Document:

Exhibit 10.1

 

6350
S 3000 E

Salt
Lake City, UT 84121

 

Mr. Stephen
Chesnut

3936
Blustery Way

Marietta.
Georgia 30066

Email:
schesnut@bellsouth.net

 

Dear
Steve,

 

I am pleased to offer you the position of Senior
Vice President, Finance (principal financial officer) with Overstock.com,
conditioned upon our satisfaction with the results of a background check.  Overstock.com will secure its future success
by continuing to attract talented and dedicated employees such as you.

 

The
following is a summary of the terms of our employment offer:

 

Start
Date: January 5,
2009

Employment
Status: Full-Time,
Exempt

Compensation: $200,000
per year

One-Time Signing Bonus: $30,000 (to be paid within 10 days of the beginning employment). Full
amount must be returned to Overstock.com if you choose to leave or are
terminated for cause before completing six months of employment.

Performance Bonus: Participation in 2009 bonus plan based on performance.

Paid Time Off: 15
days per year accrued at 5 hours per pay period (with an additional and
immediate 5 days in 2009 to be use for relocation activities).

Restricted Stock Unit Grant: At least 10,000 shares pending board approval and with standard
three-year vesting and other terms.

Relocation: Direct
payment to relocation companies of up to $20,000 in reimbursable relocation
costs — to be used within nine months of first day of employment.  You must reimburse Overstock.com the full
amount if you choose to leave or are terminated for cause before completing
nine months of employment.

COBRA Reimbursement: Up to $1,000 per month for one month.

Report to:
Jonathan Johnson

 

You
will also be eligible to receive the following benefits effective the first of
the month following your first full month of employment.

 

	
  Medical

  	
  Dependent
  Care Reimbursement Account

  
	
  Dental
  with Orthodontia

  	
  Health
  Care Reimbursement Account

  
	
  Vision

  	
  Pre-Paid
  Legal

  
	
  Supplemental Life

  	
  Life Insurance

  
	
  Supplemental
  Disability, Accident/Sickness,  Cancer

  

 

You
will be eligible to participate in the Overstock.com 401(k) plan beginning
the first of the quarter following 6 months of service. This plan matches 50%
of your pre-tax contributions up to 6% of your salary.

 

Overstock.com
is an at-will employer. Nothing in this offer shall limit the right of
Overstock.com or yourself to terminate the employment relationship.

 

Please
sign below and return this document via fax to 801-947-3144, signifying
acceptance of this offer. If you have any questions, please feel free to
contact me at 801-947-3114.  I look
forward to working with you.

 

	
  Sincerely,

  	
  I
  accept the above terms of employment.

  
	
   

  	
   

  
	
   

  	
   

  
	
  Jonathan
  E. Johnson III

  	
  Stephen
  Chesnut

  	
  December     ,
  2008

  
	
  President

  	
   

  	
   

  

 

CONFIDENTIAL
– PROPERTY OF OVERSTOCK.COM: the existence and terms of this letter and all related communications
are confidential and intended only for your personal and family consideration.Exhibit 10.1

 

EXECUTION
COPY

 

EMPLOYMENT
AGREEMENT

 

THIS EMPLOYMENT AGREEMENT
(this “Agreement”) dated as of December 31, 2008, is made by and between
CommunitySouth Financial Corporation, a South Carolina corporation (the
“Company”), CommunitySouth Bank and Trust (the “Bank”), a South Carolina state
bank and wholly owned subsidiary of the Company (the Company and the Bank
collectively referred to herein as the “Employer”), and C. Allan Ducker, III,
an individual resident of South Carolina (the “Executive”).

 

The Employer presently
employs the Executive as the Chief Executive Officer of the Bank and the
Company.  The Employer recognizes that
the Executive’s contribution to the growth and success of the Bank and the
Company is substantial.  The Employer
desires to provide for the continued employment of the Executive and to make
certain changes in the Executive’s employment arrangements which the Employer
has determined will reinforce and encourage the continued dedication of the
Executive to the Employer and will promote the best interests of the Employer
and the Company’s shareholders.  The
Executive is willing to terminate his interests and rights under the existing
employment agreement with the Employer and to continue to serve the Employer on
the terms and conditions herein provided. 
Certain terms used in this Agreement are defined in Section 17
hereof.

 

In consideration of the
foregoing, the mutual covenants contained herein, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties hereto, intending to be legally bound, hereby agree as follows:

 

1.             Employment.  The Employer shall continue to employ the
Executive, and the Executive shall continue to serve the Employer, as Chief
Executive Officer of the Company and the Bank upon the terms and conditions set
forth herein.  The Executive shall have
such authority and responsibilities consistent with his position as are set
forth in the Company’s or the Bank’s Bylaws or assigned by the Company’s or the
Bank’s Board of Directors (collectively, the “Board”) from time to time.  The Executive shall devote his full business
time, attention, skill and efforts to the performance of his duties hereunder,
except during periods of illness or periods of vacation and leaves of absence
consistent with Bank policy.  The
Executive may devote reasonable periods to service as a director or advisor to
other organizations, to charitable and community activities, and to managing
his personal investments; provided that, such activities do not
materially interfere with the performance of his duties hereunder and are not
in conflict or competitive with, or adverse to, the interests of the Company or
the Bank.

 

The Executive is currently
serving as a director of each of the Company and the Bank.  The Company shall nominate the Executive for
election as a director at such times as necessary so that the Executive will,
if elected by shareholders, remain a director of the Company throughout the
term of this Agreement.  The Executive hereby
consents to serving as a director and to being named as a director of the
Company in documents filed with the Securities and Exchange Commission.  The Board shall undertake every lawful effort
to ensure that the Executive continues throughout the term of employment to be
elected or reelected as a director of the Bank.

 

2.             Term.  Unless earlier terminated as provided herein,
the Executive’s employment under this Agreement shall commence on the date
hereof and be for a term (the “Term”) of three years.  At the end of each day of the Term, the Term
shall be extended for an additional day so that the remaining term shall
continue to be three years; provided that, the Executive or the Employer
may at any time, by written notice, fix the Term to a finite term of three
years commencing with the date of the notice. 
Notwithstanding the foregoing, the Term of employment hereunder will end
on the date that the Executive attains the retirement age, if any, specified in
the Bylaws of the Bank for directors of the Bank.

 

3.     Compensation and Benefits.

 

(a)   The Employer shall pay the Executive an
initial annual base salary of $195,000, which shall be paid in accordance with
the Employer’s standard payroll procedures. 
The Board or the Compensation Committee

 

 

shall review the Executive’s
performance and salary at least annually and the Board may increase the
Executive’s base salary if it determines in its sole discretion that an
increase is appropriate.

 

(b)   The Executive shall participate in the
Employer’s long-term equity incentive program and be eligible for the grant of
stock options, restricted stock, and other awards thereunder or under any
similar plan adopted by the Company.  Any
options or similar awards shall be issued to Executive at an exercise price of
not less than the stock’s current fair market value as of the date of grant,
and the number of shares subject to such grant shall be fixed on the date of
grant.

