Dated as of May 10, 2006
This GUARANTEE AGREEMENT (the "Guarantee"), dated as of May 10, 2006, is executed and delivered by
GrandSouth Bancorporation, a bank holding company incorporated in South Carolina (the "Guarantor"), and
Wilmington Trust Company, a Delaware banking corporation, as trustee (the "Guarantee Trustee"), for the
benefit of the Holders (as defined herein) from time to time of the Capital Securities (as defined herein) of
GrandSouth Capital Trust I, a Delaware statutory trust (the "Issuer").
WHEREAS, pursuant to an Amended and Restated Declaration of Trust (the "Declaration"), dated as of May
10, 2006, among the trustees named therein of the Issuer, GrandSouth Bancorporation, as sponsor, and the
Holders from time to time of undivided beneficial interests in the assets of the Issuer, the Issuer is issuing on the
date hereof securities, having an aggregate liquidation amount of up to $8,000,000, designated the Capital
Securities (the "Capital Securities"); and
WHEREAS, as incentive for the Holders to purchase the Capital Securities, the Guarantor desires irrevocably
and unconditionally to agree, to the extent set forth in this Guarantee, to pay to the Holders of Capital Securities
the Guarantee Payments (as defined herein) and to make certain other payments on the terms and conditions set
NOW, THEREFORE, in consideration of the purchase by each Holder of the Capital Securities, which purchase
the Guarantor hereby agrees shall benefit the Guarantor, the Guarantor executes and delivers this Guarantee for
the benefit of the Holders.
DEFINITIONS AND INTERPRETATION
Section 1.1. Definitions and Interpretation.
In this Guarantee, unless the context otherwise requires:
(a) capitalized terms used in this Guarantee but not defined in the preamble above have the respective meanings
assigned to them in this
(b) a term defined anywhere in this Guarantee h