sections 2.1.2,
2.2.2, or 2.3.2, the Bank shall pay the remaining salary continuation benefits
to the Executive in a single lump sum within three days after the Change in
Control. The lump-sum payment due to the Executive as a result of a Change in
Control shall be an amount equal to the Accrual Balance amount corresponding to
that particular benefit then being paid.

        2.6     Petition for Payment of Normal Retirement Benefit, Early
Termination Benefit or Disability Benefit. If the Executive is entitled to the
normal retirement benefit provided by Section 2.1, the Early Termination benefit
provided by Section 2.2, or the Disability benefit provided by Section 2.3, the
Executive may petition the board of directors to have the Accrual Balance amount
corresponding to that particular benefit paid to the Executive in a single lump
sum. The board of directors shall have sole and absolute discretion about
whether to pay the remaining Accrual Balance in a lump sum. If the remaining
Accrual Balance is paid in a single lump sum, the Bank shall have no further
obligations under this Agreement.

        2.7     Contradiction in Terms of Agreement and Schedule A. If there is
a contradiction in the terms of this Agreement and Schedule A attached hereto
concerning the actual amount of a particular benefit amount due the Executive
under Section 2.2, 2.3, or 2.4 hereof, then the actual amount of the benefit set
forth in the Agreement shall control.

                                    ARTICLE 3
                                 DEATH BENEFITS

        3.1     Death During Active Service. Except as provided in Section 5.2,
if the Executive dies in active service to the Bank before the Normal Retirement
Age, the Bank shall pay to the Executive's Beneficiary (a) an amount in cash
equal to the Accrual Balance at the time of the Executive's death, and (b) the
benefit described in the Split Dollar Agreement attached to this Agreement as
Addendum A.

        3.2     Death after Termination of Employment. If the Executive dies
after Termination of Employment and the Executive is entitled to the normal
retirement benefit provided by Section 2.1, the Early Termination benefit
provided by Section 2.2, or the Disability benefit provided by Section 2.3, the
Bank shall pay to the Executive's Beneficiary (a) an amount in cash equal to the
Accrual Balance remaining at the time of the Executive's death, and (b) the
benefit described in the Split Dollar Agreement attached to this Agreement as
Addendum A; provided, however, that no benefits under this Agreement or under
the Split Dollar Agreement shall be paid or payable to the Executive or the
Executive's Beneficiary if this Agreement is terminated according to Article 5.

                                    ARTICLE 4
                                  BENEFICIARIES

        4.1     Beneficiary Designations. The Executive shall have the right to
designate at any time a Beneficiary to receive any benefits payable under this
Agreement upon the death of the Executive. The Beneficiary designated under this
Agreement may be the same as or different from the beneficiary designation under
any other benefit plan of the Bank in which the Executive participates.

        4.2     Beneficiary Designation: Change. The Executive shall designate a
Beneficiary by completing and signing the Beneficiary Designation Form and
delivering it to the Plan Administrator or its designated agent. The Executive's
Beneficiary designation shall be deemed automatically revoked if

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the Beneficiary predeceases the Executive or if the Executive names a spouse as
Beneficiary and the marriage is subsequently dissolved. The Executive shall have
the right to change a Beneficiary by completing, signing, and otherwise
complying with the terms of the Beneficiary Designation Form and the Plan
Administrator's rules and procedures, as in effect from time to time. Upon the
acceptance by the Plan Administrator of a new Beneficiary Designation Form, all
Beneficiary designations previously filed shall be cancelled. The Plan
Administrator shall be entitled to rely on the last Beneficiary Designation Form
filed by the Executive and accepted by the Plan Administrator before the
Executive's death.

        4.3     Acknowledgment. No designation or change in designation of a
Beneficiary shall be effective until received, accepted, and acknowledged in
writing by the Plan Administrator or its designated agent.

        4.4     No Beneficiary Designation. If the Executive dies without a
valid beneficiary designation, or if all designated Beneficiaries predecease the
Executive, then the Executive's spouse shall be the designated Beneficiary. If
the Executive has no surviving spouse, the benefits shall be made to the
personal representative of the Executive's estate.

