FIRST NATIONAL SOUTH

                             PHANTOM STOCK AGREEMENT


         THIS AGREEMENT is made this day of , 1997 by and between FIRST NATIONAL
SOUTH, a national banking association located at 307 North Main Street,  Marion,
South  Carolina  (the  "Bank"),  M&M  FINANCIAL  CORPORATION,  a South  Carolina
corporation (the "Company") of which the Bank is a wholly-owned subsidiary,  and
Chester A. Duke (the "Executive").

                                  INTRODUCTION


         To encourage the Executive to remain an employee of the Bank,  the Bank
is willing to provide to the  Executive a phantom  stock  opportunity.  The Bank
will pay the value of the phantom stock account in cash from its general assets.

                                    AGREEMENT


         The Executive, the Bank and the Company agree as follows:

                                    Article 1

                                   Definitions


     1.1 Definitions.  Whenever used in this Agreement,  the following words and
phrases shall have the meanings specified:

               1.1.1 "Change of Control"  means the transfer of more than 50% of
          the  Company's  outstanding  voting  common stock or if the Company is
          merged or  consolidated  with another  corporation  in an  acquisition
          transaction  or the Company sells  substantially  all of the assets of
          the  Company,  or the Bank which  employs the  Executive  is merged or
          consolidated  with another bank which is not owned at least 50% by the
          Company or its subsidiary or the Bank has a change of control in which
          more than 50% of the stock of the Bank is  acquired  or the Bank sells
          substantially all of its assets.

               1.1.2  "Code"  means  the  "Internal  Revenue  Code of  1986,  as
          amended.

               1.1.3 "Disability"  means the Executive's  inability to engage in
          any   substantial   gainful   activity  by  reason  of  any  medically
          determinable physical or mental impairment

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         which can be  expected to result in death or which has lasted or can be
         expected to last for a  continuous  period of not less than twelve (12)
         months.  As a  condition  to any  benefits,  the Bank may  require  the
         Executive to submit to such physical or mental evaluations and tests as
         the Bank's Board of Directors deems appropriate.

               1.1.4  "Dividend  Rate" means the total dividends paid during the
          fiscal year divided by flea total stockholders'  equity less preferred
          stock, measured as of the beginning of the fiscal year.

               1.1.5  "Extraordinary  Items"  means  those items  recognized  by
          Generally  Accepted  Accounting  Principles  as  extraordinary,   that
          substantially  affect  shareholder equity and/or the Company's assets.
          Examples of such items are stock redemptions,  mergers,  acquisitions,
          stock splits and other items of that nature.  The  Company's  Board of
          Directors, in its sole discretion, may designate other items of income
          or expense as extraordinary.

               1.1.6 "Growth of Stock Rate" means the  percentage  change in the
          Company's fair market value of common stock (the "Stock Price") over a
          one year  period,  measured on December 31 of each year.  For example,
          awards for the 1997 Plan Year would be credited  immediately after the
          1998 Plan Year with the Growth of Stock Rate  determined  on  December
          31, 1998 by taking the per share Stock Price on December 31, 1998 less
          the per share Stock Price on December 31, 1997 divided by the December
          31, 1997 per share Stock Price. The fair market value of the Company's
          common stock shall be  determined  as of December 31 of each Plan Year
          by computing the average  price of all trades  reported to the Company
          of the Company's common stock during the preceding twelve (12) months.

               1.1.7  "Interest"  means that when an interest rate accrues or is
          provided for with regard to a benefit,  interest shall accrue on a 365
          day year, compounded quarterly.

               1.1.8  "Normal   Retirement  Age"  means  the  Executive's   65th
          birthday.

               1.1.9  "Normal  Retirement  Date"  means the later of the  Normal
          Retirement Age or Termination of Employment.

               1.1.10 "Plan Year" means a 12 month  calendar  year.  The initial
          Plan Year shall be 1997.

               1.1.11 "Termination of Employment" means the Executive ceasing to
          be  employed  by the Bank or the  Company  for any reason  whatsoever,
          voluntary or involuntary, other than by reason of an approved leave of
          absence.


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                                    Article 2

                               Phantom Stock Award


     2.1 Phantom Stock Award Amount. The Bank's Board of Directors,  in its sole
discretion, shall determine the Executive's "Phantom Stock Award Percentage," as
of December 31 of each Plan Year based on performance objectives established and
achieved for the Plan Year.

The  Phantom  Stock  Award  Amount  shall be  calculated  annually by taking the
Executive's  base salary for the  applicable  year times the Phantom Stock Award
Percentage.

     2.2 Phantom Stock Deferral On December 31 of each Plan Year, the Bank shall
defer the Phantom Stock Award Amount into the Phantom Stock Account as set forth
in Article 3 of this Agreement.

