EXHIBIT 10.12

                     CHANGE-IN-CONTROL PROTECTIVE AGREEMENT

         THIS AMENDED AND RESTATED AGREEMENT (the "Agreement") entered into this
20th day of April, 2006 (the "Effective  Date"), by and between FIRST SOUTH BANK
(the "Bank"),  FIRST SOUTH BANCORP,  INC. (the  "Company"),  and WILLIAM L. WALL
(the "Employee").

         WHEREAS,  the Employee has  heretofore  been employed by the Bank as an
executive officer; and

         WHEREAS,  the Board of Directors  of each of the Company,  the Bank and
the Employee have  determined that it is necessary and appropriate to enter into
this Amended and Restated  Agreement to ensure the Employee's  continued service
on terms  consistent  with his role and his  importance  to the  success  of the
Company and the Bank;

         NOW, THEREFORE, the undersigned parties AGREE as follows:

         1. Defined Terms

         When used anywhere in the Agreement, the following terms shall have the
meanings set forth herein.

         (a) "Change in Control" shall mean any one of the following events: (i)
the  acquisition  by any person  (or  persons  acting as a group) of  ownership,
holding or power to vote more than 25% of the voting stock of the Company or the
Bank,  (ii) the  acquisition by any person (or persons acting as a group) of the
ability to control the  election of a majority  of the  Company's  or the Bank's
directors,  (iii) the acquisition of a controlling influence over the management
or  policies  of the  Company or of the Bank,  or (iv)  during any period of two
consecutive years, individuals (the "Continuing Directors") who at the beginning
of such period  constitute  the Board of Directors of the Company or of the Bank
(the  "Existing  Board") cease for any reason to constitute at least  two-thirds
thereof,  provided that any individual whose election or nomination for election
as a member of the Existing Board was approved by a vote of at least  two-thirds
of the  Continuing  Directors  then in office  shall be  considered a Continuing
Director. For purposes of this paragraph,  the terms "person" or "persons acting
as a group"  shall be  construed  within the  meaning  of  Section  13(d) of the
Securities  Exchange  Act  of  1934  and  shall  refer  to  an  individual  or a
corporation,  partnership,  trust, association,  joint venture, pool, syndicate,
sole proprietorship, unincorporated organization or any other form of entity not
specifically listed herein.

         (b) "Code"  shall mean the Internal  Revenue  Code of 1986,  as amended
from time to time, and as interpreted through applicable rulings and regulations
in effect from time to time.

         (c) "Good Reason" shall mean any of the  following  events,  which has
not been consented to in advance by the Employee in writing: (i) the requirement
that  the  Employee  move his  personal  residence,  or  perform  his  principal
executive  functions,  more than thirty (30) miles from his primary office as of
the date of the Change in Control;  (ii) a material  reduction in the Employee's
base  compensation  as in effect on the date of the  Change in Control or as the
same may be  increased  from time to time;  (iii) the failure by the Bank or the
Company to continue to provide  the  Employee  with  compensation  and  benefits
provided for on the date of the Change in Control,  as the same may be increased
from time to time, or with benefits  substantially  similar to those provided to
him  under  any of the  employee  benefit  plans in which  the  Employee  now or
hereafter becomes a participant,  or the taking of any action by the Bank or the
Company  which  would  directly  or  indirectly  reduce any of such  benefits or
deprive the Employee of any material  fringe benefit  enjoyed by him at the time
of the Change in  Control;  (iv) the  assignment  to the  Employee of duties and
responsibilities  materially  different from those normally  associated with his
position;  (v) a  failure  to elect or  reelect  the  Employee  to the  Board of
Directors of the Bank or the  Company,  if the Employee is serving on such Board
on the date of the Change in Control; (vi) a material diminution or reduction in
the   Employee's    responsibilities   or   authority    (including    reporting
responsibilities)  in  connection  with  his  employment  with  the  Bank or the
Company;   or  (vii)  a  material   reduction  in  the   secretarial   or  other
administrative support of the Employee.

