Document:

FIRST SOUTH BANK
                      DIRECTOR'S RETIREMENT PLAN AGREEMENT
                    AS AMENDED AND RESTATED DECEMBER 14, 1995

                              ____________________

                                 2003 Amendment
                              ____________________

     WHEREAS, First South Bank (formerly known as "NewSouth Bank" and, prior
thereto, "Home Savings Bank, SSB") (the "Bank") has entered into a separate
Director's Retirement Plan Agreement (the "Agreement") with each of Directors E.
Buckman, Jr., F. Howdy, C. Parker, Jr., F. Holscher, L. Gibbs, Jr., M. T.
Singleton and T. Vann (the "Directors"); and

     WHEREAS, each Agreement authorizes the Bank to amend the Agreement with the
written approval of the Director; and

     WHEREAS, the Bank has determined that it is in the best interest of the
Bank and the Director to amend the Agreement.

     NOW, THEREFORE, the Agreement with each Director is hereby amended by
adding the following paragraph at the end of Section 4 thereof:

          Notwithstanding the foregoing provisions of this Section 4, in the
     event that the Director ceases to serve as a director of the Bank on or
     after his 55th birthday, and after having completed enough service to
     become entitled to 100% of the monthly installment payments stated in
     Section 1 of this Agreement, the Director shall be entitled to receive such
     monthly installment payments. Such payment shall commence on a date to be
     determined by the Bank, but in no event later than the first day of the
     sixth calendar month following the calendar month in which the Director
     ceases to serve as a director of the Bank

     WHEREFORE, on this 18th day of December, 2003, the Bank and each Director
who is party to an Agreement hereby execute this 2003 Amendment to the
Agreement.

ATTEST                                       FIRST SOUTH BANK

/s/ William L. Wall                          By /s/ Linley H. Gibbs, Jr.
-------------------------                       ----------------------------
                                             Its Chairman of the Board

                                             DIRECTOR

/s/ William L. Wall                          /s/ Edmund T. Buckman, Jr.
-------------------------                    -------------------------------
Witness                                      Edmund T. Buckman, Jr.

<PAGE>

                                             DIRECTOR

/s/ William L. Wall                          /s/ Frederick L. Howdy
-------------------------                    -------------------------------
Witness                                      Frederick H. Howdy

                                             DIRECTOR

/s/ William L. Wall                          /s/ Charles E. Parker, Jr.
-------------------------                    -------------------------------
Witness                                      Charles E. Parker, Jr.

                                             DIRECTOR

-------------------------                    -------------------------------
Witness                                      Marshall T. Singleton

                                             DIRECTOR

/s/ William L. Wall                          /s/ Frederick N. Holscher
-------------------------                    -------------------------------
Witness                                      Frederick N. Holscher

                                             DIRECTOR

/s/ William L. Wall                          /s/ Linley H. Gibbs, Jr.
-------------------------                    -------------------------------
Witness                                      Linley H. Gibbs, Jr.

                                             DIRECTOR

/s/ William L. Wall                          /s/ Thomas A. Vann
-------------------------                    -------------------------------
Witness                                      Thomas A. Vann

<PAGE>

                                                                    EXHIBIT 10.8

                             AMENDED AND RESTATED
                     DIRECTOR'S RETIREMENT PLAN AGREEMENT

     THIS AMENDED AND RESTATED DIRECTOR'S RETIREMENT PLAN AGREEMENT (this
"Agreement"), made and entered into this 1st day of January, 1994 and amended
and restated this the 14th day of December, 1995, by and between Home Savings
Bank, SSB, a mutual state savings bank organized and existing under the laws of
the State of North Carolina (the "Bank"), and Edmund T. Buckman, Jr. (the
"Director").

                             W I T N E S S E T H:

     WHEREAS, the Bank recognizes the valuable services heretofore performed for
it by the Director and wishes to encourage his further services and assist him
in providing for the contingencies of retirement and death;

     WHEREAS, the parties hereto wish to provide the terms and conditions upon
which the Bank shall make certain payments to the Director or his designated
beneficiaries;

     WHEREAS, the parties hereto intend that this Agreement be considered an
unfunded arrangement maintained to provide deferred compensation benefits for
the Director; and

     WHEREAS, the parties hereto desire to amend the Agreement and to restate
the Agreement as amended.

     NOW, THEREFORE, in consideration of the premises and of the mutual promises
herein contained, the parties hereto agree as follows:

     Section 1.  Retirement Benefits.  The Bank agrees that, except as otherwise
     ---------   -------------------
specifically provided herein, upon the later to occur of the Director's 70th
birthday and January 1, 1999 (the "Qualifying Date"), the Bank will pay the
Director $2,000.00 per month for a continuous period of 120 months. Such
continuous monthly installment payments shall commence on a date to be
determined by the Bank, but in no event later than the first day of the sixth
calendar month following the calendar month in which the Qualifying Date shall
occur.

     Section 2.  Pre-Retirement Death Benefits.  Should the Director die while
     ---------   -----------------------------
serving as a director of the Bank and prior to the Qualifying Date, the Bank
will pay $2,000.00 per month for a continuous period of 120 months to such
beneficiary or beneficiaries as are designated by the Director to the Bank in
writing (the "Beneficiaries").  The first such monthly installment payment shall
be made on a date to be determined by the Bank, but in no event later than the
first day of the sixth calendar month following the calendar month in which the
Director died.  Notwithstanding the foregoing, if the Director dies as a result
of suicide on or before January 1, 1996, no benefits of whatever nature shall be
payable to the Beneficiaries under this Agreement.  In the event of the death of
the last living Beneficiary before all the unpaid payments shall have been made,
the balance of any payments which remain unpaid at the time of such
Beneficiary's death shall be commuted on

<PAGE>

the basis of six percent (6%) per annum compounded interest and shall be paid in
a single sum to the estate of the last Beneficiary to die. In the absence of any
such beneficiary designation, any amount remaining unpaid at the Director's
death shall be commuted on the basis of six percent (6%) per annum compounded
interest and shall be paid in a single sum to the Director's estate.

     Section 3.  Post-Retirement Death Benefits.  In the event that the Director
     ---------   ------------------------------
should die after becoming entitled to receive monthly installment payments under
this Agreement but before all remaining installment payments have been made, the
Bank will pay all remaining installment  payments to the Beneficiary or
Beneficiaries.  In the event of the death of the last living Beneficiary before
all installment payments have been made, the balance of any payments which
remain unpaid at the time of such Beneficiary's death shall be commuted on the
basis of six percent (6%) per annum compounded interest and shall be paid in a
single sum to the estate of the last Beneficiary to die.  In the absence of such
beneficiary designation, any payments remaining unpaid at the Director's death
shall be commuted on the basis of six percent (6%) per annum compounded interest
and shall be paid in a single sum to the Director's estate.

     Section 4.  Termination Benefits.  Should the Director voluntarily resign
     ---------   --------------------
as a director prior to the Qualifying Date, he or his Beneficiaries, as
applicable, shall be entitled to receive, commencing on a date to be determined
by the Bank, but in no event later than the first day of the sixth calendar
month following the month in which the earlier of the Director's death or 70th
birthday shall occur, the percentage of the amount of the monthly installment
payment stated in Section 1 of this Agreement determined under the following
table:

<TABLE>
<CAPTION>
                                             PERCENTAGE OF MONTHLY INSTALLMENT
                                             PAYMENT STATED IN SECTION 1 OF THIS
     FULL NUMBER OF YEARS SERVED AS          AGREEMENT TO WHICH DIRECTOR IS
     DIRECTOR AFTER JANUARY 1, 1994          ENTITLED
     ------------------------------          -----------------------------------
     <S>                                     <C>
                 1                                          20%
                 2                                          40%
                 3                                          60%
                 4                                          80%
                 5                                         100%
</TABLE>

     Section 5.  Benefits Not Transferable.  Neither the Director, his
     ---------   -------------------------
Beneficiaries nor any other person claiming any right or interest under this
Agreement through the Director or any Beneficiary shall have any right to
commute, assign, transfer or otherwise convey the right to receive any benefits
hereunder.

