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EXHIBIT 4(c)

FORM OF EXCHANGE NOTE DUE 2014 

        UNLESS
THIS GLOBAL NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF
TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS
MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. 

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METROPOLITAN EDISON COMPANY    
    

 
  4.875% Exchange Senior Note due 2014    
    

	Original Issue Date:	 	March 25, 2004
	

Stated Maturity:	
 	

April 1, 2014
	

Interest Rate:	
 	

4.875%
	

Interest Payment Dates:	
 	

April 1 and October 1, commencing October 1, 2004
	

Regular Record Dates:	
 	

The Business Day immediately preceding each Interest Payment Date so long as this Note is issued in book-entry only form, otherwise the fifteenth calendar day next preceding each Interest Payment Date
	

Redeemable: Yes ý    No o	
 	

 
	

NO. R-1	
 	

 

	

 	
 	

 
	$250,000,000	 	CUSIP No.

        METROPOLITAN
EDISON COMPANY, a corporation duly organized and existing under the laws of the Commonwealth of Pennsylvania (herein called the "Company," which term includes any successor
under the Indenture referred to below), for value received, hereby promises to pay to CEDE & CO., or registered assigns, the principal sum of TWO HUNDRED AND FIFTY MILLION DOLLARS
($250,000,000) or such principal amount as shall be set forth in the Schedule attached hereto on the Stated Maturity specified above, and to pay interest thereon from the Original Issue Date specified
above or from the most recent Interest Payment Date to which interest has been paid or duly provided for, semi-annually in arrears on the Interest Payment Dates specified above in each
year, commencing with the Interest Payment Date next succeeding the Original Issue Date specified above, and at the Stated Maturity, at the Interest Rate per annum specified above, until the principal
hereof is paid or made available for payment. No interest shall accrue on the Stated Maturity, so long as the principal amount of this Note is paid on the Stated Maturity. The interest so payable, and
punctually paid or duly provided for, on any Interest Payment Date shall, as provided in such Indenture, be paid to the Person in whose name this Note (or one or more predecessor Notes) is registered
at the close of business on the Regular Record Date specified above (whether or not a Business Day) next preceding such Interest Payment Date. Notwithstanding the foregoing, (a) if the Original
Issue Date of this Note is after a Regular Record Date and before the corresponding Interest Payment Date, interest so payable for the period from and including the Original Issue Date to but
excluding such Interest Payment Date shall be paid on the next succeeding Interest Payment Date to the Holder hereof on the related Regular Record Date, and (b) interest payable at the Stated
Maturity shall be payable to the Person to whom principal shall be payable. Except as otherwise provided in said Indenture, any such interest not so punctually paid or duly provided for shall
forthwith cease to be payable to the Holder on such Regular Record Date and shall be paid to the Person in whose name this Note is registered at the close of business on a Special Record Date for the
payment of such defaulted interest to be fixed by the Trustee, notice of which shall be given to Holders of Notes of this series not more than 15 days or less than 10 days prior to such
Special Record Date. Interest on this Note shall be computed on the basis of a 360-day year consisting of twelve 30-day months. 

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        Principal,
applicable premium and interest due at the maturity of this Note shall be payable in immediately available funds when due upon presentation and surrender of this Note at the
Corporate Trust Office of the Trustee or at the authorized office of any paying agent in the Borough of Manhattan, the City and State of New York. Interest on this Note (other than interest payable at
the Stated Maturity) shall be paid by check, payable in clearinghouse funds, mailed to the Holder thereof at such Holder's address as it appears on the register; provided that if the Trustee receives
a written request from any Holder of Notes, the aggregate principal amount of all of which having the same Interest Payment Date as this Note equals or exceeds $10,000,000, on or prior to the
applicable Regular Record Date, interest on such Holder's Notes shall be paid by wire transfer of immediately available funds to a bank within the continental United States designated by such Holder
in its request or by direct deposit into the account of such Holder designated by such Holder in its request if such account is maintained with the Trustee or any paying agent. 

        This
Note is one of a duly authorized issue of Notes of the Company (herein called the "Notes of this series"), issued and issuable in one or more series under an Indenture, dated as of
July 1, 1999 (such Indenture as originally executed and delivered and as supplemented or amended from time to time thereafter, together with any constituent instruments establishing the terms
of particular Notes, being
herein called the "Indenture") between the Company and The Bank of New York, as successor trustee (herein called the "Trustee," which term includes any successor trustee under the Indenture), to which
Indenture and all indentures supplemental thereto reference is hereby made for a description of the respective rights, limitations of rights, duties and immunities of the Company, the Trustee and the
Holders of the Notes thereunder and of the terms and conditions upon which the Notes are, and are to be, authenticated and delivered. The acceptance of this Note shall be deemed to constitute the
consent and agreement by the Holder hereof to all of the terms and provisions of the Indenture. This Note is one of the series designated on the first page hereof. 