        4.5     Facility of Payment. If a benefit is payable to a minor, to a
person declared incapacitated, or to a person incapable of handling the
disposition of his or her property, the Bank may pay such benefit to the
guardian, legal representative, or person having the care or custody of the
minor, incapacitated person, or incapable person. The Bank may require proof of
incapacity, minority, or guardianship as it may deem appropriate before
distribution of the benefit. Distribution shall completely discharge the Bank
from all liability for the benefit.

                                    ARTICLE 5
                               GENERAL LIMITATIONS

        5.1     Termination for Cause. Notwithstanding any provision of this
Agreement to the contrary, the Bank shall not pay any benefit under this
Agreement and this Agreement shall terminate if Termination of Employment is a
result of Termination for Cause. Likewise, the Bank shall not pay any benefits
under the Split Dollar Agreement attached to this Agreement as Addendum A, and
the Split Dollar Agreement also shall terminate, if Termination of Employment is
a result of Termination for Cause.

        5.2     Misstatement. The Bank shall not pay any benefit under this
Agreement or under the Split Dollar Agreement attached as Addendum A if the
Executive makes any material misstatement of fact on any application or resume
provided to the Bank or on any application for benefits provided by the Bank.

        5.3     Removal. If the Executive is removed from office or permanently
prohibited from participating in the Bank's affairs by an order issued under
section 8(e)(4) or (g)(1) of the Federal Deposit Insurance Act, 12 U.S.C.
1818(e)(4) or (g)(1), all obligations of the Bank under this Agreement shall
terminate as of the effective date of the order.

        5.4     Default. Notwithstanding any provision of this Agreement to the
contrary, if the Bank is in default or in danger of default, as those terms are
defined in section 3(x) of the Federal Deposit Insurance Act, 12 U.S.C. 1813(x),
all obligations under this Agreement shall terminate.

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<PAGE>

        5.5     FDIC Open-Bank Assistance. All obligations under this Agreement
shall terminate, except to the extent determined that continuation of the
contract is necessary for the continued operation of the Bank, when the Federal
Deposit Insurance Corporation enters into an agreement to provide assistance to
or on behalf of the Bank under the authority contained in Federal Deposit
Insurance Act section 13(c). 12 U.S.C. 1823(c). Rights of the parties that have
already vested shall not be affected by such action, however.

                                    ARTICLE 6
                          CLAIMS AND REVIEW PROCEDURES

        6.1     Claims Procedure. A person or beneficiary (claimant) who has not
received benefits under the Agreement that he or she believes should be paid
shall make a claim for such benefits as follows:

        6.1.1   Initiation Written Claim. The claimant initiates a claim by
submitting to the Bank a written claim for the benefits.

        6.1.2   Timing of Bank Response. The Bank shall respond to the claimant
within 90 days after receiving the claim. If the Bank determines that special
circumstances require additional time for processing the claim, the Bank may
extend the response period by an additional 90 days by notifying the claimant in
writing before the end of the initial 90-day period that an additional period is
required. The notice of extension must state the special circumstances and the
date by which the Bank expects to render its decision.

        6.1.3   Notice of Decision. If the Bank denies part or all of the claim,
the Bank shall notify the claimant in writing of the denial. The Bank shall
write the notification in a manner calculated to be understood by the claimant.
The notification shall set forth:

        6.1.3.1 the specific reasons for the denial,

        6.1.3.2 a reference to the specific provisions of the Agreement on which
the denial is based,

        6.1.3.3 a description of any additional information or material
necessary for the claimant to perfect the claim and an explanation of why it is
needed,

        6.1.3.4 an explanation of the Agreement's review procedures and the time
limits applicable to such procedures, and

        6.1.3.5 a statement of the claimant's right to bring a civil action
under ERISA section 502(a) following an adverse benefit determination on review.

        6.2     Review Procedure. If the Bank denies part or all of the claim,
the claimant shall have the opportunity for a full and fair review by the Bank
of the denial, as follows:

        6.2.1   Initiation - Written Request. To initiate the review, within 60
days after receiving the Bank's notice of denial the claimant must file with the
Bank a written request for review.

