STATE OF SOUTH CAROLINA
COUNTY OF SPARTANBURG

                        INCENTIVE STOCK OPTION AGREEMENT

         THIS INCENTIVE STOCK OPTION AGREEMENT  (hereinafter referred to as this
"Agreement")  is made and entered  into as of this 31th day of  December,  1998,
between FIRST SOUTH BANK, A SOUTH CAROLINA corporation  (hereinafter referred to
as the  "Corporation"),  and Barry L. Slider, a resident of Spartanburg  County,
South Carolina (hereinafter referred to as the "Optionee").

         WHEREAS,  the  Board  of  Directors  of  the  Corporation  (hereinafter
referred to as the  "Board")  has adopted the First South Bank Stock Option Plan
(hereinafter referred to as the "Plan") subject to approval by the Corporation's
shareholders; and

         WHEREAS, the Plan provides that a committee (hereinafter referred to as
the  "Committee")  of the Board will make available to certain  officers and key
employees of the Corporation  the right to purchase shares of the  Corporation's
common stock (hereinafter referred to as "Common Stock"); and

         WHEREAS,  the  Committee  has  determined  that the Optionee  should be
granted an option to purchase shares of Common Stock under the Plan;

         NOW, THEREFORE, the Corporation and the Optionee agree as follows:

1.   Date of Grant of Option. The date of grant of the option granted under this
     Agreement is the 31st day of December, 1998.

2.   Grant of  Option.  Pursuant  to the  Plan,  the  Corporation  grants to the
     Optionee the right  (hereinafter  referred to as the  "Option") to purchase
     from the  Corporation  all or any part (subject to limitations set forth in
     the Plan) of an aggregate of one thousand  nine hundred one (1,901)  shares
     of Common  Stock  (hereinafter  referred to as the "Option  Shares")  which
     shall be authorized but unissued shares.

3.   Vesting.

     (a)  Periodic  Vesting.  Subject to  subparagraph  3(b) below,  the Options
          shall vest and become  nonforfeitable in accordance with the following
          schedule:

On the Date of grant:                                                  0% Vested

On or after the first anniversary of the date of grant:               20% Vested

On or after the second anniversary of the date of grant:              20% Vested

On or after the third anniversary of the date of grant:               20% Vested

On or after the fourth anniversary of the date of grant:              20% Vested

On or after the fifth anniversary of the date of grant:               20% Vested

     (b)  Accelerated Vesting.  Notwithstanding paragraph (a) above, all Options
          previously  not vested and subject to forfeiture  shall vest and shall
          become nonforfeitable upon the occurrence of any of the following:

              (i) Disability  of Optionee.  The  termination  of the  Optionee's
                  employment by the Corporation by reason of disability.  As set
                  forth in the Plan,  the term  "disability"  is  defined in the
                  same  manner as such term is defined  in Section  22(e) (3) of
                  the Internal Revenue Code of 1986, as amended.

              (ii)Death of Optionee.       The Optionee's death.

4.   Option  Price.  The price to be paid for the Option Shares shall be sixteen
     and 50/100  Dollars  ($16.50)  per share  (hereinafter  referred  to as the
     "Option  Price")  which is the fair  market  value of the Option  Shares as
     determined by the Committee as of the date of grant of this Option.

5.   Method of Exercise.  The Option shall be exercised by written notice to the
     Committee signed by the Optionee or by such other person as may be entitled
     to exercise the Option. In the exercise of the Option, the aggregate Option
     Price for the shares  being  purchased  may be paid either in cash or check
     payable to the  Corporation  or any  combination  thereof and the notice of
     exercise  shall specify how payment will be made.  The written notice shall
     state the  number  of  shares  with  respect  to which the  Option is being
     exercised  and, shall either be accompanied by the payment of the aggregate
     Option  Price  for such  shares or shall fix a date (not more than ten (10)
     business  days from the date of such  notice)  by which the  payment of the
     aggregate  Option Price will be made.  The Optionee  shall not exercise the
     Option to purchase less than one hundred (100) shares, unless the committee
     otherwise  approves  or unless the partial  exercise  is for the  remaining
     Option Shares available under the Option. A certificate or certificates for
     the Option  Shares of Common Stock  purchased by the exercise of the Option
     shall be  issued  in the  regular  course  of  business  subsequent  to the
     exercise of the Option and the payment therefor.  During the Option Period,
     no person  entitled to exercise  the Option  granted  under this  Agreement
     shall have any of the rights or privileges of a shareholder with respect to
     any shares of Common  Stock  issuable  upon  exercise of the Option,  until
     certificates  representing such shares shall have been issued and delivered
     and the  individual's  name entered as a shareholder of record on the books
     of the Corporation for such shares.