        Each
Note of this series shall be dated and issued as of the date of its authentication by the Trustee and shall bear an Original Issue Date. Each Note issued upon transfer, exchange or
substitution of such Note of this series shall bear the Original Issue Date of such transferred, exchanged or substituted Note. 

        If
any Interest Payment Date, or date on which the principal of this Note is required to be paid is not a Business Day, payment of the amounts due on this Note on such date may be made
on the next succeeding Business Day with the same force and effect as if made on such date, and, if such payment is made or duly provided for on such next succeeding Business Day, no interest shall
accrue on such amounts for the period from and after such date, to such Business Day. 

        If
an Event of Default shall occur and be continuing, the principal of the Notes may be declared due and payable in the manner and with the effect provided in the Indenture. 

        As
set forth in and subject to the provisions of the Indenture, no Holder of any Notes will have any right to institute any proceeding with respect to the Indenture or for any remedy
thereunder unless such Holder shall have previously given to the Trustee written notice of a continuing Event of Default with respect to such Notes, the Holders of a majority in principal amount of
the outstanding Notes affected by such Event of Default shall have made written request and offered reasonable indemnity to the Trustee to institute such proceeding as Trustee and the Trustee shall
have failed to institute such proceeding within 60 days; provided, however, that such limitations do not apply to a suit instituted by the Holder hereof for the enforcement of payment of the
principal of and any premium or interest on this Note on or after the respective due dates expressed here. 

        The
Notes of this series will be redeemable, as a whole or in part, at the Company's option, at any time or from time to time, on at least 30 days, but not more than
60 days, prior notice mailed to the registered address of each Holder of such Notes. The redemption prices will be equal to the greater of (1) 100% of the principal amount of such Notes
to be redeemed or (2) the sum of the present values 

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of
the Remaining Scheduled Payments (as defined below) discounted, on a semiannual basis (assuming a 360-day year consisting of twelve 30-day months), at a rate equal to the
sum of the Treasury Rate (as defined below) and 20 basis points. In each case accrued interest will be payable to the redemption date. 

        "Treasury
Rate" means, with respect to any redemption date, the rate per annum equal to the semiannual equivalent yield to maturity of the Comparable Treasury Issue, assuming a price for
the Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the Comparable Treasury Price for such redemption date. 

        "Comparable
Treasury Issue" means the United States Treasury security selected by an Independent Investment Banker as having a maturity comparable to the remaining term of the Notes of
this series that would be utilized, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities of comparable maturity to the
remaining term of such Notes. 

        "Independent
Investment Banker" means one of the Reference Treasury Dealers appointed by the Company. 

        "Comparable
Treasury Price" means, with respect to any redemption date, (1) the average of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a
percentage of its principal amount) on the third Business Day preceding such redemption date, as set forth in the daily statistical release (or any successor release) published by the Federal Reserve
Bank of New York and designated "Composite 3:30 p.m. Quotations for U.S. Government Securities" or (2) if such release (or any successor release) is not published or does not contain
such prices on such Business Day, (a) the average of the Reference Treasury Dealer Quotations for such redemption date, after excluding the highest and lowest such Reference Treasury Dealer
Quotations, or (b) if the Trustee obtains fewer than four such Reference Treasury Dealer Quotations, the average of all such quotations. 

        "Reference
Treasury Dealer Quotations" means, with respect to each Reference Treasury Dealer and any redemption date, the average, as determined by the Trustee, of the bid and asked
prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) quoted in writing to the Trustee by such Reference Treasury Dealer at 5:00 p.m., New
York City time, on the third Business Day preceding such redemption date. 

        "Reference
Treasury Dealer" means each of J.P. Morgan Securities Inc. and Wachovia Capital Markets LLC and their respective successors. If either of the foregoing shall cease to
be a primary U.S. Government securities dealer (a "Primary Treasury Dealer"), the Company shall substitute another nationally recognized investment banking firm that is a Primary Treasury Dealer. 

        "Remaining
Scheduled Payments" means, with respect to each Note of this series to be redeemed, the remaining scheduled payments of principal of and interest on such Note that would be
due after the related redemption date but for such redemption. If such redemption date is not an interest payment date with respect to such Note, the amount of the next succeeding scheduled interest
payment on such Note will be reduced by the amount of interest accrued on such Note to such redemption date. 