 

(c)   The Executive shall participate in all
retirement, medical, welfare and other benefit plans or programs of the
Employer now or hereafter applicable generally to employees of the Employer or
to a class of employees that includes senior executives of the Employer.  Employer will cover the cost of premium payments
for medical, dental, vision and disability insurance for the Executive and
medical, dental, and vision insurance for his dependents.  The Executive shall also be eligible to
receive directors’ fees in the same amount as outside directors as determined
by the Board in its sole discretion from time to time.  The Employer shall pay such fees in
accordance with the Employer’s standard payroll procedures.

 

(d)   The Employer shall provide the Executive with
a term life insurance policy providing for death benefits totaling $500,000
payable to the Executive’s spouse and heirs and $500,000 payable to the
Employer, and the Executive shall cooperate with the Employer in the securing
and maintenance of such policy.  If
Executive is taxed by state or federal authorities with respect to Employer’s
payment of the key man life insurance policy, Executive’s compensation payable
hereunder shall be increased, on a tax gross-up basis, so as to reimburse the
Executive for the additional tax payable by the Executive as a result of
Employer’s payment of the key man life insurance premiums taking into account
all taxes payable by the Executive with respect to such tax gross-up payments
hereunder, so that the Executive shall be, after payment of all taxes, in the
same financial position as if no taxes with respect to the key man life
insurance policy had been imposed upon him. 
The Employer shall require and pay the cost of an annual physical for
the Executive.

 

(e)   The Employer shall provide the Executive with
an automobile either owned or leased by the Company or the Bank of a make and
model appropriate to the Executive’s status. 
The monthly payment of this automobile shall not exceed $750 per
month.  Insurance, taxes and other
related automobile expenses shall also be paid by the Bank.

 

(f)    The Employer shall pay the dues pertaining
to area country, social, and civic clubs and shall designate the Executive as
the authorized user of such membership for so long as the Executive remains the
Chief Executive Officer of the Employer and this Agreement remains in force.

 

(g)   The Employer shall reimburse the Executive
for reasonable travel and other expenses, including cell phone expenses related
to the Executive’s duties, which are incurred and accounted for in accordance
with the normal practices of the Employer. 
The Employer shall reimburse the Executive for such expenses within 60
days of Executive’s incurring such expense.

 

(h)   The Employer shall provide the Executive with
four weeks’ annual paid time off, which includes sick leave, in accordance with
any banking rules or regulations governing paid time off leave.  Any payments made by the Employer to the
Executive as compensation for paid time off days shall be paid in accordance
with the Employer’s standard payroll procedures.

 

(i)    The Executive shall be eligible to receive
cash bonuses based on the Executive’s achievement of specified goals and
criteria.  These goals and criteria may
include both annual and long-term goals, may provide for vesting over a
specified time period, and shall be established annually by the Board (or an
appropriate committee of the Board).  Any
bonus payment made pursuant to this Section 3(i) shall be determined
by the Board and made by the earlier of (i) 70 days after the previous
year end for which the bonus was earned by the Executive or (ii) the first
pay period following the Employer’s press release announcing its previous
year’s financial performance.

 

2

 

4.     Termination.

 

(a)   The Executive’s employment under this Agreement may be terminated
prior to the end of the Term only as provided in this Section 4.

 

(b)   The Agreement will be terminated upon the
death of the Executive.  In this event,
the Employer shall pay Executive’s estate any sums due him as base salary
and/or reimbursement of expenses through the end of the month during which
death occurred in accordance with the Employer’s standard payroll
procedures.  The Employer shall also pay
the Executive’s estate any bonus earned through the date of death.  Any bonus for previous years which was not
yet paid will be paid pursuant to the terms as set forth in Section 3(i) above.  Any bonus that is earned in the year of death
will be paid on the earlier of (i) 70 days after the year end in which the
Executive died or (ii) the first pay period following the Employer’s press
release announcing its financial performance for the year in which the
Executive died.  To the extent that the
bonus is performance-based, the amount of the bonus will be calculated by taking
into account the performance of the Company and the Bank for the entire year
and prorated through the date of Executive’s death.

 

(c)   The Employer may terminate the Executive’s
employment upon the Disability of the Executive for a period of 180 days.  During the period of any Disability leading
up to the termination of the Executive’s employment under this provision, the
Employer shall continue to pay the Executive his full base salary at the rate
then in effect and all perquisites and other benefits (other than any bonus) in
accordance with the Employer’s standard payroll procedures until the Executive
becomes eligible for benefits under any long-term disability plan or insurance
program maintained by the Employer; provided that, the amount of any such
payments to the Executive shall be reduced by the sum of the amounts, if any,
payable to the Executive for the same period under any other disability benefit
or pension plan covering the Executive. 
Furthermore, the Employer shall pay the Executive any bonus earned
through the date of Disability.  Any
bonus for previous years which was not yet paid will be paid pursuant to the
terms as set forth in Section 3(i) above.  Any bonus that is earned in the year of
Disability will be paid on the earlier of (i) 70 days after the year end
in which Executive became Disabled or (ii) the first pay period following
the Employer’s press release announcing its financial performance for the year
in which the Executive became Disabled. 
To the extent that the bonus is performance-based, the amount of the
bonus will be calculated by taking into account the performance of the Company
and the Bank for the entire year and prorated based on the number of days the
Executive worked during the year of Executive’s Disability.  Nothing herein shall prohibit the Employer
from hiring an acting chief executive officer prior to the expiration of this
180-day period.

 

(d)   The Employer may terminate the Executive’s
employment for Cause upon delivery of a Notice of Termination to the
Executive.  If the Executive’s employment
is terminated for Cause under this provision, the Executive shall receive only
any sums due him as base salary and/or reimbursement of expenses through the
date of termination, which shall be paid in accordance with the Employer’s
standard payroll procedures.

 

(e)   The Employer may terminate the Executive’s
employment without Cause upon delivery of a Notice of Termination to the
Executive.  If the Executive’s employment
is terminated without Cause under this provision, subject to the possibility of
a six-month delay described below in this Section 4(e), beginning on the
first day of the month following date of the Executive’s termination, and
continuing on the first day of the month for the next 24 months, the Employer
shall pay to the Executive severance compensation in an amount equal to 100% of
his then current monthly base salary. 
Employer shall also pay the Executive any bonus earned through the date
of termination (including any amounts awarded for previous years but which were
not yet paid).  Any bonus for previous
years which was not yet paid will be paid pursuant to the terms as set forth in
Section 3(i) above.  Any bonus
that is earned in the year of the Executive’s termination will be paid on the
earlier of (i) 70 days after the year end in which the Executive was
terminated or (ii) the first pay period following the Employer’s press
release announcing its previous year’s financial performance.   To the extent that the bonus is
performance-based, the amount of the bonus will be calculated by taking into account
the performance of the Company and the Bank for the entire year and prorated
through the date of Executive’s termination of employment.

 

If when Executive’s
employment terminates he is a specified employee within the meaning of Section 409A
of the Code, and if the benefits under this Section 4(e) would be
considered deferred compensation under Section 409A, and finally if an
exemption from the six-month delay requirement of Section 409A(a)(2)(B)(i) is
not available, the

 

3

 

following benefits under
this Section 4(e) shall be paid to the Executive as follows:
severance compensation in an amount equal to 7 times his then current monthly
base salary, any bonus for previous years which was not yet paid will be paid
in a single lump sum on the date that is six months and one day following date
of Executive’s termination; thereafter on the first day of the month for the
next 17 months, the Employer shall pay to the Executive severance compensation
in an amount equal to 100% of his then current monthly base salary.  Any bonus that is earned in the year of the
Executive’s termination will be paid pursuant to the terms as set forth in Section 3(i) above.

