EXHIBIT 10.40 EMPLOYMENT AGREEMENT

EXHIBIT 10.40

EMPLOYMENT AGREEMENT

This EMPLOYMENT AGREEMENT (this “Agreement”), dated the 29th day of March, 2005 by and between Community Bank, Blountsville, Alabama (the “Bank”) and Patrick Frawley (the “Executive”) is effective as of March 29, 2005 (the “Effective Date”).

WITNESSETH:

WHEREAS, Executive currently serves as the Chairman of the Board and Chief Executive Officer of the Bank, and the Bank desires to continue the employment of Executive in accordance with the terms and conditions set forth in this Agreement;

WHEREAS, Executive desires to accept such continued employment on such terms and conditions.

NOW, THEREFORE , for and in consideration of the premises and the mutual covenants herein contained, the parties hereby agree as follows:

1. “ Bank ” – Community Bank, Blountsville, Alabama, a subsidiary of Community Bancshares, Inc. (the “Company”).

2. “ Board ” or “ Board of Directors ” – the Board of Directors of the Bank or the Company, as applicable.

3. “ Cause ” – either

(i) the willful engaging by Executive in any act that constitutes gross malfeasance of duty and that directly results in material injury to the Bank; or

(ii) Executive’s conviction of, pleading guilty to, or confession or admission of committing any felony, or any act of fraud, misappropriation or embezzlement, that directly results in a material injury to the Bank;

provided , however , that in the case of (i) above, such conduct shall not constitute Cause unless the Board shall have delivered to the Executive notice setting forth specifically (A) the conduct deemed to qualify as Cause, (B) reasonable action that would remedy such objection, and (C) a reasonable time (not less than thirty (30) days) within which the Executive may take such remedial action and the Executive shall not have taken such specified remedial action within such specified reasonable time.

4. “ Change in Control ” – shall mean any of the following:

(i) the acquisition, directly or indirectly, by any “person” (as such term is used in Section 13(d) and 14(d) of the Exchange Act) of securities of the Company representing an aggregate of twenty percent (20%) or more of the combined voting power of the Company’s then outstanding securities; or

(ii) during any period of two (2) consecutive years individuals who, at the beginning of such period, constitute the Board cease for any reason to constitute at least a majority thereof, unless the election of each new director was approved in advance by a vote of at least a majority of the directors then still in office who were directors at the beginning of the period; or

(iii) consummation of (a) a merger, consolidation, statutory share exchange, reorganization, or other business combination of the Company with any other “person” (as such term is used in Section 13(d) and 14(d) of the Exchange Act), other than a merger, consolidation, statutory share exchange, reorganization, or other business combination which would result in the outstanding common stock of the Company immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into common stock of the surviving entity or a parent or affiliate thereof) at least sixty (60%) percent of the outstanding common stock of the Company or such surviving entity or parent thereof outstanding immediately after such transaction, or (b) the sale or disposition by the Company of all or substantially all of the Company’s assets; or

(iv) approval by the shareholders of the Company of a complete liquidation or dissolution of the Company; or

(v) the occurrence of any other event or circumstances which is not covered by (i) through (iv) above which the Board determines affects control of the Company and, in order to implement the purposes of this Agreement as set forth above, adopts a resolution that such event or circumstance constitutes a “Change in Control” for the purposes of this Agreement; provided, however , that if:

(a) during the term of this Agreement there is a public announcement of a proposal for a transaction that, if consummated, would constitute a Change in Control or the Board receives and decides to explore an expression of interest with respect to a transaction which, if consummated, would lead to a Change in Control (either transaction being referred to herein as the “Proposed Transaction”); and

(b) the Executive’s employment is thereafter terminated by the Company other than for Cause or by reason of the Executive’s death or Disability; and

(c) the Proposed Transaction is consummated within one (1) year after the date of termination of the Executive’s employment;

then, for the purposes of this Agreement, a Change in Control shall be deemed to have occurred during the term of this Agreement and the termination of the Executive’s employment shall be deemed to have occurred within thirty (30) months following a Change in Control.

(vi) Notwithstanding the foregoing, if Section 409A of the Code would apply to any payment or right arising hereunder as a result of a Change in Control as hereinabove described, then with respect to such right or payment the only events that would constitute a Change in Control for purposes hereof shall be those events that would constitute a change in ownership or effective control of the Company, or in the ownership of a substantial portion of the assets of the Company, in accordance with Code Section 409A.

