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Exhibit 10.2  

 
 

EMPLOYMENT AGREEMENT    
    

        THIS EMPLOYMENT AGREEMENT (this "Agreement") dated as of March, 29th 2004, is made by and between CommunitySouth Bancshares, Inc., a South
Carolina corporation (the "Company"), which will be the holding company for CommunitySouth Bank (Proposed), a proposed South Carolina state bank (the "Bank"), and David A. Miller, an individual
resident of South Carolina (the "Executive"). Each of the Organizers of the Bank shall also be a party to this Agreement until the date the Bank opens. 

        The
Employer is in the process of organizing the Bank, and the Executive has agreed to serve as President and Chief Lending Officer of the Bank and the Company. Upon completion of the
organization of the Bank, the Bank will automatically become a party to this Agreement, and all references to the term "Employer" as used herein shall refer to the Company and the Bank. 

        The
Employer recognizes that the Executive's contribution to the growth and success of the Bank during its organization and initial years of operations will be a significant factor in
the success of the Bank. The Employer desires to provide for the employment of the Executive in a manner which will reinforce and encourage the dedication of the Executive to the Bank and promote the
best interests of the Bank and its shareholders. The Executive is willing to serve the Employer on the terms and conditions herein provided. Certain terms used in this Agreement are defined in
Section 17 hereof. 

        This
Agreement will be submitted to the FDIC and the South Carolina Board of Financial Institutions in connection with the regulatory applications related to the formation of the Bank.
The parties hereto agree to any amendments to this Agreement as may be required in connection with obtaining such regulatory approvals. 

        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 employ the Executive, and the Executive shall serve the Employer, as President
and Chief Lending Officer of the Bank and as President of the Company upon the terms and conditions set forth herein. The Executive shall also serve on the Board of Directors of the Company and the
Bank. 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. 

        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 Bank 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)   Starting
March 29, 2004, the Employer shall pay the Executive an initial annual base salary of $100,000, plus family yearly medical, dental, vision and disability
insurance premium in amounts to be determined by the Board. On the date that the Company breaks escrow on its initial offering for the formation of the Bank, the annual base salary will be increased
to $115,000. Prior to the date the Bank opens for business to the public (the "Opening Date"), the salary will be paid bi-monthly. Following the Opening Date, the salary will be paid in
accordance with the Bank's standard payroll procedures. The Board (or an appropriate committee of the Board) shall review the Executive's performance and salary at least annually and may increase the
Executive's base salary if it determines in its sole discretion that an additional increase is appropriate. 

        (b)   Following
the Opening Date of the Bank, the Executive shall be eligible each year to receive a cash bonus equaling up to 50% of his annual salary if the Bank achieves
certain performance levels established by the board of directors from time to time. 

        (c)   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 Employer. As soon as an appropriate stock option plan is adopted by the Board, the Company shall grant to the Executive an option to
purchase a number of shares of Common Stock equal to 4% of the number of shares actually sold in the offering. The award agreement for the stock option shall provide that one-third of the
shares subject to the option will vest on each of the first three anniversaries of the Opening Date, but only if the Executive remains employed by the Company or one of its subsidiaries on such date,
and shall contain other customary terms and conditions. Nothing herein shall be deemed to preclude the granting to the Executive of warrants or options under a director option plan in addition to the
options granted hereunder. The exercise price of the options will be equal to the fair market value of the stock on the date of grant. 

        (d)   The
Executive shall participate in all retirement, 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. The Executive shall also be paid directors' fees in the same amount as outside directors at such time that the
Employer begins paying directors' fees. 

        (e)   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. 

        (f)    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. Until the Employer provides this
automobile, the Employer will reimburse the Executive for the use of his personal automobile at the IRS legal mileage rate. 

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        (g)   In
addition, at a time deemed appropriate by the Board, the Employer shall obtain a membership in and pay the initiation fee for and 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 President or Chief Executive Officer of the Employer and
this Agreement remains in force. 

