Document:

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                                                                     Exhibit 4.8

                 AMERICAN FEDERAL BANK, FSB AMENDED AND RESTATED
                      1988 STOCK OPTION AND INCENTIVE PLAN

      1. Purpose of the Plan. The Plan shall be known as the American Federal
Bank, FSB Amended and Restated 1988 Stock Option and Incentive Plan (the
"Plan"). The purpose of the Plan is to attract and retain the best available
personnel as officers and key employees and to provide additional incentive to
employees of American Federal Bank, FSB (the "Bank") or any present or future
parent or subsidiary of the Bank to promote the success of the business. The
Plan is intended to provide for the grant of both "Incentive Stock Options",
within the meaning of Section 422 of the Internal Revenue Code of 1986 (the
"Code") and Non-Incentive Stock Options. Each and every one of the provisions of
the Plan relating to Incentive Stock Options shall be interpreted to conform to
the requirements of Section 422 of the Code.

      2. Definitions. As used herein, the following definitions shall apply:

      (a) "Award" means the grant by the Committee or the Board of Directors of
an Incentive Stock Option, a Non-Incentive Stock Option, or a Stock Appreciation
Right, or any combination thereof, as provided in the Plan.

      (b) "Bank" shall mean American Federal Bank, FSB.

      (c) "Board" shall mean the Board of Directors of the Bank.

      (d) "Common Stock" shall mean common stock, par value $1.00, per share, of
the Bank.

      (e) "Code" shall mean the Internal Revenue Code of 1986.

      (f) "Committee" shall mean the Stock Option Committee appointed by the
Board in accordance with paragraph 4(a) of the Plan.

      (g) "Continuous Employment" or "Continuous Status as an Employee" shall
mean the absence of any interruption or termination of employment by the Bank or
any present or future Parent or Subsidiary of the Bank. Employment shall not be
considered interrupted in the case of sick leave, military leave or any other
leave of absence approved by the Bank or in the case of transfers between
payroll locations of the Bank or between the Bank, its Parent, its Subsidiaries
or a successor.

      (h) "Director" shall mean a member of the Board.

      (i) "Effective Date" shall mean the date specified in Section 15 hereof.

      (j) "Employee" shall mean any person employed on a full-time basis by the
Bank or any present or future Parent or Subsidiary of the Bank.

      (k) "Incentive Stock Option" means an option to purchase Shares granted by
the Committee pursuant to Section 7 hereof which is subject to the limitations
and restrictions of Section 7 hereof and is intended to qualify under Section
422 of the Code.

      (l) "Non-Employee Director" means a Director who is not an Employee.

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      (m) "Non-Incentive Stock Option" means an option to purchase Shares
granted by the Committee pursuant to Section 8 hereof, which option is not
intended to qualify under Section 422 of the Code.

      (n) "Option" shall mean an Incentive or Non-Incentive Stock Option granted
pursuant to this Plan.

      (o) "Optioned Stock" shall mean stock subject to an Option granted
pursuant to the Plan.

      (p) "Optionee" shall mean any person who receives an Option.

      (q) "Parent" shall mean any present or future corporation which would be a
"parent corporation" as defined in Subsections 424(e) and (g) of the Code.

      (r) "Participant" means any full-time employee of the Bank or any Parent
or Subsidiary of the Bank.

      (s) "Plan" shall mean the American Federal Bank, FSB 1988 Amended and
Restated Stock Option and Incentive Plan.

      (t) "Related" means (i) in the case of a Stock Appreciation Right, a Stock
Appreciation Right which is granted in connection with, and to the extent
exercisable, in whole or in part, in lieu of, an Option and (ii) in the case of
an Option, an Option with respect to which and to the extent a Stock
Appreciation Right is exercisable, in whole or in part, in lieu thereof has been
granted.

      (u) "Stock Appreciation Right" means a stock appreciation right with
respect to Shares granted by the Committee pursuant to Section 11 hereof.

      (v) "Share" shall mean one share of the Common Stock.

      (w) "Subsidiary" shall mean any present or future corporation which would
be a "subsidiary corporation" as defined in Subsections 424(f) and (g) of the
Code.

      (x) "Termination For Just Cause" means termination because of 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 laws, rule or regulation (other than traffic
violations or similar offenses) or final cease and desist order.

      3. Shares Subject to the Plan. Except as otherwise required by the
provisions of Section 12 hereof, the aggregate number of Shares with respect to
which Awards may be made pursuant to the Plan shall not exceed 700,000 shares.
Such Shares may either be authorized but unissued or treasury shares. Shares
which are subject to Stock Appreciation Rights and related Options shall be
counted only once in determining whether the maximum number of Shares with
respect to which Awards may be granted under the Plan has been exceeded. An
Award shall not be considered to have been made under the Plan with respect to
any Option or Stock Appreciation Right which terminates and new Awards may be
granted under the Plan with respect to the number of Shares as to which such
termination has occurred.

      4. Administration of the Plan.

(a) Composition of the Committee. The Plan shall be administered by the
Committee, consisting of at least three Directors appointed by the Board, each
of whom is a disinterested person for purposes of Rule 16b-3(c)(2) under the
Securities Exchange Act of 1934, as amended, i.e., a Director who is not,
during, the one year prior to such service on the Committee or during, such
service, granted or awarded equity securities under the Plan or any other plan
of the Company or any of its affiliates, except that any of (A) participation in
a formula plan meeting, the conditions of Rule 16b3(c)(2)(ii), (B) participation
in any ongoing securities acquisition plan meeting the conditions of Rule
16b3(d)(2)(i), or (C) an election to receive an annual retainer fee in either
cash or an equivalent amount of securities (or partly in cash and partly in
securities), shall not disqualify a Director from being disinterested. Grants of
Options to Non-Employee Directors pursuant to-Section 9 hereof are intended to
and shall be made subject to a formula meeting the conditions of Rule 16b-
3(c)(2)(ii).

(b) Powers of the Committee. The Committee is authorized (but only to the extent
not contrary to the express provisions of the Plan or to resolutions adopted by
the Board) to interpret the Plan, to prescribe, amend and rescind rules and
regulations relating to the Plan, to designate Employees who are eligible to
receive Awards under the Plan, to determine the form and content of Awards
issued under the Plan, and to make other determinations necessary or advisable
for the

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administration of the Plan, and shall have and may exercise such other
power and authority as may be delegated to it by the Board from time to time. A
majority of the entire Committee shall constitute a quorum and the action of a
majority of the members present at any meeting at which a quorum is present
shall be deemed the action of the Committee. In no event may the Committee
revoke outstanding Awards without the consent of the Participant.

The President of the Bank and such other officers as shall be designated by the
Committee are hereby authorized to execute instruments evidencing Awards on
behalf of the Bank and to cause them to be delivered to the Participants.

(c) Effect of Committee's Decision. All decisions, determinations and
interpretations of the Committee shall be final and conclusive on all persons
affected thereby.

      5. Eligibility. Awards may be granted to such Employees of the Bank or any
present or future Parent and Subsidiary as shall be designated by the Committee
and, subject to the provisions of Section 9, to Non-Employee Directors. The
Committee shall from time to time determine the key employees who shall be
granted Options or Awards under the Plan, the number to be granted under the
Plan, and whether Options granted to each such Employee under the Plan shall be
Incentive and/or Non-Incentive Stock Options. In selecting Participants and in
determining the number of shares of Common Stock to be granted to each such
Participant pursuant to each Award granted under the Plan, the Committee may
consider the nature of the services rendered by each such Participant, each such
Participant's current and potential contribution to the Company, and such other
factors as the Committee may, in its sole discretion, deem relevant. Employees
who have been granted an Award may, if otherwise eligible, be granted additional
Options or Awards.

The aggregate fair market value (determined as of the date the Option is
granted) of the Shares with respect to which Incentive Stock Options are
exercisable for the first time by an Employee during any calendar year shall not
exceed $ 100,000.

      6. Term of Plan. The Plan shall continue in effect for a term of ten (10)
years from the Effective Date, unless sooner terminated pursuant to Section 18.
No Option shall be granted under the Plan after ten (10) years from the
Effective Date.

      7. Terms and Conditions of Incentive Stock Options. Each Incentive Stock
Option may be granted to a Participant pursuant to the Plan and shall be
evidenced by an instrument in such form as the Committee shall from time to time
approve. Each and every Incentive Stock Option granted pursuant to the Plan
shall comply with, and be subject to, the following terms and conditions:

(a) Option Price.

      (i) The price per share at which each Incentive Stock Option granted under
the Plan may be exercised shall not, as to any particular Incentive Stock
Option, be less than the fair market value of the Common Stock at the time such
Incentive Stock Option is granted. For such purposes, if the Common Stock is
traded otherwise than on a national securities exchange at the time of the
granting of an Option, then the price per share of the Optioned Stock shall be
not less than the mean between the bid and asked price on the date the Incentive
Stock Option is granted or, if there be no bid and asked price on said date,
then on the next prior business day on which there was a bid and asked price. If
no such bid and asked price is available, then the price per share shall be
determined by the Committee. If the Common Stock is listed on a national
securities exchange at the time of the granting an Incentive Stock Option, then
the price per share shall be not less than the average of the highest and lowest
selling price on such exchange on the date such Incentive Stock Option is
granted or, if there were no sales on said date, then the price shall be not
less than the mean between the bid and asked price on such date.