5. “ Code ” – the Internal Revenue Code of 1986, as amended.

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6. “ Compensation Committee ” – the Executive Compensation Committee of the Board of Directors of the Bank, or any successor committee.

7. “ Disability ” – the Executive’s inability to perform the essential functions of his regular duties and responsibilities, without reasonable accommodation, as a result of medically determinable physical or mental incapacity for a period of six (6) consecutive months. The determination of whether the Executive suffers a Disability shall be made by a physician acceptable to both the Executive (or his personal representative) and the Bank.

8. “ Excess Severance Payment ” – the term “Excess Severance Payment” shall have the same meaning as the term “excess parachute payment” defined in Section 280G(b)(1) of the Code.

9. “ Exchange Act ” – the term “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.

10. “ Involuntary Termination ” – termination of the Executive’s employment by the Executive which, in the reasonable judgment of the Executive, is due to (i) a change of the Executive’s responsibilities, position (including status, office, title, reporting relationships or working conditions), authority or duties (including changes resulting from the assignment to the Executive of any duties inconsistent with his positions, duties or responsibilities); or (ii) a reduction in the Executive’s compensation or violation of Article III hereof; or (iii) the Bank’s requiring Executive, without his consent, to move his primary place of employment to a place more than fifty (50) miles from the Executive’s primary place of employment as of the Effective Date. Involuntary Termination does not include the death or Disability of the Executive. Executive’s continued employment shall not constitute consent to, or a waiver of rights with respect to, any circumstance constituting Involuntary Termination hereunder.

11. “ Present Value ” – the term “Present Value” shall have the same meaning as provided in Section 280G(d)(4) of the Code.

12. “ Severance Payment ” – the term “Severance Payment” shall have the same meaning as the term “parachute payment” defined in Section 280G(b)(2) of the Code.

13. “ Reasonable Compensation ” – the term “Reasonable Compensation” shall have the same meaning as provided in Section 280G(b)(4) of the Code.

14. “ Retirement ”—the term “Retirement” shall mean normal retirement as defined in the Bank’s or the Company’s then-current retirement plan, or if there is no such retirement plan, “Retirement” shall mean voluntary termination after age 65 with more than ten years of service.

The Bank shall employ executive as the Chief Executive Officer of the Bank. In this capacity, Executive shall have such responsibilities commensurate with such position as shall be assigned to him by the Board of Directors of the Bank, which shall be consistent with the responsibilities of similarly situated executives of comparable companies in similar lines of business.

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During the Employment Period, and excluding any periods of vacation and sick leave to which Executive is entitled, Executive agrees to devote his business time, attention, skill and efforts exclusively to the faithful performance of his duties hereunder; provided , however , that it shall not be a violation of this Agreement for Executive to (i) devote reasonable periods of time to charitable and community activities and industry or professional activities, and/or (ii) manage personal business interests and investments, so long as such activities do not materially interfere with the performance of Executive’s responsibilities under this Agreement.

Unless earlier terminated herein in accordance with Section V hereof, Executive’s employment shall be for a three year term (the “Employment Period”), beginning on the Effective Date. Beginning on the first anniversary of the Effective Date and on each anniversary of the Effective Date, the Employment Period shall, without further action by Executive or the Bank, be extended by an additional one-year period; provided , however , that either party may, by notice to the other, cause the Employment Period to cease to extend automatically. Upon such notice, the Employment Period shall terminate upon the expiration of the then-current term, including any prior extensions.

1. Base Salary . During the Employment Period, the Bank will pay to Executive base salary which shall not be less than Executive’s base salary on the Effective Date (“Base Salary”), less normal withholdings, payable in equal monthly or more frequent installments as are customary under the Bank’s payroll practices from time to time. The Compensation Committee shall review Executive’s Base Salary annually and in its sole discretion may increase Executive’s Base Salary from year to year. The annual review of Executive’s salary will consider, among other things, Executive’s own performance and the Bank’s performance.

2. Bonus . During the Employment Period, Executive will be eligible to receive an annual bonus, based on performance criteria established from year to year by the Compensation Committee.

3. Incentive, Savings and Retirement Plans . During the Employment Period, Executive shall be entitled to participate in all incentive, savings and retirement plans, practices, policies and programs applicable generally to senior executive officers of the Bank (“Peer Executives”), and on the same basis as such Peer Executives.