        On
and after the redemption date, interest will cease to accrue on the Notes of this series or any portion of the Notes of this series called for redemption (unless the Company defaults
in the payment of the redemption price and accrued interest). On or before the redemption date, the Company will deposit with a paying agent (or the Trustee) money sufficient to pay the redemption
price of and accrued interest on the Notes of this series to be redeemed on such date. If less than all the Notes of this series are to be redeemed, the Notes of this series to be redeemed shall be
selected by the Trustee by such method as the Trustee shall deem fair and appropriate. 

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        The
Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modifications of the rights and obligations of the Company and the rights of the Holders
of Notes under the Indenture at any time by the Company and the Trustee with the consent of the Holders of a majority in principal amount of the Outstanding Notes. Any such consent or waiver by the
Holder of this Note shall be conclusive and binding upon such Holder and upon all future Holders of this Note and of any Note of this series issued upon the registration of transfer hereof or in
exchange therefor in lieu thereof whether or not notation of such consent or waiver is made upon such Note. 

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        No reference herein to the Indenture and no provision of this Note or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay
the principal of and premium, if any, and interest, if any, on this Note at the times, place and rate, in the coin or currency, and in the manner, prescribed herein or in the Indenture. 

        The
Company, at its option, and subject to the terms and conditions provided in the Indenture, will be discharged from any and all obligations in respect of the Notes (except for certain
obligations including obligations to register the transfer or exchange of Notes, replace stolen, lost or mutilated Notes, maintain paying agencies and hold monies for payment in trust, all as set
forth in the Indenture) if the Company irrevocably deposits with the Trustee cash, U.S. Government Obligations maturing as to principal and interest in such amounts and at such times as will insure
the availability of cash, or a combination of cash and U.S. Government Obligations, in any case sufficient, without reinvestment, to pay at maturity or the applicable redemption date all Outstanding
Notes, including the principal of and any premium and interest on the Notes on the dates such payments are due in accordance with the terms of the Notes. 

        As
provided in the Indenture and subject to certain limitations therein set forth, the transfer of this Note is registrable in the Note register. Upon surrender of this Note for
registration or transfer at the corporate trust office of the Trustee or such other office or agency as may be designated by the Company in the Borough of Manhattan, The City and State of New York,
endorsed by or accompanied by a written instrument of transfer in form satisfactory to the Company and the Note registrar, duly executed by the Holder hereof or the attorney in fact of such Holder
duly authorized in writing, one or more new Notes of this series of like tenor and of authorized denominations and for the same aggregate principal amount will be issued to the designated transferee
or transferees. 

        The
Notes of this series are issuable only as registered Notes, without coupons, and in denominations of $1,000 and integral multiples thereof. As provided in the Indenture and subject
to certain limitations therein set forth, Notes of this series are exchangeable for a like aggregate principal amount of Notes of the same series and tranche, of any authorized denominations, as
requested by the Holder surrendering the same, and of like tenor upon surrender of the Note or Notes to be exchanged at the office of The Bank of New York in New York, New York or such other office or
agency as may be designated by the Company from time to time. 

        The
Trustee shall not be required to exchange or register the transfer of any Notes selected, called or being called for redemption (including Notes, if any, redeemable at the option of
the Holder provided such Notes are then redeemable at such Holder's option) except, in the case of any Note to be redeemed in part, the portion thereof not to be so redeemed. 

        No
service charge shall be made for any such registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge
that may be imposed in connection therewith. 

        Prior
to due presentment of this Note for registration of transfer, the Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name this Note is
registered as the owner hereof for all purposes, whether or not this Note is overdue, and neither the Company, the Trustee nor any such agent shall be affected by notice to the contrary. 

        The
Indenture and the Notes shall be governed by and construed in accordance with the laws of the State of New York. 

        As
provided in the Indenture, no recourse for the payment of the principal of or any premium or interest on any Note, or for any claim based thereon or otherwise in respect thereof; and
no recourse under or upon any obligation, covenant or agreement of the Company, contained in the Indenture or in any supplemental indenture, or in any Note, or because of the creation of any
indebtedness represented thereby, shall be had against any incorporator, stockholder, officer or director, as such, 

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past,
present or future, of the Company or of any successor corporation, either directly or through the Company or any successor corporation, whether by virtue of any constitution, statute or rule of
law, or by the enforcement of any assessment or penalty or otherwise; it being expressly understood that all such liability is hereby expressly waived and released as a condition of, and as a
consideration for, the execution of the Indenture and the issuance of the Notes. 

        Unless
the certificate of authentication hereon has been executed by the Trustee or an Authenticating Agent by manual or facsimile signature of an authorized officer, this Note shall not
be entitled to any benefit under the Indenture or be valid or obligatory for any purpose. 