 

In addition, for the next 24
months following date of the Executive’s termination, the Employer shall
continue to provided the Executive with an automobile either owned or leased by
the Company or the Bank as well as insurance, taxes and other related
automobile expenses as stated above in Section 3(e); provided that such
total monthly expenses shall not exceed the monthly cost of such benefits
during the Executive’s employment.

 

In addition, for the next 24
months following date of the Executive’s termination, the Employer shall
reimburse the Executive for the cost of COBRA medical, dental, vision and
disability insurance coverage for himself and his dependents for the duration
of the Executive’s COBRA period, provided the Executive timely elects COBRA
coverage; provided, however, (A) if the Executive’s COBRA period ends
within 24 months of Executive’s termination, the Employer shall reimburse the
Executive for the monthly cost of medical, dental, vision and disability
insurance coverage obtained for himself and his dependents, provided such
reimbursements shall not exceed the monthly cost of coverage under COBRA during
the Executive’s COBRA period; (B) if the Executive becomes eligible for
coverage under another group health or dental insurance plan at any time within
24 months of Executive’s termination, the Employer shall only be required to
reimburse the Executive for any out-of-pocket and deductible expenses the
Executive incurs with respect to such coverages for himself and his dependents;
and, in the case of both clause (A) and (B) above, such
reimbursements shall be paid as soon as administratively practicable, but in no
event shall any reimbursement be paid after the last day of the calendar year
following the calendar year in which the expense was incurred.

 

At the time of Termination
of Employment, and as a condition to the Employer’s obligation to provide any
severance benefits as stated in this Section 4(e), the Employer and the
Executive shall enter into the release attached hereto as Exhibit A
acknowledging such remaining obligations and discharging both parties, as well
as the Employer’s officers, directors and employees with respect to their
actions for or on behalf of the Employer, from any other claims or obligations
arising out of or in connection with the Executive’s employment by the
Employer, including the circumstances of such termination.

 

(f)    The Executive may terminate his employment
at any time by delivering a Notice of Termination at least 14 days prior to
such termination, and such termination shall not in and of itself be, nor shall
it be deemed to be, a breach of this Agreement. 
If the Executive terminates his employment under this provision, the
Executive shall receive any sums due him as base salary and/or reimbursement of
expenses through the date of such termination, which shall be paid in
accordance with the Employer’s standard payroll procedures.

 

(g)   Upon the occurrence of a Change in Control,
and regardless of whether the Executive remains employed by the Employer or its
successor following a Change in Control, the Executive shall be entitled to the
following:

 

(i)            within 15 days, the Employer shall pay the Executive cash
compensation in an amount equal to 2.99 times his base amount (as defined under
Section 280G of the Code) as well as any bonus earned through the date of
Change in Control (equal to a pro rata portion of the Executive’s previous
year’s bonus based on the number of days the Executive was employed during the
year of the Change in Control) and any bonus awarded for a previous year but
which was not yet paid, subject to the provisions of Section 4(k) and
(l) below;

 

(ii)           for a period of three years, the Employer shall at its
expense continue on behalf of the Executive and his dependents and
beneficiaries the life insurance, disability, medical, dental, and
hospitalization benefits provided (x) to the Executive at any time during
the 90-day period prior to the Change in Control or at any time thereafter or (y) to
other similarly situated executives who continue in the employ of the
Employer.  Such coverage and benefits
(including deductibles and

 

4

 

costs) shall be no less
favorable to the Executive and his dependents and beneficiaries than the most
favorable of such coverages and benefits referred to above.  The Employer’s obligation hereunder with
respect to the foregoing benefits shall be limited to the extent that the
Executive obtains any such benefits pursuant to a subsequent employer’s benefit
plans, in which case the Employer may reduce the coverage of any benefits it is
required to provide the Executive hereunder as long as the aggregate coverages
and benefits of the combined benefit plans are no less favorable to the
Executive than the coverages and benefits required to be provided hereunder.  This subsection (ii) shall not be
interpreted so as to limit any benefits to which the Executive or his
dependents or beneficiaries may be entitled under any of the Employer’s
employee benefit plans, programs, or practices following the Executive’s
termination of employment, including, without limitation, retiree medical and
life insurance benefits; and

 

(iii)          the restrictions on any outstanding incentive awards
(including restricted stock) granted to the Executive under the Company’s or
the Bank’s long-term equity incentive program or any other incentive plan or
arrangement shall lapse and such awards shall become 100% vested, all stock
options and stock appreciation rights granted to the Executive shall become
immediately exercisable and shall become 100% vested, all performance units
granted to the Executive shall become 100% vested (except to the extent such
acceleration of vesting of any such award would make compensation payable to
the Executive non-deductible under Section 162(m) of the Code), and
the restrictive covenants contained in Section 9 shall not apply to the
Executive.

 

(h)   With the exceptions of the provisions of this
Section 4, and the express terms of any benefit plan under which the
Executive is a participant, it is agreed that, upon Executive’s Termination of
Employment, the Employer shall have no obligation to the Executive for, and the
Executive waives and relinquishes, any further compensation or benefits
(exclusive of COBRA benefits).  Unless
otherwise stated in this Section 4, the effect of termination on any outstanding
incentive awards, stock options, stock appreciation rights, performance units,
or other incentives shall be governed by the terms of the applicable benefit or
incentive plan and/or the agreements governing such incentives.

 

(i)    In the event that the Executive’s employment
is terminated for any reason, as a condition to the Employer’s obligation to
pay any severance hereunder, the Executive shall resign as a director of the
Company and the Bank effective upon his termination of employment.

 

(j)    The Company is aware that upon the
occurrence of a Change in Control, the Board or a shareholder of the Company
may then cause or attempt to cause the Company to refuse to comply with its
obligations under this Agreement, or may cause or attempt to cause the Company
to institute, or may institute, litigation seeking to have this Agreement
declared unenforceable, or may take, or attempt to take, other action to deny
the Executive the benefits intended under this Agreement. In these
circumstances, the purpose of this Agreement could be frustrated. It is the
intent of the parties that the Executive not be required to incur the legal
fees and expenses associated with the protection or enforcement of the
Executive’s rights under this Agreement by litigation or other legal action
because such costs would substantially detract from the benefits intended to be
extended to the Executive hereunder, nor be bound to negotiate any settlement
of the Executive’s rights hereunder under threat of incurring such costs.
Accordingly, if at any time after a Change in Control, it should appear to the
Executive that the Company is acting or has acted contrary to or is failing or
has failed to comply with any of its obligations under this Agreement for the
reason that it regards this Agreement to be void or unenforceable or for any
other reason, or that the Company has purported to terminate the Executive’s
employment for Cause or is in the course of doing so in either case contrary to
this Agreement, or in the event that the Company or any other person takes any
action to declare this Agreement void or unenforceable, or institutes any
litigation or other legal action designed to deny, diminish or recover (other
than as required by law) from the Executive the benefits provided or intended to
be provided to the Executive hereunder, and the Executive has acted in good
faith to perform the Executive’s obligations under this Agreement, the Company
irrevocably authorizes the Executive from time to time to retain counsel of the
Executive’s choice at the expense of the Company to represent the Executive in
connection with the protection and enforcement of the Executive’s rights
hereunder, including without limitation representation in connection with
termination of the Executive’s employment contrary to this Agreement or with
the initiation or defense of any litigation or other legal action, whether by
or against the Executive or the Company or any director, officer, shareholder
or other person