                                    Article 3

                              Phantom Stock Account


     3.1  Establishing  and Crediting.  The Bank shall establish a Phantom Stock
Account on its books for the  Executive,  and shall credit to the Phantom  Stock
Account the following amounts:

               3.1.1 Awards.  The Phantom Stock Award Amount as determined under
          Article 2.

               3.1.2 Interest.  On December 31 of each Plan Year and immediately
          prior to the payment of any benefits under this Agreement, interest on
          the balance in the Phantom Stock Account since the preceding credit to
          that  account  under this  Section  3.1.2,  if any, at an annual rate,
          compounded  annually,  equal  to the  Growth  of Stock  Rate  plus the
          Dividend Rate  determined  as of the end of the most recent  completed
          fiscal year.

     3.2 Statement of Accounts. The Bank shall provide to the Executive,  within
120 days of the end of each Plan Year this  Agreement is in effect,  a statement
setting forth the Phantom Stock Account balance.

     3.3  Accounting  Device Only.  The Phantom Stock Account is solely a device
for measuring amounts to be paid under this Agreement. The Phantom Stock Account
is not a trust fund of any kind. The Executive is a general  unsecured  creditor
of the Bank for the payment of benefits.  The benefits represent the mere Bank's
promise to pay such benefits. The Executive's

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rights  are  not  subject  in any  manner  to  anticipation,  alienation,  sale,
transfer,  assignment,  pledge,  encumbrance,  attachment, or garnishment by the
Executive's creditors.

                                    Article 4

                                Lifetime Benefits


         4.1 Normal Retirement Benefit. If the Executive  terminates  employment
on or after the Normal  Retirement  Age for reasons  other than death,  the Bank
shall pay to the Executive the benefit  described in this Section 4.1 in lieu of
any other benefit under this Agreement.

                  4.1.1 Amount of Benefit. The benefit under this Section 4.1 is
         the Phantom Stock Account balance at the Executive's  Normal Retirement
         Date.

                  4.1.2  Payment  of  Benefit.  The Bank  shall pay the  benefit
         amount described in Section 4.1.1 to the Executive in 180 equal monthly
         installments  commencing  on the first day of the month  following  the
         Executive's  Normal  Retirement  Date.  The Bank  shall  annuitize  the
         benefit amount over 180 months crediting interest on the unpaid balance
         of the benefit  amount at the annual rate of 8% during the  installment
         period.

         4.2 Early Termination Benefit. If the Executive  terminates  employment
before  the  Normal  Retirement  Age,  and  for  reasons  other  than  death  or
Disability,  the Bank shall pay to the Executive  the benefit  described in this
Section 4.2 in lieu of any other benefit under this Agreement.

                  4.2.1 Amount of Benefit. The benefit amount under this Section
         4.2 is the Phantom Stock Account balance at the Executive's Termination
         of Employment.

                  4.2.2  Payment  of  Benefit.  The Bank  shall pay the  benefit
         amount described in Section 4.2.1 to the Executive in 180 equal monthly
         installments  commencing  on the first day of the month  following  the
         Executive's  Termination  of Employment.  The Bank shall  annuitize the
         benefit amount over 180 months crediting interest on the unpaid balance
         of the benefit  amount at an annual  rate of 8% during the  installment
         period.

         4.3 Disability Benefit. If the Executive  terminates  employment due to
Disability  prior  to the  Normal  Retirement  Age,  the Bank  shall  pay to the
Executive the benefit described in this Section 4.3 in lieu of any other benefit
under this Agreement.

                  4.3.1 Amount of Benefit. The benefit amount under this Section
         4.3 is the Phantom Stock Account balance on the date of the Executive's
         Termination of Employment due to Disability.


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<PAGE>



                  4.3.2  Payment  of  Benefit.  The Bank  shall pay the  benefit
         amount described in Section 4.3.1 to the Executive in 180 equal monthly
         installments  commencing  on the first day of the month  following  the
         Executive's Termination of Employment due to Disability. The Bank shall
         annuitize the benefit amount over 180 months crediting  interest on the
         unpaid balance of the benefit amount at an annual rate of 8% during the
         installment period.

         4.4  Change of  Control  Benefit.  Upon a Change of  Control  while the
Executive is in the active  service of the Bank or the  Company,  the Bank shall
pay to the  Executive  the benefit  described in this Section 4.4 in lieu of any
other benefit under this Agreement.

                  4.4.1 Amount of Benefit. The benefit amount under this Section
         4.4 is the Phantom Stock Account balance at the date of the Executive's
         Termination of Employment upon a Change in Control.

                  4.4.2  Payment of  Benefit.  The Bank shall pay the benefit to
         the Executive in a lump sum within 60 days after a Change in Control.