        All
terms used in this Note which are defined in the Indenture shall have the meaning assigned to them in the Indenture. 

        IN
WITNESS WHEREOF, the Company has caused this instrument to be duly executed. 

	Date: September    , 2004	 	METROPOLITAN EDISON COMPANY
	

 	
 	

By:	

 Name:  Richard H. Marsh

Title:  Senior Vice President and

           Chief Financial Officer
	Attested:	 	 	 

	

By:	

 Name: David W. Whitehead

Title: Corporate Secretary	
 	

 

 
 

CERTIFICATE OF AUTHENTICATION    
    

        This Note is one of the Notes of the series herein designated, described or provided for in the within-mentioned Indenture. 

	Dated:	
	 	THE BANK OF NEW YORK as Trustee
	

 	

 	
 	

By:	
 	

 Authorized Signer

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   SCHEDULE OF INCREASES AND DECREASES OF GLOBAL NOTE  

	

	Date
	 	Increases in

Principal

Amount of this

Global Note
	 	Decreases in

Principal

Amount of this

Global Note
	 	Principal

Amount of this

Global Note

Remaining after

such Increase

or Decrease
	 	Notation by

Security

Registrar

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	

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METROPOLITAN EDISON COMPANY

4.875% Exchange Senior Note due 2014

CERTIFICATE OF AUTHENTICATIONQuickLinks
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Exhibit 10.5  

Saxony  

Securities, Inc.  

  
 

    AGREEMENT    
    

The
following are the terms and conditions of an agreement dated as of August 5, 2004 (the "Agreement"), under which Saxony Securities, Inc., a Missouri corporation ("SSI"), will provide
consulting services to and serve as a sponsoring dealer for CommunitySouth Bancshares, Inc. (the "Company") in connection with its subscription offering for a minimum of 1,130,000 and a maximum
of 2,500,000 shares of the Company's common stock at a price of $10.00 per share (the "Subscription Offering"). The Subscription Offering will be made means of the prospectus (the "Prospectus")
incorporated in a registration statement on Form SB-2 (together with any amendments thereto, the "Registration Statement") filed with the U.S. Securities and Exchange Commission ("SEC"),
which will be provided to SSI. SSI and the Company are hereinafter referred to collectively as the "Parties." 

I.    SERVICES AND DUTIES  

Beginning
on September 15, 2004 (the "Start Date"), SSI will provide the following services to the Company. 

	(A)
	Timetables

	

	SSI
will advise the Company on the establishment of a comprehensive plan for the development and execution of the Subscription Offering. SSI will assist the
Company in establishing a computer database that will enable Company to record and maintain records of all subscriptions for shares of the Company's common stock ("Subscription Offers"), account for
all subscription proceeds, balance Subscription Offers to subscription proceeds, and gauge the progress of the capital raising campaign on a daily basis.

	(B)
	Coordination of Media Campaigns

 
	

	Media Announcements  
	

	SSI will prepare all layout and design work for the Company's "tombstone"
announcements with coupons, and will advise on placement and related marketing factors, such as location in newspaper, style of announcement, and announcement identification techniques. These
announcements and any press releases will be subject to approval by the Company and review by counsel prior to any publication. SSI acknowledges that any publicity generated prior to completion of the
Subscription Offering (such as press releases or interviews granted by management) may be viewed by the SEC as an attempt to "condition the market" for the stock offering and therefore would be a
violation of the SEC's rules. SSI agrees not to create or cause any such publicity.

	(C)
	Marketing Overview

	

	SSI
will advise the Company (Monday through Friday, weekends if necessary) how best to coordinate all aspects of the Company's offering campaign, including
advice as to proven marketing techniques which have been successful in other de novo bank stock offerings. SSI will make sure the organizers of the Bank (the "Organizers") are committed to the
offering campaign, as this is an essential point to a timely completion of the stock sale.

	

	SSI
will advise the Organizers on how to allocate each Organizer's fund-raising responsibilities, and will provide advice to the Organizers as
to proven marketing techniques that will enable them to maximize their efforts. Included will be suggested form letters and notices. Investor meetings, including open houses, breakfast meetings,
luncheon meetings, and cocktail receptions are the best settings for introducing the Company to potential investors. 

 

	(D)
	IRA KEOGH, Pension and Profit Sharing Suitability

	

	SSI
will work with the Company in processing Subscription Offers for all the various types of retirement accounts. If potential investors wish to use
retirement funds to invest in the Company's stock, but do not have a retirement account established or have a custodian that will not process this type of transaction, then SSI will seek out those
retirement custodians who will allow such a transaction. SSI will oversee all retirement account transactions to ensure they are properly initiated and completed in compliance with applicable law.