 

5

 

affiliated with the Company,
in any jurisdiction. The reasonable fees and expenses of counsel selected from
time to time by the Executive as hereinabove provided shall be paid or
reimbursed to the Executive by the Company on a regular, periodic basis upon presentation
by the Executive of a statement or statements prepared by such counsel.  If other officers or key executives of the
Company have retained counsel in connection with the protection and enforcement
of their rights under similar agreements between them and the Company, and,
unless in the Executive’s sole judgment use of common counsel could be
prejudicial to the Executive or would not be likely to reduce the fees and
expenses chargeable hereunder to the Company, the Executive agrees to use the
Executive’s best efforts to agree with such other officers or executives to
retain common counsel.

 

(k)   The parties intend that the severance
payments and other compensation provided for herein are reasonable compensation
for the Executive’s services to the Employer and shall not constitute “excess
parachute payments” within the meaning of Section 280G of the Code.  In the event that the Employer’s independent
accountants acting as auditors for the Employer on the date of a Change in
Control determine that the payments provided for herein constitute “excess
parachute payments,” then the compensation payable hereunder shall be reduced
to an amount the value of which is $1.00 less than the maximum amount that
could be paid to the Executive without the compensation being treated as
“excess parachute payments” under Section 280G.  The allocations of the reduction required
hereby among the termination benefits payable to the Executive shall be
determined by the Executive.

 

(l)    Notwithstanding any other provision in this
Agreement, if the Executive is determined by the Board, as of the date of
termination of employment with the Bank, to be a “specified employee,” as such
term is defined in Treasury Regulation § 1.409A-1(i), and if any benefits paid
to the Executive hereunder would be considered deferred compensation under Section 409A,
and finally if an exemption from the six-month delay requirement of Section 409A(a)(2)(B)(i) is
not available, then all severance payments and other payment, except for other
payments of base salary at the normal payroll schedule, reimbursement of
expenses, and other than as a result of death, that would normally be paid
within six months and one day from the date of termination of employment shall
be paid on the first day of the seventh month following termination of
employment.

 

(m)  If the Executive is suspended or temporarily
prohibited from participating, in any way or to any degree, in the conduct of
the Employer’s affairs by (1) a notice served under section 8(e) or (g) of
Federal Deposit Insurance Act (12 U.S.C. 1818 (e) or (g)) or (2) as a
result of any other regulatory or legal action directed at the Executive by any
regulatory or law enforcement agency having jurisdiction over the Executive
(each of the foregoing referred to herein as a “Suspension Action”), and if
this Agreement is not terminated, the Employer’s obligations under this
Agreement shall be suspended as of the earlier of the effective date of such
Suspension Action or the date on which the Executive was provided notice of the
Suspension Action, unless stayed by appropriate proceedings.  If the charges underlying the Suspension
Action are dismissed, the Bank shall:

 

(i)            pay on the first day of the first month following such
dismissal of charges (or as provided elsewhere in this Agreement) the Executive
all of the compensation withheld while the obligations under this Agreement
were suspended; and

 

(ii)           reinstate any such obligations which were suspended.

 

Notwithstanding anything to
the contrary herein, if the Executive is removed or permanently prohibited from
participating, in any way or to any degree, in the conduct of the Employer’s
affairs by (1) an order issued under section 8(e)(4) or (g)(1) of
the Federal Deposit Insurance Act (12 U.S.C. Section 1818 (e)(4) or
(g)(1)) or (2) any other legal or law enforcement action (each of the
foregoing referred to herein as a “Removal Action”), all obligations of the
Executive under this Agreement shall terminate as of the effective date of the
Removal Action, but any vested rights of the parties hereto shall not be
affected.

 

Notwithstanding anything to
the contrary herein, if the Employer is in default (as defined in section 3(x)(1) of
the Federal Deposit Insurance Act, 12 U.S.C. Section 1813(x)(1)), all
obligations under this Agreement shall terminate as of the date of default, but
this paragraph (4)(m) shall not affect any vested rights of the parties
hereto.

 

6

 

Any payments made to the Executive pursuant to this
Agreement, or otherwise, are subject to and conditioned upon their compliance
with 12 U.S.C. Section 1828(k) and any regulations promulgated
thereunder.

 

5.                                       Ownership of Work Product. 
The Employer shall own all Work Product arising during the course of the
Executive’s employment (prior, present or future).  For purposes hereof, “Work Product” shall
mean all intellectual property rights, including all Trade Secrets, U.S. and
international copyrights, patentable inventions, and other intellectual
property rights in any programming, documentation, technology or other work
product that relates to the Employer, its business or its customers and that
the Executive conceives, develops, or delivers to the Employer at any time
during his employment, during or outside normal working hours, in or away from
the facilities of the Employer, and whether or not requested by the
Employer.  If the Work Product contains
any materials, programming or intellectual property rights that the Executive
conceived or developed prior to, and independent of, the Executive’s work for
the Employer, the Executive agrees to point out the pre-existing items to the
Employer and the Executive grants the Employer a worldwide, unrestricted, royalty-free
right, including the right to sublicense such items.  The Executive agrees to take such actions and
execute such further acknowledgments and assignments as the Employer may
reasonably request to give effect to this provision.

 

6.                                       Protection of Trade Secrets. 
The Executive agrees to maintain in strict confidence and, except as
necessary to perform his duties for the Employer, the Executive agrees not to
use or disclose any Trade Secrets of the Employer during or after his
employment.  “Trade Secret” means
information, including a formula, pattern, compilation, program, device,
method, technique, process, drawing, cost data or customer list, that: (i) derives
economic value, actual or potential, from not being generally known to, and not
being readily ascertainable by proper means by, other persons who can obtain
economic value from its disclosure or use; and (ii) is the subject of
efforts that are reasonable under the circumstances to maintain its secrecy.

 

7.                                       Protection of Other Confidential Information. 
In addition, the Executive agrees to maintain in strict confidence and,
except as necessary to perform his duties for the Employer, not to use or
disclose any Confidential Business Information of the Employer during his
employment and for a period of 24 months following termination of the Executive’s
employment.  “Confidential Business
Information” shall mean any internal, non-public information (other than Trade
Secrets already addressed above) concerning the Employer’s financial position
and results of operations (including revenues, assets, net income, etc.);
annual and long-range business plans; product or service plans; marketing plans
and methods; training, educational and administrative manuals; customer and
supplier information and purchase histories; and employee lists.  The provisions of Sections 6 and 7 shall also
apply to protect Trade Secrets and Confidential Business Information of third
parties provided to the Employer under an obligation of secrecy.