        (h)   The
Employer shall reimburse the Executive for reasonable travel and other expenses related to the Executive's duties, including cell phone expenses, which are incurred
and accounted for in accordance with the normal practices of the Employer. 

        (i)    The
Employer shall provide the Executive with four weeks' paid vacation per year, which shall be taken in accordance with any banking rules or regulations governing
vacation leave. 

        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 Executive's estate shall receive any sums due him as base salary and/or
reimbursement of expenses through the end of the month during which death occurred, plus any bonus earned or accrued through the date of death (including any amounts awarded for previous years but
which were not yet vested). 

        (c)   The
Employer may terminate this Agreement upon the disability of the Executive for a period of 180 days which, in the opinion of the Board of Directors, renders
him unable to perform the essential functions of his job and for which reasonable accommodation is unavailable. For purposes of this Agreement, a "disability" is defined as a physical or mental
impairment that substantially limits one or more major life activities, and a "reasonable accommodation" is one that does not impose an undue hardship on the Employer. During the period of any
incapacity 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) 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 Executive shall receive any bonus earned or accrued through the date of incapacity (including any amounts awarded for previous years but which
were not yet vested). 

        (d)   The
Employer may terminate this Agreement 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 such termination. 

        (e)   The
Employer may terminate this Agreement without Cause upon delivery of a Notice of Termination to the Executive. If the Executive's employment is terminated without
Cause under this provision, the Employer shall pay to the Executive severance compensation in an amount equal to 100% of his then current monthly base salary each month for 24 months from the
date of termination, plus any bonus earned or accrued through the date of termination (including any amounts awarded for previous years but which were not yet vested). 

        (f)    The
Executive may terminate this Agreement at any time by delivering a Notice of Termination. If the Executive resigns 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. 

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        (g)   The
Executive may terminate this Agreement for Good Reason upon delivery of a Notice of Termination to the Employer within a 90-day period beginning on the
30th day after the occurrence of a Change in Control or within a 90-day period beginning on the one year anniversary of the occurrence of a Change in Control. If the Executive's employment
is terminated by the Executive pursuant to this provision, in addition to other rights and remedies available in law or equity, the Executive shall be entitled to the following: 

          (i)  the
Employer shall pay the Executive in cash within fifteen days of the date of termination severance compensation in an amount equal to his then current monthly base
salary multiplied by 36, plus any bonus earned or accrued through the date of termination (including any amounts awarded for previous years but which were not yet vested); 

         (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 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 is 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, and the restrictive covenants contained in Section 9 shall
not apply to the Executive. 

        (h)   The
Employer may terminate this Agreement if its effort to organize the Bank is abandoned, or if the Company or the Bank receives notice or otherwise has reason to
believe that it will not receive approval of any bank regulatory application in connection with the formation of the Bank and the Board determines in good faith that the Executive's actions,
inactions, lack of experience, or background was a material factor in the failure to obtain such approval. If the Executive's employment is terminated under this provision, the Employer shall pay to
the Executive severance compensation in an amount equal to 100% of his then current monthly base salary each month for six months from the date of termination, but shall not be obligated to pay any
portion of any bonus. 

        (i)    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 termination of the Executive's 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 

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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. At the time of termination of employment, the Employer and the Executive shall enter into a mutually satisfactory form of release 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. 

        (j)    In
the event that the Executive's employment is terminated for any reason, the Executive shall tender his resignation as a director of the Company and the Bank and
effective as of the date of termination. 

        (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 Internal Revenue Code of 1986 and any regulations thereunder. 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. 

        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 

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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 Employer), 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, 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 thereafter, the Executive shall not (without the prior written consent of the Employer) 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 therefor if such
depository institution or holding company has one or more offices or branches located in the Territory. 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. 

        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 

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properties.
The Executive's rights and obligations under this Agreement may not be assigned by him, except that his right to receive accrued 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 Employer with a copy to the Secretary of the Employer. 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 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. 

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        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 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. In order for the Board of Directors to make a determination that termination shall be for Cause, the Board must provide the
Executive with an opportunity to meet with the Board in person. 