         4.5 Hardship  Distribution.  Upon the Bank's  determination  (following
petition by the  Executive)  that the  Executive  has suffered an  unforeseeable
financial emergency, the Bank shall distribute to the Executive all or a portion
of the Phantom Stock Account  balance as determined by the Bank, but in no event
shall the  distribution  be greater than is  necessary to relieve the  financial
hardship. An unforeseeable  financial emergency means that an event arising from
the death of a family member, divorce, sickness, i'~jury, catastrophe or similar
event  outside  the  control of the  Executive  occurs  and the Bank's  Board of
Directors,  in its sole  discretion,  approves  of, in writing,  of the hardship
distribution.


                                    Article 5

                                 Death Benefits


         5.1 Death During Active  Service.  If the  Executive  dies while in the
active service of the Bank or the Company, the Bank shall pay to the Executive's
beneficiary  the  benefit  described  in this  Section  5.1 in lieu of any other
benefit under this Agreement.

                  5.1.1 Amount of Benefit. The benefit under this Section 5.1 is
         the Phantom Stock Account balance at the Executive's death.

                  5.1.2  Payment  of  Benefit.  The Bank  shall pay the  benefit
         amount described in Section 5.1.1 to the Executive's beneficiary in 180
         equal  monthly  installments  payable  on the first  day of each  month
         following the Executive's death. The Bank shall annuitize the

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         benefit amount over 180 months crediting interest on the unpaid balance
         of the benefit  amount at the annual rate of 8% during the  installment
         period.

         5.2 Death During  Benefit  Period.  If the Executive dies after benefit
payments  have  commenced  under this  Agreement  but before  receiving all such
payments,  the  Bank  shall  pay  the  remaining  benefits  to  the  Executive's
beneficiary  at the same time and in the same  amounts that would have been paid
to the Executive had the Executive survived.

                                    Article 6

                                  Beneficiaries


         6.1   Beneficiary   Designations.   The  Executive  shall  designate  a
beneficiary  by filing a written  designation  with the Bank.  The Executive may
revoke  or  modify  the  designation  at any time by  filing a new  designation.
However,  designations  will only be  effective if signed by the  Executive  and
accepted  by  the  Bank  during  the  Executive's   lifetime.   The  Executive's
beneficiary designation shall be deemed automatically revoked if the beneficiary
predeceases the Executive, or if the Executive names a spouse as beneficiary and
the marriage is  subsequently  dissolved.  If the Executive dies without a valid
beneficiary designation, all payments shall be made to the Executive's surviving
spouse,  if any,  and if none,  to the  Executive's  surviving  children and the
descendants of any deceased child by right of representation, and if no children
or descendants  survive,  to the Executive's estate. If a beneficiary dies after
beginning to receive payments hereunder, then such payments shall continue to be
paid to the beneficiary's estate.

         6.2  Facility  of  Payment.  If a benefit is  payable to a minor,  to a
person  declared  incompetent,   or  to  a  person  incapable  of  handling  the
disposition  of his or her  property,  the  Bank  may pay  such  benefit  to the
guardian,  legal  representative  or person  having  the care or custody of such
minor,  incompetent  person or incapable  person.  The Bank may require proof of
incompetence,  minority  or  guardianship  as it may deem  appropriate  prior to
distribution of the benefit.  Such distribution  shall completely  discharge the
Bank from all liability with respect to such benefit.

                                    Article 7

                               General Limitations


         7.1  Notwithstanding  any provision of this  Agreement to the contrary,
the Bank shall not pay any benefit under this Agreement:

                  (a) To the extent the  benefit  would be "an excess  parachute
         payment" as that term is defined under Section 2800 of the Code; or


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                  (b) If the Bank,  the Company or any  affiliate of the Bank or
         the  Company  that may  employ  Executive  terminates  the  Executive's
         employment for "cause," which shall include:

                         (i) Gross negligence or gross neglect of duties;

                         (ii)  Commission  of  a  felony  or  of  a  misdemeanor
                    involving moral turpitude; or

                         (iii)   Fraud,   disloyalty,   dishonesty   or  willful
                    violation of any law or  significant  Bank or Company policy
                    or commission or omission of any act committed in connection
                    with the Executive's  employment and resulting in an adverse
                    effect on the Bank or the Company.

         7.2 Suicide or  Misstatement.  If the Executive  commits suicide within
two years after the date of this  Agreement,  or if the  Executive  has made any
material misstatement of fact on any application for life insurance purchased by
the Bank.