 

8.                                       Return of Materials. 
The Executive shall surrender to the Employer, promptly upon its request
and in any event upon termination of the Executive’s employment, all media,
documents, notebooks, computer programs, handbooks, data files, models,
samples, price lists, drawings, customer lists, prospect data, or other
material of any nature whatsoever (in tangible or electronic form) in the
Executive’s possession or control, including all copies thereof, relating to
the Employer, its business, or its customers. 
Upon the request of the Employer, the Executive shall certify in writing
compliance with the foregoing requirement.

 

9.                                       Restrictive Covenants.

 

(a)                                  No Solicitation of Customers. 
During the Executive’s employment with the Employer and for a period of
24 months thereafter, the Executive shall not (except on behalf of or with the
prior written consent of the Chairman of the Board), either directly or
indirectly, on the Executive’s own behalf or in the service or on behalf of
others, (A) solicit, divert, or appropriate to or for a Competing
Business, or (B) attempt to solicit, divert, or appropriate to or for a
Competing Business, any person or entity that is or was a customer of the
Employer or any of its Affiliates at any time during the 12 months prior to the
date of termination and with whom the Executive has had material contact.

 

(b)                                 No Recruitment of Personnel. 
During the Executive’s employment with the Employer and for a period of
24 months thereafter, the Executive shall not, either directly or indirectly,
on the Executive’s own behalf or in the service or on behalf of others, (A) solicit,
divert,

 

7

 

or hire away, or (B) attempt
to solicit, divert, or hire away, to any Competing Business located in the
Territory, any employee of or consultant to the Employer or any of its
Affiliates, regardless of whether the employee or consultant is full-time or
temporary, the employment or engagement is pursuant to written agreement, or
the employment is for a determined period or is at will.

 

(c)                                  Non-Competition Agreement. 
During the Executive’s employment with the Employer and for a period of
24 months following any termination (as opposed to expiration) of this
Agreement, the Executive shall not (without the prior written consent of the
Chairman of the Board) compete with the Employer or any of its Affiliates by,
directly or indirectly, forming, serving as an organizer, director or officer
of, or consultant to, or acquiring or maintaining more than a 1% passive
investment in, a depository financial institution or holding company therefore,
if such depository institution or holding company has, or upon formation will
have, one or more offices or branches located in the Territory.

 

(d)                                 Notwithstanding the foregoing, the
Executive may serve as an officer of or consultant to a depository institution
or holding company therefor even though such institution operates one or more
offices or branches in the Territory, if the Executive’s employment does not
directly involve, in whole or in part, the depository financial institution’s
or holding company’s operations in the Territory.

 

(e)                                  The parties hereby agree that the
provisions set forth in this Section 9 shall not apply following a Change
in Control.

 

10.                                 Independent Provisions. 
The provisions in each of the above Sections 9(a), 9(b), and 9(c) are
independent, and the unenforceability of any one provision shall not affect the
enforceability of any other provision.

 

11.                                 Successors; Binding Agreement. The rights and obligations of this
Agreement shall bind and inure to the benefit of the surviving corporation in
any merger or consolidation in which the Employer is a party, or any assignee
of all or substantially all of the Employer’s business and properties.  The Executive’s rights and obligations under
this Agreement may not be assigned by him, except that his right to receive
earned but unpaid compensation, unreimbursed expenses and other rights, if any,
provided under this Agreement which survive termination of this Agreement shall
pass after death to the personal representatives of his estate.

 

12.                                 Notice.  For the
purposes of this Agreement, notices and all other communications provided for
in the Agreement shall be in writing and shall be deemed to have been duly
given when personally delivered or sent by certified mail, return receipt
requested, postage prepaid, addressed to the respective addresses last given by
each party to the other; provided, however, that all notices to
the Employer shall be directed to the attention of the Chairman of the Board with
a copy to the Secretary.  All notices and
communications shall be deemed to have been received on the date of delivery
thereof.

 

13.                                 Governing Law. 
This Agreement shall be governed by and construed and enforced in
accordance with the laws of the State of South Carolina without giving effect
to the conflict of laws principles thereof. 
Any action brought by any party to this Agreement shall be brought and
maintained in a court of competent jurisdiction in State of South Carolina.

 

14.                                 Non-Waiver.  Failure of
the Employer to enforce any of the provisions of this Agreement or any rights
with respect thereto shall in no way be considered to be a waiver of such
provisions or rights, or in any way affect the validity of this Agreement.

 

15.                                 Enforcement. 
The Executive agrees that in the event of any breach or threatened
breach by the Executive of any covenant contained in Section 9(a), 9(b),
or 9(c) hereof, the resulting injuries to the Employer would be difficult
or impossible to estimate accurately, even though irreparable injury or damages
would certainly result.  Accordingly, an
award of legal damages, if without other relief, would be inadequate to protect
the Employer.  The Executive, therefore,
agrees that in the event of any such breach, the Employer shall be entitled to
obtain from a court of competent jurisdiction an injunction to restrain the
breach or anticipated breach of any such covenant, and to obtain any other
available legal, equitable, statutory, or contractual relief.  Should the Employer have cause to seek such
relief, no bond shall be required from the Employer, and the Executive

 

8

 

shall pay all attorney’s fees and court costs which
the Employer may incur to the extent the Employer prevails in its enforcement
action.

 

16.                                 Saving Clause. 
The provisions of this Agreement shall be deemed severable and the
invalidity or unenforceability of any provision shall not affect the validity
or enforceability of the other provisions hereof.  If any provision or clause of this Agreement,
or portion thereof, shall be held by any court or other tribunal of competent
jurisdiction to be illegal, void, or unenforceable in such jurisdiction, the
remainder of such provision shall not be thereby affected and shall be given
full effect, without regard to the invalid portion.  It is the intention of the parties that, if
any court construes any provision or clause of this Agreement, or any portion
thereof, to be illegal, void, or unenforceable because of the duration of such
provision or the area or matter covered thereby, such court shall reduce the
duration, area, or matter of such provision, and, in its reduced form, such
provision shall then be enforceable and shall be enforced. The Executive and
the Employer hereby agree that they will negotiate in good faith to amend this
Agreement from time to time to modify the terms of Sections 9(a), 9(b), and
9(c), the definition of the term “Territory,” and the definition of the term “Business,”
to reflect changes in the Employer’s business and affairs so that the scope of
the limitations placed on the Executive’s activities by Section 9
accomplishes the parties’ intent in relation to the then current facts and
circumstances.  Any such amendment shall
be effective only when completed in writing and signed by the Executive and the
Employer.

 

17.                                 Certain Definitions.

 

(a)                                  “Affiliate” shall mean any
business entity controlled by, controlling or under common control with the
Employer.

 

(b)                                 “Business” shall mean the
operation of a depository financial institution, including, without limitation,
the solicitation and acceptance of deposits of money and commercial paper, the
solicitation and funding of loans and the provision of other banking services,
and any other related business engaged in by the Employer or any of its
Affiliates as of the date of termination.