6.   Termination of Option. The Option shall terminate as follows:

     (a)  Except as provided in subparagraphs (b), (c) and (d) below, the Option
          granted under this Agreement, to the extent that it has vested and not
          been exercised or expired,  shall  terminate on the earlier of (i) the
          date that the  Optionee is  discharged  for cause,  (ii) three  months
          after the date the Optionee gives notice that the Optionee  terminates
          his or her  employment  with the  Corporation  for a reason other than
          retirement  or  disability  or (iii) the date  which is ten (10) years
          from the date of grant of the Option set forth in  paragraph 1 hereof.
          The phrase  "discharged  for cause" shall include  termination  at the
          sole discretion of the Board of Directors of the  Corporation  because
          of  the  Optionee's   personal   dishonesty,   incompetence,   willful
          misconduct,  breach  of  fiduciary  duty  involving  personal  profit,
          intentional failure to perform stated duties, willful violation of any
          law,  rule or  regulation  (other than traffic  violations  or similar
          offenses) or final cease and desist order,  or material  breach of any
          provision of any employment  agreement that the optionee may have with
          the Corporation.

     (b)  In the event the Optionee  retires prior to the date which is ten (10)
          years after the date of grant of the Option,  the Optionee  shall have
          the right to exercise  the Option,  to the extent that it has not been
          exercised by the Optionee or expired,  notwithstanding  any limitation
          placed on the exercise of the Option by the Plan or by this Agreement,
          immediately  in full and at any time within three (3) months after the
          date of retirement,  but in no event may the Option be exercised later
          than ten (10) years after the date of grant of the Option set forth in
          paragraph  1  hereof.  For  purposes  of  this  Agreement,   the  term
          "retirement"  shall mean (i) termination of the Optionee's  employment
          under  conditions  which  would  constitute  retirement  under any tax
          qualified  retirement  plan  maintained  by the  Corporation  or  (ii)
          attaining age 65.

     (c)  In the event the Optionee  becomes disabled prior to the date which is
          ten (10) years  after the date of grant of the  Option,  the  Optionee
          shall have the right to exercise the Option, to the extent that it has
          not been  exercised  by the Optionee or expired,  notwithstanding  any
          limitation placed on the exercise of the Option by the Plan or by this
          Agreement,  immediately  in full and at any time  within  twelve  (12)
          months after the last date on which the Optionee  provided services as
          an officer or an employee of the  Corporation  before being  disabled,
          but in no event may the Option be  exercised  later than ten (10 years
          after the date of grant of the Option set forth in paragraph 1 hereof.
          For purposes of this Agreement, 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.

     (d)  In the event the Optionee should die while employed by the Corporation
          or within  three (3)  months  after  retirement  but prior to the date
          which is ten (10)  years  after the date of grant of the  Option,  the
          Option,  to the extent it has not been  exercised  by the  Optionee or
          expired, shall be exercisable, according to its terms, by the personal
          representative,  the  executor  or  administrator  of  the  Optionee's
          estate, or any person or persons who acquired the Option by bequest or
          inheritance from the Optionee,  notwithstanding  any limitation placed
          on the  exercise  of the  Option  by the  Plan or by  this  Agreement,
          immediately  in full and at any time within  twelve (12) months  after
          the date of death of the  Optionee,  but in no event may the Option be
          exercised  later  than  ten (10)  years  from the date of grant of the
          Option as set forth in paragraph 1 hereof.

7.   Effect of Agreement  on  Employment  Status of Optionee.  The fact that the
     committee has granted the Option to the Optionee under this Agreement shall
     not confer on the Optionee any right to employment  with the Corporation or
     to a position as an officer or an employee of the Corporation, nor shall it
     limit the right of the Corporation to remove the Optionee from any position
     held by the Optionee or to terminate his or her employment at any time.