     Section 6.  Binding Upon Successors.  This Agreement and the Bank's
     ---------   -----------------------
obligations hereunder shall be binding upon the Bank's successors and permitted
assigns. The Bank may not assign its rights or obligations under this Agreement
without the Director's prior written consent. In addition, the Bank shall not
enter into any agreement providing for the merger of the Bank with and into
another business entity or the sale of more than a majority of the Bank's assets
to another business

                                       2
<PAGE>

entity, person or group persons that does not specifically provide that such
successor by merger or purchaser(s) of assets shall assume and satisfy each and
every obligation of the Bank to the Director under this Agreement. In the case
of an asset sale, such assumption shall not relieve the Bank of its liability to
fulfill such obligations.

     Except as otherwise provided in Sections 1, 2, 3 or 4, as applicable, in
the event that, on or before the occurrence of the Qualifying Date, the
Director's service as a director of the Bank is terminated for any reason
coincident with or within twenty-four (24) months following a merger of the Bank
with or into another business entity or of an asset sale as described above,
then the provisions of Section 1 shall be deemed applicable except that the
Qualifying Date shall be deemed to be the date that such merger or asset sale
shall be consummated.

     Section 7.  Benefits Payable Only From General Corporate Assets;
     ---------   ----------------------------------------------------
Unsecured General Creditors Status of Director.
----------------------------------------------

     The payments to the Director or his Beneficiary or Beneficiaries hereunder
shall be made from assets which for all purposes shall continue to be a part of
the general, unrestricted assets of the Bank; no person shall have any interest
in any such assets by virtue of the provisions of this Agreement. The Bank's
obligations hereunder shall be an unfunded and unsecured promise to pay money in
the future. To the extent that any person acquires a right to receive payments
from the Bank under the provisions hereof, such right shall be no greater than
the right of any unsecured general creditor of the Bank; no such person shall
have nor require any legal or equitable right, interest or claim in or to any
property or assets of the Bank.

     In the event that, in its discretion, the Bank purchases an insurance
policy or policies insuring the life of the Director (or any other property), in
order  to allow the Bank to recover the cost of providing benefits, in whole or
in part, hereunder, neither the Director, nor any Beneficiary, shall have any
rights whatsoever therein or in the proceeds therefrom.  The Bank shall be the
sole owner and beneficiary of such insurance policy and shall possess and may
exercise all incidents of ownership therein.

     Section 8.  Additional Benefits.  The benefits and rights provided under
     ---------   -------------------
this Agreement are independent of those benefits and rights provided under other
agreements between the parties hereto, and shall not affect, reduce or diminish
the right of Director to participate in any current or future benefit plan or
other supplemental compensation arrangement.

     Section 9.  No Contract of Employment.  Nothing contained herein shall be
     ---------   -------------------------
construed to be a contract of employment or as conferring upon the Director the
right to continue as a director of the Bank.  It is expressly understood by the
parties hereto that this Agreement relates exclusively to supplemental
retirement payments for the Director, and is not intended to be an employment or
services agreement.

                                       3
<PAGE>

     Section 10.  Amendment.  This Agreement may not be amended, altered or
     ----------   ---------
modified, except by a written instrument signed by the parties hereto or their
respective successors, and may not be otherwise terminated except as provided
herein.

     Section 11.  Governing Law.  This Agreement, and the rights of the parties
     ----------   -------------
hereunder, shall be governed by and construed on accordance with the laws of the
State of North Carolina.

     IN WITNESS WHEREOF, the parties have executed this Amended and Restated
Director's Retirement Plan Agreement as of the day and year first above written.

                                   HOME SAVINGS BANK, SSB
Attest:

/s/ Ruby Adams                     By:  /s/ Thomas A. Vann
----------------------                  -------------------------------
Ruby Adams                              Thomas A. Vann
Secretary

[Corporate Seal]                   Title:  President

                                   DIRECTOR:

                                   /s/ Edmund T. Buckman, Jr.       (Seal)
                                   --------------------------------
                                   Edmund T. Buckman, Jr.

                                       4
<PAGE>

                             AMENDED AND RESTATED
                     DIRECTOR'S RETIREMENT PLAN AGREEMENT

     THIS AMENDED AND RESTATED DIRECTOR'S RETIREMENT PLAN AGREEMENT (this
"Agreement"), made and entered into this 1st day of January, 1994 and amended
and restated this the 14th day of December, 1995, by and between Home Savings
Bank, SSB, a mutual state savings bank organized and existing under the laws of
the State of North Carolina (the "Bank"), and Linley H. Gibbs, Jr. (the
"Director").

                             W I T N E S S E T H:

     WHEREAS, the Bank recognizes the valuable services heretofore performed for
it by the Director and wishes to encourage his further services and assist him
in providing for the contingencies of retirement and death;

     WHEREAS, the parties hereto wish to provide the terms and conditions upon
which the Bank shall make certain payments to the Director or his designated
beneficiaries;

     WHEREAS, the parties hereto intend that this Agreement be considered an
unfunded arrangement maintained to provide deferred compensation benefits for
the Director; and

     WHEREAS, the parties hereto desire to amend the Agreement and to restate
the Agreement as amended.

     NOW, THEREFORE, in consideration of the premises and of the mutual promises
herein contained, the parties hereto agree as follows:

     Section 1.  Retirement Benefits.  The Bank agrees that, except as otherwise
     ---------   -------------------
specifically provided herein, upon the later to occur of the Director's 70th
birthday and January 1, 1999 (the "Qualifying Date"), the Bank will pay the
Director $2,000.00 per month for a continuous period of 120 months.  Such
continuous monthly installment payments shall commence on a date to be
determined by the Bank, but in no event later than the first day of the sixth
calendar month following the calendar month in which the Qualifying Date shall
occur.

     Section 2.  Pre-Retirement Death Benefits.  Should the Director die while
     ---------   -----------------------------
serving as a director of the Bank and prior to the Qualifying Date, the Bank
will pay $2,000.00 per month for a continuous period of 120 months to such
beneficiary or beneficiaries as are designated by the Director to the Bank in
writing (the "Beneficiaries").  The first such monthly installment payment shall
be made on a date to be determined by the Bank, but in no event later than the
first day of the sixth calendar month following the calendar month in which the
Director died.  Notwithstanding the foregoing, if the Director dies as a result
of suicide on or before January 1, 1996, no benefits of whatever nature shall be
payable to the Beneficiaries under this Agreement. In the event of the death of
the last living Beneficiary before all the unpaid payments shall have been made,
the balance of any payments which remain unpaid at the time of such
Beneficiary's death shall be commuted on
<PAGE>

the basis of six percent (6%) per annum compounded interest and shall be paid in
a single sum to the estate of the last Beneficiary to die. In the absence of any
such beneficiary designation, any amount remaining unpaid at the Director's
death shall be commuted on the basis of six percent (6%) per annum compounded
interest and shall be paid in a single sum to the Director's estate.

     Section 3.  Post-Retirement Death Benefits.  In the event that the Director
     ---------   ------------------------------
should die after becoming entitled to receive monthly installment payments under
this Agreement but before all remaining installment payments have been made, the
Bank will pay all remaining installment  payments to the Beneficiary or
Beneficiaries.  In the event of the death of the last living Beneficiary before
all installment payments have been made, the balance of any payments which
remain unpaid at the time of such Beneficiary's death shall be commuted on the
basis of six percent (6%) per annum compounded interest and shall be paid in a
single sum to the estate of the last Beneficiary to die.  In the absence of such
beneficiary designation, any payments remaining unpaid at the Director's death
shall be commuted on the basis of six percent (6%) per annum compounded interest
and shall be paid in a single sum to the Director's estate.

     Section 4.  Termination Benefits.  Should the Director voluntarily resign
     ---------   --------------------
as a director prior to the Qualifying Date, he or his Beneficiaries, as
applicable, shall be entitled to receive, commencing on a date to be determined
by the Bank, but in no event later than the first day of the sixth calendar
month following the month in which the earlier of the Director's death or 70th
birthday shall occur, the percentage of the amount of the monthly installment
payment stated in Section 1 of this Agreement determined under the following
table:

<TABLE>
<CAPTION>
                                          PERCENTAGE OF MONTHLY INSTALLMENT
                                          PAYMENT STATED IN SECTION 1 OF THIS
     FULL NUMBER OF YEARS SERVED AS       AGREEMENT TO WHICH DIRECTOR IS
     DIRECTOR AFTER JANUARY 1, 1994       ENTITLED
     ------------------------------       -----------------------------------
     <S>                                  <C>
                 1                                       12.5%
                 2                                       25.0%
                 3                                       37.5%
                 4                                       50.0%
                 5                                       62.5%
                 6                                       75.0%
                 7                                       87.5%
                 8                                      100.0%
</TABLE>

     Section 5.  Benefits Not Transferable.  Neither the Director, his
     ---------   -------------------------
Beneficiaries nor any other person claiming any right or interest under this
Agreement through the Director or any Beneficiary shall have any right to
commute, assign, transfer or otherwise convey the right to receive any benefits
hereunder.