 

(c)                                  “Cause” shall consist of any of (A) the
commission by the Executive of a willful act (including, without limitation, a
dishonest or fraudulent act) or a grossly negligent act, or the willful or
grossly negligent omission to act by the Executive, which is intended to cause,
causes or is reasonably likely to cause material harm to the Employer
(including harm to its business reputation); (B) the indictment of the
Executive for the commission or perpetration by the Executive of any felony or
any crime involving dishonesty, moral turpitude or fraud; (C) the material
breach by the Executive of this Agreement that, if susceptible of cure, remains
uncured ten days following written notice to the Executive of such breach; (D) the
receipt of any form of notice, written or otherwise, that any regulatory agency
having jurisdiction over the Employer intends to institute any form of formal
or informal (e.g., a memorandum of understanding which relates to the
Executive’s performance) regulatory action against the Executive or the
Employer (provided, that the Board of Directors determines in good
faith, with the Executive abstaining from participating in the consideration of
and vote on the matter, that the subject matter of such action involves acts or
omissions by or under the supervision of the Executive or that termination of
the Executive would materially advance the Employer’s compliance with the
purpose of the action or would materially assist the Employer in avoiding or
reducing the restrictions or adverse effects to the Employer related to the
regulatory action); (E) the exhibition by the Executive of a standard of
behavior within the scope of his employment that is materially disruptive to
the orderly conduct of the Employer’s business operations (including, without
limitation, substance abuse or sexual misconduct) to a level which, in the
Board of Directors’ good faith and reasonable judgment, with the Executive
abstaining from participating in the consideration of and vote on the matter,
is materially detrimental to the Employer’s best interest, that, if susceptible
of cure remains uncured ten days following written notice to the Executive of
such specific inappropriate behavior; or (F) the failure of the Executive
to devote his full business time and attention to his employment as provided
under this Agreement that, if susceptible of cure, remains uncured 30 days
following written notice to the Executive of such failure.  The Executive shall not be deemed to have
been terminated for Cause unless and until there is delivered to the Executive
a copy of a resolution duly adopted by the affirmative vote of 75% of the
non-management directors of the Employer then in office, excluding the Executive,
at a meeting of the Board of Directors, which resolution shall (x) contain
findings that, in the good faith opinion of the Board of Directors, the
Executive has committed an act constituting Cause, and (y) specify the
particulars thereof. Notice of the meeting of the Board of Directors and the
proposed termination for Cause shall be given to the

 

9

 

Executive at least seven calendar days before such
meeting.  The Executive and the Executive’s
counsel (if the Executive chooses to have counsel present) shall have a
reasonable opportunity to be heard by the Board of Directors at the
meeting.  Nothing in this Agreement
limits the Executive’s or the Executive’s beneficiaries’ right to challenge the
validity or propriety of the board’s determination of Cause.

 

(d)                                 “Change in Control” shall mean as
defined by Treasury Regulation § 1.409A-3(i)(5).

 

(e)                                  “Code” shall mean the Internal
Revenue Code of 1986 and any regulations thereunder.

 

(f)                                    “Competing Business” shall mean
any business that, in whole or in part, is the same or substantially the same
as the Business.

 

(g)                                 “Disability” or “Disabled”
shall mean as defined by Treasury Regulation § 1.409A-3(i)(4).

 

(h)                                 “Notice of Termination” shall mean
a written notice of termination from the Employer or the Executive which
specifies an effective date of termination, indicates the specific termination
provision in this Agreement relied upon, and, in the case of a termination for
Cause, sets forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of the Executive’s employment for Cause.

 

(i)                                     “Standard Payroll Procedures”
shall mean no less frequently than monthly.

 

(j)                                     “Terminate,” “terminated,” “termination,”
or “Termination of Employment” shall mean separation from service as
defined by Regulation 1.409A-1(h).

 

(k)                                  “Territory” shall mean a radius of
25 miles from (i) the main office of the Employer or (ii) any branch
office of the Employer.

 

18.                                 Entire Agreement. 
This Agreement constitutes the entire agreement between the parties
hereto and supersedes all prior agreements, if any, understandings and
arrangements, oral or written, between the parties hereto with respect to the
subject matter hereof.

 

19.                                 Counterparts. 
This Agreement may be executed in one or more counterparts, each of
which shall be deemed an original but all of which together shall constitute
one and the same instrument.

 

20.                                 Compliance with Capital Purchase Program. 
Notwithstanding anything to the contrary herein, any payments to the
Executive shall be limited to the extent required under the United States
Treasury Capital Purchase Program and related regulations in the event that the
Company participates in such Program. 
The Executive agrees to such amendments, agreements, or waivers that are
required by the United States Treasury or requested by the Company to comply
with the terms of such program.

 

10

 

IN WITNESS WHEREOF, the Employer has caused this
Agreement to be executed and its seal to be affixed hereunto by its officers
thereunto duly authorized, and the Executive has signed and sealed this
Agreement, effective as of the date first above written.

 

 

	
   

  	
   

  	
  COMMUNITYSOUTH FINANCIAL CORPORATION

  
	
   

  	
   

  	
   

  
	
  ATTEST:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Barbara J. Marcy

  	
   

  	
  By:

  	
  /s/  David
  Larry Brotherton

  
	
   

  	
   

  	
   

  	
   

  
	
  Name:

  	
  Barbara J. Marcy

  	
   

  	
  Name:

  	
  David Larry Brotherton

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
  Chairman of the
  Compensation Committee

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  COMMUNITYSOUTH
  BANK AND TRUST

  
	
   

  	
   

  	
   

  
	
  ATTEST:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Barbara J. Marcy

  	
   

  	
  By:

  	
    /s/ David Larry Brotherton

  
	
   

  	
   

  	
   

  
	
  Name:

  	
  Barbara J. Marcy

  	
   

  	
  Name:

  	
  David Larry Brotherton

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
  Chairman of the
  Compensation Committee

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  EXECUTIVE

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
    /s/
  C. Allan Ducker, III

  
	
   

  	
   

  	
  C. Allan
  Ducker, III

  
											

 

11

 

Exhibit A

 

Form of Release of Claims

 

SEVERANCE AGREEMENT AND RELEASE

 

This Severance Agreement
and Release (the “Agreement”) is made between C. Allan Ducker, III,
an individual resident of South Carolina (“Employee”), and CommunitySouth
Bank and Trust (the “Bank”).

 

As used in this
Agreement, the term “Employee” shall include the employee’s heirs, executors,
administrators, and assigns, and the term “Bank” shall include the Bank, its
holding company, any other related or affiliated entities, and the current and
former officers, directors, shareholders, employees, and agents of them.

 

On
                    ,
2008, the Bank and Employee entered into an Employment Agreement governing the
relationship between the parties.  Section 4(e) provides
that the Bank may terminate the Employment Agreement without cause.  Section 4 of the Employment Agreement
also provides that Employee shall be entitled to severance benefits if the
Employment Agreement is terminated without cause, on the condition that
Employee enter into this release or a substantially similar release.

 

Employee desires to
receive severance benefits and the Bank is willing to provide severance
benefits on the condition the Employee enter into this Agreement.

 

Now, in consideration for
the mutual promises and covenants set forth herein, and in full and complete
settlement of all matters between Employee and the Bank, the parties agree as
follows:

 

1.                                      Termination Date:  The Employee
agrees that his employment with the Bank terminates as of
                                
(the “Termination Date”).

 

2.                                      Severance Payments: 
Subsequent
to his Termination Date, the Bank shall pay Employee severance benefits as
noted in Paragraph 4(e) of the Employment Agreement, dated
                ,
2008, (the “Severance Payment”), less applicable deductions and withholdings.