      (ii) In the case of an Employee who owns Common Stock representing more
than ten percent (10%) of the outstanding Common Stock at the time the Incentive
Stock Option is granted, the Incentive Stock Option price shall not be less than
one hundred and ten percent (110%) of the fair market value of the Common Stock
at the time the Incentive Stock Option is granted.

(b) Payment.

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      Full payment for each share of Common Stock purchased upon the exercise of
any Incentive Stock Option granted under the Plan shall be made at the time of
exercise of each such Incentive Stock Option and shall be paid in cash (in
United States Dollars), Common Stock or a combination of cash and Common Stock.
Common Stock utilized in full or partial payment of the exercise price shall be
valued at its fair market value at the date of exercise. The Bank shall accept
full or partial payment in Common Stock only to the extent permitted by
applicable law. No shares of Common Stock shall be issued until full payment
therefor has been received by the Bank, and no Optionee shall have any of the
rights of a shareholder of the Bank until shares of Common Stock are issued to
him.

(c) Term of Incentive Stock Option. The term of each Incentive Stock Option
granted pursuant to the Plan shall be not more than ten (10) years from the date
each such Incentive Stock Option is granted, provided that in the case of an
Employee who owns stock representing more than 10% of the Common Stock
outstanding at the time the Incentive Stock Option is granted, the term of the
Incentive Stock Option shall not exceed five (5) years.

(d) Exercise Generally.

      Except as otherwise provided in Section 10 hereof, no Incentive Stock
Option may be exercised unless the optionee shall have been in the employ of the
Bank at all times during the period beginning with the date of grant of any such
Incentive Stock Option and ending on the date three (3) months prior to the date
of exercise of any such Incentive Stock Option. The Committee may impose
additional conditions upon the right of an optionee to exercise any Incentive
Stock Option granted hereunder which are not inconsistent with the terms of the
Plan or the requirements for qualification as an Incentive Stock Option under
Section 422 of the Code.

(e) Transferability.

      Any Incentive Stock Option granted pursuant to the Plan shall be exercised
during any Optionee's lifetime only by the Optionee to whom it was granted and
shall not be assignable or transferable otherwise than by will or by the laws of
descent and distribution.

      8. Terms and Conditions of Non-Incentive Stock Options. Non- Incentive
Stock Options may be granted only to Participants. Each Non-Incentive Stock
Option granted pursuant to the Plan shall be evidenced by an instrument in such
form as the Committee shall from time to time approve. Each and every
Non-Incentive Stock Option granted pursuant to the Plan shall comply with and be
subject to the following terms and conditions:

(a) Option Price.

The exercise price per share of Common Stock for each Non- Incentive Stock
Option granted pursuant to the Plan shall be such price as the Committee may
determine, in its sole discretion, but shall not, as to any particular
Non-Incentive Stock Option, be less than the Fair Market Value of the Common
Stock at the time such Non-Incentive Option is granted.

(b) Payment.

Full payment for each share of Common Stock purchased upon the exercise of any
Non-Incentive Stock Option granted under the Plan shall be made at the time of
exercise of each such Non-Incentive Stock Option and shall be paid in cash (in
United States Dollars), Common Stock or a combination of cash and Common Stock.
Common Stock utilized in full or partial payment of the exercise price shall be
valued at its fair market value at the date of exercise. The Bank shall accept
full or partial payment in Common Stock only to the extent permitted by
applicable law. No shares of Common Stock shall be issued until full payment
therefor has been received by the Bank, and no Optionee shall have any of the
rights of a shareholder of the Bank until the shares of Common Stock are issued
to him.

(c) Term.

The term of each Non-Incentive Stock Option granted pursuant to the Plan shall
be not more than ten (10) years from the date each such Non-Incentive Stock
Option is granted, provided that, in the case of an Employee who owns stock
representing more than 10% of the Common Stock at the time the Incentive Stock
Option is granted, the term of the Non-Incentive Stock Option shall not exceed
five (5) years.

(d) Exercise Generally.

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The Committee may impose additional conditions upon the right of any Participant
to exercise any Non-Incentive Stock Option granted hereunder which are not
inconsistent with the terms of the Plan.

(e) Transferability.

   Any Non-Incentive Stock Option granted pursuant to the Plan shall be
exercised during any Optionee's lifetime only by the Optionee to whom it was
granted and shall not be assignable or transferable otherwise than by will or by
the laws of descent and distribution.

      9. Non-Incentive Stock Options for Non-Employee Directors.

      Options shall be granted to Non-Employee Directors in accordance
with the terms and conditions set for-forth herein.

      (a) Grant of Options.

      Each Non-Employee Director serving on the Board as of April 28, 1993 shall
be granted, effective April 28, 1993, Options to purchase 3,500 shares of Common
Stock. To the extent that Options are then available for issuance under this
Plan, each Non- Employee Director who first becomes a Director after April 28,
1993 shall be granted Options to purchase 3,500 shares of Common Stock as of the
date of such Non-Employee Director's election or appointment to the Board. The
foregoing number of shares shall be adjusted in accordance with the principles
in Section 13 in the event of the occurrence of an event described therein. All
Options granted to Non-Employee Directors under this Section 9 shall be
Non-Incentive Stock Options. Nothing, in this Section 9 shall prevent the
Committee from granting Options under Sections 5, 7, and 8 to Directors who are
Employees of the Bank.

      (b) Exercise Price.

      The exercise price of an Option granted pursuant to this Section 9 shall
equal the Fair Market Value of the Common Stock on the effective date of the
Option grant.

      (c) Payment.

      Full payment for each share of Common Stock purchased upon the exercise of
any Option granted under this Section 9 shall be made at the time of exercise of
each such Option and shall be paid in cash (in United States Dollars), Common
Stock or a combination of cash and Common Stock. Common Stock utilized in full
or partial payment of the exercise price shall be valued at its fair market
value at the date of exercise.

      (d) Term.

      Options granted under this Section 9 to a Non-Employee Director shall have
a ten (10) year term. Notwithstanding, the foregoing, in the event a
Non-Employee Director ceases to be a Director at any time during such ten-year
term, the Option shall lapse ninety (90) days after said Non-Employee ceases to
be a Director.

      (e) Exercise.

      Each Option granted under this Section 9 to a Non-Employee Director shall
become exercisable in full on the effective date of the grant.

      (f) Amendment.

      The provisions of this Section 9 shall not be amended more than once in
any six-month period other than to comport with Changes in the Internal Revenue
Code, the Employee Retirement Income Security Act of 1974, as amended, or the
rules thereunder.

      10. Effect of Termination of Employment, Disability or Death on Incentive
Stock Options.

      (a) Termination of Employment.

      In the event that any Optionee's employment by the Bank shall terminate
for any reason, other than Permanent and Total Disability (as such term is
defined in Section 22(e)(3) of the Code) or death or except for termination by
the Bank for reason other than Termination For Just Cause, as defined in Section
2, all of any such Optionee's Incentive Stock Options, and all of any such
Optionee's rights to purchase or receive shares of Common Stock pursuant
thereto, as the case may be, shall automatically terminate on the date of such
termination of employment. However, no termination of an optionee's Incentive
Stock Options shall occur after a termination of employment if not a Termination
For Just Cause except upon the earlier of (i) the respective expiration dates of
any such

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Incentive Stock Options or (ii) the expiration of not more than three (3) months
after the date of such termination of employment, but only if, and to the extent
that, the Optionee was entitled to exercise any such Incentive Stock Options at
the date of such termination of employment. The Committee may, but is not
required, to provide an Optionee up to three months after his or her voluntary
termination of employment to exercise options, but only if and to the extent
that the Optionee was entitled to exercise any such Incentive Stock Options at
the date of termination of employment. In the event that a subsidiary ceases to
be a subsidiary of the Bank, the employment of all of its employees who are not
immediately thereafter employees of the Bank shall be deemed to terminate upon
the date such subsidiary so ceases to be a subsidiary of the Bank.

      (b) Disability.

      In the event that any Optionee's employment by the Bank shall terminate as
the result of the Permanent and Total disability of such Optionee, such Optionee
may exercise any Incentive Stock Options granted to him pursuant to the Plan at
any time prior to the earlier of (i) the respective expiration dates of any such
Incentive Stock Options or (ii) the date which is one (1) year after the date of
such termination of employment, but only if, and to the extent that, the
Optionee was entitled to exercise any such Incentive Stock Options at the date
of such termination of employment.

      (c) Death.