         (d) "Just Cause"  shall mean,  in the good faith  determination  of the
Bank's Board of Directors,  the Employee'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 this Agreement.
The Employee shall have no right to receive  compensation  or other benefits for
any period after  termination  for Just Cause. No act, or failure to act, on the
Employee's part shall be considered  "willful" unless he has acted, or failed to
act,  with an absence of good faith and  without a  reasonable  belief  that his
action or failure to act was in the best  interest of the Bank and the  Company.
Notwithstanding  the  foregoing,  the Employee  shall not be deemed to have been
terminated for Just Cause unless there shall have been delivered to the Employee
a copy of a resolution duly adopted by the  affirmative  vote of not less than a
majority of the  membership of the Bank's Board at a meeting called and held for
that purpose (after reasonable notice to the Employee and an opportunity for the
Employee to be heard before the Board),  finding that in the good faith  opinion
of the Boards the Employee was guilty of conduct and specifying the  particulars
thereof in detail.

         (e)  "Protected  Period"  shall mean the period that begins on the date
that is six (6)  months  before a  Change  in  Control  and ends on later of the
second anniversary of the effective date of a Change in Control.

         2. Trigger Events

         The Employee  shall be entitled to the severance  benefits set forth in
Section 3 of this  Agreement  in the  event  that (i) the  Employee  voluntarily
terminates  employment for any reason within the 30-day period  beginning on the
effective date of a Change in Control, (ii) the Employee voluntarily  terminates
employment  within 90 days of an event that both  occurs  during  the  Protected
Period and  constitutes  Good Reason,  or (iii) the Bank, the Company,  or their
successor(s)  in interest  terminate the  Employee's  employment  for any reason
other than Just Cause during the Protected Period.

         3. Severance Benefit

         If the Employee becomes entitled to collect severance benefits pursuant
to Section 2 hereof,  the Bank shall pay the Employee a severance  benefit equal
to one (1) times the  Employee's  base annual  salary at the rate in effect when
the Protected  Period begins.  Said sum shall be paid in one lump sum within ten
(10) days of the later of the date of the Change in Control  and the  Employee's
last day of  employment  with the Bank or the  Company.  In  addition,  upon the
Employee's  termination of employment during the Protected Period for any reason
other than Just Cause, the Employee and his spouse shall continue to participate
in the  Bank's  group  health  insurance  program  for the  remainder  of  their
respective lives on the terms set forth herein.  The Bank shall fund the cost of
such  continuation  coverage  on the same  terms as the Bank  funded the cost of
coverage  for the Employee and his spouse  immediately  prior to the  Employee's
termination  of employment  (i.e.,  the Employee will pay the same dollar amount
toward the premium  costs as he paid  immediately  prior to his  termination  of
employment),  and the Bank shall fund the  balance  of such  costs.  If, for any
reason,  the Employee or his spouse  cannot be continued  under the Bank's group
health insurance program for the period  contemplated by this subparagraph,  the
Bank shall  reimburse the Employee or his spouse for the cost of any  substitute
coverage  obtained by the  Employee or his spouse  that  provides  substantially
similar  benefits.  Such  reimbursement  shall  be in an  amount  determined  by
reference  to the dollar  amount paid by the Employee  immediately  prior to his
termination of employment, with the remaining amount paid by the Bank.

         4. Excise Tax Indemnification

         (a) For purposes of this Agreement,  "Covered  Benefits" shall mean any
payment or benefit paid or provided to the Employee by the Company,  the Bank or
any  affiliate or any  successor in interest to the Company or the Bank (whether
pursuant to this Agreement or otherwise)  that will be (or in the opinion of Tax
Counsel (as defined  below) might  reasonably  be expected to be) subject to any
excise tax (the "Excise Tax") imposed under Section 4999 of the Internal Revenue
Code of 1986, as amended (the  "Code").  In the event that at any time during or
after the Term of Employment  the Employee  shall receive any Covered  Benefits,
the Company  shall pay to the  Employee  an  additional  amount  (the  "Gross-Up
Payment")  such that the net amount  retained by the Employee  from the Gross-Up
Payment,  after deduction of any federal,  state and local income taxes,  Excise
Tax, and FICA and Medicare  withholding taxes on the Gross-Up Payment,  shall be
equal to the Excise Tax on the Covered Benefits. For purposes of determining the
amount of such  Excise Tax on the  Covered  Benefits,  the amount of the Covered
Benefits that shall be taken into account in calculating the Excise Tax shall be
equal to (i) the Covered Benefits, less (ii) the amount of such Covered Benefits
that,  in the  opinion of tax counsel  selected  by the  Company and  reasonably
acceptable to the Employee ("Tax Counsel"),  are not parachute  payments (within
the meaning of Section 280G(b)(1) of the Code).