                                    Article 8

                          Claims and Review Procedures


         8.1  Claims  Procedure.  The  Bank  shall  notify  the  Executive,  the
Executive's  beneficiary  or any other  person  which  makes a claim  under this
Agreement  (the  "Claimant")  in writing,  within ninety (90) days of his or her
written application for benefits, of his or her eligibility or ineligibility for
benefits under the Agreement.  If the Bank  determines  that the Claimant is not
eligible  for  benefits  or full  benefits,  the notice  shall set forth (1) the
specific reasons for such denial,  (2) a specific reference to the provisions of
the Agreement on which the denial is based,  (3) a description of any additional
information or material  necessary for the Claimant to perfect his or her claim,
and a  description  of  why  it is  needed,  and  (4)  an  explanation  of  the~
Agreement's claims review procedure and other appropriate  information as to the
steps to be taken if the Claimant wishes to have the claim reviewed. If the Bank
determines  that there are special  circumstances  requiring  additional time to
make a decision, the Bank shall notify the Claimant of the special circumstances
and the date by which a decision is expected to be made, and may extend the time
for up to an additional ninety-day period.

         8.2 Review Procedure.  If the Claimant is determined by the Bank not to
be eligible for benefits, or if the Claimant believes that he or she is entitled
to greater or different  benefits,  the Claimant  shall have the  opportunity to
have such claim  reviewed  by the Bank by filing a petition  for review with the
Bank within sixty (60) days after receipt of the notice issued by the Bank. Said
petition shall state the specific  reasons which the Claimant  believes  entitle
him or her to benefits or to greater or  different  benefits.  Within sixty (60)
days after receipt by the Bank

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of the petition,  the Bank shall afford the Claimant  (and  counsel,  if any) an
opportunity to present his or her position to the Bank orally or in writing, and
the  Claimant  (or  counsel)  shall  have the  right  to  review  the  pertinent
documents.  The Bank shall notify the Claimant of its decision in writing within
the sixty day period, stating specifically the basis of its decision, written in
a manner calculated to be understood by the Claimant and the specific provisions
of the Agreement on which the decision is based.  If,  because of the need for a
hearing,  the sixty-day  period is not sufficient,  the decision may be deferred
for up to another  sixty-day  period at the election of the Bank,  but notice of
this deferral shall be given to the Claimant.


                                    Article 9

                           Amendments and Termination


         This Agreement may be amended or terminated only by a written agreement
signed by the Bank and the Executive.


                                   Article 10

                                  Miscellaneous


         10.1 Binding Effect. This Agreement shall bind the Executive,  the Bank
and  the and  their  beneficiaries,  survivors,  executors,  administrators  and
transferees.

         10.2 No Guaranty of  Employment.  This  Agreement is not an  employment
policy  or  contract.  It does not give the  Executive  the  right to  remain an
employee of the Bank or the Company,  nor does it  interfere  with the Bank's or
the  Company's  right to discharge the  Executive.  It also does not require the
Executive  to remain an employee nor  interfere  with the  Executive's  right to
terminate employment at any time.

         10.3 Non-Transferability. Benefits under this Agreement cannot be sold,
transferred, assigned, pledged, attached or encumbered in any manner.

         10.4 Tax  Withholding.  The Bank  shall  withhold  any  taxes  that are
required to be withheld from the benefits provided under this Agreement.

         10.5  Applicable  Law. The Agreement and all rights  hereunder shall be
governed  by the laws of the  State  of South  Carolina,  except  to the  extent
preempted by the laws of the United States of America.


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         10.6 Unfunded  Arrangement.  The Executive and  beneficiary are general
unsecured  creditors  of the  Bank  for  the  payment  of  benefits  under  this
Agreement.  The  benefits  represent  the mere  promise  by the Bank to pay such
benefits.  The rights to benefits are not subject in any manner to anticipation,
alienation,  sale, transfer,  assignment,  pledge,  encumbrance,  attachment, or
garnishment  by creditors.  Any insurance on the  Executive's  life is a general
asset of the Bank to which the  Executive and  beneficiary  have no preferred or
secured claim.

         10.7 Entire Agreement.  This Agreement constitutes the entire agreement
between the Bank, the Company and the Executive as to the subject matter hereof.
No rights are granted to the  Executive by virtue of this  Agreement  other than
those specifically set forth herein.

         10.8  Administration.  The Bank's Board of Directors  shall have powers
which are necessary to administer this Agreement, including but not limited to:

               (a) Interpreting the provisions of the Agreement;

               (b)  Establishing  and revising the method of accounting  for the
          Agreement;

               (c) Maintaining a record of benefit payments; and

               (d)  Establishing  rules and  prescribing  any forms necessary or
          desirable to administer the Agreement.

         IN WITNESS WHEREOF, the Executive,  a duly authorized Bank officer, and
a duly authorized Company officer have signed this Agreement.


                              [SIGNAUTRES OMITTED]


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