      In the event of the death of any Optionee, any Incentive Stock Options
granted to any such Optionee may be exercised by the person or persons to whom
the Optionee's rights under any such Incentive Stock Options pass by will or by
the laws of descent and distribution (including the Optionee's estate during the
period of administration) at any time prior to the earlier of (i) the respective
expiration dates of any such Incentive Stock Options or (ii) the date which is
one (1) year after the date of death of such Optionee, but only if, and to the
extent that, the Optionee was entitled to exercise any such Incentive Stock
Options at the date of death. For purposes of this Section 10(c), any Incentive
Stock Option held by an Optionee shall be considered exercisable at the date of
his death if the only unsatisfied condition precedent to the exercisability of
such Incentive Stock Option at the date of death is the passage of a specified
period of time.

      (d) Incentive Stock Options Deemed Exercisable.

      For purposes of Section 10(a), 10(b) and 10(c) above, any Incentive Stock
Option held by any Optionee shall be considered exercisable at the date of the
termination of his employment if any such Incentive Stock Option would have been
exercisable at such date of termination of employment. Any exercise of any
Incentive Stock Option granted pursuant to the Plan is considered exercisable
pursuant to this Section 10(d).

      (e) Termination of Incentive Stock Options.

      To the extent that any Incentive Stock Option granted under the Plan to
any Optionee whose employment by the Bank terminates shall not have been
exercised within the applicable period set forth in this Section 10, any such
Incentive Stock Option, and all rights to purchase or receive shares of Common
Stock pursuant thereto, as the case may be, shall terminate on the last day of
the applicable period.

      11. Effect of Termination of Employment, Disability or Death on
Non-Incentive Stock Options. The terms and conditions of Non-Incentive Stock
Options relating to the effect of the termination of an Optionee's employment,
disability of an Optionee or his death shall be such terms and conditions as the
Committee shall, in its sole discretion, determine at the time of termination.

      12. Stock Appreciation Rights. A Stock Appreciation Right shall, upon its
exercise, entitle the Participant to whom such Stock Appreciation Right was
granted to receive a number of Shares or cash or combination thereof, as the
Committee in its discretion shall determine, the aggregate value of which (i.e.,
the sum of the amount of cash and/or the fair market value of such Shares on the
date of exercise) shall equal (as nearly as possible, it being understood that
the Bank shall not issue any fractional shares) the amount by which the fair
market value per Share on the date of such exercise shall exceed the exercise
price of such Stock Appreciation Right, multiplied by the number of Shares with
respect of which such Stock Appreciation Right shall have been exercised. A
Stock Appreciation

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Right may be related to an Option or may be granted independently of any Option
as the Committee shall determine whether and to what extent a Related Stock
Appreciation Right shall be granted with respect thereto; provided, however and
notwithstanding any other provision of the Plan, that if the Related Option is
an Incentive Stock Option, the Related Stock Appreciation Right shall satisfy
all the restrictions and limitations of Section 7 hereof as if such Related
Stock Appreciation Right were an Incentive Stock Option. Upon the exercise or
termination of a Related Option, any Related Stock Appreciation Right shall
terminate to the extent of the Shares with respect to which the Related Option
was exercised or terminated.

      13. Recapitalization, Merger, Consolidation, Change in Control and Similar
Transactions.

      (a) Adjustment.

      Subject to any required action by the shareholders of the Bank, the
aggregate number of shares of Common Stock for which stock options may be
granted hereunder, the number of shares of Common Stock covered by each
outstanding stock option, and the exercise price per share of Common Stock of
each such stock option, shall all be proportionately adjusted for any increase
or decrease in the number of issued and outstanding shares of Common Stock
resulting from a subdivision or consolidation of shares or the payment of a
stock dividend (but only on the Common Stock) or any other increase or decrease
in the number of such shares of Common Stock effected without the receipt of
consideration by the Bank.

      (b) Change in Control.

      In the event of a change in control of the Bank, the Optionee at his
option may receive on the date immediately prior to the consummation of such
change in control, in lieu of stock, cash in an amount equal to the aggregate
difference between the exercise price per share and the market price per share
of the stock underlying such outstanding options on the date immediately prior
to the consummation of such change in control of the Bank. For purposes of this
Section, "change in control" shall mean: the acquisition of the "beneficial
ownership" (as that term is defined in Rule 13d-3 of the General Rules and
Regulations under the Securities Exchange Act of 1934) of ten (10) percent or
more of the voting securities of the Bank by any person or by persons acting as
a group within the meaning of Section 13(d) of the Securities Exchange Act of
1934; provided, however, that for the purposes of the Option Plan no change in
control shall be deemed to have occurred if prior to the acquisition of, or
offer to acquire 10 percent or more of the voting securities of the Bank the
full Board of Directors of the Bank shall have adopted by not less than a
two-thirds vote a resolution specifically approving such acquisition or offer.
The term "person" refers to an individual or a corporation, partnership, trust,
association, joint venture, pool, syndicate, sole proprietorship, unincorporated
organization or any form of entity not specifically listed herein.

      (c) Extraordinary Corporate Action.

      Subject to any required action by the shareholders of the Bank, in the
event of any Change in Control, recapitalization, merger, consolidation,
exchange of shares, spin-off, reorganization, tender offer, liquidation or other
extraordinary corporate action or event, the Committee, in its sole discretion,
shall have the power, prior or subsequent to such action or event to:

      (i) appropriately adjust the number of shares of Common Stock subject to
each stock option, the exercise price per share of Common Stock, and the
consideration to be given or received by the Bank upon the exercise of any
outstanding Option;

      (ii) cancel any or all previously granted Options, provided that
appropriate consideration is paid to the Optionee in connection therewith;
and/or

      (iii) make such other adjustments in connection with the Plan as the
Committee, in its sole discretion, deems necessary, desirable, appropriate or
advisable; provided, however, that no action shall be taken by the Committee
which would cause Incentive Stock Options granted pursuant to the Plan to fail
to meet the requirements of Section 422 of the Code, or that shall materially
decrease the Optionee's benefits under the plan without the consent of the
holder of the Option, except as otherwise permitted under Section 18 hereof.

      Except as expressly provided in Sections 13(a) and 13(b) hereof, no
Optionee shall have any rights by reason of the occurrence of any of the events
described in this Section 13.

      (d) Acceleration.

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      The Committee shall at all times have the power to accelerate the exercise
date of Options previously granted under the Plan.

      14. Time of Granting Options. The date of grant of an Option under the
Plan shall, for all purposes, be the date on which the Committee makes the
determination of granting such Option. Notice of the determination shall be
given to each Employee to whom an Option is so granted within a reasonable time
after the date of such grant.

      15. Effective Date. The Plan shall become effective upon the completion of
the Bank's conversion from mutual to stock form. Options may be granted prior to
ratification of the Plan by the stockholders if the exercise of such Options is
subject to such stockholder ratification.

      16. Approval by Stockholders. The Plan shall be approved by stockholders
of the Bank within twelve (12) months before or after the date it becomes
effective.

      17. Modification of Options. At any time and from time to time, the Board
may authorize the Committee to direct the execution of an instrument providing
for the modification of any outstanding Option, provided no such modification,
extension or renewal shall confer on the holder of said Option any right or
benefit which could not be conferred on him by the grant of a new Option at such
time, or shall not materially decrease the Optionee's benefits under the Option
without the consent of the holder of the Option, except as otherwise permitted
under Section 18 hereof.

      18. Amendment and Termination of the Plan.

      (a) Action by the Board.

      The Board may alter, suspend or discontinue the Plan, except that no
action of the Board may increase (other than as provided in Section 13) the
maximum number of shares permitted to be optioned under the Plan, materially
increase the benefits accruing to participants under the Plan or materially
modify the requirements for eligibility for participation in the Plan unless
such action of the Board shall be subject to approval or ratification by the
shareholders of the Bank. However, such alteration, suspension or discontinuance
of the Plan shall not affect any options already granted and still outstanding
under the provisions hereof.

      (b) Change in Applicable Law.

      Notwithstanding any other provision contained in the Plan, in the event of
a change in any federal or state law, rule or regulation which would make the
exercise of all or part of any previously granted Incentive and/or Non-Incentive
Stock Option unlawful or subject the Bank to any penalty, the Committee may
restrict any such exercise without the consent of the Optionee or other holder
thereof in order to comply with any such law, rule or regulation or to avoid any
such penalty.

      19. Conditions Upon Issuance of Shares. Shares shall not be issued with
respect to any Option granted under the Plan unless the issuance and delivery of
such Shares shall comply with all relevant provisions of law, including, without
limitation, the Securities Act of 1933, as amended, the rules and regulations
promulgated thereunder, any applicable state securities law and the requirements
of any stock exchange upon which the Shares may then be listed.

      The inability of the Bank to obtain from any regulatory body or authority
deemed by the Bank's counsel to be necessary to the lawful issuance and sale of
any Shares hereunder shall relieve the Bank of any liability in respect of the
non-issuance or sale of such Shares. As a condition to the exercise of an
Option, the Bank may require the person exercising the Option to make such
representations and warranties as may be necessary to assure the availability of
an exemption from the registration requirements of federal or state securities
law.

      20. Reservation of Shares. During the term of the Plan, the Bank will
reserve and keep available a number of Shares sufficient to satisfy the
requirements of the Plan.