     Section 6.  Binding Upon Successors.  This Agreement and the Bank's
     ---------   -----------------------
obligations hereunder shall be binding upon the Bank's successors and permitted
assigns.  The Bank may not assign its rights or obligations under this Agreement
without the Director's prior written consent.  In addition,

                                       2
<PAGE>

the Bank shall not enter into any agreement providing for the merger of the Bank
with and into another business entity or the sale of more than a majority of the
Bank's assets to another business entity, person or group persons that does not
specifically provide that such successor by merger or purchaser(s) of assets
shall assume and satisfy each and every obligation of the Bank to the Director
under this Agreement. In the case of an asset sale, such assumption shall not
relieve the Bank of its liability to fulfill such obligations.

     Except as otherwise provided in Sections 1, 2, 3 or 4, as applicable, in
the event that, on or before the occurrence of the Qualifying Date, the
Director's service as a director of the Bank is terminated for any reason
coincident with or within twenty-four (24) months following a merger of the Bank
with or into another business entity or of an asset sale as described above,
then the provisions of Section 1 shall be deemed applicable except that the
Qualifying Date shall be deemed to be the date that such merger or asset sale
shall be consummated.

     Section 7.  Benefits Payable Only From General Corporate Assets;
     ---------   ----------------------------------------------------
Unsecured General Creditors Status of Director.
----------------------------------------------

     The payments to the Director or his Beneficiary or Beneficiaries hereunder
shall be made from assets which for all purposes shall continue to be a part of
the general, unrestricted assets of the Bank; no person shall have any interest
in any such assets by virtue of the provisions of this Agreement.  The Bank's
obligations hereunder shall be an unfunded and unsecured promise to pay money in
the future.  To the extent that any person acquires a right to receive payments
from the Bank under the provisions hereof, such right shall be no greater than
the right of any unsecured general creditor of the Bank; no such person shall
have nor require any legal or equitable right, interest or claim in or to any
property or assets of the Bank.

     In the event that, in its discretion, the Bank purchases an insurance
policy or policies insuring the life of the Director (or any other property), in
order  to allow the Bank to recover the cost of providing benefits, in whole or
in part, hereunder, neither the Director, nor any Beneficiary, shall have any
rights whatsoever therein or in the proceeds therefrom.  The Bank shall be the
sole owner and beneficiary of such insurance policy and shall possess and may
exercise all incidents of ownership therein.

     Section 8.  Additional Benefits.  The benefits and rights provided under
     ---------   -------------------
this Agreement are independent of those benefits and rights provided under other
agreements between the parties hereto, and shall not affect, reduce or diminish
the right of Director to participate in any current or future benefit plan or
other supplemental compensation arrangement.

     Section 9.  No Contract of Employment.  Nothing contained herein shall be
     ---------   -------------------------
construed to be a contract of employment or as conferring upon the Director the
right to continue as a director of the Bank.  It is expressly understood by the
parties hereto that this Agreement relates exclusively to supplemental
retirement payments for the Director, and is not intended to be an employment or
services agreement.

                                       3
<PAGE>

     Section 10. Amendment.  This Agreement may not be amended, altered or
     ----------  ---------
modified, except by a written instrument signed by the parties hereto or their
respective successors, and may not be otherwise terminated except as provided
herein.

     Section 11. Governing Law.  This Agreement, and the rights of the parties
     ----------  -------------
hereunder, shall be governed by and construed on accordance with the laws of the
State of North Carolina.

     IN WITNESS WHEREOF, the parties have executed this Amended and Restated
Director's Retirement Plan Agreement as of the day and year first above written.

                                    HOME SAVINGS BANK, SSB
Attest:

/s/ Ruby Adams                      By:     /s/ Thomas A. Vann
---------------------                       -----------------------------------
Ruby Adams                                  Thomas A. Vann
Secretary

[Corporate Seal]                    Title:  President

                                    DIRECTOR:

                                    /s/ Linley H. Gibbs, Jr.
                                    ----------------------------------- (Seal)
                                    Linley H. Gibbs, Jr.

                                       4
<PAGE>

                             AMENDED AND RESTATED
                     DIRECTOR'S RETIREMENT PLAN AGREEMENT

     THIS AMENDED AND RESTATED DIRECTOR'S RETIREMENT PLAN AGREEMENT (this
"Agreement"), made and entered into this 1st day of January, 1994 and amended
and restated this the 14th day of December, 1995, by and between Home Savings
Bank, SSB, a mutual state savings bank organized and existing under the laws of
the State of North Carolina (the "Bank"), and Frederick N. Holscher (the
"Director").

                             W I T N E S S E T H:

     WHEREAS, the Bank recognizes the valuable services heretofore performed for
it by the Director and wishes to encourage his further services and assist him
in providing for the contingencies of retirement and death;

     WHEREAS, the parties hereto wish to provide the terms and conditions upon
which the Bank shall make certain payments to the Director or his designated
beneficiaries;

     WHEREAS, the parties hereto intend that this Agreement be considered an
unfunded arrangement maintained to provide deferred compensation benefits for
the Director; and

     WHEREAS, the parties hereto desire to amend the Agreement and to restate
the Agreement as amended.

     NOW, THEREFORE, in consideration of the premises and of the mutual promises
herein contained, the parties hereto agree as follows:

     Section 1.  Retirement Benefits.  The Bank agrees that, except as otherwise
     ---------   -------------------
specifically provided herein, upon the later to occur of the Director's 70th
birthday and January 1, 1999 (the "Qualifying Date"), the Bank will pay the
Director $2,000.00 per month for a continuous period of 120 months.  Such
continuous monthly installment payments shall commence on a date to be
determined by the Bank, but in no event later than the first day of the sixth
calendar month following the calendar month in which the Qualifying Date shall
occur.

     Section 2.  Pre-Retirement Death Benefits.  Should the Director die while
     ---------   -----------------------------
serving as a director of the Bank and prior to the Qualifying Date, the Bank
will pay $2,000.00 per month for a continuous period of 120 months to such
beneficiary or beneficiaries as are designated by the Director to the Bank in
writing (the "Beneficiaries").  The first such monthly installment payment shall
be made on a date to be determined by the Bank, but in no event later than the
first day of the sixth calendar month following the calendar month in which the
Director died.  Notwithstanding the foregoing, if the Director dies as a result
of suicide on or before January 1, 1996, no benefits of whatever nature shall be
payable to the Beneficiaries under this Agreement.  In the event of the death of
the last living Beneficiary before all the unpaid payments shall have been made,
the balance of any payments which remain unpaid at the time of such
Beneficiary's death shall be commuted on
<PAGE>

the basis of six percent (6%) per annum compounded interest and shall be paid in
a single sum to the estate of the last Beneficiary to die. In the absence of any
such beneficiary designation, any amount remaining unpaid at the Director's
death shall be commuted on the basis of six percent (6%) per annum compounded
interest and shall be paid in a single sum to the Director's estate.

     Section 3.  Post-Retirement Death Benefits.  In the event that the Director
     ---------   ------------------------------
should die after becoming entitled to receive monthly installment payments under
this Agreement but before all remaining installment payments have been made, the
Bank will pay all remaining installment  payments to the Beneficiary or
Beneficiaries.  In the event of the death of the last living Beneficiary before
all installment payments have been made, the balance of any payments which
remain unpaid at the time of such Beneficiary's death shall be commuted on the
basis of six percent (6%) per annum compounded interest and shall be paid in a
single sum to the estate of the last Beneficiary to die.  In the absence of such
beneficiary designation, any payments remaining unpaid at the Director's death
shall be commuted on the basis of six percent (6%) per annum compounded interest
and shall be paid in a single sum to the Director's estate.