 

3.                                      Legal Obligations

 

The parties acknowledge
that pursuant to Section 4(e) of the Employment Agreement, they
agreed that at the time of termination and as a condition of payment of
severance, they would enter into this release acknowledging any remaining
obligations and discharging each other from any other claims or obligations
arising out of or in connection with Employee’s employment by the Bank,
including the circumstances of such termination.

 

With the exceptions of
the provisions of Section 2, and the express terms of any benefit plan
under which the Employee is a participant, it is agreed that the Bank shall
have no obligation to the Employee for, and the Employee waives and
relinquishes, any further compensation or benefits (exclusive of COBRA
benefits).  Unless otherwise stated in
this Section 3, the effect of termination on any outstanding incentive
awards, stock options, stock appreciation rights, performance units, or other
incentives shall be governed by the terms of the applicable benefit or
incentive plan and/or the agreements governing such incentives.

 

Employee acknowledges that the Bank has no prior legal obligations to
make the payments described in Section 2 above which are exchanged for the
promises of Employee set forth in this Agreement.  It is specifically agreed that the payments
described in Section 2 are valuable and sufficient consideration for each
of the promises of Employee set forth in this Agreement and are payments in
addition to anything of value to which Employee is otherwise entitled.

 

12

 

4.                                      Waiver and Release:

 

a)                                      Employee unconditionally releases and
discharges the Bank and its predecessors, successors and assigns, its and their
current and former parents, affiliates, subsidiaries, divisions, and joint
ventures (individually and collectively, for purposes of this paragraph, “Bank”)  from any and all causes of action, suits,
damages, claims, proceedings, controversies, promises, grievances, complaints,
charges, liabilities, debts, taxes, allowances, demands, and remedies of any
type that the Employee has ever had, or may now have, against the Bank, whether
asserted or unasserted, whether known or unknown, concerning any matter
occurring up to and including the date of the signing of this Agreement.

 

b)                                     Employee acknowledges that he is waiving
and releasing, to the full extent permitted by law, all claims against the
Bank, including (but not limited to) all claims arising out of, or related in
any way to, his employment with the Bank or the termination of that employment,
including (but not limited to) any and all breach of contract claims, tort
claims, claims of wrongful discharge, claims for breach of an express or
implied employment contract, defamation claims, claims under the Civil Rights
Act of 1866, which prohibits discrimination on the basis of race or color,
Title VII of the Civil Rights Act of 1964 as amended, which prohibits
discrimination in employment based on race, color, national origin, religion or
sex, the Civil Right Act of 1991, which modifies the 1964 Act by providing for
the right to trial by jury on discrimination claims, the Family and Medical
Leave Act of 1993, which provides for unpaid leave for family or medical
reasons, the Equal Pay Act of 1963, which prohibits paying men and women
unequal pay for equal work, the Age Discrimination in Employment Act of 1967,
which prohibits age discrimination in employment, the Americans with Disabilities
Act of 1990, which prohibits discrimination based on disability, the
Rehabilitation Act of 1973, which prohibits discrimination on the basis of
disability, the Employee Retirement Income Security Act of 1974, which
regulates employee benefit plans, the Fair Labor Standards Act of 1938, which
establishes a national minimum wage, regulates overtime compensation, and
prohibits employment of a minor, the Older Workers Benefit Protection Act of
1990, which prohibits age discrimination related to employee
benefits, the
Occupational Safety and Health Act of 1970, which governs occupational health
and safety in the workplace, the Sarbanes-Oxley Act of 2002, which establishes
standards of conduct for all U.S. public company boards, management, and
public accounting firms, the South Carolina Human Affairs Law, any and all
other applicable local, state and federal non-discrimination statutes, the
South Carolina Payment of Wages Law and all other statutes or regulations
relating to employment, the common law of the State of South Carolina, or any
other state, and any and all claims for attorneys’ fees.

 

This General Release
includes a release of all claims based on the treatment of any payments
hereunder under Section 409A of the Internal Revenue Code (the “Code”)
including specifically any penalties thereunder.

 

This General Release also
includes a release of all compensation and benefit claims, including, without
limitation, claims concerning salary, bonus, and any award(s), grant(s), or
purchase(s) under any equity and incentive compensation plan or program,
and separation pay under any Bank severance plan.

 

c)                                      This Waiver and Release provision ((a) through
(c) of this paragraph) shall be construed to release all claims to the
full extent allowed by law.  If any term
of this paragraph shall be declared unenforceable by a court or other tribunal
of competent jurisdiction, it shall not adversely affect the enforceability of
the remainder of this paragraph.

 

d)                                     The Bank unconditionally releases and
discharges Employee from any and all causes of action, suits, damages, claims,
proceedings, and demands that the Bank has ever had, or may now have, against
Employee, whether asserted or unasserted, whether known or unknown, concerning
any matter occurring up to and including the date of the signing of this
Agreement with the exception of any claims for breach of trust, or any act
which constitutes a felony or crime involving dishonesty, theft, or fraud.

 

5.                                      Restrictive Covenants and
Other Obligations

 

The parties agree that Section 5
– “Ownership of Work Product,” Section 6 – “Protection of Trade Secret,” Section 7
– “Protection of Confidential Information,” Section 8 – “Return of
Materials,” Section 9 – “Restrictive Covenants,” Section 10 – “Independent
Provisions,” Section 15 – “Enforcement,” and Section 16 – “Savings
Clause,” of the Employment Agreement shall remain in full force and effect and
that Employee will perform his obligations under those sections and those
sections of the Employment Agreement are incorporated

 

13

 

by reference as if set
forth fully herein.  In the event
Employee breaches any obligation under this Section 5, the Bank’s
obligation to make severance payments to Employee shall terminate immediately and
the Bank shall have no further obligations to Employee.

 

6.                                      Duty of
Loyalty/Nondisparagement

 

The parties shall not
(except as required by law) communicate to anyone, whether by word or deed,
whether directly or through any intermediary, and whether expressly or by
suggestion or innuendo, any statement, whether characterized as one of fact or
of opinion, that is intended to cause or that reasonably would be expected to
cause any person to whom it is communicated to have a lowered opinion of the
other party.

 

7.                                      Confidentiality Of The
Terms Of This Agreement

 

Except to the extent that
this Agreement has been disclosed in the Bank’s SEC filings, Employee agrees
not to publicize or disclose the contents of this Agreement, including the
amount of the monetary payments, except (i) to his immediate family; (ii) to
his attorney(s), accountant(s), and/or tax preparer(s); (iii) as may be
required by law; or (iv) as necessary to enforce the terms of this
Agreement.  Employee further agrees that
he will inform anyone to whom the terms of this Agreement are disclosed of the
confidentiality requirements contained herein. 
Notwithstanding the foregoing, the parties agree that where business
needs dictate, Employee may disclose to a third party that he has entered into
an agreement with the Bank, which agreement contains restrictive covenants
including noncompetition and nondisclosure provisions, one or more of which
prohibit him from performing the requested service.