8.   Listing and Registration of Option Shares

     (a)  The  Corporation's  obligation  to issue  shares of Common  Stock upon
          exercise  of  the  Option  is  expressly   conditioned  upon  (i)  the
          completion  by  the   Corporation   of  any   registration   or  other
          qualification  of such  shares  under  any  state  or  federal  law or
          regulations or rulings of any government  regulatory  body or (ii) the
          making of such investment representations or other representations and
          agreements  by the  Optionee or any person  entitled  to exercise  the
          Option in order to comply with the  requirements of any exemption from
          any such  registration  or other  qualification  of the Option  Shares
          which the committee shall, in its sole  discretion,  deem necessary or
          advisable.  Notwithstanding  the foregoing,  the Corporation  shall be
          under no obligation to register or qualify the Option Shares under any
          state or federal  law.  The required  representations  and  agreements
          referenced above may include  representations  and agreements that the
          Optionee,  or any other person entitled to exercise the Option, (i) is
          purchasing  such shares on his or her own behalf as an investment  and
          not with a present  intention  of  distribution  or  re-sale  and (ii)
          agrees to have placed upon any  certificates  representing  the Option
          Shares a legend setting forth any representations and agreements which
          have been given to the  Committee  or a reference  thereto and stating
          that such shares may not be transferred  except in accordance with all
          applicable  state and federal  securities  laws and  regulations,  and
          further   representing  that,  prior  to  making  any  sale  or  other
          disposition  of the Option Shares,  the Optionee,  or any other person
          entitled to exercise the Option,  will give the Corporation  notice of
          the intention to sell or dispose of such shares not less than five (5)
          days prior to such sale or disposition.


9.   Adjustment Upon Change in Capitalization; Dissolution or Liquidation

     (a)  In the  event of a change in the  number  of  shares  of Common  Stock
          outstanding   by   reason   of  a   stock   dividend,   stock   split,
          recapitalization, reorganization, merger, exchange of shares, or other
          similar capital adjustment, prior to the termination of the Optionee's
          rights under this Agreement, equitable proportionate adjustments shall
          be made by the Committee in the number,  kind, and the Option Price of
          shares subject to the unexercised  portion of the Option granted under
          this Agreement.  The adjustments to be made shall be determined by the
          Committee and shall be  consistent  with such change or changes in the
          Corporation's total number of outstanding shares;  provided,  however,
          that no  adjustment  shall change the  aggregate  Option Price for the
          exercise of the Option granted under this Agreement.

     (b)  The grant of the Option under this  Agreement  shall not affect in any
          way the right or power of the Corporation or its  shareholders to make
          or authorize  any  adjustment,  recapitalization,  reorganization,  or
          other change in the  Corporation's  capital structure or its business,
          or any merger or consolidation of the Corporation,  or to issue bonds,
          debentures,  preferred or other preference stock ahead of or affecting
          Common Stock or the right thereof,  or the  dissolution or liquidation
          of the Corporation,  or any sale or transfer of all or any part of the
          Corporation's assets or business.

     (c)  Upon the  effective  date of the  dissolution  or  liquidation  of the
          Corporation, the Option granted under this Agreement shall terminate.

10.  Nontransferability.  The Option granted under this  Agreement  shall not be
     assignable  or  transferable  except,  in the  event  of the  death  of the
     Optionee, by will or by the laws of descent and distribution.  In the event
     of the death of the Optionee, the personal representative,  the executor or
     the  administrator of the Optionee's  estate,  or the person or persons who
     acquired by bequest or  inheritance  the right to  exercise  the Option may
     exercise the unexercised  Option or a portion  thereof,  in accordance with
     the terms hereof,  prior to the date which is ten (10) years after the date
     of grant of Option as set forth in paragraph 1 hereof.

11.  Notices.  Any notice or other  communications  required or  permitted to be
     given under this Agreement  shall be in writing and shall be deemed to have
     been sufficiently given when delivered  personally or when deposited in the
     United States mail as Certified Mail,  return receipt  requested,  properly
     addressed  with postage  prepaid,  if to the  Corporation  at its principal
     office at 1450 Reidville Road,  Spartanburg,  South Carolina 29306; and, if
     to the  Optionee to his or her last  address  appearing on the books of the
     Corporation.  The  Corporation and the Optionee may change their address or
     addresses by giving written notice of such change as provided  herein.  Any
     notice or other communication  hereunder shall be deemed to have been given
     on the date  actually  delivered  or as of the  third  (3rd)  business  day
     following the date mailed, as the case may be.

12.  Construction Controlled by Plan. This Agreement shall be construed so as to
     be consistent with the Plan; and the provisions of the Plan shall be deemed
     to be controlling in the event at any provision  hereof should appear to be
     inconsistent therewith.  The Optionee hereby acknowledges receipt of a copy
     of the Plan from the Corporation.

