FIRST SOUTH BANK

                                STOCK OPTION PLAN

                                    ARTICLE I

                               GENERAL PROVISIONS

1.   Purpose.  The Stock  Option  Plan (the  "Plan")  of First  South  Bank (the
     "Corporation")  is intended to allow certain  officers and key employees of
     the Corporation to have an opportunity to acquire an ownership  interest in
     the  Corporation  as an  additional  incentive  to attract  and retain such
     officers and employees and to encourage  them to promote the  Corporation's
     business.

2.   Elements  of the Plan.  Options  granted  under the Plan  shall be  granted
     pursuant to Article II of the Plan.  Options granted pursuant to Article II
     are  intended  to qualify as  incentive  stock  options  ("Incentive  Stock
     Options")  under  Section  422 of the  Internal  Revenue  Code of 1986,  as
     amended (the "Code").

3.   Administration. The Plan shall be administered by the Board of Directors of
     the Corporation  (the "Board") or, in the case of options granted  pursuant
     to Article II, a Committee  (the  "Committee"),  which shall consist of not
     less than three nonemployee directors of the Corporation.  No member of the
     Board or of the Committee  shall be liable for any action or  determination
     made in good  faith  with  respect  to the  Plan or to any  option  granted
     thereunder. In addition,  directors,  including Committee members, shall be
     eligible  for  indemnification  from  the  Corporation,   pursuant  to  the
     Corporation's  bylaws, for any expenses,  judgments or other costs incurred
     as a result of a lawsuit filed against them or any one of them claiming any
     rights or remedies due to their  participation in the administration of the
     Plan.

4.   Authority of the Board and Committee.

     (a)  Subject  to  the  other  provisions  of the  Plan,  the  Board  or the
          committee,  as the case  may be,  shall  have  sole  authority  in its
          absolute discretion: to grant options under the Plan; to determine the
          number of shares  subject  to any  option  under the Plan;  to fix the
          option price and the duration of each option;  to establish  any other
          terms and  conditions of options;  and to accelerate the time at which
          any outstanding option may be exercised.

     (b)  Subject  to the  other  provisions  of the  plan,  and  with a view to
          effecting its purpose, the Board or the Committee, as the case may be,
          shall have sole  authority in their absolute  discretion:  to construe
          and interpret the Plan; to define the terms used herein; to prescribe,
          amend, and rescind rules and regulations relating to the Plan; to make
          any other  determinations and to do everything  necessary or advisable
          to administer the Plan.

     (c)  All decisions,  determinations,  and interpretations made by the Board
          or the Committee,  as the case may be, shall be binding and conclusive
          on all  participants  in the Plan and on their legal  representatives,
          heirs and beneficiaries.

5.   Shares Subject to the Plan.

     (a)  The maximum  aggregate  number of shares of the  Corporation's  common
          stock, par value $5.00 per share ("Common Stock")  available  pursuant
          to the Plan,  subject  to  adjustment  as  provided  in  Section 10 of
          Article I, shall be 75,000 shares.  If any option granted  pursuant to
          the Plan  expires  or  terminates  for any  reason  before it has been
          exercised in full, the unpurchased shares subject to that option shall
          again be available for the purposes of the Plan, regardless of whether
          the  option  was  granted  pursuant  to  Article  II of the Plan.  The
          Corporation,  during the term of the Plan,  will at all times  reserve
          and keep  available such number of shares of the Common Stock as shall
          be sufficient to satisfy the requirements of the Plan.

     (b)  Notwithstanding  any other  provision  contained  herein,  the maximum
          number of  options  that may be granted  to any  officer  or  employee
          pursuant  to Article  II hereof  shall not exceed 40% of the number of
          shares of Common Stock designated in subparagraph (a) above.

<PAGE>

6.   Eligibility.

     (a)  Incentive  Stock  Options.  Incentive  Stock Options may be granted to
          such  officers  and key  employees  of the  Corporation  or any of its
          subsidiaries as may be determined by the Committee.

     (b)  Number of  Options.  More than one  option  may be granted to the same
          person if the person is an eligible recipient under the Plan.