         (b) For purposes of this Section 4, the Employee shall be deemed to pay
federal income taxes at the highest  marginal rate of federal income taxation in
the calendar  year in which the Excise Tax is payable and state and local income
taxes at the highest  marginal rate of taxation in the state and locality of the
Employee's residence on the effective date of the Employee's termination, net of
the reduction in federal  income taxes which could be obtained from deduction of
such  state  and  local  taxes.   Except  as  otherwise   provided  herein,  all
determinations  required  to be made under this  Section 13 shall be made by Tax
Counsel,  which  determinations  shall be conclusive and binding on the Employee
and Company, absent manifest error.

         (c) The Company shall indemnify and hold the Employee harmless from any
and all losses,  costs and expenses  (including without  limitation,  reasonable
attorney's fees, reasonable accountant's fees, interest,  fines and penalties of
any  kind)  which the  Employee  incurs  as a result  of any  administrative  or
judicial  review of the Employee's  liability  under Section 4999 of the Code by
the  Internal  Revenue  Service  or any  comparable  state  agency  through  and
including a final judicial  determination or final administrative  settlement of
any  dispute  arising  out of the  Employee's  liability  for the  Excise Tax or
otherwise  relating to the  classification  for  purposes of Section 280G of the
Code of any of the Covered Benefits or other payment or benefit in the nature of
compensation made or provided to the Employee by the Company. The Employee shall
promptly notify the Company in writing whenever the Employee  receives notice of
the  commencement  of any  judicial  or  administrative  proceeding,  formal  or
informal,  in which the federal tax treatment  under Section 4999 of the Code of
any amount paid or payable under this  Agreement or otherwise is being  reviewed
or is in dispute  (including a notice of audit or other inquiry  concerning  the
reporting of the  Employee's  liability  under  Section  4999).  The Company may
assume control at its expense over all legal and accounting  matters  pertaining
to such  federal  or state tax  treatment  (except to the  extent  necessary  or
appropriate  for the Employee to resolve any such proceeding with respect to any
matter  unrelated  to the Covered  Benefits  or other  payment or benefit in the
nature of compensation  made or provided to the Employee by the Company) and the
Employee  shall  cooperate  fully with the Company in any such  proceeding.  The
Employee  shall  not  enter  into any  compromise  or  settlement  or  otherwise
prejudice any rights the Company may have in connection  therewith without prior
consent  of the  Company.  In the event  that the  Company  elects not to assume
control over such matters, the Company shall promptly reimburse the Employee for
all  expenses  related  thereto  as  and  when  incurred  upon  presentation  of
appropriate documentation relating thereto.

         5. Term of the Agreement

         This Agreement shall remain in effect for the period  commencing on the
Effective  Date and ending on the  earlier  of (i) the date 12 months  after the
Effective  Date, and (ii) the date on which the Employee  terminates  employment
with the Bank;  provided that the  Employee's  rights  hereunder  shall continue
following  the  termination  of this  employment  with the Bank under any of the
circumstances  described  in  Section 2  hereof.  Additionally,  on each  annual
anniversary  date from the Effective  Date, the term of this Agreement  shall be
extended for an additional one-year period beyond the then effective  expiration
date  provided the Board of Directors of the Bank  determines  in a duly adopted
resolutions  that the performance of the Employee has met the  requirements  and
standards of the Board, and that this Agreement shall be extended.

         6. Termination or Suspension Under Federal Law

         (a) Any payments made to the Employee  pursuant to this  Agreement,  or
otherwise,  are subject to and conditioned  upon their compliance with 12 U.S.C.
Section 1828(k) and any regulations promulgated thereunder.