13.  Severability.  Whenever possible, each provision of this Agreement shall be
     interpreted  in  such  a  manner  as  to be  valid  and  enforceable  under
     applicable  law, but if any provision of this Agreement is determined to be
     unenforceable,  invalid or illegal,  the validity of any other provision or
     part  thereof,  shall not be  affected  thereby  and this  Agreement  shall
     continue  to be binding  on the  parties  hereto as if such  unenforceable,
     invalid or illegal provision or part thereof had not been included herein.

14.  Modification of Agreement; Waiver. This Agreement may be modified, amended,
     suspended, or terminated, and any terms,  representations or conditions may
     be waived,  but only by written  instrument  signed by each of the  parties
     hereto.  No waiver  hereunder shall constitute a waiver with respect to any
     subsequent  occurrence  or  other  transaction  hereunder  or of any  other
     provision hereof.

15.  Captions and Headings;  Gender and Number.  Captions and paragraph headings
     used herein are for  convenience  only, do not modify or affect the meaning
     of any provision  herein,  are not a part hereof,  and shall not serve as a
     basis for  interpretation  or in construction  of this  Agreement.  As used
     herein,  the masculine  gender shall  include the feminine and neuter,  the
     singular  number the plural,  and vice versa,  whenever  such  meanings are
     appropriate.

16.  Governing Law; Venue and Jurisdiction.  Without regard to the principles of
     conflicts of laws, the laws of the State of South Carolina shall govern and
     control the validity, interpretation,  performance, and enforcement of this
     Agreement.  The parties  hereto  agree that any suit or action  relating to
     this  Agreement  shall be  instituted  and  prosecuted in the courts of the
     County of Spartanburg,  State of South Carolina, and each party hereby does
     waive any right or defense relating to such jurisdiction and venue.

17.  Binding Effect. This Agreement shall be binding upon and shall inure to the
     benefit  of the  Corporation,  its  successors  and  assigns,  and shall be
     binding upon and inure to the benefit of the Optionee, his heirs, legatees,
     personal representatives, executors, and administrators.

18.  Entire  Agreement.  This  Agreement  constitutes  and  embodies  the entire
     understanding  and agreement of the parties hereto and, except as otherwise
     provided  hereunder,  there  are no  other  agreements  or  understandings,
     written or oral,  in effect  between  the  parties  hereto  relating to the
     matters addressed herein.

19.  Counterparts. This Agreement may be executed in any number of counterparts,
     each of which when executed and delivered shall be deemed an original,  but
     all of which taken together shall constitute one and the same instrument.


        IN WITNESS WHEREOF,  the  Corporation,  has caused this instrument to be
executed in its corporate name by its President,  or one of its Vice Presidents,
and  attested by its  Secretary  or one of its  Assistant  Secretaries,  and its
corporate seal to be hereto affixed,  all by authority of its Board of Directors
first duly given,  and the Optionee has hereunto set his or her hand and adopted
as his or her seal the typewritten work "SEAL" appearing beside his or her name,
all done this the day and year first above written.

                                     FIRST SOUTH BANK

                                     By:----------------------------------------
                                        Roger A. F. Habisreutinger, Chairman

ATTEST:

-------------------------------------------
V. Lewis Shuler, Corporate Secretary

[CORPORATE SEAL]


                                     -------------------------------------------
                                     Barry L. Slider, Optionee


















                                    EXHIBIT A

                              NOTICE OF EXERCISE OF
                             INCENTIVE STOCK OPTION


To: The Stock Option Committee of the Board of Directors of First South Bank

                  The undersigned  hereby elects to purchase  _____________whole
shares of Common Stock of First South Bank (the  "Corporation")  pursuant to the
Incentive  Stock Option  granted to the  undersigned  in that certain  Incentive
Stock Option  Agreement  between the Corporation  and the undersigned  dated the
____day of  ____________,________.  The aggregate purchase price for such shares
is  $_________,  which  amount  is (i)  being  tendered  herewith,  (ii) will be
tendered on or before  _______________________,199___ (cross out provision which
does not apply) in cash and/or check payable to the  Corporation.  The effective
date of this election shall be  ________________,199___,  or the date of receipt
of this Notice by the Corporation if later.

         Executed   this    _________day    of    __________________,    199___,
at_____________________________________________________________________.



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                                          (Social Security Number)