      21. Unsecured Obligation. No Participant under the Plan shall have any
interest in any fund or special asset of the Bank by reason of the Plan or the
grant of any Incentive or Non-Incentive Stock Option to him under the Plan. No
trust fund shall be created in connection with the Plan or any grant of any
Incentive or Non-Incentive Stock Option hereunder and there shall be no required
funding of amounts which may become payable to any Participant.

      22. Withholding Tax. The Bank shall have the right to deduct from all
amounts paid in cash with respect to the exercise of a Stock Appreciation Right
under the Plan any taxes required by law to be

<PAGE>

withheld with respect to such cash payments. Where a Participant or other person
is entitled to receive Shares pursuant to the exercise of any Option or Stock
Appreciation Right pursuant to the Plan, the Bank shall have the right to
require the Participant or such other person to pay the Bank the amount of any
taxes which the Bank is required to withhold with respect to such Shares, or, in
lieu thereof, to retain, or sell without notice a number of such Shares
sufficient to cover the amount required to be withheld.

      23. Governing Law. The Plan shall be governed by and construed in
accordance with the laws of the State of South Carolina.<PAGE>

                                                                     Exhibit 4.9

                           STONE STREET BANCORP, INC.
                                STOCK OPTION PLAN

      THIS IS THE STOCK OPTION PLAN ("Plan") of Stone Street Bancorp, Inc. (the
"Corporation"), a North Carolina corporation, with its principal office in
Mocksville, Davie County, North Carolina, adopted by the Board of Directors of
the Corporation and effective upon the approval of the Plan by the shareholders
of the Corporation, under which options may be granted from time to time to
eligible directors and employees of the Corporation, Mocksville Savings Bank,
Inc., SSB (the "Bank") and of any corporation or other entity of which either
the Corporation or the Bank owns, directly or indirectly, not less than fifty
percent (50%) of any class of equity securities (a "Subsidiary"), to purchase
shares of common stock of the Corporation ("Common Stock"), subject to the
provisions set forth below:

      1. PURPOSE OF THE PLAN. The purpose of the Plan is to aid the Corporation,
the Bank and any Subsidiary in attracting and retaining capable directors and
employees and to provide a long range incentive for directors, employees and
others to remain in the management and service of the Corporation, the Bank or
any Subsidiary, to perform at increasing levels of effectiveness and to acquire
a permanent stake in the Corporation with the interest and outlook of an owner.
These objectives will be promoted through the granting of options to acquire
shares of Common Stock pursuant to the terms of this Plan.

      2. ADMINISTRATION. The Plan shall be administered by a committee (the
"Committee"), which shall consist of not less than two members of the Board of
Directors of the Corporation (the "Board") who are "Non-Employee Directors" as
defined in Rule l6b-3(b)(3) of the Rules and Regulations under the Securities
Act of 1934 (the "Exchange Act"). Members of the Committee shall serve at the
pleasure of the Board. In the absence at any time of a duly appointed Committee,
this Plan shall be administered by the Board. The Committee may designate any
officers or employees of the Corporation, the Bank or any Subsidiary to assist
in the administration of the Plan and to execute documents on behalf of the
Committee and perform such other ministerial duties as may be delegated to them
by the Committee.

      Subject to the provisions of the Plan, the determinations or the
interpretation and construction of any provision of the Plan by the Committee
shall be final and conclusive upon all persons affected thereby. By way of
illustration and not of limitation, the Committee shall have the discretion (a)
to construe and interpret the Plan and all options granted hereunder and to
determine the terms and provisions (and amendments thereof) of the options
granted under the Plan (which need not be identical); (b) to define the terms
used in the Plan and in the options granted hereunder; (c) to prescribe, amend
and rescind the rules and regulations relating to the Plan; (d) to determine the
individuals to whom and the time or times at which such options shall be
granted, the number of shares to be subject to each option, the option price,
and the determination of leaves of absence which may be granted to participants
without constituting a termination of their employment for the purposes of the
Plan; and (e) to make all other determinations necessary or advisable for the
administration of the Plan.

      It shall be in the discretion of the Committee to grant options which
qualify as "incentive stock options," as that term is defined in Section 422 of
the Internal Revenue Code of 1986, as amended ("Incentive Stock Options") or
which do not qualify as Incentive Stock Options ("Nonqualified Stock Options")
(herein referred to collectively as "Options;" however, whenever reference is
specifically made only to "Incentive Stock Options" or "Nonqualified Stock
Options," such reference shall be deemed to be made to the exclusion of the
other). Any options granted which fail to satisfy the requirements for Incentive
Stock Options shall become Nonqualified Stock Options.

<PAGE>

      3. STOCK AVAILABLE FOR OPTIONS. In the discretion of the Committee, the
stock to be subject to Options under the Plan shall be authorized but unissued
shares of Common Stock which are issued directly to optionees upon exercise of
options and/or shares of Common Stock which are acquired by the Plan or the
Corporation in the open market. The total number of shares of Common Stock for
which Options may be granted under the Plan is 182,505 shares, which is ten
percent (10%) of the total number of shares of Common Stock issued by the
Corporation in connection with the conversion of the Bank into a North Carolina
mutual savings bank to a North Carolina stock savings bank on March 29, 1996
(the "Conversion"). Such number of shares is subject to any capital adjustments
as provided in Section 16. In the event that an Option granted under the Plan is
forfeited, released, expires or is terminated unexercised as to any shares
covered thereby, such shares thereafter shall be available for the granting of
Options under the Plan; however, if the forfeiture, expiration, release or
termination date of an Option is beyond the term of existence of the Plan as
described in Section 21, then any shares covered by forfeited, unexercised,
released or terminated options shall not reactivate the existence of the Plan
and therefore may not be available for additional grants under the Plan. The
Corporation, during the term of the Plan, will reserve and keep available a
number of shares of Common Stock sufficient to satisfy the requirements of the
Plan. In the discretion of the Committee, the shares of Common Stock necessary
to be delivered to satisfy exercised options may be from authorized and unissued
shares of Common Stock or may be purchased in the open market.

      4. ELIGIBILITY. Options shall be granted only to individuals who meet all
of the following eligibility requirements:

            (a) Such individual must be (i) an employee or a member of the Board
      of Directors of the Corporation, the Bank or a Subsidiary or (ii) a person
      serving as an advisor or consultant to the Corporation, the Bank or a
      Subsidiary or member of a committee appointed by the Board of Directors of
      the Corporation or the Bank (a "corporate consultant"). For this purpose,
      an individual shall be considered to be an "employee" only if there exists
      between the Corporation, the Bank or a Subsidiary and the individual the
      legal and bona fide relationship of employer and employee. In determining
      whether such relationship exists, the regulations of the United States
      Treasury Department relating to the determination of such relationship for
      the purpose of collection of income tax at the source on wages shall be
      applied.

            (b) Such individual must have such knowledge and experience in
      financial and business matters that he or she is capable of evaluating the
      merits and risks of the investment involved in the exercise of the
      Options.

                                       2

<PAGE>

            (c) Such individual, being otherwise eligible under this Section 4,
      shall have been selected by the Committee as a person to whom an Option
      shall be granted under the Plan.

      In determining the directors and employees to whom Options shall be
granted and the number of shares to be covered by each Option, the Committee
shall take into account the nature of the services rendered by respective
directors, employees and corporate consultants, their present and potential
contributions to the success of the Corporation, the Bank and any Subsidiary and
such other factors as the Committee stall deem relevant. A director, employee or
corporate consultant who has been granted an Option under the Plan maybe granted
an additional Option or Options under the Plan if the Committee shall so
determine.

      If, pursuant to the terms of the Plan, it is necessary that the percentage
of stock ownership of any individual be determined, stock ownership in the
Corporation or of a related corporation which is owned (directly or indirectly)
by or for such individual's brothers and sisters (whether by the whole or half
blood), spouse, ancestors, and lineal descendants or by or for any corporation,
partnership, estate or trust of which such employee is a shareholder, partner or
beneficiary shall be considered as owned by such director or employee.

      5.OPTION AGREEMENT. Such Options shall be granted after the date the Plan
is approved by the Corporation's shareholders and after execution by the
optionee of a Stock Option Grant and Agreement (the "Option Agreement") in the
form attached hereto as Exhibit A, as modified by the Committee to the extent it
deems such modification to be necessary or desirable. Such Options shall be
granted with the intention that they will be Nonqualified Stock Options or
Incentive Stock Options as denominated in the Option Agreement. Any Option
granted with the intention that it will be an Incentive Stock Option but which
fails to satisfy a requirement for Incentive Stock Options shall continue to be
valid and shall be treated as a Nonqualified Stock Option.

      6.OPTION PRICE.