         (b) If the  Employee  is removed  and/or  permanently  prohibited  from
participating  in the  conduct of the Bank's  affairs by an order  issued  under
Sections  8(e)(4) or 8(g)(1) of the Federal  Deposit  Insurance Act ("FDIA") (12
U.S.C.  1818(e)(4) or (g)(1)),  all obligations of the Bank under this Agreement
shall terminate, as of the effective date of the order, but the vested rights of
the parties shall not be affected.
         (c) If the Bank is in default (as defined in Section  3(x)(1) of FDIA),
all obligations  under this Agreement shall terminate as of the date of default;
however, this Paragraph shall not affect the vested rights of the parties.

         (d) If a notice served under Section  8(e)(3) or (g)(1) of the FDIA (12
U.S.C. 1818(e)(3) and (g)(1)) suspends and/or temporarily prohibits the Employee
from participating in the conduct of the Bank's affairs,  the Bank's obligations
under this Agreement  shall be suspended as of the date of such service,  unless
stayed by appropriate  proceedings.  If the charges in the notice are dismissed,
the  Bank  may in its  discretion  (i)  pay  the  Employee  all or  part  of the
compensation  withheld while its contract  obligations were suspended,  and (ii)
reinstate (in whole or in part) any of its obligations which were suspended.

         7. Expense Reimbursement

         In the event that any dispute  arises between the Employee and the Bank
as to the terms or  interpretation  of this  Agreement,  whether  instituted  by
formal legal  proceedings  or otherwise,  including any action that the Employee
takes to enforce  the terms of this  Agreement  or to defend  against any action
taken by the Bank or the Company, the Employee shall be reimbursed for all costs
and expenses,  including reasonable  attorneys' fees, arising from such dispute,
proceedings or actions, provided that the Employee shall obtain a final judgment
in favor of the  Employee  in a court of  competent  jurisdiction  or in binding
arbitration  under  the  rules of the  American  Arbitration  Association.  Such
reimbursement shall be paid within ten (10) days of Employee's furnishing to the
Bank or the  Company  written  evidence,  which may be in the form,  among other
things,  of a cancelled check or receipt,  of any costs or expenses  incurred by
the Employee.

         8. Successors and Assigns; Source of Payments

         (a) This  Agreement  shall inure to the benefit of and be binding  upon
any  corporate or other  successor of the Bank or Company  which shall  acquire,
directly or indirectly, by merger, consolidation,  purchase or otherwise, all or
substantially all of the assets or stock of the Bank or Company.

         (b) Since the Bank is contracting for the unique and personal skills of
the Employee,  the Employee  shall be precluded from assigning or delegating his
rights or duties  hereunder  without first  obtaining the written consent of the
Bank.

         (c) The payments and benefits due the Employee under this Agreement, if
any, shall be paid or provided by the Bank; provided,  however, that the Company
agrees  that it shall be  jointly  and  severally  liable  with the Bank for the
payment of all amounts and the provision of all benefits due the Employee  under
any provision of this Agreement.

         9. Amendments

         No amendments or additions to this  Agreement  shall be binding  unless
made in writing  and signed by all of the  parties,  except as herein  otherwise
specifically provided.

         10. Applicable Law

         Except to the extent preempted by federal law, the laws of the State of
North Carolina  shall govern this  Agreement in all respects,  whether as to its
validity, construction, capacity, performance or otherwise.

         11. Severability

         The  provisions  of this  Agreement  shall be deemed  severable and the
invalidity or unenforceability of any provision shall not affect the validity or
enforceability of the other provisions hereof.

         12. Entire Agreement

         This  Agreement,  together  with  any  understanding  or  modifications
thereof as agreed to in  writing by the  parties,  shall  constitute  the entire
agreement between the parties hereto.


<PAGE>



         IN WITNESS WHEREOF, the parties have executed this Amended and Restated
Agreement on the day and year first hereinabove written.

ATTEST:                                             FIRST SOUTH BANK


/s/ Kristie W. Hawkins                              By:   /s/ Thomas A. Vann
---------------------------                            -------------------------
Assistant Secretary                                       Its President

ATTEST:                                             FIRST SOUTH BANCORP, INC.


/s/ Kristie W. Hawkins                              By:   /s/ Thomas A. Vann_
---------------------------                            -------------------------
Assistant Secretary                                       Its President


WITNESS:

/s/ Kristie W. Hawkins                              /s/ William L. Wall
----------------------------                        ----------------------------
                                                    William L. Wall