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<PAGE>

        6.2.2   Additional Submissions Information Access. The claimant shall
then have the opportunity to submit written comments, documents, records, and
other information relating to the claim. Upon request and free of charge, the
Bank shall also provide the claimant reasonable access to and copies of all
documents, records, and other information relevant (as defined in applicable
ERISA regulations) to the claimant's claim for benefits.

        6.2.3   Considerations on Review. In considering the review, the Bank
shall take into account all materials and information the claimant submits
relating to the claim, without regard to whether the information was submitted
or considered in the initial benefit determination.

        6.2.4   Timing of Bank Response. The Bank shall respond in writing to
the claimant within 60 days after receiving the request for review. If the Bank
determines that special circumstances require additional time for processing the
claim, the Bank may extend the response period by an additional 60 days by
notifying the claimant in writing before the end of the initial 60-day period
that an additional period is required. The notice of extension must state the
special circumstances and the date by which the Bank expects to render its
decision.

        6.2.5   Notice of Decision. The Bank shall notify the claimant in
writing of its decision on review. The Bank shall write the notification in a
manner calculated to be understood by the claimant. The notification shall set
forth:

                6.2.5.1 the specific reason for the denial,

                6.2.5.2 a reference to the specific provisions of the Agreement
        on which the denial is based,

                6.2.5.3 a statement that the claimant is entitled to receive,
        upon request and free of charge, reasonable access to and copies of all
        documents, records, and other information relevant (as defined in
        applicable ERISA regulations) to the claimant's claim for benefits, and

                6.2.5.4 a statement of the claimant's right to bring a civil
        action under ERISA section 502(a).

                                    ARTICLE 7
                                  MISCELLANEOUS

        7.1     Amendments and Termination. Subject to Section 7.15 of this
Agreement, (a) this Agreement may be amended solely by a written agreement
signed by the Bank and by the Executive, and (b) except for termination
occurring under Article 5, this Agreement may be terminated solely by a written
agreement signed by the Bank and by the Executive.

        7.2     Binding Effect. This Agreement shall bind the Executive, the
Bank, and their beneficiaries, survivors, executors, successors, administrators,
and transferees.

        7.3     No Guarantee of Employment. This Agreement is not an employment
policy or contract. It does not give the Executive the right to remain an
employee of the Bank, nor does it interfere with the Bank's right to discharge
the Executive. It also does not require the Executive to remain an employee nor
interfere with the Executive's right to terminate employment at any time.

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        7.4     Non-Transferability. Benefits under this Agreement cannot be
sold, transferred, assigned, pledged, attached, or encumbered in any manner.

        7.5     Successors; Binding Agreement. The Bank will require any
successor (whether direct or indirect, by purchase, merger, consolidation, or
otherwise) to all or substantially all of the business or assets of the Bank, by
an assumption agreement in form and substance satisfactory to the Executive, to
expressly assume and agree to perform this Agreement in the same manner and to
the same extent that the Bank would be required to perform this Agreement if no
such succession had occurred. The Bank's failure to obtain an assumption
agreement before effectiveness of any such succession shall be a breach of this
Agreement and shall entitle the Executive to the Change-in-Control benefit
provided in Section 2.4.

        7.6     Tax Withholding. The Bank shall withhold any taxes that are
required to be withheld from the benefits provided under this Agreement.

        7.7     Applicable Law. This Agreement and all rights hereunder shall be
governed by the laws of the State of North Carolina, except to the extent
preempted by the laws of the United States of America.

        7.8     Unfunded Arrangement. The Executive and Beneficiary are general
unsecured creditors of the Bank for the payment of benefits under this
Agreement. The benefits represent the mere promise by the Bank to pay benefits.
Rights to benefits are not subject in any manner to anticipation, alienation,
sale, transfer, assignment, pledge, encumbrance, attachment, or garnishment by
creditors. Any insurance on the Executive's life is a general asset of the Bank
to which the Executive and Beneficiary have no preferred or secured claim.