        (d)   "Change in Control" shall mean the occurrence during the Term of any of the following events, unless such event is a
result of a Non-Control Transaction: 

          (i)  The
individuals who, as of the date of this Agreement, are members of the Board of Directors of the Company (the "Incumbent Board") cease for any reason to constitute
at least 50% of the Board of Directors of the Company; provided, however, that if the election, or
nomination for election by the Company's shareholders, of any new director was approved in advance by a vote of at least 50% of the Incumbent Board, such new director shall, for purposes of this
Agreement, be considered as a member of the Incumbent Board; provided, further, that no individual shall
be considered a member of the Incumbent Board if such individual initially assumed office as a result of either an actual or threatened election contest, or other actual or threatened solicitation of
proxies or consents by or on behalf of any person other than the Board of Directors of the Company, including by reason of any agreement intended to avoid or settle any election contest or proxy
contest. 

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         (ii)  An
acquisition (other than directly from the Company) of any voting securities of the Company (the "Voting Securities") by any "Person" (as the term "person" is used
for purposes of Section 13(d) or 14(d) of the Exchange Act) immediately after which such Person has "Beneficial Ownership" (within the meaning of Rule 13d-3 promulgated under
the Exchange Act) of 20% or more of the combined voting power of the Company's then outstanding Voting Securities; provided,  however, that in determining
whether a Change in Control has occurred, Voting Securities which are acquired in a Non-Control Acquisition
shall not constitute an acquisition which would cause a Change in Control. 

        (iii)  Consummation
of: (i) a merger, consolidation, or reorganization involving the Company; (ii) a complete liquidation or dissolution of the Company; or
(iii) the sale or other disposition of all or substantially all of the assets of the Company to any Person (other than a transfer to a Subsidiary). 

        (iv)  A
notice of an application is filed with the South Carolina Board of Financial Institutions or the Federal Reserve Board or any other bank or thrift regulatory approval
(or notice of no disapproval) is granted by the Federal Reserve, South Carolina Board of Financial Institutions, the OCC, the Federal Deposit Insurance Corporation, or any other regulatory authority
for permission to acquire control of the Company or any of its banking subsidiaries; provided that if the application is filed in connection with a transaction which has been approved by the Board,
then the Change in Control shall not be deemed to occur until consummation of the transaction. 

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

        (f)    "Good Reason" shall mean the occurrence after a Change in Control of any of the events or conditions described in
subsections (i) through (viii) hereof: 

          (i)  a
change in the Executive's status, title, position or responsibilities (including reporting responsibilities) which, in the Executive's reasonable judgment, represents
an adverse change from his status, title, position or responsibilities as in effect at any time within ninety days preceding the date of a Change in Control or at any time thereafter; the assignment
to the Executive of any duties or responsibilities which, in the Executive's reasonable judgment, are inconsistent with his status, title, position or responsibilities as in effect at any time within
ninety days preceding the date of a Change in Control or at any time thereafter; any removal of the Executive from or failure to reappoint or reelect him to any of such offices or positions, except in
connection with the termination of his employment for Disability or Cause, as a result of his death, or by the Executive other than for Good Reason, or any other change in condition or circumstances
that in the Executive's reasonable judgment makes it materially more difficult for the Executive to carry out the duties and responsibilities of his office than existed at any time within ninety days
preceding the date of Change in Control or at any time thereafter; 

         (ii)  a
reduction in the Executive's base salary or any failure to pay the Executive any compensation or benefits to which he is entitled within five days of the date due; 

        (iii)  the
Employer's requiring the Executive to be based at any place outside a 30-mile radius from the executive offices occupied by the Executive immediately
prior to the Change in Control, except for reasonably required travel on the Employer's business which is not materially greater than such travel requirements prior to the Change in Control; 

        (iv)  the
failure by the Employer to (A) continue in effect (without reduction in benefit level and/or reward opportunities) any material compensation or employee
benefit plan in which the Executive was participating at any time within ninety days preceding the date of a 

9

 