            (a) The option price of each Option granted under the Plan shall be
      not less than one hundred percent (100%) of the market value of the stock
      on the date of grant of the Option. In the case of incentive stock options
      granted to a shareholder who owns stock possessing more than 10 percent
      (10%) of the total combined voting power of all classes of stock of the
      Corporation, the Bank or a Subsidiary (a "ten percent shareholder"), the
      option price of each Option granted under the Plan shall not be less than
      one hundred and ten percent (110%) of the market value of the stock on the
      date of grant of the Option. If the Common Stock is listed on a national
      securities exchange (including for this purpose the Nasdaq Stock Market,
      Inc. National Market) on the date in question, then the market value per
      share shall be not less than the average of the highest and lowest selling
      price on such exchange on such date, or if there were no sales on such
      date, then the market price per share shall be equal to the average
      between the bid and asked price on such date. If the Common Stock is
      traded otherwise than on a national securities exchange (including for
      this purpose the Nasdaq Stock Market, Inc. National Market) on the date in
      question, then the market price per share shall be equal to the average
      between the bid and asked price on such date, or, if there is no bid and
      asked price on such date,

                                       3

<PAGE>

      then on the next prior business day on which there was a bid and asked
      price. If no such bid and asked price is available, then the market value
      per share shall be its fair market value as determined by the Committee,
      in its sole and absolute discretion. The Committee shall maintain a
      written record of its method of determining such value.

            (b) The option price shall be payable to the Corporation either (i)
      in cash or by check, bank draft or money order payable to the order of the
      Corporation, or (ii) at the discretion of the Committee, through the
      delivery of shares of the common stock of the Corporation owned by the
      optionee with a market value (determined in a manner consistent with (i)
      above) equal to the option price, or (iii) at the discretion of the
      Committee by a combination of (i) and (ii) above. No shares shall be
      delivered until full payment has been made,

      7. EXPIRATION OF OPTIONS. The Committee shall determine the expiration
date or dates of each Option, but such expiration date shall be not later than
ten (10) years after the date such Option is granted. In the event an Incentive
Stock Option is granted to a ten percent shareholder, the expiration date or
dates of each Option shall be not later than five (5) years after the date such
Option is granted, The Committee, in its discretion, may extend the expiration
date or dates of an Option after such date was originally set; however, such
expiration date may not exceed the maximum expiration date described in this
Section 7.

      8. TERMS AND CONDITIONS OF OPTIONS.

            (a) All Options must be granted within ten (10) years of the
      Effective Date of this Plan as defined in Section 20.

            (b) The Committee may grant Options which are intended to be
      Incentive Stock Options and Nonqualified Stock Options, either separately
      or jointly, to an eligible employee.

            (c) The grant of Options shall be evidenced by a written instrument
      (an Option Agreement) containing terms and conditions established by the
      Committee consistent with the provisions of this Plan.

            (d) Not less than 100 shares may be purchased at any one time unless
      the number purchased is the total number at that time purchasable under
      the Plan.

            (e) The recipient of an Option shall have no rights as a shareholder
      with respect to any shares covered by his Option until payment in full by
      him for the shares being purchased. No adjustment shall be made for
      dividends (ordinary or extraordinary, whether in cash, securities or other
      property) or distributions or other rights for which the record date is
      prior to the date such stock is fully paid for, except as provided in
      Section 16.

            (f) The aggregate fair market value of the stock (determined as of
      the time the Option is granted) with respect to which Incentive Stock
      Options are exercisable for the

                                       4
<PAGE>

      first time by any participant during any calendar year (under all benefit
      plans of the Corporation, the Bank or any Subsidiary, if applicable) shall
      not exceed $100,000; provided, however, that such $100,000 limit of this
      subsection (i) shall not apply to the grant of Nonqualified Stock Options.
      The Committee may grant Options which are exercisable in excess of the
      foregoing limitations, in which case Options granted which are exercisable
      in excess of such limitation shall be Nonqualified Stock Options.

            (g) All stock obtained pursuant to an option which qualifies as an
      Incentive Stock Option shall be held in escrow for a period which ends on
      the later of (i) two (2) years from the date of the granting of the Option
      or (ii) one (1) year after the transfer of the stock pursuant to the
      exercise of the Option. The stock shall be held by the Corporation or its
      designee, The employee who has exercised the Option shall during such
      holding period have all rights of a shareholder, including but not limited
      to the rights to vote, receive dividends and sell the stock. The sole
      purpose of the escrow is to inform the Corporation of a disqualifying
      disposition of the stock within the meaning. of Section 422 of the
      Internal Revenue Code of 1986, as amended, and it shall be administered
      solely for that purpose.

      9. EXERCISE OF OPTIONS.

            (a) Unless otherwise set forth in the Option Agreement, all Options
      granted to an optionee by virtue of his position as a nonemployee director
      of the Corporation or the Bank or corporate consultant (as stated in the
      Option Agreement) shall be fully vested, exercisable and nonforfeitable
      immediately at the time of the grant.

            (b) Options granted to an optionee by virtue of his position as an
      employee (as stated in the Option Agreement) shall become vested and
      exercisable at the times, at the rate and subject to such limitations as
      may be set forth in the Option Agreement executed in connection therewith;
      provided, however, that all outstanding and nonforfeited options shall be
      exercisable, if not sooner, on the day prior to the expiration date
      thereof.

      Notwithstanding the foregoing, Options shall become exercisable with
      respect to all of the shares subject thereto upon the optionee's death,
      retirement or disability within the meaning of Section 22(e)(3) of the
      Internal Revenue Code of 1986, as amended, and in the event of a change in
      control as set forth in Section 13 of this Plan.

      Any right to exercise Options in annual installments shall be cumulative
      and any vested installments may be exercised, in whole or in part, at the
      election of the optionee. The exercise of any Option must be evidenced by
      written notice to the Corporation that the optionee intends to exercise
      his Option.

      In no event shall an Option be deemed granted by the Corporation or
      exercisable by a recipient prior to the mutual execution by the
      Corporation and the recipient of an Option Agreement which comports with
      the requirements of Section 5 and Section 8(c).

                                       5

<PAGE>

            (c) The inability of the Corporation or Bank to obtain approval from
      any regulatory body or authority deemed by counsel to be necessary to the
      lawful issuance and sale of any shares of Common Stock hereunder shall
      relieve the Corporation and the Bank of any liability in respect of the
      non-issuance or sale of such shares. As a condition to the exercise of an
      option, the Corporation may require the person exercising the Option to
      make such representations and warranties as may be necessary to assure the
      availability of an exemption from the registration requirements of federal
      or state securities laws.

            (d) The Committee shall have the discretionary authority to impose
      in the Option Agreements such restrictions on shares of Common Stock as it
      may deem appropriate or desirable, including but not limited to the
      authority to impose a right of first refusal or to establish repurchase
      rights or both of these restrictions.

            (e) Notwithstanding anything to the contrary herein, an optionee
      receiving the grant of an Option by virtue of his or her position as a
      director, corporate consultant or as an employee of the Corporation, the
      Bank or a Subsidiary (as stated in the Option Agreement), shall be
      required to exercise his or her Options within the periods set forth in
      Sections 10, 11 and 12 below.

      10. TERMINATION OF EMPLOYMENT - EXCEPT BY DISABILITY RETIREMENT OR DEATH.
If any optionee receiving the grant of an Option by virtue of his position as a
director or corporate consultant (as stated in the Option Agreement) ceases to
be a director or corporate consultant of at least one of the Corporation, the
Bank or any Subsidiary for any reason other than death, retirement (as defined
in Section 11) or disability (as defined in Section 11) or if any optionee
receiving the grant of an Option by virtue of his position as an employee (as
stated in the Option Agreement) ceases to be an employee of at least one of the
Corporation, the Bank and any Subsidiary for any reason other than death,
retirement (as defined in Section 11) or disability (as defined in Section 11),
he may, (i) at any time within three (3) months after his date of termination,
but not later than the date of expiration of the Option, exercise any Option
designated in the Option Agreement as an Incentive Stock Option and (ii) at any
time prior to the date of expiration of the Option, exercise any option
designated in the Option Agreement as a Nonqualified Stock Option. However, in
either such event the optionee may exercise any Option only to the extent it was
vested and he or she was entitled to exercise the Option on the date of
termination. Any Options or portions of Options of terminated optionees not so
exercised shall terminate and be forfeited.

      11. TERMINATION OF EMPLOYMENT - DISABILITY OR RETIREMENT. If any optionee
receiving the grant of an Option by virtue of his position as a director or
corporate consultant (as stated in the Option Agreement) ceases to be a director
or corporate consultant of at least one of the Corporation, the Bank or any
Subsidiary due to his becoming disabled within the meaning of Section 22(e)(3)
of the Internal Revenue Code of 1986, as amended, or if any employee receiving
the grant of an Option by virtue of his position as an employee (as stated in
the Option Agreement) ceases to be employed by at least one of the Corporation,
the Bank and any Subsidiary due to his becoming disabled within the meaning of
Section 22(e)(3) of the Internal Revenue Code of 1986, as amended, all unvested
and forfeitable Options of such optionee shall immediately become vested and
nonforfeitable and he may, (i) at

                                       6
<PAGE>

any time within 12 months after his date of termination, but not later than the
date of expiration of the Option, exercise any option designated in the Option
Agreement as an Incentive Stock Option with respect to all shares subject
thereto and (ii) at any time prior to the date of expiration of the Option,
exercise any Option designated in the Option Agreement as a Nonqualified Stock
Option with respect to all shares subject thereto. Any portions of Options of
optionees who are terminated because they become disabled which are not so
exercised shall terminate.