        7.9     Entire Agreement. This Agreement and the Split Dollar Agreement
attached as Addendum A constitute the entire agreement between the Bank and the
Executive concerning the subject matter hereof. No rights are granted to the
Executive under this Agreement other than those specifically set forth herein.
This Agreement supersedes and replaces in its entirety the June 25, 2001
Executive Supplemental Retirement Plan Executive Agreement, and from and after
the Effective Date of this Agreement the June 25, 2001 Executive Supplemental
Retirement Plan Executive Agreement shall be of no further force or effect.

        7.10    Severability. If for any reason any provision of this Agreement
is held invalid, such invalidity shall not affect any other provision of this
Agreement not held invalid, and each such other provision shall continue in full
force and effect to the full extent consistent with law. If any provision of
this Agreement is held invalid in part, such invalidity shall not affect the
remainder of the provision not held invalid, and the remainder of such provision
together with all other provisions of this Agreement shall continue in full
force and effect to the full extent consistent with law.

        7.11    Headings. Caption headings and subheadings herein are included
solely for convenience of reference and shall not affect the meaning or
interpretation of any provision of this Agreement.

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<PAGE>

        7.12    Notices. All notices, requests, demands, and other
communications hereunder shall be in writing and shall be deemed to have been
duly given if delivered by hand or mailed, certified or registered mail, return
receipt requested, with postage prepaid, to the following addresses or to such
other address as either party may designate by like notice.

        (a)     If to the Bank, to:
                Board of Directors
                Citizens South
                Bank 519 South New Hope Road
                Gastonia, North Carolina 28054-4040
                        Attention: Corporate Secretary

        (b)     If to the Executive, to:
                Kim S. Price
                Citizens South Bank
                519 South New Hope Road
                Gastonia, North Carolina 28054-4040

and to such other or additional person or persons as either party shall have
designated to the other party in writing by like notice.

        7.13    Payment of Legal Fees. The Bank is aware that after a Change in
Control management of the Bank could cause or attempt to cause the Bank to
refuse to comply with its obligations under this Agreement, or could institute
or cause or attempt to cause the Bank to institute litigation seeking to have
this Agreement declared unenforceable, or could take or attempt to take other
action to deny Executive the benefits intended under this Agreement. In these
circumstances, the purpose of this Agreement would be frustrated. It is the
intention of the Bank that the Executive not be required to incur the expenses
associated with the enforcement of his rights under this 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 the intention of the Bank that the Executive not be forced to
negotiate settlement of his rights under this Agreement under threat of
incurring expenses. Accordingly, if after a Change in Control occurs it appears
to the Executive that (a) the Bank has failed to comply with any of its
obligations under this Agreement, or (b) the Bank or any other person has taken
any action to declare this 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,
the Bank irrevocably authorizes the Executive from time to time to retain
counsel of his choice, at the expense of the Bank as provided in this Section
7.13, to represent the Executive in connection with the initiation or defense of
any litigation or other legal action, whether by or against the Bank or any
director, officer, stockholder, or other person affiliated with the Bank, in any
jurisdiction. Notwithstanding any existing or previous attorney-client
relationship between the Bank and any counsel chosen by the Executive under this
Section 7.13, the Bank irrevocably consents to the Executive entering into an
attorney-client relationship with that counsel, and the Bank 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 the Bank 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. The Bank's obligation to pay the Executive's legal fees provided by
this Section 7.13 operates separately from and in addition to any legal fee
reimbursement obligation the Bank may have with the Executive under any separate
employment, severance, or other agreement between the Executive and the Bank.

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        7.14    Internal Revenue Code Section 280G Gross Up. (a) Additional
Payment to Account for Excise Taxes. If as a result of a Change in Control the
Executive becomes entitled to acceleration of benefits under this Salary
Continuation Agreement or under any other plan or agreement of or with the Bank
or its affiliates (together, the Total Benefits), and if any of the Total
Benefits will be subject to the Excise Tax as set forth in sections 280G and
4999 of the Internal Revenue Code of 1986 (the Excise Tax), the Bank shall pay
to the Executive the following additional amounts, consisting of (1) a payment
equal to the Excise Tax payable by the Executive on the Total Benefits under
section 4999 of the Internal Revenue Code (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 Agreement as the Gross-Up Payment
Amount.