	(E)
	Staffing

	

	During
the term of this Agreement, SSI will locate one Series 7 registered representative at the Company's offices in Easley, South Carolina and
provide the assistance of such other employees or representatives as may be appropriate (including up to two broker's assistants) to provide the services called for by this Agreement or otherwise
provided by SSI to the Company.

	(F)
	Privacy Policy

	

	SSI
will not remove from the Company any list that has been compiled by the Company. All computer discs or hard-copy lists of prospects,
subscribers and shareholders, whether produced by the Company, SSI, or any of their respective employees, agents, representatives or affiliates, are and will remain the sole property of the Company
and will not be removed from the premises by SSI or any of SSI's employees, agents, representatives or affiliates. Likewise, any and all information gained by or given to SSI and its employees,
agents, representatives or affiliates during the course of the Subscription Offering about the Company, its business plan, financial projections, marketing strategies, Organizers, Subscription
Offering, and subscribers shall be and remain confidential, and neither SSI nor any of its employees, agents, representatives or affiliates shall disclose any such information to any other person, or
utilize any such information for any purpose other than on the Company's behalf, without the prior written consent of the Company.

	(G)
	Sponsoring Dealer

	

	The
Company intends to offer and sell the Shares in several states to be agreed upon by the Parties in accordance with such states' "blue sky" regulations.
The Parties understand that no Company securities will be considered for registration by certain state securities regulators unless the application therefor is "sponsored" by a registered dealer. If
the Company elects to register the Subscription Offering in states that require a sponsoring broker dealer, the Company has the option of appointing SSI as its sponsoring dealer. In such capacity, SSI
will act as sponsoring dealer for the account of the Company in connection with effecting the public offer and sale of the Shares to residents of the states where SSI acts as a sponsoring dealer for
the Company after the Registration Statement's effectiveness with the SEC and the Company's filing of the appropriate notice, fee and consent to service of process with the applicable states'
securities divisions. SSI will effect the sale of the Shares in each state on behalf of the Company at a public offering price of $10 per share. The Company acknowledges that SSI has not been, nor
will SSI be involved, in the determination of the public offering price of the Shares.

	

	As
soon as practicable following the date on which the applicable state securities divisions where SSI is representing the Company as its sponsoring dealer
clears the Subscription Offering for sale, and continuing until such time as the Subscription Offering is terminated by the Company, SSI shall serve as the selling agent and sponsoring dealer for the
Company. SSI will not have any commitment to acquire any Shares for its own account or with a view to 

2

 

their
distribution. SSI is acting as an agent, not as an underwriter, and SSI is not bound hereunder to purchase any Shares. 

	

	The
Parties acknowledge that the Shares shall be offered and sold exclusively through certain employees, officers and directors of the Company and, with
respect to offers and sales to residents in states where SSI is acting as the sponsoring dealer for the Company, by SSI. The Parties also acknowledge that the Shares shall be sold by means of the
subscription offer that is attached to and made part of the Prospectus.

	

	SSI
shall perform its duties pursuant to this Agreement in compliance with all applicable federal and state securities laws, and shall solicit subscriptions
for the Shares only by means of the Prospectus and only in such jurisdictions specified by the Company and in which the Company may make such offers and sales. SSI shall not, and shall not permit its
employees or agents to, make any statement or provide any information regarding the Subscription Offering or the Company or the Bank that is inconsistent with the information contained in the
Prospectus. 

II.    FEE ARRANGEMENT  

	(A)
	SSI
will be paid an engagement fee of $10,000 upon the acceptance of this Agreement.

	(B)
	SSI
will be paid a fee of 1.5% of the minimum Subscription Offering amount of $11,400,000, or $171,000, payable in three monthly installments of $57,000 beginning on the Start Date.
This fee will not be increased if the Company sells more than the minimum number of shares in the Subscription Offering.

	(C)
	For
the first four week period following the Start Date (as defined above), the Company will pay to SSI an additional fee of $30,000 payable at the beginning of such period. Upon the
expiration of the initial four week period, the Company has the option of extending the term for one or more four week periods or one week periods. At the beginning of each new period, and depending
on the option selected by Company, the Company will pay to SSI a fee of either $30,000 for each four week period or $7,500 for each one week period.

	(D)
	Without
regard to the amount of stock for which Subscription Offers are received, the Company agrees to reimburse SSI for its reasonable out-of-pocket expenses
reasonably incurred in connection with providing the services to the Company called for by this Agreement. These expenses will be presented to the Company at the end of each four week period during
the term of this Agreement. Attachment A, a part of this Agreement, describes the expenses for which reimbursement will be made and the reimbursement policy to be followed. Total expenses for which
the Company will be obligated to reimburse SSI will not exceed $5,000 per monthly period. That limit will be pro rated for a partial week period based on the number of days in that period during which
this Agreement was in effect.