Change
in Control or at any time thereafter, unless such plan is replaced with a plan that provides substantially equivalent compensation or benefits to the Executive, or (B) provide the
Executive with compensation and benefits, in the aggregate, at least equal (in terms of benefit levels and/or reward opportunities) to those provided for under each other employee benefit plan,
program and practice in which the Executive was participating at any time within ninety days preceding the date of a Change in Control or at any time thereafter; 

         (v)  the
insolvency or the filing (by any party, including the Company or the Bank) of a petition for bankruptcy of the Company or the Bank, which petition is not dismissed
within sixty days; 

        (vi)  any
material breach by the Employer of any material provision of this Agreement; 

       (vii)  any
purported termination of the Executive's employment for Cause by the Employer which does not comply with the terms of this Agreement; or 

      (viii)  the
failure of the Employer to obtain an agreement, satisfactory to the Executive, from any successor or assign to assume and agree to perform this Agreement, as
contemplated in Section 11 hereof. 

        Any
event or condition described in clause (i) through (viii) above which occurs prior to a Change in Control but which the Executive reasonably demonstrates (A) was
at the request of a third party, or (B) otherwise arose in connection with, or in anticipation of, a Change in Control which actually occurs, shall constitute Good Reason for purposes of this
Agreement, notwithstanding that it occurred prior to the Change in Control. The Executive's right to terminate his employment for Good Reason shall not be affected by his incapacity due to physical or
mental illness. 

        (g)   "Non-Control Transaction" shall mean a transaction described below: 

          (i)  the
shareholders of the Company, immediately before such merger, consolidation or reorganization, own, directly or indirectly, immediately following such merger,
consolidation or reorganization, at least 50% of the combined voting power of the outstanding voting securities of the corporation resulting from such merger, consolidation or reorganization (the
"Surviving Corporation") in substantially the
same proportion as their ownership of the Voting Securities immediately before such merger, consolidation or reorganization; and 

         (ii)  immediately
following such merger, consolidation or reorganization, the number of directors on the board of directors of the Surviving Corporation who were members of
the Incumbent Board shall at least equal the number of directors who were affiliated with or appointed by the other party to the merger, consolidation or reorganization. 

        (h)   "Territory" shall mean a radius of 15 miles from (i) the main office of the Employer or (ii) any branch
office of the Employer. 

        (i)    "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 Good Reason or for Cause, sets forth in reasonable
detail the facts and circumstances claimed to provide a basis for termination of the Executive's employment under the provision so indicated. 

        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. 

10

 

        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. 

        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 Bancshares, Inc.
	

ATTEST:	
 	

 	
 	

 
	

By:	
 	

 	
 	

By:	
 	

 
	 	 	
	 	 	 	

	Name:	 	 	 	Name:	 	 
	 	 	
	 	 	 	

	 	 	 	 	Title:	 	 
	 	 	 	 	 	 	

	

 	
 	

 	
 	

EXECUTIVE
	

 	
 	

 	
 	

 David A. Miller

        The
following Organizers of the Bank agree to personally guarantee the obligations of the Employer under Section 4(h) of this Agreement until the date the Bank opens for business
to the public: 

	
 David Larry Brotherton	 	
 W. Michael Riddle
	

 G. Dial Dubose	
 	

 Joanne McMillin Rogers
	

 Dave Edwards	
 	

 B. Lynn Spencer
	

 R. Wesley Hammond	
 	

 Neal Workman
	

 Arnold J. Ramsey	
 	

 Daniel E. Youngblood

11

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Exhibit 10.4  

 
 

ESCROW AGREEMENT    
    

        THIS ESCROW AGREEMENT (this "Agreement") is entered into and effective as of the 14th day of July,
2004, by and between CommunitySouth Bancshares, Inc., a South Carolina corporation (the "Company"), and Bank of Tennessee, a Tennessee state bank (the "Escrow Agent"). 