 

Employee recognizes that
the disclosure of any information regarding this Agreement by him, his family,
his attorneys, his accountants or financial advisors, could cause the Bank
irreparable injury and damage, the amount of which would be difficult to
determine.  In the event the Bank
establishes a violation of this paragraph of the Agreement by Employee, his
attorneys, immediate family, accountants, or financial advisors, or others to
whom Employee disclosed information in violation of the terms of this
Agreement, the Bank shall be entitled to injunctive relief without the need for
posting a bond and shall also be entitled to recover from Employee the amount
of attorneys’ fees and costs incurred by the Bank in enforcing the provisions
of this paragraph.

 

8.                                      Continued Cooperation

 

Employee agrees that he
will cooperate fully with the Bank in the future regarding any matters in which
he was involved during the course of his employment, and in the defense or
prosecution of any claims or actions now in existence or which may be brought
or threatened in the future against or on behalf of the Bank.  Employee’s cooperation in connection with
such matters, actions and claims shall include, without limitation, being
available to meet with the Bank’s officials regarding personnel or commercial
matters in which he was involved; to prepare for any proceeding (including,
without limitation, depositions, consultation, discovery or trial); to provide
affidavits; to assist with any audit, inspection, proceeding or other inquiry;
and to act as a witness in connection with any litigation or other legal
proceeding affecting the Bank.  Employee
further agrees that should he be contacted (directly or indirectly) by any
person or entity adverse to the Bank, he shall within 48 hours notify the then-current
Chairman of the Board of the Bank. 
Employee shall be reimbursed for any reasonable costs and expenses
incurred in connection with providing such cooperation.

 

9.                                      Entire Agreement;
Modification of Agreement

 

Except as otherwise expressly noted herein, this Agreement constitutes
the entire understanding of the parties and supersedes all prior discussions,
understandings, and agreements of every nature between them relating to the
matters addressed herein.  Accordingly,
no representation, promise, or inducement not included or incorporated by
reference in this Agreement shall be binding upon the parties.  Employee affirms that the only consideration
for the signing of this Agreement are the terms set forth above and that no
other promises or assurances of any kind have been made to him by the Bank or
any other entity or person as an inducement for

 

14

 

him to sign this
Agreement.  This Agreement may not be
changed orally, but only by an agreement in writing signed by the parties or
their respective heirs, legal representatives, successors, and assigns.

 

10.                               Partial Invalidity

 

The parties agree that
the provisions of this Agreement and any paragraphs, subsections, sentences, or
provisions thereof shall be deemed severable and that the invalidity or
unenforceability of any paragraph, subsection, sentence, or provision shall not
affect the validity or enforceability of the remainder of the Agreement.

 

11.                               Waiver

 

The waiver of the breach
of any term or provision of this Agreement shall not operate as or be construed
to be a waiver of any other subsequent breach of this Agreement.

 

12.                               Successors and Assigns

 

This Agreement shall
inure to and be binding upon the Bank and Employee, their respective heirs,
legal representatives, successors, and assigns.

 

13.                               Governing Law

 

This Agreement shall be
construed in accordance with the laws of the state of South Carolina and any
applicable federal laws.

 

14.                               Headings

 

The headings or titles of
sections and subsections of this Agreement are for convenience and reference
only and do not constitute a part of this Agreement.

 

15.                               Notice

 

Any notice or
communication required or permitted under this Agreement shall be made in
writing and sent by overnight courier (confirmation of receipt required) or
certified mail (postage prepaid and return receipt requested) addressed as
follows:

 

If to Employee:

 

[INSERT]

 

If to the Bank:

 

[INSERT]

 

16.                               Tax Matters

 

The payment of any amount
pursuant to this Agreement shall be subject to all applicable withholding and
payroll taxes and other applicable deductions. Notwithstanding any provision to
the contrary in this Agreement or in any of the Bank’s equity plans (each, a “Plan”),
any payment otherwise required to be made to Employee under any Bank plan on
account of Employee’s “separation from service,” within the meaning of the Section 409A
Rules (as defined below), to the extent such payment (after taking into
account all exclusions applicable to such payment under the Section 409A
Rules) is properly treated as deferred compensation subject to the Section 409A
Rules, shall not be made until the first business day after (i) the
expiration of six (6) months from the date of Employee’s separation from
service, or (ii) if earlier, the date of Employee’s death (the 

 

15

 

“Delayed Payment Date”).
On the Delayed Payment Date, there shall be paid to Employee or, if Employee
has died, Employee’s estate, in a single cash lump sum, an amount equal to
aggregate amount of the payments delayed pursuant to the preceding sentence. In
the case of each Plan under which Employee is entitled to receive amounts
treated as deferred compensation subject to the Section 409A Rules and
which provides for payment of such amounts in the form of “a series of installment
payments”, as defined in Treas. Reg. §1.409A-2(b)(iii), (A) Employee’s
right to receive such payments shall be treated as a right to receive a series
of separate payments under Treas. Reg. §1.409A-2(b)(iii), and (B) to the
extent such Plan does not already so provide, it is hereby amended to so
provide, with respect to amounts payable to Employee thereunder. For purposes
of this subparagraph, the “Section 409A Rules” shall mean Section 409A
of the Code, the regulations issued thereunder, and all notices, rulings, and
other guidance issued by the Internal Revenue Service interpreting same.
Notwithstanding the foregoing, Employee shall be solely responsible, and the
Bank shall have no liability, for any taxes, acceleration of taxes, interest,
or penalties arising under the Section 409A Rules.

 

17.                               Construction

 

Employee and the Bank
have participated jointly in the negotiation and drafting of this Agreement. In
the event an ambiguity or question of intent or interpretation arises, this
Agreement shall be construed as if drafted jointly by Employee and the Bank,
and no presumption or burden of proof shall arise favoring or disfavoring
either of them by virtue of the authorship of any of the provisions of this
Agreement.

 

18.                               Representations: 
Employee
acknowledges that:

 

a)                                      He has read this Agreement and
understands its meaning and effect.

 

b)                                     He has knowingly and voluntarily entered
into this Agreement of his own free will.

 

c)                                      By signing this Agreement, Employee has
waived, to the full extent permitted by law, all claims against the Bank based
on any actions taken by the Bank up to the date of the signing of this
Agreement, and the Bank may plead this Agreement as a complete defense to any
claim the Employee may assert.

 

d)                                     He would not otherwise be entitled to the
consideration described in this Agreement, and that the Bank is providing such
consideration in return for Employee’s agreement to be bound by the terms of
this Agreement.

 

e)                                      He has been given up to 21 days to
consider the terms of this Agreement.

 

f)                                        He has seven (7) days, after
Employee has signed the Agreement and it has been received by the Bank, to
revoke it by notifying the Chairman of the Board of his intent to revoke
acceptance.  For such revocation to be
effective, the notice of revocation must be received no later than 5:00 p.m.
on the seventh day after the signed Agreement is received by the Bank.  This Agreement shall not become effective or
enforceable until the revocation period has expired.

 

g)                                     He is not waiving or releasing any rights
or claims that may arise after the date the Employee signs this Agreement.

 

h)                                     HE HAS BEEN ADVISED TO CONSULT WITH AN
ATTORNEY BEFORE SIGNING THIS AGREEMENT.

 

As to Employee:

 

	
   

  	
   

  	
   

  
	
  Date

  	
   

  	
  C. Allan
  Ducker, III

  
	
   

  	
   

  	
   

  
	
  As to the Bank:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Date

  	
   

  	
  Chairman of the Board

  

 

16

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