     Section 4.  Termination Benefits.  Should the Director voluntarily resign
     ---------   --------------------
as a director prior to the Qualifying Date, he or his Beneficiaries, as
applicable, shall be entitled to receive, commencing on a date to be determined
by the Bank, but in no event later than the first day of the sixth calendar
month following the month in which the earlier of the Director's death or 70th
birthday shall occur, the percentage of the amount of the monthly installment
payment stated in Section 1 of this Agreement determined under the following
table:

<TABLE>
<CAPTION>
                                          PERCENTAGE OF MONTHLY INSTALLMENT
                                          PAYMENT STATED IN SECTION 1 OF THIS
     FULL NUMBER OF YEARS SERVED AS       AGREEMENT TO WHICH DIRECTOR IS
     DIRECTOR AFTER JANUARY 1, 1994       ENTITLED
     ------------------------------       -----------------------------------
     <S>                                  <C>
                1                                       10%
                2                                       20%
                3                                       30%
                4                                       40%
                5                                       50%
                6                                       60%
                7                                       70%
                8                                       80%
                9                                       90%
                10                                      100%
</TABLE>

     Section 5.  Benefits Not Transferable.  Neither the Director, his
     ---------   -------------------------
Beneficiaries nor any other person claiming any right or interest under this
Agreement through the Director or any Beneficiary shall have any right to
commute, assign, transfer or otherwise convey the right to receive any benefits
hereunder.

                                       2
<PAGE>

     Section 6.  Binding Upon Successors.  This Agreement and the Bank's
     ---------   -----------------------
obligations hereunder shall be binding upon the Bank's successors and permitted
assigns. The Bank may not assign its rights or obligations under this Agreement
without the Director's prior written consent. In addition, the Bank shall not
enter into any agreement providing for the merger of the Bank with and into
another business entity or the sale of more than a majority of the Bank's assets
to another business entity, person or group persons that does not specifically
provide that such successor by merger or purchaser(s) of assets shall assume and
satisfy each and every obligation of the Bank to the Director under this
Agreement. In the case of an asset sale, such assumption shall not relieve the
Bank of its liability to fulfill such obligations.

     Except as otherwise provided in Sections 1, 2, 3 or 4, as applicable, in
the event that, on or before the occurrence of the Qualifying Date, the
Director's service as a director of the Bank is terminated for any reason
coincident with or within twenty-four (24) months following a merger of the Bank
with or into another business entity or of an asset sale as described above,
then the provisions of Section 1 shall be deemed applicable except that the
Qualifying Date shall be deemed to be the date that such merger or asset sale
shall be consummated.

     Section 7.  Benefits Payable Only From General Corporate Assets;
     ---------   ----------------------------------------------------
Unsecured General Creditors Status of Director.
----------------------------------------------

     The payments to the Director or his Beneficiary or Beneficiaries hereunder
shall be made from assets which for all purposes shall continue to be a part of
the general, unrestricted assets of the Bank; no person shall have any interest
in any such assets by virtue of the provisions of this Agreement.  The Bank's
obligations hereunder shall be an unfunded and unsecured promise to pay money in
the future.  To the extent that any person acquires a right to receive payments
from the Bank under the provisions hereof, such right shall be no greater than
the right of any unsecured general creditor of the Bank; no such person shall
have nor require any legal or equitable right, interest or claim in or to any
property or assets of the Bank.

     In the event that, in its discretion, the Bank purchases an insurance
policy or policies insuring the life of the Director (or any other property), in
order  to allow the Bank to recover the cost of providing benefits, in whole or
in part, hereunder, neither the Director, nor any Beneficiary, shall have any
rights whatsoever therein or in the proceeds therefrom.  The Bank shall be the
sole owner and beneficiary of such insurance policy and shall possess and may
exercise all incidents of ownership therein.

     Section 8.  Additional Benefits.  The benefits and rights provided under
     ---------   -------------------
this Agreement are independent of those benefits and rights provided under other
agreements between the parties hereto, and shall not affect, reduce or diminish
the right of Director to participate in any current or future benefit plan or
other supplemental compensation arrangement.

     Section 9.  No Contract of Employment.  Nothing contained herein shall be
     ---------   -------------------------
construed to be a contract of employment or as conferring upon the Director the
right to continue as a director of the

                                       3
<PAGE>

Bank. It is expressly understood by the parties hereto that this Agreement
relates exclusively to supplemental retirement payments for the Director, and is
not intended to be an employment or services agreement.

     Section 10. Amendment.  This Agreement may not be amended, altered or
     ----------  ---------
modified, except by a written instrument signed by the parties hereto or their
respective successors, and may not be otherwise terminated except as provided
herein.

     Section 11. Governing Law.  This Agreement, and the rights of the parties
     ----------  -------------
hereunder, shall be governed by and construed on accordance with the laws of the
State of North Carolina.

     IN WITNESS WHEREOF, the parties have executed this Amended and Restated
Director's Retirement Plan Agreement as of the day and year first above written.

                                    HOME SAVINGS BANK, SSB
Attest:

/s/ Ruby Adams                      By:     /s/ Thomas A. Vann
--------------------------                  ------------------------------------
Ruby Adams                                  Thomas A. Vann
Secretary

[Corporate Seal]                    Title:  President

                                    DIRECTOR:

                                    /s/ Frederick N. Holscher
                                    ----------------------------------- (Seal)
                                    Frederick N. Holscher

                                       4
<PAGE>

                             AMENDED AND RESTATED
                     DIRECTOR'S RETIREMENT PLAN AGREEMENT

     THIS AMENDED AND RESTATED DIRECTOR'S RETIREMENT PLAN AGREEMENT (this
"Agreement"), made and entered into this 1st day of January, 1994 and amended
and restated this the 14th day of December, 1995, by and between Home Savings
Bank, SSB, a mutual state savings bank organized and existing under the laws of
the State of North Carolina (the "Bank"), and Frederick H. Howdy (the
"Director").

                             W I T N E S S E T H:

     WHEREAS, the Bank recognizes the valuable services heretofore performed for
it by the Director and wishes to encourage his further services and assist him
in providing for the contingencies of retirement and death;

     WHEREAS, the parties hereto wish to provide the terms and conditions upon
which the Bank shall make certain payments to the Director or his designated
beneficiaries;

     WHEREAS, the parties hereto intend that this Agreement be considered an
unfunded arrangement maintained to provide deferred compensation benefits for
the Director; and

     WHEREAS, the parties hereto desire to amend the Agreement and to restate
the Agreement as amended.

     NOW, THEREFORE, in consideration of the premises and of the mutual promises
herein contained, the parties hereto agree as follows:

     Section 1.  Retirement Benefits.  The Bank agrees that, except as otherwise
     ---------   -------------------
specifically provided herein, upon the later to occur of the Director's 70th
birthday and January 1, 1999 (the "Qualifying Date"), the Bank will pay the
Director $2,000.00 per month for a continuous period of 120 months.  Such
continuous monthly installment payments shall commence on a date to be
determined by the Bank, but in no event later than the first day of the sixth
calendar month following the calendar month in which the Qualifying Date shall
occur.

     Section 2.  Pre-Retirement Death Benefits.  Should the Director die while
     ---------   -----------------------------
serving as a director of the Bank and prior to the Qualifying Date, the Bank
will pay $2,000.00 per month for a continuous period of 120 months to such
beneficiary or beneficiaries as are designated by the Director to the Bank in
writing (the "Beneficiaries"). The first such monthly installment payment shall
be made on a date to be determined by the Bank, but in no event later than the
first day of the sixth calendar month following the calendar month in which the
Director died. Notwithstanding the foregoing, if the Director dies as a result
of suicide on or before January 1, 1996, no benefits of whatever nature shall be
payable to the Beneficiaries under this Agreement. In the event of the death of
the last living Beneficiary before all the unpaid payments shall have been made,
the balance of any payments which remain unpaid at the time of such
Beneficiary's death shall be commuted on
<PAGE>

the basis of six percent (6%) per annum compounded interest and shall be paid in
a single sum to the estate of the last Beneficiary to die. In the absence of any
such beneficiary designation, any amount remaining unpaid at the Director's
death shall be commuted on the basis of six percent (6%) per annum compounded
interest and shall be paid in a single sum to the Director's estate.