W I T N E S S E T H:  

        WHEREAS, the Company proposes to offer and sell (the "Offering") up to 2,500,000 shares of Common Stock, $0.01 par
value per share (the "Shares"), to investors at $10.00 per Share pursuant to a registered public offering; and 

        WHEREAS, the Company desires to establish an escrow for funds forwarded by subscribers for Shares, and the Escrow Agent is willing to
serve as Escrow Agent upon the terms and conditions herein set forth. 

        NOW, THEREFORE, in consideration of the premises and other good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows: 

        1.     Deposit with Escrow Agent.

        (a)   The
Escrow Agent agrees that it will from time to time accept, in its capacity as escrow agent, subscription funds for the Shares (the "Escrowed Funds") in the form of
checks received by the
Company from subscribers. All checks shall be made payable to the Escrow Agent. If any check does not clear normal banking channels in due course, the Escrow Agent will promptly notify the Company.
Any check which does not clear normal banking channels and is returned by the drawer's bank to Escrow Agent will be promptly turned over to the Company along with all other subscription documents
relating to such check. Any check received that is made payable to a party other than the Escrow Agent shall be returned to the Company for return to the proper party. The Company in its sole and
absolute discretion may reject any subscription for shares for any reason and upon such rejection it shall notify and instruct the Escrow Agent in writing to return the Escrowed Funds by check made
payable to the subscriber. 

        (b)   Subscription
agreements for the Shares shall be reviewed for accuracy by the Company and, immediately thereafter, the Company shall deliver to the Escrow Agent the
following information: (i) the name and address of the subscriber; (ii) the number of Shares subscribed for by such subscriber; (iii) the subscription price paid by such
subscriber; (iv) the subscriber's tax identification number certified by such subscriber; and (v) a copy of the subscription agreement. 

        2.     Investment of Escrowed Funds.  Upon collection of each check by the Escrow Agent, the
Escrow Agent shall invest the funds in a single deposit, or such other investments as the Escrow Agent and the Company shall agree. The Company shall provide the Escrow Agent with instructions from
time to time concerning in which of the specific investment instruments described above the Escrowed Funds shall be invested, and subject to Escrow Agent's prior approval and agreement on reasonable
investment vehicles and fees, Escrow Agent shall adhere to such instructions. Interest and other earnings, if applicable, shall start accruing on such funds as soon as such funds would be deemed to be
available for access under applicable banking laws and pursuant to the Escrow Agent's own banking policies. 

        3.     Distribution of Escrowed Funds.  The Escrow Agent shall distribute the Escrowed Funds
in the amounts, at the times, and upon the conditions hereinafter set forth in this Agreement. 

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        (a)   If
at any time on or prior to the expiration date of the offering as described in the prospectus relating to the Offering, (the "Offering Termination Date"),
(i) the Escrow Agent has certified to the Company in writing that the Escrow Agent has received at least $11,300,000 in Escrowed Funds, and (ii) the Escrow Agent has received a
certificate from the President or the Chairman of the Board of the Company that all other conditions to the release of funds as described in the Company's prospectus relating to the Offering as filed
with the Securities and Exchange Commission have been met, then the Escrow Agent shall deliver the Escrowed Funds to the Company to the extent such Escrowed Funds are collected funds (the "Closing
Date"). If any portion of the Escrowed Funds is not collected funds, then the Escrow Agent shall notify the Company of such facts and shall distribute such funds to the Company only after such funds
become collected funds. For purposes of this Agreement, "collected funds" shall mean all funds received by the Escrow Agent, which have cleared normal banking channels. 

        (b)   If
the Escrowed Funds do not, on or prior to the Offering Termination Date, become deliverable to the Company based on failure to meet the conditions described in
Paragraph 3(a), or if the Company terminates the offering at any time prior to the Offering Termination Date and delivers written notice to the Escrow Agent of such termination (the
"Termination Notice"), the Escrow Agent shall return the Escrowed Funds, without interest, which are collected funds as directed in writing by the Company to the respective subscribers in amounts
equal to the subscription amount theretofore paid by each of them. All uncleared checks representing Escrowed Funds which are not collected funds as of the initial Closing Date shall be collected by
the Escrow Agent, and together with all related subscription documents thereof shall be delivered to the Company by the Escrow Agent, unless the Escrow Agent is otherwise specifically directed in
writing by the Company. 