      If any optionee receiving the grant of an Option by virtue of his position
as a director or corporate consultant (as stated in the Option Agreement) ceases
to be a director or corporate consultant of at least one of the Corporation, the
Bank or any Subsidiary due to his retirement, or if any employee receiving the
grant of an Option by virtue of his position as an employee (as stated in the
Option Agreement) ceases to be employed by at least one of the Corporation, the
Bank and any Subsidiary due to his retirement, all unvested and forfeitable
Options of such optionee shall immediately become vested and nonforfeitable and
he may, at any time prior to the date of expiration of the Option, exercise such
Option; provided, however, that if the Option is exercised more than three
months after such retirement, the Option may be treated as a Nonqualified Stock
Option. Any portions of Options of retired directors, corporate consultants or
employees not so exercised shall terminate. For purposes of this Plan, the term
"retirement," as it relates to any optionee receiving a grant of an Option as a
result of his or her position as an employee of the Corporation, the Bank or any
Subsidiary, shall mean (i) the termination of the optionee's employment under
conditions which would constitute retirement under any tax qualified retirement
plan maintained by the Corporation, the Bank or a Subsidiary, or (ii)
termination of employment after attaining age 65. The term "retirement," as it
relates to any optionee receiving a grant of an Option as a result of his or her
position as a director or corporate consultant, shall mean the cessation of
membership on such board of directors or cessation of the relationship creating
the corporate consultant status (i) with the approval of such board of
directors, at any time after such optionee reaches age 65, or (ii) at the
election of the optionee at any time after not less than twenty-five (25) years
of service as a member of the such board of directors and/or as a corporate
consultant, as applicable.

      12. TERMINATION OF EMPLOYMENT - DEATH, If an optionee receiving the grant
of an option by virtue of his position as a director or corporate consultant (as
stated in the Option Agreement) dies while a director or corporate consultant of
the Corporation, the Bank or any Subsidiary or if any employee receiving the
grant of an option by virtue of his position as an employee (as stated in the
Option Agreement) dies while in the employment of the Corporation, the Bank or a
Subsidiary, all unvested and forfeitable Options of such optionee shall
immediately become vested and nonforfeitable and the person or persons to whom
the Option is transferred by will or by the laws of descent and distribution may
exercise the Option at any time until the term of the Option has expired, with
respect to all shares subject thereto, to the same extent and upon the same
terms and conditions the optionee would have been entitled to do so had he
lived. Any Options or portions of options of deceased directors or employees not
so exercised shall terminate.

      13. CHANGE IN CONTROL. In the event that an optionee ceases to be an
employee, a director or corporate consultant of the Corporation, the Bank or a
Subsidiary (which

                                       7

<PAGE>
position resulted in his or her receipt of an option pursuant to this Plan) for
any reason after the occurrence of a "change in control" and prior to the time
that all shares allocated to him or her would be 100% vested, nonforfeitable and
exercisable in accordance with Sections 9 and 10 above, then, notwithstanding
Sections 9 and 10 above, all Options granted to such optionee shall immediately
become fully vested and nonforfeitable. For purposes of this Plan, a "change in
control" shall mean (i) a change in control of a nature that would be required
to be reported by the Corporation in response to Item 1 of the Current Report on
Form 8-K, as in effect on the date hereof, pursuant to Section 13 or 15(d) of
the Exchange Act; (ii) such time as any "person" (as such term is used in
Sections 13(d) and 14(d) of the Exchange Act) is or becomes the "beneficial
owner" (as defined in Rule l3d-3 under the Exchange Act), directly or
indirectly, of securities of the Corporation or Bank representing 25 percent or
more of the combined voting power of the outstanding Common Stock of the
Corporation or outstanding common stock of the Bank, as applicable; or (iii)
individuals who constitute the Board or the board of directors of the Bank on
the date hereof (the "Incumbent Board" and "Incumbent Bank Board," respectively)
cease for any reason to constitute at least a majority thereof, provided that
any person becoming a director subsequent to the date hereof whose election was
approved by a vote of at least three-quarters of the directors comprising the
Incumbent Board or Incumbent Bank Board, as applicable, or whose nomination for
election by the Corporation's or Bank's shareholders was approved by the
Corporation's or Bank's Board of Directors or Nominating Committee, shall be
considered as though he or she were a member of the Incumbent Board or Incumbent
Bank Board, as applicable; or (iv) either the Corporation or the Bank
consolidates or merges with or into another corporation, association or entity
or is otherwise reorganized, where neither the Corporation nor the Bank,
respectively, is the surviving corporation in such transaction; or (v) all or
substantially all of the assets of either the Corporation or the Bank are sold
or otherwise transferred to or are acquired by any other entity or group.

      As set forth in Section 10, in the event of such a termination after a
change in control, the Optionee must exercise any Incentive Stock Options within
three (3) months after his date of termination and may exercise any Nonqualified
Stock Options at any time prior to the date of expiration of the Option.

      14. STOCK APPRECIATION RIGHTS.

            (a) General Terms and Conditions. The Committee may, but shall not
      be obligated to, grant rights to optionees to surrender an exercisable
      Option, or any portion thereof, in consideration for the payment by the
      Corporation of an amount equal to the excess of the market value
      (determined asset forth in Section 6 above) of the shares of Common Stock
      subject to the Option, or portion thereof, surrendered over the exercise
      price of the Option with respect to such shares (any such authorized
      surrender and payment being hereinafter referred to as a "Stock
      Appreciation Right"). Such payment, at the discretion of the Committee,
      may be made in shares of Common Stock valued at the then market value
      thereof (determined as set forth in Section 6 above), or in cash, or
      partly in cash and partly in shares of Common Stock.

            The terms and conditions set with respect to a Stock Appreciation
      Right may include (without limitation), subject to other provisions of
      this Section 14 and this Plan, the period during which, date by which or
      event upon which the Stock Appreciation

                                       8
<PAGE>

      Right may be exercised (which shall be on the same terms as the Option to
      which is related); the method for valuing shares of Common Stock for
      purposes of this Section 14; a ceiling on the amount of consideration
      which the Corporation may pay in connection with exercise of the Stock
      Appreciation Right; and arrangements for income tax withholding. The
      Committee shall have complete discretion to determine whether, when and to
      whom Stock Appreciation Rights may be granted.

            (b) Time Limitations. A Stock Appreciation Right may be exercised
      only within the period, if any, within which the Option to which it
      relates may be exercised. Notwithstanding the foregoing, any election by
      an optionee to exercise Stock Appreciation Rights shall be made during the
      period beginning on the third business day following the release for
      publication of quarterly or annual financial information required to be
      prepared and disseminated by the Corporation pursuant to the requirements
      of the Exchange Act and ending on the twelfth business day following such
      date. The required release of information shall be deemed to have been
      satisfied when the specified financial data appears on or in a wire
      service, financial news service or newspaper of general circulation or is
      otherwise first made publicly available.

            (c) Effects of Exercise of Stock Appreciation Rights or Options.
      Upon the exercise of a Stock Appreciation Right, the number of shares of
      Common Stock available under the Option to which it relates shall decrease
      by a number equal to the number of shares for which the Stock Appreciation
      Right was exercised. Upon the exercise of an Option, any related Stock
      Appreciation Right shall terminate as to any number of shares of Common
      Stock subject to the Stock Appreciation Right that exceeds the total
      number of shares for which the Option remains unexercised.

            (d) Time of Grant. A Stock Appreciation Right granted in connection
      with an Incentive Stock Option must be granted concurrently with the
      Option to which is relates, while a Stock Appreciation Right granted in
      connection with a Nonqualified Stock Option may be granted concurrently
      with the Option to which it relates or at any time thereafter prior to the
      exercise or expiration of such Option. No optionee shall have any Stock
      Appreciation Rights unless (i) in the case of Incentive Stock Options and
      Nonqualified Stock Options, the Stock Option Agreement shall so state or
      (ii) in the case of Nonqualified Stock Options, the Committee shall have
      executed an amendment to the Stock Option Agreement so stating.

            (e) Non-Transferable. A Stock Appreciation Right may not be
      transferred or assigned except in connection with a transfer of the Option
      to which it relates.

      15. RESTRICTIONS ON TRANSFER. An Option granted under this Plan may not be
transferred except by will or the laws of descent and distribution and, during
the lifetime of the optionee to whom it was granted, may be exercised only by
such optionee.

                                       9

<PAGE>

      16. CAPITAL ADJUSTMENTS AFFECTING COMMON STOCK.

            (a) If the outstanding shares of Common Stock of the Corporation are
      increased, decreased, changed into or exchanged for a different number or
      kind of shares or other securities of the Corporation or another entity as
      a result of a recapitalization, reclassification, stock dividend, stock
      split, amendment to the Corporation's Certificate of Incorporation,
      reverse stock split, merger or consolidation, an appropriate adjustment
      shall be made in the number and/or kind of securities allocated to the
      Options and Stock Appreciation Rights previously and subsequently granted
      under the Plan, without change in the aggregate purchase price applicable
      to the unexercised portion of the outstanding Options but with a
      corresponding adjustment in the price for each share or other unit of any
      security covered by the Options.