     Section 3. Post-Retirement Death Benefits.  In the event that the Director
     ---------   ------------------------------
should die after becoming entitled to receive monthly installment payments under
this Agreement but before all remaining installment payments have been made, the
Bank will pay all remaining installment payments to the Beneficiary or
Beneficiaries. In the event of the death of the last living Beneficiary before
all installment payments have been made, the balance of any payments which
remain unpaid at the time of such Beneficiary's death shall be commuted on the
basis of six percent (6%) per annum compounded interest and shall be paid in a
single sum to the estate of the last Beneficiary to die. In the absence of such
beneficiary designation, any payments remaining unpaid at the Director's death
shall be commuted on the basis of six percent (6%) per annum compounded interest
and shall be paid in a single sum to the Director's estate.

     Section 4. Termination Benefits.  Should the Director voluntarily resign
     ---------   --------------------
as a director prior to the Qualifying Date, he or his Beneficiaries, as
applicable, shall be entitled to receive, commencing on a date to be determined
by the Bank, but in no event later than the first day of the sixth calendar
month following the month in which the earlier of the Director's death or 70th
birthday shall occur, the percentage of the amount of the monthly installment
payment stated in Section 1 of this Agreement determined under the following
table:

<TABLE>
<CAPTION>
                                             PERCENTAGE OF MONTHLY INSTALLMENT
                                             PAYMENT STATED IN SECTION 1 OF THIS
     FULL NUMBER OF YEARS SERVED AS          AGREEMENT TO WHICH DIRECTOR IS
     DIRECTOR AFTER JANUARY 1, 1994          ENTITLED
     ------------------------------          -----------------------------------
     <S>                                     <C>
                 1                                          12.5%
                 2                                          25.0%
                 3                                          37.5%
                 4                                          50.0%
                 5                                          62.5%
                 6                                          75.0%
                 7                                          87.5%
                 8                                         100.0%
</TABLE>

     Section 5.  Benefits Not Transferable.  Neither the Director, his
     ---------   -------------------------
Beneficiaries nor any other person claiming any right or interest under this
Agreement through the Director or any Beneficiary shall have any right to
commute, assign, transfer or otherwise convey the right to receive any benefits
hereunder.

     Section 6.  Binding Upon Successors.  This Agreement and the Bank's
     ---------   -----------------------
obligations hereunder shall be binding upon the Bank's successors and permitted
assigns.  The Bank may not assign its rights or obligations under this Agreement
without the Director's prior written consent.  In addition,

                                       2
<PAGE>

the Bank shall not enter into any agreement providing for the merger of the Bank
with and into another business entity or the sale of more than a majority of the
Bank's assets to another business entity, person or group persons that does not
specifically provide that such successor by merger or purchaser(s) of assets
shall assume and satisfy each and every obligation of the Bank to the Director
under this Agreement. In the case of an asset sale, such assumption shall not
relieve the Bank of its liability to fulfill such obligations.

     Except as otherwise provided in Sections 1, 2, 3 or 4, as applicable, in
the event that, on or before the occurrence of the Qualifying Date, the
Director's service as a director of the Bank is terminated for any reason
coincident with or within twenty-four (24) months following a merger of the Bank
with or into another business entity or of an asset sale as described above,
then the provisions of Section 1 shall be deemed applicable except that the
Qualifying Date shall be deemed to be the date that such merger or asset sale
shall be consummated.

     Section 7.  Benefits Payable Only From General Corporate Assets;
     ---------   ----------------------------------------------------
Unsecured General Creditors Status of Director.
----------------------------------------------

     The payments to the Director or his Beneficiary or Beneficiaries hereunder
shall be made from assets which for all purposes shall continue to be a part of
the general, unrestricted assets of the Bank; no person shall have any interest
in any such assets by virtue of the provisions of this Agreement.  The Bank's
obligations hereunder shall be an unfunded and unsecured promise to pay money in
the future.  To the extent that any person acquires a right to receive payments
from the Bank under the provisions hereof, such right shall be no greater than
the right of any unsecured general creditor of the Bank; no such person shall
have nor require any legal or equitable right, interest or claim in or to any
property or assets of the Bank.

     In the event that, in its discretion, the Bank purchases an insurance
policy or policies insuring the life of the Director (or any other property), in
order to allow the Bank to recover the cost of providing benefits, in whole or
in part, hereunder, neither the Director, nor any Beneficiary, shall have any
rights whatsoever therein or in the proceeds therefrom. The Bank shall be the
sole owner and beneficiary of such insurance policy and shall possess and may
exercise all incidents of ownership therein.

     Section 8.  Additional Benefits.  The benefits and rights provided under
     ---------   -------------------
this Agreement are independent of those benefits and rights provided under other
agreements between the parties hereto, and shall not affect, reduce or diminish
the right of Director to participate in any current or future benefit plan or
other supplemental compensation arrangement.

     Section 9.  No Contract of Employment.  Nothing contained herein shall be
     ---------   -------------------------
construed to be a contract of employment or as conferring upon the Director the
right to continue as a director of the Bank.  It is expressly understood by the
parties hereto that this Agreement relates exclusively to supplemental
retirement payments for the Director, and is not intended to be an employment or
services agreement.

                                       3
<PAGE>

     Section 10.  Amendment.  This Agreement may not be amended, altered or
     ----------   ---------
modified, except by a written instrument signed by the parties hereto or their
respective successors, and may not be otherwise terminated except as provided
herein.

     Section 11.  Governing Law.  This Agreement, and the rights of the parties
     ----------   -------------
hereunder, shall be governed by and construed on accordance with the laws of the
State of North Carolina.

     IN WITNESS WHEREOF, the parties have executed this Amended and Restated
Director's Retirement Plan Agreement as of the day and year first above written.

                                   HOME SAVINGS BANK, SSB
Attest:

/s/ Ruby Adams                     By:  /s/ Thomas A. Vann
---------------------                   --------------------------------
Ruby Adams                         Thomas A. Vann
Secretary

[Corporate Seal]                   Title:  President

                                   DIRECTOR:

                                   /s/ Frederick H. Howdy
                                   ----------------------------- (Seal)
                                   Frederick H. Howdy

                                       4
<PAGE>

                             AMENDED AND RESTATED
                     DIRECTOR'S RETIREMENT PLAN AGREEMENT

     THIS AMENDED AND RESTATED DIRECTOR'S RETIREMENT PLAN AGREEMENT (this
"Agreement"), made and entered into this 1st day of January, 1994 and amended
and restated this the 14th day of December, 1995, by and between Home Savings
Bank, SSB, a mutual state savings bank organized and existing under the laws of
the State of North Carolina (the "Bank"), and Charles E. Parker (the
"Director").

                             W I T N E S S E T H:

     WHEREAS, the Bank recognizes the valuable services heretofore performed for
it by the Director and wishes to encourage his further services and assist him
in providing for the contingencies of retirement and death;

     WHEREAS, the parties hereto wish to provide the terms and conditions upon
which the Bank shall make certain payments to the Director or his designated
beneficiaries;

     WHEREAS, the parties hereto intend that this Agreement be considered an
unfunded arrangement maintained to provide deferred compensation benefits for
the Director; and

     WHEREAS, the parties hereto desire to amend the Agreement and to restate
the Agreement as amended.

     NOW, THEREFORE, in consideration of the premises and of the mutual promises
herein contained, the parties hereto agree as follows:

     Section 1.  Retirement Benefits.  The Bank agrees that, except as otherwise
     ---------   -------------------
specifically provided herein, upon the later to occur of the Director's 70th
birthday and January 1, 1999 (the "Qualifying Date"), the Bank will pay the
Director $2,000.00 per month for a continuous period of 120 months. Such
continuous monthly installment payments shall commence on a date to be
determined by the Bank, but in no event later than the first day of the sixth
calendar month following the calendar month in which the Qualifying Date shall
occur.