        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 Agreement or any other agreement or any other benefit
                plan or arrangement with the Bank, any person whose actions
                result in a Change in Control, or any person affiliated with the
                Bank 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 the Bank 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 amount
of 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

                                       148
<PAGE>

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).

        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 the Bank - 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), the Bank shall make an additional Gross-Up
Payment Amount 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 the Bank.
Determinations Shall Be Made by the Accounting Firm. Subject to the provisions
of Section 7.14(a), all determinations required to be made under this Section
7.14(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
the Bank and the Executive within 15 business days after receipt of notice from
the Bank or the Executive that there has been a Gross-Up Payment Amount, or such
earlier time as is requested by the Bank.

        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 the Bank. The Bank 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 the
Bank 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 the Bank (Underpayment), or that a Gross-Up
Payment Amount will be made that should not have been made by the Bank
(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

                                       149
<PAGE>

at the rate provided in section 1274(d)(2)(B) of the Internal Revenue Code)
shall be paid promptly by the Bank 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 7.14(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 the Bank. Provided that his expenses are
reimbursed by the Bank, the Executive shall cooperate with any reasonable
requests by the Bank in any contests or disputes with the Internal Revenue
Service relating to the Excise Tax.

        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 Agreement shall be deemed to refer
to the accounting firm appointed by the Executive under this paragraph).

        7.15    Termination or Modification of Agreement Because of Changes in
Law, Rules or Regulations. The Bank is entering into this Agreement on the
assumption that certain existing tax laws, rules, and regulations will continue
in effect in their current form. If that assumption materially changes and the
change has a material detrimental effect on this Agreement, then the Bank
reserves the right to terminate or modify this Agreement accordingly, subject to
the written consent of the Executive, which shall not be unreasonably withheld.
This Section 7.15 shall become null and void effective immediately if a Change
in Control occurs.

                                    ARTICLE 8
                           ADMINISTRATION OF AGREEMENT

        8.1     Plan Administrator Duties. This Agreement shall be administered
by a Plan Administrator consisting of the board or such committee or person(s)
as the board shall appoint. The Executive may be a member of the Plan
Administrator. The Plan Administrator shall also have the discretion and
authority to (a) make, amend, interpret, and enforce all appropriate rules and
regulations for the administration of this Agreement and (b) decide or resolve
any and all questions, including interpretations of this Agreement, as may arise
in connection with the Agreement.

        8.2     Agents. In the administration of this Agreement, the Plan
Administrator may employ agents and delegate to them such administrative duties
as it sees fit (including acting through a duly appointed representative) and
may from time to time consult with counsel, who may be counsel to the Bank.

        8.3     Binding Effect of Decisions. The decision or action of the Plan
Administrator with respect to any question arising out of or in connection with
the administration, interpretation, and application of the Agreement and the
rules and regulations promulgated hereunder shall be final and conclusive and
binding upon all persons having any interest in the Agreement. No Executive or
Beneficiary shall be deemed to have any right, vested or nonvested, regarding
the continued use of any previously adopted assumptions, including but not
limited to the discount rate and calculation method described in Section 1.1.

                                       150
<PAGE>

        8.4     Indemnity of Plan Administrator. The Bank shall indemnify and
hold harmless the members of the Plan Administrator against any and all claims,
losses, damages, expenses, or liabilities arising from any action or failure to
act with respect to this Agreement, except in the case of willful misconduct by
the Plan Administrator or any of its members.

        8.5     Bank Information. To enable the Plan Administrator to perform
its functions, the Bank shall supply full and timely information to the Plan
Administrator on all matters relating to the date and circumstances of the
retirement, Disability, death, or Termination of Employment of the Executive and
such other pertinent information as the Plan Administrator may reasonably
require.

        IN WITNESS WHEREOF, the Executive and a duly authorized officer of the
Bank have executed this Salary Continuation Agreement as of the date first
written above.