7.   Terms and Conditions of Options. Stock options granted under the Plan shall
     be evidenced by  agreements  in such form as the Board or the Committee may
     from  time to time  approve,  which  agreements  shall  comply  with and be
     subject  to  the  following  terms  and  conditions,  in  addition  to  the
     provisions of Article II as applicable:

     (a)  Number of Shares;  Designation.  Each option shall state the number of
          shares to which it  pertains  and  whether  it is an  Incentive  Stock
          Option granted under Article II of the Plan.

     (b)  Option Price.  Each option shall state the option  price,  which shall
          not be less than the fair market  value (as  hereinafter  defined) per
          share of the Common  Stock at the time the  option is granted  (except
          that for an Incentive  Stock  Option  granted to any employee who owns
          more than 10% of the combined  voting power of all classes of stock of
          the  Corporation,  or of its parent or  subsidiary,  the option  price
          shall not be less than 110% of fair market  value).  Fair market value
          shall be determined by the Board or the Committee, as the case may be,
          on the basis of such  factors as either deems  appropriate;  provided,
          however,  that fair market value shall be determined without regard to
          any restriction  other than a restriction  which,  by its terms,  will
          never  lapse,   and  further   provided   that  if  at  the  time  the
          determination  of fair  market  value is  made,  the  Common  Stock is
          admitted to trading on a national  securities exchange for which sales
          prices are  regularly  reported,  fair market  value shall not be less
          than  the  mean of the  high and low  asked  or  closing  sales  price
          reported  for the common  Stock on that  exchange on the date of grant
          (or most recent  trading day preceding the date on which the option is
          granted).  For  purposes of the Plan,  the term  "national  securities
          exchange" shall include the National Association of Securities Dealers
          Automated Quotation system and the over the counter market.

     (c)  Exercise of Options;  Vesting. Each option agreement shall set forth a
          period  during which the option may be exercised  and,  with regard to
          Incentive  Stock  Options  pursuant to Article II hereof,  the vesting
          schedule for such  options as indicated in such Article II;  provided,
          however,  that this  period  shall not  exceed ten (10) years from the
          date of grant of the option. Not less than 100 shares may be purchased
          at any one time unless the number  purchased  is the total number that
          may be  purchased  under the  option at that  time.  No option  may be
          exercised for any fraction of a share of Common Stock.

     (d)  Written Notice and Payment Required. An option granted pursuant to the
          terms of the Plan  shall be  exercised  when  written  notice  of that
          exercise has been received by the Corporation at its principal  office
          from the person  entitled to exercise  the option and full payment for
          the shares  with  respect to which the  option is  exercised  has been
          received  by  the  Corporation.  The  purchase  price  of  any  shares
          purchased  shall be paid in full in cash or by  certified or cashier's
          check payable to the order of the Corporation.

     (e)  Compliance  with  Securities  Laws. The options granted under the Plan
          may at the option of the  Corporation,  be registered under applicable
          federal and state securities  laws, but the Corporation  shall have no
          obligation to undertake any such registrations. Shares of Common Stock
          shall not be issued with respect to any option  granted under the Plan
          unless the  exercise of that option and the  issuance  and delivery of
          those shares  pursuant to that exercise shall comply with all relevant
          provisions of state and federal law, and the requirements of any stock
          exchange  upon  which  the  shares  may then be  listed,  and shall be
          further  subject to the approval of counsel for the  Corporation  with
          respect to such  compliance.  The Board or the Committee,  as the case

<PAGE>

          may be, may also require an optionee to furnish evidence  satisfactory
          to the  Corporation,  including  a written  and signed  representation
          letter and consent to be bound by any transfer  restriction imposed by
          law,  legend,  condition,  or  otherwise,  that the  shares  are being
          purchased  only for  investment  and without any present  intention to
          sell or  distribute  the shares in  violation  of any state or federal
          law, rule, or regulation.  Further, each optionee shall consent to the
          imposition of a legend on the shares of Common Stock subject to his or
          her option restricting their  transferability as required by law or by
          the Plan.

     (f)  Options Not Transferable. Options granted pursuant to the Plan may not
          be sold,  pledged,  assigned,  or transferred in any manner  otherwise
          than  by  will  or the  laws of  descent  or  distribution  and may be
          exercised during the lifetime of an optionee only by that optionee.