        4.     Distribution of Interest.  Any interest earned on the Escrowed Funds shall be retained
by the Company. 

        5.     Fee of Escrow Agent.  The escrow agent will accrue a service charge of $15.00 per
month. In addition, a $20.00 per check fee will be charged if the escrow account has to be refunded due to a failure to complete the subscription. All of these fees are payable upon the release of the
Escrowed Funds, and the Escrow Agent is hereby authorized to deduct such fees from the Escrowed Funds prior to any release thereof pursuant to Section 3 hereof. 

        6.     Liability of Escrow Agent.

        (a)   In
performing any of its duties under the Agreement, or upon the claimed failure to perform its duties hereunder, the Escrow Agent shall not be liable to anyone for any
damages, losses or expenses which it may incur as a result of the Escrow Agent so acting, or failing to act; provided, however, the Escrow Agent shall be liable for damages arising out of its willful
default or misconduct or its gross negligence under this Agreement. Accordingly, the Escrow Agent shall not incur any such liability with respect to (i) any action taken or omitted to be taken
in good faith upon advice of its counsel or counsel for the Company which is given with respect to any questions relating to the duties and responsibilities of the Escrow Agent hereunder; or
(ii) any action taken or omitted to be taken in reliance upon any document, including any written notice or instructions provided for in this Escrow Agreement, not only as to its due execution
and to the validity and effectiveness of its provisions but also as to the truth and accuracy of any information contained therein, if the Escrow Agent shall in good faith believe such document to be
genuine, to have been signed or presented by a proper person or persons, and to conform with the provisions of this Agreement. 

        (b)   The
Company agrees to indemnify and hold harmless the Escrow Agent against any and all losses, claims, damages, liabilities and expenses, including, without limitation,
reasonable costs of investigation and counsel fees and disbursements which may be imposed by the Escrow Agent 

2

 

or
incurred by it in connection with its acceptance of this appointment as Escrow Agent hereunder or the performance of its duties hereunder, including, without limitation, any litigation arising from
this Escrow Agreement or involving the subject matter thereof; except, that if the Escrow Agent shall be found guilty of willful misconduct or gross negligence under this Agreement, then, in that
event, the Escrow Agent shall bear all such losses, claims, damages and expenses. 

        (c)   If
a dispute ensues between any of the parties hereto which, in the opinion of the Escrow Agent, is sufficient to justify its doing so, the Escrow Agent shall retain
legal counsel of its choice as it reasonably may deem necessary to advise it concerning its obligations hereunder and to represent it in any litigation to which it may be a part by reason of this
Agreement. The Escrow Agent shall be entitled to tender into the registry or custody of any court of competent jurisdiction all money or property in its hands under the terms of this Agreement, and to
file such legal proceedings as it deems appropriate, and shall thereupon be discharged from all further duties under this Agreement. Any such legal action may be brought in any such court as the
Escrow Agent shall determine to have jurisdiction thereof. In connection with such dispute, the Company shall indemnify the Escrow Agent against its court costs and reasonable attorney's fees
incurred. 

        (d)   The
Escrow Agent may resign at any time upon giving thirty (30) days written notice to the Company. If a successor escrow agent is not appointed by Company within
thirty (30) days after notice of resignation, the Escrow Agent may petition any court of competent jurisdiction to name a successor escrow agent, and the Escrow Agent herein shall be fully
relieved of all liability under this Agreement to any and all parties upon the transfer of the Escrowed Funds and all related documentation thereto, including appropriate information to assist the
successor escrow agent with the reporting of earnings of the Escrowed Funds to the appropriate state and federal agencies in accordance with the applicable state and federal income tax laws, to the
successor escrow agent designated by the Company appointed by the court. 