	(E)
	In
the event the Subscription Offering is terminated prior to breaking escrow, SSI must return to the Company all fees paid pursuant to this Section II in excess of actual
accountable out-of-pocket expenses. 

III.    TERM OF AGREEMENT  

The
term of this Agreement shall begin on the Start Date and end on October 13, 2004, but the term may be extended at the Company's discretion for one or more additional periods as described in
Section II(C) above. However, (i) this Agreement may be terminated at any time, whether at the end of its term or otherwise, at the option of the Company upon ten days written notice to
SSI, and (ii) notwithstanding the termination of this Agreement at the end of its term or 

3

 

otherwise,
SSI's and the Company's agreements, representatives and warranties under Sections IV and V below, and the indemnification agreements and obligations of SSI and the Company under Sections VI
and VII below, shall remain in full force and effect following any such termination except to the extent that they are expressly terminated by an agreement in writing between SSI and the Company. 

IV.    SSI's COVENANTS, REPRESENTATIONS AND WARRANTIES

SSI
hereby makes the following covenants, representations and warranties with and to the Company, with the understanding that the Company will rely on the same in entering into this Agreement. 

	(A)
	SSI
is registered as a broker-dealer under applicable federal and state law (including South Carolina and the other states in which SSI serves as the sponsoring dealer), is a member
in good standing of the National Association of Securities Dealers, Inc., and has met and will continue to meet all registration, licensing, financial and reporting requirements it is required
to meet under applicable federal and state laws and regulations in order to provide the services SSI has agreed to provide, or that SSI contemplates that it will provide, to the Company under this
Agreement or otherwise in connection with the Subscription Offering.

	(B)
	Each
employee, agent, representative or affiliate of SSI that provides any services to the Company under this Agreement or otherwise in connection with the Subscription Offering will,
at the time of providing those services, meet all registration and licensing requirements he or it is required to meet under applicable federal and state laws and regulations in order to provide those
services. Lee Bradley shall be the agent of SSI primarily responsible for SSI's services under this Agreement.

	(C)
	SSI
will not provide any service or engage in any activity, and it will not permit SSI or any of its or SSI's employees, agents, representatives or affiliates to provide any service
or engage in any activity, whether pursuant to this Agreement or otherwise in connection with the Subscription Offering, for which it or he does not have in effect all registrations, licenses and
approvals necessary to cause that service or activity to comply with applicable federal and state laws and regulations.

	(D)
	SSI
agrees that any employees, agents or representatives of any of SSI or any of SSI's other affiliates which provide any services to the Company under this Agreement or otherwise in
connection with the Subscription Offering will be considered, for purposes of SSI's agreements, representations, warranties and obligations under this Agreement, to also be employees, agents or
representatives of SSI.

	(E)
	Notwithstanding
anything contained in this Agreement to the contrary, the terms and conditions of the Subscription Offering as described in the Company's Prospectus shall control the
conduct of the Subscription Offering, and neither, SSI, nor any of their respective employees, agents, representatives or affiliates shall take any action in connection with the Subscription Offering
contrary to those terms and conditions.

	(F)
	In
connection with or during the course of the Subscription Offering, neither SSI nor any employee, agent, representative or affiliate of SSI will make any representation or provide
any information to any subscriber or potential subscriber for shares of the Company's stock other than the representations and information contained in the Prospectus or other information specifically
approved by the Company's President.

	(G)
	During
the course of the Subscription Offering, only the Organizers or proposed officers of the Company are authorized to receive or accept from a subscriber any Subscription Offer 

4

 

and/or
payment. In the event that any Subscription Offer or payment comes into the possession of SSI or any of their respective employees, agents, representatives or affiliates, it or he will
immediately deliver the same to an officer or director of the Company for transmittal to the Company's escrow agent. 

	(H)
	This
Agreement does not create an exclusive arrangement for SSI to provide services to the Organizers or the Company, and nothing in this Agreement shall preclude the Company from
contracting or entering into an arrangement with any other sales agent, consultant, broker-dealer or other person for such other person or entity to provide services to the Company as agent in the
Subscription Offering and to receive compensation from the Company in connection with the Subscription Offering.