     (g)  Duration of Options.  Each  option and all rights  thereunder  granted
          pursuant to the terms of this Plan shall expire on the date  specified
          in the applicable option  agreement,  but in no event shall any option
          be  exercisable  after ten years from the date of grant of the option.
          Moreover,  any Incentive  Stock Option granted to an employee who owns
          more than 10% of the combined  voting power of all classes of stock of
          the Corporation,  or of its parent or subsidiary,  shall expire within
          five years from the date of grant of the  option.  In  addition,  each
          option shall be subject to early  termination  as provided in the Plan
          or applicable option agreement.

     (h)  Option Agreements. The option agreements authorized under the Plan may
          differ from one another and shall  contain such other  provisions  not
          inconsistent  with the Plan and Article II as  applicable as the Board
          or the  Committee,  as the case  may be,  may in its  discretion  deem
          advisable from time to time, including, without limitation, conditions
          precedent  to the  exercise  of the option  covered by any  agreement,
          which conditions may include the satisfaction of specified performance
          criteria by the Corporation or the optionee.

     (i)  Limited Stock Appreciation Rights. In connection with the grant of any
          Option under this Plan,  the Board or  Committee,  as the case may be,
          may, in its  discretion,  provide an optionee  with the right  (herein
          sometimes  referred  to  as  "Limited  Stock  Appreciation   Rights"),
          following  a "change  in  control"  (as  hereinafter  defined)  of the
          Corporation  and without regard to any  restrictions  on exercise that
          would otherwise  apply,  to surrender any unexercised  portion of such
          option as such  optionee then may have for a cash payment equal to the
          amount by which the fair market value (as  determined  by the Board or
          Committee,  as the case may be,) of the  number  of  shares  of Common
          Stock then subject to such option  exceeds the aggregate  option price
          therefor.  Limited  Stock  Appreciation  Rights  shall be exercised by
          written notice to the Corporation as provided in Section 7 (d) of this
          Article I at any time  prior to the  earlier  of (i) the date which is
          thirty  (30) days  after the date of notice of a change in  control is
          given by the Board or  Committee  to the optionee or (ii) the last day
          of the option period  provided for in an option  agreement,  but in no
          event  later  than ten  years  from  the date of grant of the  option.
          Limited  Stock  Appreciation  Rights  may be  exercised  only when the
          market  value of the Common  Stock  subject to an option  exceeds  the
          aggregate  option price as determined in accordance  with Section 7(b)
          of this Article I.

     (j)  When used  herein,  the phrase  "change-in-control"  refers to (i) the
          acquisition  by any  person,  group  of  persons  or  entities  of the
          beneficial   ownership   or  power  to  vote  more  than  20%  of  the
          Corporation's  outstanding  stock,  (ii)  during  any  period  of  two
          consecutive  years,  a change in the  majority of the Board unless the
          election of each new director was approved by at least  two-thirds  of
          the directors then still in office who were directors at the beginning
          of such two year period, or (iii) a reorganization,  merger,  exchange
          of shares, combination or consolidation of the Corporation with one or
          more  other   corporations  or  other  legal  entities  in  which  the
          Corporation is not the surviving corporation,  or a transfer of all or
          substantially  all of the assets of the  Corporation to another person
          or entity.


<PAGE>

8.   Tax  Withholding.  The  exercise  of any option  granted  under the Plan is
     subject  to  the  condition  that  if at any  time  the  Corporation  shall
     determine,  in its discretion,  that the satisfaction of withholding tax or
     other  withholding  liabilities under any state or federal law is necessary
     or desirable as a condition of, or in any connection with, such exercise or
     the delivery or purchase of shares  pursuant  thereto,  then in such event,
     the exercise of the option shall not be effective  unless such  withholding
     tax or other withholding  liabilities shall have been satisfied in a manner
     acceptable to the Corporation.


9.   Employment.  Nothing in the Plan or in any option  award shall  confer upon
     any eligible employee any right to continued employment by the Corporation,
     or by its parent or subsidiary corporations,  or limit in any way the right
     of the Corporation or alter the terms of that employment.