            (b) In the event that the Corporation shall declare and pay any
      dividend with respect to the Common Stock (other than a dividend payable
      in shares of the Corporation's Common Stock or a regular quarterly cash
      dividend), including a dividend which results in a nontaxable return of
      capital to the holders of shares of Common Stock for federal income tax
      purposes, or otherwise than by dividend makes distribution of property to
      the holders of its shares of Common Stock, the Committee, in its
      discretion applied uniformly to all outstanding Options, may adjust the
      exercise price per share of outstanding Options in such a manner as the
      Committee may determine to be necessary to reflect the effect of the
      dividend or other distribution on the fair market value of a share of
      Common Stock.

            (c) To the extent that the foregoing adjustments described in
      Sections 16(a) and (b) above relate to particular Options or to particular
      stock or securities of the Corporation subject to Option under this Plan,
      such adjustments shall be made by the Committee, whose determination in
      that respect shall be final and conclusive.

            (d) The grant of an Option or Stock Appreciation Right pursuant to
      this Plan shall not affect in any way the right or power of the
      Corporation to make adjustments, reclassifications, reorganizations or
      changes of its capital or business structure or to merge or to consolidate
      or to dissolve, liquidate or sell, or transfer all or any part of its
      business or assets.

            (e) No fractional shares of stock shall be issued under the Plan for
      any such adjustment.

            (f) Any adjustment made pursuant to this Section 16, shall be made,
      to the extent practicable, in such manner as not to constitute a
      modification of any outstanding Incentive Stock Options within the meaning
      of Section 424(h) of the Internal Revenue Code of 1986, as amended.

      17. INVESTMENT PURPOSE. At the discretion of the Committee, any Option
Agreement may provide that the optionee shall, by accepting the Option,
represent and agree, for himself and his transferees by will or the laws of
descent and distribution, that all shares of stock

                                       10
<PAGE>

purchased upon the exercise of the Option will be acquired for investment and
not for resale or distribution, and that upon each exercise of any portion of an
Option, the person entitled to exercise the same shall furnish evidence of such
facts which is satisfactory to the Corporation. Certificates for shares of stock
acquired under the Plan may be issued bearing such restrictive legends as the
Corporation and its counsel may deem necessary to ensure that the optionee is
not an "underwriter" within the meaning of the regulations of the Securities
Exchange Commission.

      18. APPLICATION OF FUNDS. The proceeds received by the Corporation from
the sale of Common Stock pursuant to Options will be used for general corporate
purposes.

      19. NO OBLIGATION TO EXERCISE. The granting of an Option or Stock
Appreciation Right shall impose no obligation upon the optionee to exercise such
Option or Stock Appreciation Right.

      20. EFFECTIVE DATE OF PLAN. The Plan will become effective upon the
approval of the Plan by the shareholders of the Corporation and receipt of any
necessary regulatory approvals.

      21. TERM OF PLAN. Options and Stock Appreciation Rights may be granted
pursuant to this Plan from time to time within ten (10) years from the effective
date of the Plan.

      22. TIME OF GRANTING OF OPTIONS. Nothing contained in the Plan or in any
resolution adopted or to be adopted by the Committee or the shareholders of the
Corporation and no action taken by the Committee shall constitute the granting
of any Option or Stock Appreciation Right hereunder. The granting of an Option
and Stock Appreciation Right pursuant to the Plan shall take place only when an
Option Agreement shall have been duly executed and delivered by and on behalf of
the Corporation at the direction of the Committee.

      23. CASH PAYMENTS. At the time of the payment of any dividend or other
distribution with respect to the Common Stock, in the absolute discretion of,
and upon direction of the Board, the Corporation shall cause to be paid to
existing directors, corporate consultants and employees of the Corporation, the
Bank or any Subsidiary who hold nonforfeited, unexercised Options under this
Plan, regardless of whether or not such Options are vested and nonforfeitable, a
cash amount equal to the number of shares of Common Stock subject to
nonforfeited, unexercised options held by such optionee multiplied by the amount
of any dividends or other distributions paid per share of Common Stock
outstanding. The Board shall have the discretion to approve cash payments at the
time of some dividends or distributions but not others. Notwithstanding the
foregoing, no amounts shall be paid to optionees pursuant to this Section 23
with respect to any dividend or distribution if at the time of such dividend or
distribution, the exercise price of the Options shall have been reduced pursuant
to Section 16(b) above.

      If any director, corporate consultant or employee of the Corporation, the
Board or any Subsidiary shall receive any cash payment from the Company, the
Board or any Subsidiary pursuant to this Section 23 with respect to an Option
which is not vested and exercisable, and if such Option shall be forfeited, then
within 30 days after the effective date of such forfeiture, the optionee shall
pay to the Corporation, the Bank or the Subsidiary (as applicable) an amount
equal

                                       11
<PAGE>

to the cash payment received by such optionee with respect to such forfeited
Option. In the alternative, at the option of the Corporation, the Bank or the
Subsidiary (as applicable) the amount to be repaid may be withheld from the
final compensation payable to the optionee.

      24. WITHHOLDING TAXES. Whenever the Corporation proposes or is required to
cause to be issued or transferred shares of stock, cash or other assets pursuant
to this Plan, the Corporation shall have the right to require the optionee to
remit to the Corporation an amount sufficient to satisfy any Federal, state
and/or local withholding tax requirements prior to the issuance of any
certificate or certificates for such shares or delivery of such cash or other
assets. Alternatively, the Corporation may issue or transfer such shares of
stock or make other distributions of cash or other assets net of the number of
shares or other amounts sufficient to satisfy the withholding tax requirements.
For withholding tax purposes, the shares of stock, cash and other assets to be
distributed shall be valued on the date the withholding obligation is incurred.

      25. TERMINATION AND AMENDMENT. The Board may at any time alter, suspend,
terminate or discontinue the Plan, subject to any applicable regulatory
requirements and any required stockholder approval or any stockholder approval
which the Board may deem advisable for any reason, such as for the purpose of
obtaining or retaining any statutory or regulatory benefits under tax,
securities or other laws or satisfying applicable stock exchange or quotation
system listing requirements. The Board may not, without the consent of the
holder of an Option or Stock Appreciation Right previously granted, make any
alteration which would deprive the optionee of his rights with respect thereto.

      26. 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, and shall not serve as a basis
for interpretation or construction of this Plan. As used herein, the masculine
gender shall include the feminine and neuter, and the singular number shall
include the plural, and vice versa, whenever such meanings are appropriate.

      27. COST OF PLAN; EXCULPATION AND INDEMNIFICATION. All costs and expenses
incurred in the operation and administration of the Plan shall be borne by the
Corporation, the Bank and the Subsidiaries. In connection with this Plan, no
member of the Board, no member of the Board of Directors of the Bank, and no
member of the Board of Directors of any Subsidiary, and no member of the
Committee shall be personally liable for any act or omission to act, nor for any
mistake in judgment made in good faith, unless arising out of, or resulting
from, such persons own bad faith, willful misconduct or criminal acts. To the
extent permitted by applicable law and regulation, the Corporation shall
indemnify, defend and hold harmless the members of the Board, the members of the
Board of Directors of the Bank and the members of the Board of Directors of any
Subsidiary, and members of the Committee, and each other officer or employee of
the Bank, the Corporation or of any Subsidiary to whom any power or duty
relating to the administration or interpretation of this Plan may be assigned or
delegated, from and against any and all liabilities (including any amount paid
in settlement of a claim with the approval of the Board), and any costs or
expenses (including counsel fees) incurred by such persons arising out of or as
a result of, any act or omission to act, in connection with the

                                       12
<PAGE>

performance of such person's duties, responsibilities and obligations under this
Plan, other than such liabilities, costs, and expenses as may arise out of; or
result from the bad faith, willful misconduct or criminal acts of such persons.

      28. GOVERNING LAW. Without regard to the principles of conflicts of laws,
the laws of the State of North Carolina shall govern and control the validity,
interpretation, performance, and enforcement of this Plan.

      29. INSPECTION OF PLAN. A copy of this Plan, and any amendments thereto,
shall be maintained by the Secretary of the Corporation and shall be shown to
any proper person making inquiry about it.

      30. OTHER PROVISIONS, The Option Agreements authorized under this Plan
shall contain such other provisions not inconsistent with the foregoing,
including, without limitation, increased restrictions upon the exercise of
options, as the Committee may deem advisable.