EXECUTIVE:                        BANK:
                                  Citizens South Bank

/s/ Kim S. Price                  By:     /s/ Paul L. Teem, Jr.
                                          --------------------------------------
                                  Its:    Executive Vice President and Secretary

                                  And By: /s/ Gary F. Hoskins
                                          --------------------------------------
                                  Its:    Executive Vice President, Chief
                                          Financial Officer and Treasurer

                                       151
<PAGE>

                             BENEFICIARY DESIGNATION
                               CITIZENS SOUTH BANK
                          SALARY CONTINUATION AGREEMENT

        I, Kim S. Price, designate the following as beneficiary of any death
benefits under this Salary Continuation Agreement

        Primary:

_____________________________________________________________.

        Contingent:

_____________________________________________________________.

        Note: To name a trust as beneficiary, please provide the name of the
trustee(s) and the exact name and date of the trust agreement.

        I understand that I may change these beneficiary designations by filing
a new written designation with the Bank. I further understand that the
designations will be automatically revoked if the beneficiary predeceases me, or
if I have named my spouse as beneficiary and our marriage is subsequently
dissolved.

        Signature: /s/ Kim S. Price

        Date: January 3, 2004

        Accepted by the Bank this 3rd day of January, 2004.

                By:         /s/ Paul L. Teem, Jr.
                            --------------------------------------
                Print Name: Paul L. Teem, Jr.

                Title:      Executive Vice President and Secretary

                                       152
<PAGE>

                                   SCHEDULE A
                               CITIZENS SOUTH BANK
                          SALARY CONTINUATION AGREEMENT

                                  KIM S. PRICE

<TABLE>
<CAPTION>
                                                                EARLY TERMINATION    DISABILITY ANNUAL      CHANGE-IN-
                                 AGE AT       ACCRUAL            ANNUAL BENEFIT      BENEFIT PAYABLE AT   CONTROL BENEFIT
            PLAN YEAR ENDING   PLAN YEAR      BALANCE           PAYABLE AT NORMAL    NORMAL RETIREMENT     PAYABLE IN A
PLAN YEAR     DECEMBER 31,        END         8.50% (1)         RETIREMENT AGE (2)        AGE (2)            LUMP SUM
---------   ----------------   ---------   ----------------     ------------------   ------------------   ---------------
     <S>     <C>                  <C>      <C>                  <C>                  <C>                  <C>
      1           2004            49       $        171,627     $           64,581   $           64,581   $      394,643
      2           2005            50       $        202,047     $           69,854   $           69,854   $      429,525
      3           2006            51       $        236,504     $           75,126   $           75,126   $      467,492
      4           2007            52       $        275,474     $           80,399   $           80,399   $      508,814
      5           2008            53       $        319,485     $           85,671   $           85,671   $      553,788
      6           2009            54       $        369,124     $           90,943   $           90,943   $      602,738
      7           2010            55       $        425,043     $           96,216   $           96,216   $      656,014
      8           2011            56       $        487,963     $          101,488   $          101,488   $      714,000
      9           2012            57       $        558,685     $          106,760   $          106,760   $      777,111
     10           2013            58       $        638,097     $          112,033   $          112,033   $      845,801
     11           2014            59       $        727,183     $          117,305   $          117,305   $      920,562
     12           2015            60       $        827,032     $          122,578   $          122,578   $    1,001,931
     13           2016            61       $        938,851     $          127,850   $          127,850   $    1,090,493
     14           2017            62       $      1,063,976     $          133,122   $          133,122   $    1,186,882
     15           2018            63       $      1,203,886     $          138,395   $          138,395   $    1,291,792
     16           2019            64       $      1,360,217     $          143,667   $          143,667   $    1,405,975
             November 2020        65       $      1,519,487(4)  $          148,500   $          148,500   $    1,519,487
     17           2020            65       $      1,517,787
     18           2021            66       $      1,496,178
     19           2022            67       $      1,469,545
     20           2023            68       $      1,437,379
     21           2024            69       $      1,399,129
     22           2025            70       $      1,354,192
     23           2026            71       $      1,301,911
     24           2027            72       $      1,241,568
</TABLE>