10.  Adjustments.

     (a)  If the  shares  of  Common  Stock of the  Corporation  are  increased,
          decreased,  changed into, or exchanged for a different  number or kind
          of shares or securities  through merger,  consolidation,  combination,
          exchange   of   shares,   other   reorganization,    recapitalization,
          reclassification,  stock dividend,  stock split or reverse stock split
          in which the Corporation is the surviving entity, the Board shall make
          an appropriate and proportionate  adjustment in the maximum number and
          kind of shares as to which  options may be granted  under the Plan.  A
          corresponding  adjustment  changing  the  number  or  kind  of  shares
          allocated to unexercised options that shall have been granted prior to
          any such  change  shall  likewise  be made.  Any  such  adjustment  in
          outstanding  options  shall be made  without  change in the  aggregate
          purchase price  applicable to the  unexercised  portion of the option,
          but with a  corresponding  adjustment  in the price for each  share or
          other  unit of any  security  covered  by the  option.  In making  any
          adjustment  pursuant to this  Section 10 (a),  any  fractional  shares
          shall be disregarded.

     (b)  In the event of a  consolidation  or a merger in which the Corporation
          is not the  surviving  corporation,  or any other  merger in which the
          shareholders of the Corporation  exchange their shares of stock in the
          Corporation  for  stock of  another  corporation,  or in the  event of
          complete  liquidation  of the  Corporation,  or in the case of  tender
          offer  approved  by the Board,  all  outstanding  options,  unless the
          applicable   option  agreement   provides   otherwise,   shall  become
          exercisable  in full  immediately  prior to the effective  date of any
          such  transaction,  regardless  of the vesting  schedule for Incentive
          Stock Options.

11.  Effective  Date of Plan.  The Plan shall be effective  April 17, 1996,  the
     date of adoption  of the Plan by the Board  subject to approval of the Plan
     by the South Carolina Banking Commissioner and the shareholders by the vote
     of the  holders  of  two-thirds  (2/3) of the  Corporation's  Common  Stock
     present or represented at a duly held meeting of shareholders.

12.  Termination  and Amendment of Plan.  The Plan may be terminated at any time
     by the Board.  Unless sooner  terminated the Plan shall terminate April 17,
     2006.  No  options  shall  be  granted  under  the Plan  after  the Plan is
     terminated.  Subject  to the  limitation  contained  in  Section 13 of this
     Article I, the Board or the Committee,  as the case may be, may at any time
     amend or revise the terms of the Plan,  including the form and substance of
     the option  agreements to be used hereunder;  provided that no amendment or
     revision,  unless  approved by the  shareholders,  shall (a)  increase  the
     maximum  aggregate  number  of  shares  subject  to this  Plan,  except  as
     permitted  under  Section 10 of this  Article  I; (b)  change  the  minimum
     purchase  price for shares  subject to options  granted under the Plan; (c)
     extend the maximum term established under the Plan for any option award; or
     (d) permit the granting of an option award to anyone other than as provided
     in the Plan.


<PAGE>

13.  Prior Rights and Obligations.  No amendment,  suspension, or termination of
     the Plan  shall,  without  the  consent of the person who has  received  an
     option award,  alter or impair any of that person's  rights or  obligations
     under any option  award  granted  under the Plan  prior to such  amendment,
     suspension, or termination.


                                   ARTICLE II

                             INCENTIVE STOCK OPTIONS

Options  granted  pursuant  to this  Article  II of the  Plan  shall  constitute
Incentive Stock Options under Section 422 of the Code and shall be designated as
such at the time of grant.  Incentive  Stock  Options  granted  pursuant to this
Article II shall be subject to the terms,  conditions and  limitations set forth
in Article I above and to the following:

1.   Maximum  Amount of Incentive  Stock  Options.  The maximum  aggregate  fair
     market value of Common Stock, determined as of the time the Incentive Stock
     Option is granted,  for which any employee may be granted  Incentive  Stock
     Options  (as defined in Section  422 (b) of the Code)  exercisable  for the
     first time during any calendar year under all incentive  stock option plans
     of the Corporation and any parent, subsidiary, and predecessor corporations
     held by such employee shall not exceed $100,000.