     Section 2.  Pre-Retirement Death Benefits.  Should the Director die while
     ---------   -----------------------------
serving as a director of the Bank and prior to the Qualifying Date, the Bank
will pay $2,000.00 per month for a continuous period of 120 months to such
beneficiary or beneficiaries as are designated by the Director to the Bank in
writing (the "Beneficiaries"). The first such monthly installment payment shall
be made on a date to be determined by the Bank, but in no event later than the
first day of the sixth calendar month following the calendar month in which the
Director died. Notwithstanding the foregoing, if the Director dies as a result
of suicide on or before January 1, 1996, no benefits of whatever nature shall be
payable to the Beneficiaries under this Agreement. In the event of the death of
the last living Beneficiary before all the unpaid payments shall have been made,
the balance of any payments which remain unpaid at the time of such
Beneficiary's death shall be commuted on
<PAGE>

the basis of six percent (6%) per annum compounded interest and shall be paid in
a single sum to the estate of the last Beneficiary to die. In the absence of any
such beneficiary designation, any amount remaining unpaid at the Director's
death shall be commuted on the basis of six percent (6%) per annum compounded
interest and shall be paid in a single sum to the Director's estate.

     Section 3.  Post-Retirement Death Benefits.  In the event that the Director
     ---------   ------------------------------
should die after becoming entitled to receive monthly installment payments under
this Agreement but before all remaining installment payments have been made, the
Bank will pay all remaining installment  payments to the Beneficiary or
Beneficiaries.  In the event of the death of the last living Beneficiary before
all installment payments have been made, the balance of any payments which
remain unpaid at the time of such Beneficiary's death shall be commuted on the
basis of six percent (6%) per annum compounded interest and shall be paid in a
single sum to the estate of the last Beneficiary to die.  In the absence of such
beneficiary designation, any payments remaining unpaid at the Director's death
shall be commuted on the basis of six percent (6%) per annum compounded interest
and shall be paid in a single sum to the Director's estate.

     Section 4.  Termination Benefits.  Should the Director voluntarily resign
     ---------   --------------------
as a director prior to the Qualifying Date, he or his Beneficiaries, as
applicable, shall be entitled to receive, commencing on a date to be determined
by the Bank, but in no event later than the first day of the sixth calendar
month following the month in which the earlier of the Director's death or 70th
birthday shall occur, the percentage of the amount of the monthly installment
payment stated in Section 1 of this Agreement determined under the following
table:

<TABLE>
<CAPTION>
                                             PERCENTAGE OF MONTHLY INSTALLMENT
                                             PAYMENT STATED IN SECTION 1 OF THIS
     FULL NUMBER OF YEARS SERVED AS          AGREEMENT TO WHICH DIRECTOR IS
     DIRECTOR AFTER JANUARY 1, 1994          ENTITLED
     ---------------------------------       -----------------------------------
     <S>                                     <C>
                    1                                        10%
                    2                                        20%
                    3                                        30%
                    4                                        40%
                    5                                        50%
                    6                                        60%
                    7                                        70%
                    8                                        80%
                    9                                        90%
                    10                                      100%
</TABLE>

     Section 5.  Benefits Not Transferable.  Neither the Director, his
     ---------   -------------------------
Beneficiaries nor any other person claiming any right or interest under this
Agreement through the Director or any Beneficiary shall have any right to
commute, assign, transfer or otherwise convey the right to receive any benefits
hereunder.

                                       2
<PAGE>

     Section 6.  Binding Upon Successors.  This Agreement and the Bank's
     ---------   -----------------------
obligations hereunder shall be binding upon the Bank's successors and permitted
assigns. The Bank may not assign its rights or obligations under this Agreement
without the Director's prior written consent. In addition, the Bank shall not
enter into any agreement providing for the merger of the Bank with and into
another business entity or the sale of more than a majority of the Bank's assets
to another business entity, person or group persons that does not specifically
provide that such successor by merger or purchaser(s) of assets shall assume and
satisfy each and every obligation of the Bank to the Director under this
Agreement. In the case of an asset sale, such assumption shall not relieve the
Bank of its liability to fulfill such obligations.

     Except as otherwise provided in Sections 1, 2, 3 or 4, as applicable, in
the event that, on or before the occurrence of the Qualifying Date, the
Director's service as a director of the Bank is terminated for any reason
coincident with or within twenty-four (24) months following a merger of the Bank
with or into another business entity or of an asset sale as described above,
then the provisions of Section 1 shall be deemed applicable except that the
Qualifying Date shall be deemed to be the date that such merger or asset sale
shall be consummated.

     Section 7.  Benefits Payable Only From General Corporate Assets;
     ---------   ----------------------------------------------------
Unsecured General Creditors Status of Director.
----------------------------------------------

     The payments to the Director or his Beneficiary or Beneficiaries hereunder
shall be made from assets which for all purposes shall continue to be a part of
the general, unrestricted assets of the Bank; no person shall have any interest
in any such assets by virtue of the provisions of this Agreement. The Bank's
obligations hereunder shall be an unfunded and unsecured promise to pay money in
the future. To the extent that any person acquires a right to receive payments
from the Bank under the provisions hereof, such right shall be no greater than
the right of any unsecured general creditor of the Bank; no such person shall
have nor require any legal or equitable right, interest or claim in or to any
property or assets of the Bank.

     In the event that, in its discretion, the Bank purchases an insurance
policy or policies insuring the life of the Director (or any other property), in
order to allow the Bank to recover the cost of providing benefits, in whole or
in part, hereunder, neither the Director, nor any Beneficiary, shall have any
rights whatsoever therein or in the proceeds therefrom. The Bank shall be the
sole owner and beneficiary of such insurance policy and shall possess and may
exercise all incidents of ownership therein.

     Section 8.  Additional Benefits.  The benefits and rights provided under
     ---------   -------------------
this Agreement are independent of those benefits and rights provided under other
agreements between the parties hereto, and shall not affect, reduce or diminish
the right of Director to participate in any current or future benefit plan or
other supplemental compensation arrangement.

     Section 9.  No Contract of Employment.  Nothing contained herein shall be
     ---------   -------------------------
construed to be a contract of employment or as conferring upon the Director the
right to continue as a director of the

                                       3
<PAGE>

Bank. It is expressly understood by the parties hereto that this Agreement
relates exclusively to supplemental retirement payments for the Director, and is
not intended to be an employment or services agreement.

     Section 10.  Amendment.  This Agreement may not be amended, altered or
     ----------   ---------
modified, except by a written instrument signed by the parties hereto or their
respective successors, and may not be otherwise terminated except as provided
herein.

     Section 11.  Governing Law.  This Agreement, and the rights of the parties
     ----------   -------------
hereunder, shall be governed by and construed on accordance with the laws of the
State of North Carolina.

     IN WITNESS WHEREOF, the parties have executed this Amended and Restated
Director's Retirement Plan Agreement as of the day and year first above written.

                                   HOME SAVINGS BANK, SSB
Attest:

/s/ Ruby Adams                     By:  /s/ Thomas A. Vann
-------------------------               ---------------------------
Ruby Adams                              Thomas A. Vann
Secretary

[Corporate Seal]                   Title:  President

                                   DIRECTOR:

                                   /s/ Charles E. Parker, Jr.    (Seal)
                                   ------------------------------
                                   Charles E. Parker, Jr.

                                       4
<PAGE>

                             AMENDED AND RESTATED
                     DIRECTOR'S RETIREMENT PLAN AGREEMENT

     THIS AMENDED AND RESTATED DIRECTOR'S RETIREMENT PLAN AGREEMENT (this
"Agreement"), made and entered into this 1st day of January, 1994 and amended
and restated this the 14th day of December, 1995, by and between Home Savings
Bank, SSB, a mutual state savings bank organized and existing under the laws of
the State of North Carolina (the "Bank"), and Thomas A. Vann (the "Director").

                             W I T N E S S E T H:

     WHEREAS, the Bank recognizes the valuable services heretofore performed for
it by the Director and wishes to encourage his further services and assist him
in providing for the contingencies of retirement and death;

     WHEREAS, the parties hereto wish to provide the terms and conditions upon
which the Bank shall make certain payments to the Director or his designated
beneficiaries;

     WHEREAS, the parties hereto intend that this Agreement be considered an
unfunded arrangement maintained to provide deferred compensation benefits for
the Director; and

     WHEREAS, the parties hereto desire to amend the Agreement and to restate
the Agreement as amended.