	(I)
	SSI
is registered with the SEC as a broker-dealer and is a member in good standing with the National Association of Securities Dealers, Inc. (the "NASD"), and SSI and all its
agents and representatives have or will have all required licenses and registrations to perform its obligations under this Agreement; and such registrations, membership and licenses will remain in
effect during the term of this Agreement. SSI is also registered as a dealer under the requirements of the respective states where it agrees to represent the Company as its sponsoring dealer. SSI
agrees that, in performing its obligations under this Agreement, SSI will comply with all applicable statutes and the rules and regulations of the NASD and any other federal or state governmental
agency which are applicable to it. SSI shall make all necessary filings with the NASD and/or the applicable state securities regulators in connection with its services provided hereunder. All terms of
this Agreement, including the fee arrangement, are subject to such changes, as any as may be required by the NASD.

	(J)
	This
Agreement has been duly and validly authorized, executed and delivered by SSI and is its valid and binding agreement and obligation. 

V.    COMPANY'S COVENANTS, REPRESENTATIONS AND WARRANTIES  

The
Company hereby makes the following covenants, representations and warranties with and to SSI, with the understanding that SSI will rely on the same in entering into this Agreement. 

	(A)
	An
application has been duly filed with the South Carolina Commissioner of Financial Institutions (the "Commissioner") for approval of the Bank's South Carolina charter. The Company
currently is not aware of any reason why the Bank's application will not be approved.

	(B)
	An
application has been duly filed with the Federal Deposit Insurance Corporation for approval of federal deposit insurance for the Bank's deposit accounts, and approval of that
application is pending. The Company currently is not aware of any reason why the Bank's application will not be approved.

	(C)
	The
Subscription Offering has been registered under the Securities Act of 1933 (the "1933 Act").

	(D)
	The
Company will not solicit or accept a Subscription Offer from a resident of any state unless it shall have determined to its satisfaction, based on the advice of its legal counsel,
that an offer of a subscription for shares of the Company's common stock is registered or qualified under the securities laws of that state.

	(E)
	During
the course of the Subscription Offering, all funds received by the Company from subscribers shall be held in an escrow account as described in the Prospectus and, following
receipt by the Company, each Subscription Offer received, together with funds for the 

5

 

purchase
of shares covered thereby, shall be transmitted promptly by the Company to its escrow agent. 

	(F)
	If
SSI is required to make any filings with the NASD or any applicable state securities divisions where SSI is acting as the sponsoring dealer for the Company in connection with this
Subscription Offering, the Company will apply its best efforts to cooperate with SSI. The Company covenants that it will not commence the Subscription Offering in any states where SSI is representing
it as its sponsoring dealer until such time as SSI has received any required approvals from the applicable state securities division. 

VI.    INDEMNIFICATION BY THE COMPANY  

	(A)
	The
Company agrees to indemnify and hold harmless SSI, and its officers, directors, agents, representatives and affiliates and any other person, if any, who controls SSI or its
affiliates within the meaning of Section 15 of the Securities Act of 1933 (these parties together with SSI are hereinafter referred to as the "Saxony Indemnitees") against any and all losses,
claims, damages, liabilities and expenses (including reasonable costs of investigation and counsel's fees) arising out of or based upon the actions of the Company or any of its employees, agents,
representatives or affiliates (i) that constitute bad faith or gross negligence on the part of the Company or its employee, agent, representative or affiliate, (ii) that constitute
violations of applicable federal or state laws or regulations on the part of the Company or its employee, agent, representative or affiliate, or (iii) that constitute a violation of any of the
Company's agreements, representations or warranties contained in this Agreement. The Company will reimburse SSI and the Saxony Indemnitees for any legal or other expenses reasonably incurred
(individually or collectively) by it or them in connection with investigating or defending any such loss, claim, damage, liability or action. However, the Company will not be responsible for
(i) any losses, claims, damages, liabilities or expenses that result from bad faith or gross negligence on the part of SSI or any of its employees, agents, representatives or affiliates, or on
the part of the Saxony Indemnitee, (ii) that arise out of actions or conduct by SSI or any of its employees, agents, representatives or affiliates, or by any Saxony Indemnitee, that constitute
a violation of any applicable federal or state law or regulation, or (iii) that arise out of actions or conduct by SSI or any of its employees, agents, representatives or affiliates, or by any
SSI Indemnitee, that constitutes a violation of any of SSI's agreements, representations or warranties contained in this Agreement.

	(B)
	If
any action or claim shall be brought or asserted against a Saxony Indemnitee in respect of which indemnity may be sought from the Company, it or he shall promptly notify the
Company in writing, enclosing copies of all papers served on or delivered to such party. A failure to notify or delay in notifying the Company shall not affect the right of the Saxony Indemnitee to be
indemnified or reimbursed hereunder except to the extent the Company is shown to have been materially prejudiced as a result of such failure. No Saxony Indemnitee shall settle, compromise or consent
to the entry of any judgment with respect to any litigation, investigation or proceeding commenced or threatened by any person or entity, including any governmental agency or body, or any claim
whatsoever in respect of which indemnification or contribution can be sought under this Section VI (whether or not the Saxony Indemnitees are actual or potential parties thereto), unless SSI or
the Saxony Indemnitee obtains the prior written consent of the Company. 