2.   Compliance with Section 422 of the Code. This Plan is intended to comply in
     every aspect with Section 422 of the Code and the  regulations  promulgated
     thereunder  with  regard to the grant of  Incentive  Stock  Options and the
     purchase and delivery of shares of Common Stock upon the exercise  thereof.
     In the event any future statute or regulation shall modify Section 422, the
     Plan shall be deemed to  incorporate  by reference  such  modification  for
     purposes of granting  Incentive  Stock Options or the purchase and delivery
     of any  shares  of common  Stock  upon the  exercise  thereof.  Any  option
     agreement  relating to an Incentive  Stock Option  granted  pursuant to the
     Plan that is outstanding and unexercised at the time any modifying  statute
     or regulation  becomes  effective  shall also be deemed to  incorporate  by
     reference such  modification,  and no notice of such  modification  need be
     given  to the  optionee.  If any  provision  of the Plan is  determined  to
     disqualify  the shares  purchasable  pursuant to  Incentive  Stock  Options
     granted under the Plan from the special tax  treatment  provided by Section
     422,  such  provision  shall be  deemed to  incorporate  by  reference  for
     purposes  of the  Incentive  Stock  Options  the  modification  required to
     qualify the shares of said tax treatment.

3.   Termination of Employment, Disability or Death.

     (a)  If an optionee ceases to be employed by the Corporation, or its parent
          or any of its subsidiaries (or a corporation or a parent or subsidiary
          of  such  corporation   issuing  or  assuming  a  stock  option  in  a
          transaction  to which  Section  424(a) of the Code  applies),  for any
          reason  other  than  disability  or  death  or  cause  defined  in the
          applicable option agreement, his or her option may be exercised at any
          time up to three months after the date or termination of employment.

     (b)  If an optionee  becomes  disabled  within the meaning of Section 22(e)
          (3) of the Code while  employed by the  Corporation,  or any parent or
          subsidiary  corporation (or a corporation or a parent or subsidiary of
          such  corporation  issuing or assuming a stock option in a transaction
          to which  Section  424(a)  of the Code  applies),  the  option  may be
          exercised  at  any  time  within  twelve  months  after  the  date  of
          termination of employment due to disability.

     (c)  If an optionee dies while employed by the  Corporation,  its parent or
          any of its  subsidiaries,  (or a corporation or a parent or subsidiary
          of  such  corporation   issuing  or  assuming  a  stock  option  in  a
          transaction  to which  Section  424(a) of the Code  applies) or within
          three  months of  retirement,  his or her option shall expire one year
          after  the date of  death.  During  this  period,  the  option  may be
          exercised,  except as  otherwise  provided  in the  applicable  option
          agreement,  by the  person or persons  to whom the  optionee's  rights
          under the  option  shall  pass by will or by the laws of  descent  and
          distribution.

<PAGE>

     (d)  Any option that may be exercised for a period following termination of
          the  optionee's  employment may be exercised only to the extent it was
          exercisable  immediately before such termination and in no event after
          the  option  would  expire  by  its  terms  without   regard  to  such
          termination.

4.   Vesting of Options.

     (a)  Options  granted as Incentive Stock Options under this Plan shall vest
          and the right of recipient to the options shall be nonforfeitable.

     (b)  In  determining  the number of options  vested a  recipient  shall not
          receive fractional  options. If the product resulting from multiplying
          the  vested  percentage  times  the  allocated  options  results  in a
          fractional  option,  then a  recipient's  vested right shall be to the
          whole number of options disregarding any fractional options.

     (c)  In the event any recipient to whom options are awarded under this Plan
          terminates  employment  with the Corporation for any reason other than
          as provided in  subparagraph  4(d) below and such  recipient  does not
          have a 100% vested  interest  in the  recipient's  options  under this
          Plan,  then any options which are not vested,  based upon the schedule
          above,  shall be forfeited  and shall be available  again for grant to
          officers and key employees as may be determined by the Committee.

     (d)  In the event that the employment of a recipient  with the  Corporation
          should terminate because of such recipient's disability or death prior
          to the date when all options  allocated to the recipient would be 100%
          vested in accordance  with the schedule above,  then,  notwithstanding
          the schedule  above,  all options  allocated to such  recipient  shall
          immediately  become fully vested and  nonforfeitable.  For purposes of
          this Plan, the term disability  shall be defined in the same manner as
          such term is defined in section 22(e) (3) of the Internal Revenue Code
          of 1986, as amended.