                                       13
<PAGE>

                                    EXHIBIT A

                        STOCK OPTION GRANT AND AGREEMENT

      THIS STOCK OPTION GRANT AND AGREEMENT ("Agreement"), being made according
to and subject to the terms and conditions of the STOCK OPTION PLAN of Stone
Street Bancorp, Inc. ("Plan"), a copy of which is attached hereto as Annex A and
is hereby incorporated by reference and made a part of this Agreement, is herein
executed and effective the ________ day of ___________, _____, between Stone
Street Bancorp, Inc. (the "Corporation") and ("Optionee"):

      1.    Grant. As of the above date, the Corporation hereby grants to the
            Optionee (applicable provisions are marked):

            ___ An Incentive Stock Option [as that term is defined in Section
            422 of the Internal Revenue Code of 1986, as amended (the "Code")]
            to purchase ____ shares of Common Stock of the Corporation at the
            price stated in this Agreement;

            ___ Nonqualified Stock Option to purchase __________ shares of
            Common Stock of the Corporation at the price stated in this
            Agreement.

            The Optionee ___ shall ___ shall not have Stock Appreciation Rights
            in connection with the Options granted hereby, in accordance with
            Section 14 of the Plan.

            The Option(s) and any Stock Appreciation Rights granted under this
            section and as described in this Agreement is (are) in all respects
            subject to and conditioned by the terms, definitions, and provisions
            of this Agreement and of the Plan. Capitalized terms in this
            Agreement which are not otherwise defined but which are defined in
            the Plan shall have the same meaning given to those terms in the
            Plan.

            The Optionee has been granted Options under the Plan as a result of
            the Optionee's position as a ___ director ___ employee ___ corporate
            consultant of the Corporation, the Bank or a Subsidiary.

<PAGE>

      2.    Price. The Option price is $_______ for each share.

      3.    Exercise of Option. The Option(s) granted under this Agreement shall
            be exercisable pursuant to the terms and conditions of the Plan and
            as set forth below:

            (a) Right to Exercise: In addition to the terms and conditions
            imposed on the Optionee's right to exercise his Options and any
            Stock Appreciation Rights imposed in the Plan, the following terms
            and conditions are applicable:

            ____________________________________________________________________
            ____________________________________________________________________

            (b) ___ (Marked if applicable) Annual Installments: Subject to the
            terms and conditions of the Plan, the Incentive Stock Options can be
            exercised in annual installments as follows:

            _________ shares beginning on ______________, 19__
            _________ shares beginning on ______________, 19__
            _________ shares beginning on ______________, 19__
            _________ shares beginning on ______________, 19__
            _________ shares beginning on ______________, 19__

            Subject to the terms and conditions of the Plan, the Nonqualified
            Options can be exercised in annual installments as follows:

            _________ shares beginning on ______________, 19__
            _________ shares beginning on ______________, 19__
            _________ shares beginning on ______________, 19__
            _________ shares beginning on ______________, 19__
            _________ shares beginning on ______________, 19__

            The right to exercise the Option(s) in annual installments shall be
            cumulative. In addition, the option(s) shall be exercisable upon
            disability, death, retirement and a change in control as set forth
            in the Plan.

            (c)___(Marked if applicable) Immediate Vesting: Subject to the terms
            and conditions of the Plan, all of the Options are vested,
            nonforfeitable and exercisable.

            (d) Method of Exercise: The Options and any Stock Appreciation
            Rights granted under this Agreement shall be exercisable by a
            written notice to the Secretary of the Corporation which shall:

                  (1) State the election to exercise the Option or the election
                  to surrender an exercisable Option and exercise Stock
                  Appreciation. Rights, the number of shares in respect of which
                  the Option or Stock

                                       2
<PAGE>

                  Appreciation Right is being exercised, the person in whose
                  name any stock certificate or certificates for such shares of
                  Common Stock is to be registered or to whom any cash is to be
                  paid, his or her address, and social security number;

                  (2) Contain any such representation and agreements as to
                  Optionee's investment intent with respect to shares of Common
                  Stock as may be required by the Committee;

                  (3) Be signed by the person entitled to exercise the Option
                  and, if the Option is being exercised by any person or persons
                  other than the Optionee, be accompanied by proof, satisfactory
                  to the Corporation, of the right of such person or persons to
                  exercise the Option or Stock Appreciation Rights in accordance
                  with the Plan; and

                  (4) Be accompanied by payment of the purchase price of any
                  shares with respect to which the Option is being exercised
                  which payment shall be in form acceptable to the Committee
                  pursuant to Section 6(b) of the Plan.

            (e) Representations and Warranties: In order to exercise an Option
            or Stock Appreciation Right, the person exercising the Option or
            Stock Appreciation Right must make the representations and
            warranties to the Corporation as may be required by any applicable
            law or regulation, or as may otherwise be required pursuant to the
            Plan.

            (f) Approvals. In order for an Option or Stock Appreciation Right to
            be exercised, all filings and approvals required by applicable law
            and regulations or pursuant to the Plan must have been made and
            obtained.

      4.    Non-transferability. Neither any Option nor any Stock Appreciation
            Rights may be transferred in any manner otherwise than by will or
            the laws of descent and distribution and such Option and any Stock
            Appreciation Rights may be exercised during the life of the Optionee
            only by him or her.

      5.    This Option and any Stock Appreciation Rights may not be exercised
            if the issuance of shares or payment of cash upon such

                                        3

<PAGE>
\
            exercise would constitute a violation of any applicable federal or
            state securities law or other law or valid regulation.

      6.    Expiration. This Option and any corresponding Stock Appreciation
            Rights shall expire on _____________, _________.

      7.    Escrow. All stock purchased pursuant to an Incentive Stock Option
            shall be held in escrow for a period which ends on the later of (i)
            two (2) years from the date of the granting of the option or (ii)
            one (1) year after the transfer of the stock pursuant to the
            exercise of the Option. The stock shall be held by the Corporation
            or its designee. The Optionee who has exercised the Option shall
            have all rights of a stockholder, including, but not limited to, the
            rights to vote, receive dividends and sell the stock. The sole
            purpose of the escrow is to inform the Corporation of a
            disqualifying disposition of the stock within the meaning of Section
            422 of the Code, and it shall be administered solely for this
            purpose.

      8.    Repayment of Cash Payments. If the Optionee hereunder forfeits any
            Options pursuant to the Plan, the Optionee shall, within 30 days
            after the effective date of such forfeiture, pay the Corporation,
            the Bank or a Subsidiary (as applicable) an amount equal to the cash
            payments received by the Optionee from the Corporation, the Bank or
            any Subsidiary with respect to such forfeited Options pursuant to
            Section 23 of the Plan. In the alternative, at the option of the
            Corporation, the Bank or a Subsidiary, the amount to be repaid may
            be withheld by the Corporation, the Bank or a Subsidiary from the
            final compensation or fees payable to the Optionee. Each acceptance
            by an Optionee of cash payments pursuant to such Section 23 with
            respect to Options still subject to forfeiture shall constitute a
            reaffirmation of the agreements set forth in this paragraph 8.

      9.    Tax Withholding. All stock, cash and other assets distributed
            pursuant to this Agreement shall be subject to applicable federal,
            state and local withholding for taxes. The Optionee expressly
            acknowledges and agrees to such withholding. The Optionee
            acknowledges and agrees to the tax withholding provisions which are
            set forth in the Plan.

      10.   Resolution of Disputes. Any dispute or disagreement which should
            arise under, or as a result of, or in any way relate to, the
            interpretation, construction, or application of this Agreement or
            the Plan will be determined by the Committee designated in Section 2
            of the Plan. Any determination made by such Committee shall be
            final, binding, and conclusive for all purposes.

      11.   Construction Controlled by Plan, The Options and any corresponding
            Stock Appreciation Rights evidenced hereby shall be subject to all
            of the

                                        4

<PAGE>

            requirements, conditions and provisions of the 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 that any prevision should appear to be inconsistent therewith.

      12.   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.

      13.   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 a written instrument signed by
            each of the parties hereto and only subject to the limitations set
            forth in the Plan. No waiver hereunder shall constitute a waiver
            with respect to any subsequent occurrence or other transaction
            hereunder or of any other provision.

      14.   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, and
            shall not serve as a basis for interpretation or construction, of
            this Agreement. As used herein, the masculine gender shall include
            the feminine and neuter, and the singular number shall include the
            plural, and vice versa, whenever such meanings are appropriate.

      15.   Governing Law; Venue and Jurisdiction. Without regard to the
            principles of conflicts of laws, the laws of the State of North
            Carolina shall govern and control the validity, interpretation,
            performance, and enforcement of this Agreement.

      16.   Binding Effect. This Agreement shall be binding upon and shall inure
            to the benefit of the Corporation, and its successors and assigns,
            and shall be binding upon and inure to the benefit of the Optionee,
            and his or her heirs, legatees, personal representative, executor,
            administrator and permitted assigns.

      17.   Entire Agreement. This Agreement and the Plan constitute and embody
            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.

                                        5
<PAGE>

      18.   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 parties have set their hands and seals the
      day and year first above written.

      ATTEST:                       STONE STREET BANCORP, INC.

                                    By:__________________________
      (Corporate Seal)                   __________________ President

                                    OPTIONEE:

                                      ________________________________
      (SEAL)

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