     NOW, THEREFORE, in consideration of the premises and of the mutual promises
herein contained, the parties hereto agree as follows:

     Section 1.  Retirement Benefits.  The Bank agrees that, except as otherwise
     ---------   -------------------
specifically provided herein, upon the later to occur of the Director's 70th
birthday and January 1, 1999 (the "Qualifying Date"), the Bank will pay the
Director $2,000.00 per month for a continuous period of 120 months.  Such
continuous monthly installment payments shall commence on a date to be
determined by the Bank, but in no event later than the first day of the sixth
calendar month following the calendar month in which the Qualifying Date shall
occur.

     Section 2.  Pre-Retirement Death Benefits.  Should the Director die while
     ---------   -----------------------------
serving as a director of the Bank and prior to the Qualifying Date, the Bank
will pay $2,000.00 per month for a continuous period of 120 months to such
beneficiary or beneficiaries as are designated by the Director to the Bank in
writing (the "Beneficiaries").  The first such monthly installment payment shall
be made on a date to be determined by the Bank, but in no event later than the
first day of the sixth calendar month following the calendar month in which the
Director died.  Notwithstanding the foregoing, if the Director dies as a result
of suicide on or before January 1, 1996, no benefits of whatever nature shall be
payable to the Beneficiaries under this Agreement.  In the event of the death of
the last living Beneficiary before all the unpaid payments shall have been made,
the balance of any payments which remain unpaid at the time of such
Beneficiary's death shall be commuted on
<PAGE>

the basis of six percent (6%) per annum compounded interest and shall be paid in
a single sum to the estate of the last Beneficiary to die. In the absence of any
such beneficiary designation, any amount remaining unpaid at the Director's
death shall be commuted on the basis of six percent (6%) per annum compounded
interest and shall be paid in a single sum to the Director's estate.

     Section 3.  Post-Retirement Death Benefits.  In the event that the Director
     ---------   ------------------------------
should die after becoming entitled to receive monthly installment payments under
this Agreement but before all remaining installment payments have been made, the
Bank will pay all remaining installment  payments to the Beneficiary or
Beneficiaries.  In the event of the death of the last living Beneficiary before
all installment payments have been made, the balance of any payments which
remain unpaid at the time of such Beneficiary's death shall be commuted on the
basis of six percent (6%) per annum compounded interest and shall be paid in a
single sum to the estate of the last Beneficiary to die.  In the absence of such
beneficiary designation, any payments remaining unpaid at the Director's death
shall be commuted on the basis of six percent (6%) per annum compounded interest
and shall be paid in a single sum to the Director's estate.

     Section 4.  Termination Benefits.  Should the Director voluntarily resign
     ---------   --------------------
as a director prior to the Qualifying Date, he or his Beneficiaries, as
applicable, shall be entitled to receive, commencing on a date to be determined
by the Bank, but in no event later than the first day of the sixth calendar
month following the month in which the earlier of the Director's death or 70th
birthday shall occur, the percentage of the amount of the monthly installment
payment stated in Section 1 of this Agreement determined under the following
table:

                                          PERCENTAGE OF MONTHLY INSTALLMENT
                                          PAYMENT STATED IN SECTION 1 OF THIS
     FULL NUMBER OF YEARS SERVED AS       AGREEMENT TO WHICH DIRECTOR IS
     DIRECTOR AFTER JANUARY 1, 1994       ENTITLED
     -----------------------------------  --------------------------------------
                     1                                     10%
                     2                                     20%
                     3                                     30%
                     4                                     40%
                     5                                     50%
                     6                                     60%
                     7                                     70%
                     8                                     80%
                     9                                     90%
                     10                                    100%

     Section 5.  Benefits Not Transferable.  Neither the Director, his
     ---------   -------------------------
Beneficiaries nor any other person claiming any right or interest under this
Agreement through the Director or any Beneficiary shall have any right to
commute, assign, transfer or otherwise convey the right to receive any benefits
hereunder.

                                       2
<PAGE>

     Section 6.  Binding Upon Successors.  This Agreement and the Bank's
     ---------   -----------------------
obligations hereunder shall be binding upon the Bank's successors and permitted
assigns. The Bank may not assign its rights or obligations under this Agreement
without the Director's prior written consent. In addition, the Bank shall not
enter into any agreement providing for the merger of the Bank with and into
another business entity or the sale of more than a majority of the Bank's assets
to another business entity, person or group persons that does not specifically
provide that such successor by merger or purchaser(s) of assets shall assume and
satisfy each and every obligation of the Bank to the Director under this
Agreement. In the case of an asset sale, such assumption shall not relieve the
Bank of its liability to fulfill such obligations.

     Except as otherwise provided in Sections 1, 2, 3 or 4, as applicable, in
the event that, on or before the occurrence of the Qualifying Date, the
Director's service as a director of the Bank is terminated for any reason
coincident with or within twenty-four (24) months following a merger of the Bank
with or into another business entity or of an asset sale as described above,
then the provisions of Section 1 shall be deemed applicable except that the
Qualifying Date shall be deemed to be the date that such merger or asset sale
shall be consummated.

     Section 7.  Benefits Payable Only From General Corporate Assets;
     ---------   ----------------------------------------------------
Unsecured General Creditors Status of Director.
----------------------------------------------

     The payments to the Director or his Beneficiary or Beneficiaries hereunder
shall be made from assets which for all purposes shall continue to be a part of
the general, unrestricted assets of the Bank; no person shall have any interest
in any such assets by virtue of the provisions of this Agreement.  The Bank's
obligations hereunder shall be an unfunded and unsecured promise to pay money in
the future.  To the extent that any person acquires a right to receive payments
from the Bank under the provisions hereof, such right shall be no greater than
the right of any unsecured general creditor of the Bank; no such person shall
have nor require any legal or equitable right, interest or claim in or to any
property or assets of the Bank.

     In the event that, in its discretion, the Bank purchases an insurance
policy or policies insuring the life of the Director (or any other property), in
order  to allow the Bank to recover the cost of providing benefits, in whole or
in part, hereunder, neither the Director, nor any Beneficiary, shall have any
rights whatsoever therein or in the proceeds therefrom.  The Bank shall be the
sole owner and beneficiary of such insurance policy and shall possess and may
exercise all incidents of ownership therein.

     Section 8.  Additional Benefits.  The benefits and rights provided under
     ---------   -------------------
this Agreement are independent of those benefits and rights provided under other
agreements between the parties hereto, and shall not affect, reduce or diminish
the right of Director to participate in any current or future benefit plan or
other supplemental compensation arrangement.

     Section 9.  No Contract of Employment.  Nothing contained herein shall be
     ---------   -------------------------
construed to be a contract of employment or as conferring upon the Director the
right to continue as a director of the

                                       3
<PAGE>

Bank. It is expressly understood by the parties hereto that this Agreement
relates exclusively to supplemental retirement payments for the Director, and is
not intended to be an employment or services agreement.

     Section 10.  Amendment.  This Agreement may not be amended, altered or
     ----------   ---------
modified, except by a written instrument signed by the parties hereto or their
respective successors, and may not be otherwise terminated except as provided
herein.

     Section 11.  Governing Law.  This Agreement, and the rights of the parties
     ----------   -------------
hereunder, shall be governed by and construed on accordance with the laws of the
State of North Carolina.

     IN WITNESS WHEREOF, the parties have executed this Amended and Restated
Director's Retirement Plan Agreement as of the day and year first above written.

                                       HOME SAVINGS BANK, SSB
Attest:

/s/ Ruby Adams                         By: /s/ William L. Wall
------------------------------             --------------------------------
Ruby Adams                                 William L. Wall
Secretary

[Corporate Seal]                       Title:  Executive Vice President

                                       DIRECTOR:

                                       /s/ Thomas A. Vann
                                       --------------------------------- (Seal)
                                       Thomas A. Vann

                                       4
<PAGE>

                            HOME SAVINGS BANK, SSB
                     DIRECTOR'S RETIREMENT PLAN AGREEMENT
                   AS AMENDED AND RESTATED DECEMBER 14, 1995

                             --------------------

                                1996 Amendment

                             --------------------

          WHEREAS, Home Savings Bank, SSB (the "Bank") has entered into a
Director's Retirement Plan Agreement (the "Agreement"), originally effective
January 1, 1994 and as amended and restated effective December 14, 1995, with
Directors E. Buckman, Jr., F. Howdy, C. Parker, Jr., F. Holscher, L. Gibbs, Jr.,
H. Lane, and T. Vann (the "Directors"); and

          WHEREAS, the Bank has authorized an amendment to the Agreement with
each Director in order to address issues arising from the Bank's upcoming
conversion from mutual to stock form;

          NOW, THEREFORE, pursuant to Section 10 of each Agreement, the
Agreement with each Director is hereby amended as follows, effective immediately
on execution hereof:

          1.  The second paragraph of Section 6 is amended by replacing the
words "merger of the Bank with or into another business entity or of an asset
sale as described above" with the words "Change in Control as defined in Section
7 hereof."