4. Welfare Benefit Plans . During the Employment Period, Executive and Executive’s eligible dependents shall be eligible for participation in, and shall receive all benefits under, the welfare benefit plans, practices, policies and programs provided by the Bank (including, without limitation, medical, prescription, dental, disability, employee life, group life, accidental death and travel accident insurance plans and programs) (“Welfare Plans”) to the extent applicable generally to Peer Executives.

5. Expenses . During the Employment Period, Executive shall be entitled to receive prompt reimbursement for all reasonable expenses incurred by Executive in accordance with the policies, practices and procedures of the Bank to the extent applicable generally to Peer Executives.

6. Fringe Benefits . During the Employment Period, Executive shall be entitled to fringe benefits in accordance with the plans, practices, programs and policies of the Bank in effect

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for Peer Executives. Without limiting the foregoing, the Bank shall pay the initiation fee, membership fees and dues for Executive’s membership in two country clubs and one business or social association or club to be used for the benefit of the Bank.

7. Vacation . During the Employment Period, Executive will be entitled to the greater of five weeks of paid vacation each year, or the amount set forth in the Bank’s vacation policy.

8. Automobile . During the Employment Period, the Bank shall provide to Executive a full-size domestic automobile, or such other class of automobile as the Bank and Executive mutually agree. The Bank shall provide a new automobile every three years or 120,000 miles, whichever comes first. During the Employment Period, the Bank shall reimburse Executive for reasonable expenses related to his primary use of such automobile (including, without limitation, insurance, operating costs, and maintenance).

1. Death, Retirement or Disability . Executive’s employment shall terminate automatically upon Executive’s death or Retirement during the Employment Period. If the Bank determines in good faith that the Disability of Executive has occurred during the Employment Period, it may give to Executive written notice of its intention to terminate Executive’s employment. In such event, Executive’s employment with the Bank shall terminate effective on the 30th day after receipt of such written notice by Executive (the “Disability Effective Date”), provided that, within the 30 days after such receipt, Executive shall not have returned to full-time performance of Executive’s duties.

2. Termination by the Bank . The Bank may terminate Executive’s employment during the Employment Period with or without Cause.

3. Termination by Executive . Executive’s employment may be terminated by Executive by reason of Involuntary Termination or for no reason.

4. Notice of Termination . Any termination by the Bank for Cause, or by Executive for Involuntary Termination, shall be communicated by Notice of Termination to the other party hereto given in accordance with Section 3 of Article VII of this Agreement. For purposes of this Agreement, a “Notice of Termination” means a written notice which (i) indicates the specific termination provision in this Agreement relied upon, (ii) to the extent applicable, sets forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of Executive’s employment under the provision so indicated and (iii) specifies the termination date. If a dispute exists concerning the provisions of this Agreement that apply to Executive’s termination of employment, the parties shall pursue the resolution of such dispute with reasonable diligence. Within five (5) days of such a resolution, any party owing any payments pursuant to the provisions of this Agreement shall make all such payments together with interest accrued thereon at the rate provided in Section 1274(b)(2)(B) of the Code. The failure by Executive or the Bank to set forth in the Notice of Termination any fact or circumstance which contributes to a showing of Cause or Involuntary Termination shall not waive any right of Executive or the Bank, respectively, hereunder or preclude Executive or the Bank, respectively, from asserting such fact or circumstance in enforcing Executive’s or the Bank’s rights hereunder.

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1. Termination by the Bank Other Than for Cause, Death or Disability; Termination by Executive for Involuntary Termination – If, during the Employment Period, Executive’s employment is terminated (i) by the Bank (other than for Cause or by reason of the Executive’s death or Disability) or (ii) by the Executive pursuant to Involuntary Termination, or (iii) by Executive for any reason or no reason during the 30-day period beginning on the first anniversary of a Change in Control, Executive shall be entitled to, and the Bank shall pay or provide to the Executive, the following benefits:

(a) Accrued Obligations – The Bank will pay to Executive, in a lump sum in cash, within thirty (30) days following his termination of employment, the sum of (1) Executive’s then-current Base Salary through the date of termination to the extent not theretofore paid, (2) the product of (x) the higher of Executive’s earned bonus or target bonus for the then-current fiscal and (y) a fraction, the numerator of which is the number of days in the then-current fiscal year through the date of Executive’s termination, and the denominator of which is 365, (3) any accrued vacation pay to the extent not theretofore paid, and (4) unless Executive has ele