VII.    INDEMNIFICATION BY SSI  

	(A)
	SSI
agrees to indemnify and hold harmless the Company, and its officers, directors, agents, organizers, representatives and affiliates and any other person, if any, who controls the
Company or its affiliates within the meaning of Section 15 of the Securities Act of 1933 (these 

6

 

parties
together with the Company are hereinafter referred to as the "Company Indemnitees") against any and all losses, claims, damages, liabilities and expenses (including reasonable costs of
investigation and counsel's fees) arising out of or based upon the actions of SSI or any of their respective employees, agents, representatives or affiliates (i) that constitute bad faith or
gross negligence on the part of SSI or any of its employees, agents, representatives or affiliates, (ii) that constitute violations of applicable federal or state laws or regulations on the
part of SSI or any of its employees, agents, representatives or affiliates, or (iii) that constitutes a violation of any of SSI's agreements, representations or warranties contained in this
Agreement. SSI will reimburse the Company and the Company Indemnitees for any legal or other expenses reasonably incurred (individually or collectively) by it or them in connection with investigating
or defending any such loss, claim, damage, liability or action. However, SSI will not be responsible for (i) any losses, claims, damages, liabilities or expenses that result from bad faith or
gross negligence on the part of the Company or any of its employees, agents, representatives or affiliates, or on the part of the Company Indemnitee, (ii) that arise out of actions or conduct
by the Company or any of its employees, agents, representatives or affiliates, or by the Company, that constitute a violation of any applicable federal or state law or regulation, or (iii) that
constitutes a violation of any of the Company's agreements, representations or warranties contained in this Agreement. 

	(B)
	If
any action or claim shall be brought or asserted against a Company Indemnitee in respect of which indemnity may be sought from SSI, it or he shall promptly notify SSI in writing,
enclosing copies of all papers served on or delivered to such party. A failure to notify or delay in notifying SSI shall not affect the right of the Company Indemnitee to be indemnified or reimbursed
hereunder except to the extent SSI is shown to have been materially prejudiced as a result of such failure. No Company Indemnitee shall settle, compromise or consent to the entry of any judgment with
respect to any litigation, investigation or proceeding commenced or threatened by any person or entity, including any governmental agency or body, or any claim whatsoever in respect of which
indemnification or contribution can be sought under this Section VII (whether or not the Company Indemnitees are actual or potential parties thereto), unless the Company obtains the prior
written consent of SSI.

	(C)
	SSI
agrees to indemnify and hold harmless the Company Indemnitees against any and all losses, liabilities, claims, damages and expenses to which it or they may become subject if such
losses, liabilities, claims, damages or expenses arise solely out of, or are based solely on, (i) any untrue or alleged untrue statement of material fact contained in the Prospectus or any
amendment or supplement thereto, or the omission of a material fact required to be stated therein, or necessary to make the statements therein not misleading, but only if such untrue statement or
omission or alleged omission was made in the Prospectus (as amended or supplemented) based upon and in conformity with written information concerning SSI furnished to the Company by SSI specifically
for use in the Prospectus or (ii) any untrue or alleged untrue statement of material fact contained in any other information (whether oral or in writing) provided by SSI or any of their
respective employees, agents, representatives or affiliates to the Company or any other person in the course of providing services pursuant to this Agreement or otherwise in connection with the
Subscription Offering. 

7

 

 
 

Signature Page    
    

        The undersigned agree to the terms and conditions as outlined in this Agreement. 

	 	 	SAXONY SECURITIES, INC.
	

 	
 	

By:	

/s/  RICHARD E. GRIFFARD      
 Richard E. Griffard, President
	

 	
 	
COMMUNITYSOUTH BANCSHARES, INC.
	

 	
 	

By:	

/s/  C. ALLAN DUCKER, III      
 C. Allan Ducker III, CEO

8

 
 
 

ATTACHMENT A    
    

MEALS  

Up
to $35 a day per person with receipts attached to expense reports. 

MILEAGE/AIRFARE  

$.36
per mile on direct business related travel with personal cars. All mileage is to be logged on a daily basis on expense reports. Local travel to and from the Company's office is not reimbursable.
When traveling by air, the lowest cost available will be used. 

LODGING  

The
lowest cost alternative to the Company will be used commensurate with reasonable safety and cleanliness for our staff. 

9

QuickLinks

AGREEMENT

Signature Page

ATTACHMENT A

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