        7.     Appointment of Successor.  The Company may, upon the delivery of thirty
(30) days' written notice appointing a successor escrow agent to the Escrow Agent, terminate the services of the Escrow Agent hereunder. In the event of such termination, the Escrow Agent shall
immediately deliver to the successor escrow agent selected by the Company all documentation and Escrowed Funds including interest earnings thereon in its possession, less any fees and expenses due to
the Escrow Agent or required to be paid by the Escrow Agent to a third party pursuant to this Agreement. 

        8.     Notice.  All notices, requests, demands and other communications or deliveries
required or permitted to be given hereunder shall be in writing and shall be deemed to have been duly given 

3

 

three
days after having been deposited for mailing if sent by registered mail, or certified mail return receipt requested, or delivery by courier, to the respective addresses set forth below: 

	If to the subscribers for Shares:	 	To their respective addresses as specified in their Subscription Agreements.
	

The Company:	
 	

CommunitySouth Bancshares, Inc.

1909 East Main Street

Easley, South Carolina 29640

Attn: C. Allan Ducker

Chief Executive Officer
	

With a copy to:	
 	

Nelson Mullins Riley & Scarborough, LLP

999 Peachtree Street, Suite 1400

Atlanta, Georgia 30309

Attn: Jason R. Wolfersberger, Esq.
	

The Escrow Agent:	
 	

Bank of Tennessee
	

 	
 	

Attn: Tony Howell

Executive Vice President

        9.     Representations of the Company.  The Company hereby acknowledges that the status of
the Escrow Agent with respect to the offering of the Shares is that of agent only for the limited purposes herein set forth, and hereby agrees it will not represent or imply that the Escrow Agent, by
serving as the Escrow Agent hereunder or otherwise, has investigated the desirability or advisability in an investment in the Shares, or has approved, endorsed or passed upon the merits of the Shares,
nor shall the Company use the name of the Escrow Agent in any manner whatsoever in connection with the offer or sale of the Shares, other than by acknowledgment that it has agreed to serve as Escrow
Agent for the limited purposes herein set forth. 

        10.   General.

        (a)   This
Agreement shall be governed by and construed and enforced in accordance with the laws of the State of South Carolina. 

        (b)   The
section headings contained herein are for reference purposes only and shall not in any way affect the meaning or interpretation of this Agreement. 

        (c)   This
Agreement sets forth the entire agreement and understanding of the parties with regard to this escrow transaction and supersedes all prior agreements, arrangements
and understandings relating to the subject matter hereof. 

        (d)   This
Agreement may be amended, modified, superseded or canceled, and any of the terms or conditions hereof may be waived, only by a written instrument executed by each
party hereto or, in the case of a waiver, by the party waiving compliance. The failure of any part at any time or times to require performance of any provision hereof shall in no manner affect the
right at a later time to enforce the same. No waiver in any one or more instances by any part of any condition, or of the breach of any term contained in this Agreement, whether by conduct or
otherwise, shall be deemed to be, or construed as, a further or continuing waiver of any such condition or breach, or a waiver of any other condition or of the breach of any other terms of this
Agreement. 

        (e)   This
Agreement may be executed simultaneously in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and
the same instrument. 

4

 

        (f)    This
Agreement shall inure to the benefit of the parties hereto and their respective administrators, successors and assigns. The Escrow Agent shall be bound only by the
terms of this Escrow Agreement and shall not be bound by or incur any liability with respect to any other agreement or understanding between the parties except as herein expressly provided. The Escrow
Agent shall not have any duties hereunder except those specifically set forth herein. 

        (g)   No
interest in any part to this Agreement shall be assignable in the absence of a written agreement by and between all the parties to this Agreement, executed with the
same formalities as this original Agreement. 

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

	COMPANY:	 	ESCROW AGENT:
	

COMMUNITYSOUTH BANCSHARES, INC.	
 	

BANK OF TENNESSEE
	

By:	
 	

/s/  C. ALLAN DUCKER      
	
 	

By:	
 	

/s/  TONY HOWELL      

	 	 	C. Allan Ducker	 	 	 	Tony Howell
	 	 	Chief Executive Officer	 	 	 	Executive Vice President

5

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