<TABLE>
<CAPTION>
                  NORMAL
             RETIREMENT BENEFIT
               PAYABLE AFTER
                  NORMAL
              RETIREMENT DATE
PLAN YEAR           (3)
---------    ------------------
     <S>     <C>
      1      $                0
      2      $                0
      3      $                0
      4      $                0
      5      $                0
      6      $                0
      7      $                0
      8      $                0
      9      $                0
     10      $                0
     11      $                0
     12      $                0
     13      $                0
     14      $                0
     15      $                0
     16      $                0
             $                0
     17      $           12,375
     18      $          148,748
     19      $          151,722
     20      $          154,757
     21      $          157,852
     22      $          161,009
     23      $          164,229
     24      $          167,514
</TABLE>

                                       153
<PAGE>

<TABLE>
<CAPTION>
                                                                EARLY TERMINATION    DISABILITY ANNUAL      CHANGE-IN-
                                 AGE AT       ACCRUAL            ANNUAL BENEFIT      BENEFIT PAYABLE AT   CONTROL BENEFIT
            PLAN YEAR ENDING   PLAN YEAR      BALANCE           PAYABLE AT NORMAL    NORMAL RETIREMENT     PAYABLE IN A
PLAN YEAR     DECEMBER 31,        END         8.50% (1)         RETIREMENT AGE (2)        AGE (2)            LUMP SUM
---------   ----------------   ---------   ----------------     ------------------   ------------------   ---------------
     <S>     <C>                  <C>      <C>                  <C>                  <C>                  <C>
     25           2028            73       $      1,172,384
     26           2029            74       $      1,093,506
     27           2030            75       $      1,004,005
     28           2031            76       $        902,871
     29           2032            77       $        789,000
     30           2033            78       $        661,190
     31           2034            79       $        518,132
     32           2035            80       $        358,398
     33           2036            81       $        180,435
     34      November 2037        82       $              0
</TABLE>

<TABLE>
<CAPTION>
                  NORMAL
             RETIREMENT BENEFIT
               PAYABLE AFTER
                  NORMAL
              RETIREMENT DATE
PLAN YEAR           (3)
---------    -------------------
     <S>     <C>
     25      $          170,864
     26      $          174,281
     27      $          177,767
     28      $          181,322
     29      $          184,949
     30      $          188,648
     31      $          192,421
     32      $          196,269
     33      $          200,195
     34      $          186,870
</TABLE>

        (1)     Calculations are approximations. Benefit calculations are based
on prior year-end accrual balances. The accrual balance reflects payment at the
beginning of each month during retirement, beginning December 1, 2020.

        (2)     The Early Termination benefit and the Disability benefit are
calculated as an annual payment stream of the Accrual Balance that exists at the
end of the year preceding the year in which Early Termination or Disability
occurs, using a standard discount rate (8.50%). Under section 2.2.1 and section
2.3.1 of the Salary Continuation Agreement, the Early Termination benefit and
the Disability benefit amount increase annually by 2% to offset inflation,
beginning in the year after payment of the benefit commences. The Early
Termination and Disability benefits continue for the Executive's lifetime and
are included for illustrative purposes only.

        (3)     The Normal Retirement annual benefit under section 2.1 of the
Salary Continuation Agreement continues for the Executive's lifetime. This
illustration merely shows the Normal Retirement annual benefit until the
Executive attains age 82. The Normal Retirement annual benefit in 2020 consists
of one monthly payment. The Normal Retirement annual benefit in 2037 consists of
eleven monthly payments. The illustrated Normal Retirement annual benefit
figures reflect the annual 2% increase to offset inflation. Consistent with
section 2.1.1 of the Salary Continuation Agreement, this illustration assumes
that the 2% annual increase occurs in December of each year, beginning in
December 2021.

        (4)     Projected retirement occurs on November 17, 2020, with the first
normal monthly retirement benefit being paid on December 1, 2020.

                                       154

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