          2.   Section 7 of the Agreement shall be amended by adding the
following paragraphs immediately at the end thereof:

               Notwithstanding any other provision of this Agreement that may be
          contrary or inconsistent herewith, not later than ten business days
          after a Change in Control (as defined in the last paragraph of this
          Section 8), the Bank shall (i) deposit in a grantor trust (the
          "Trust") that is designed in accordance with Revenue Procedure 92-64
          and has a trustee independent of the Bank, the Company and any
          successor to their interest, an amount equal to the present value of
          all benefits that may become payable under this Agreement, unless the
          Director has previously provided a written release of any claims under
          this Agreement, and (ii) provide the trustee of the Trust with a
          written direction to hold said amount and any investment return
          thereon in a segregated account for the benefit of the Director, and
          to follow the procedures set forth in the next paragraph as to the
          payment of such amounts from the Trust.
<PAGE>

               At any time or from time to time following the Change in Control,
          the Director may provide the trustee of the Trust with a written
          schedule directing that the trustee pay to the Director amounts
          designated in the schedule as being payable pursuant to this
          Agreement.  Within three business days after receiving said notice,
          the trustee of the Trust shall send a copy of the notice to the Bank
          via overnight and registered mail (return receipt requested).  On the
          fifth business day after mailing said notice to the Bank, the trustee
          of the Trust shall pay the Director the amount designated therein in
          immediately available funds, unless prior thereto the Bank provides
          the trustee with a written notice directing the trustee to withhold
          such payment.  In the latter event, the trustee shall submit the
          dispute to non-appealable binding arbitration for a determination of
          the amount payable to the Director pursuant to this Agreement, and the
          costs of such arbitration (including any attorneys' fees incurred by
          the Director) shall be paid by the Bank.  The trustee shall choose the
          arbitrator to settle the dispute, and such arbitrator shall be bound
          by the rules of the American Arbitration Association in making his
          determination.  The parties and the trustee shall be bound by the
          results of the arbitration and, within three days of the determination
          by the arbitrator, the trustee shall pay from the Trust the amounts
          required to be paid to the Director and/or the Bank, and in no event
          shall the trustee be liable to either party for making the payments as
          determined by the arbitrator.

               Upon receiving the Director's release of all claims under this
          Agreement, the trustee of the Trust shall pay to the Bank or its
          successor in interest the entire balance remaining in the segregated
          account maintained for the benefit of the Director.  The Director
          shall thereafter have no further interest in the Trust pursuant to
          this Agreement.

               For purposes of this Agreement, "Change in Control" shall mean
          any one of the following events:  (i) the acquisition of ownership,
          holding, or power to vote more than 25% of the voting stock of the
          Bank or NewSouth Bancorp, Inc. (the "Company"), (ii) the acquisition
          of the ability to control the election of a majority of the Bank's or
          the Company's directors, (iii) the acquisition of a controlling
          influence over the management or policies of the Bank or of the
          Company by any person or by persons acting as a "group" (within the
          meaning of Section 13(d) of the Securities Exchange Act of 1934), or
          (iv) during any period of two consecutive years, individuals (the
          "Continuing Directors") who at the beginning of such period constitute
          the Board of Directors of the Bank or of the Company (the "Existing
          Board") cease for any reason to constitute at least two-thirds
          thereof, provided that any individual whose election or nomination for
          election as a member of the Existing Board was approved by a vote of
          at least two-thirds of the Continuing Directors then in office shall
          be considered a Continuing Director.  Notwithstanding the foregoing,
          the Company's ownership
<PAGE>

          of the Bank shall not of itself constitute a Change in Control for
          purposes of the Agreement.  For purposes of this paragraph only, the
          term "person" refers to an individual or a corporation, partnership,
          trust, association, joint venture, pool, syndicate, sole
          proprietorship, unincorporated organization or any other form of
          entity not specifically listed herein.

     3.   Nothing contained herein shall be held to alter, vary or affect any of
the terms, provisions, or conditions of the Agreement entered into thereunder,
other than as stated above.
<PAGE>

     WHEREFORE, on this 23rd day of October, 1996, the Bank and each Director
who is party to an Agreement hereby execute this 1996 Amendment to the Plan.

<TABLE>
<S>                                             <C>
                                                HOME SAVINGS BANK, SSB

                                                By  /s/  Frederick H. Howdy
                                                  --------------------------
                                                     Its Chairman of the Board
October 23, 1996
-------------------------------                 Attest:   William L. Wall
Date                                                    ------------------------------------ (Seal)

                                                DIRECTORS

Brenda S. Ipoch                                 /s/ Edmund T. Buckman, Jr.
-----------------------------------             -------------------------------------------
Witness:                                        E. Buckman, Jr.

Brenda S. Ipoch                                 /s/ Frederick H. Howdy
-----------------------------------             -------------------------------------------
Witness:                                        F. Howdy

Brenda S. Ipoch                                 /s/ Charles E. Parker, Jr.
-----------------------------------             ---------------------------------------------
Witness:                                        C. Parker, Jr.

Brenda S. Ipoch                                 /s/ Frederick N. Holscher
-----------------------------------             -------------------------------------------
Witness:                                        F. Holscher

Brenda S. Ipoch                                 /s/ Linley H. Gibbs, Jr.
-----------------------------------             --------------------------------------------
Witness:                                        L. Gibbs, Jr.

Brenda S. Ipoch                                 /s/ Harold A. Lane
-----------------------------------             --------------------------------------------
Witness:                                        H. Lane

Brenda S. Ipoch                                 /s/ Thomas A. Vann
------------------------------------            -------------------------------------------
Witness:                                        T. Vann
</TABLE>FIRST SOUTH BANK
                      DIRECTOR'S RETIREMENT PLAN AGREEMENT
                  AS AMENDED AND RESTATED DECEMBER 14, 1995

                             ____________________

                                 2003 Amendment
                             ____________________

     WHEREAS, First South Bank (formerly known as "NewSouth Bank" and, prior
thereto, "Home Savings Bank, SSB") (the "Bank") has entered into a separate
Director's Retirement Plan Agreement (the "Agreement") with each of Directors E.
Buckman, Jr., F. Howdy, C. Parker, Jr., F. Holscher, L. Gibbs, Jr., M. T.
Singleton and T. Vann (the "Directors"); and

     WHEREAS, each Agreement authorizes the Bank to amend the Agreement with the
written approval of the Director; and

     WHEREAS, the Bank has determined that it is in the best interest of the
Bank and the Director to amend the Agreement.

     NOW, THEREFORE, the Agreement with each Director is hereby amended by
adding the following paragraph at the end of Section 4 thereof:

          Notwithstanding the foregoing provisions of this Section 4, in the
     event that the Director ceases to serve as a director of the Bank on or
     after his 55th birthday, and after having completed enough service to
     become entitled to 100% of the monthly installment payments stated in
     Section 1 of this Agreement, the Director shall be entitled to receive such
     monthly installment payments. Such payment shall commence on a date to be
     determined by the Bank, but in no event later than the first day of the
     sixth calendar month following the calendar month in which the Director
     ceases to serve as a director of the Bank

     WHEREFORE, on this 18th day of December, 2003, the Bank and each Director
who is party to an Agreement hereby execute this 2003 Amendment to the
Agreement.

ATTEST                                    FIRST SOUTH BANK

                                          By /s/ Linley H. Gibbs, Jr.
-------------------------                    --------------------------------
                                          Its Chairman of the Board

                                          DIRECTOR

-------------------------                 -----------------------------------
Witness                                   Edmund T. Buckman, Jr.

<PAGE>

                                          DIRECTOR

-------------------------                 -----------------------------------
Witness                                   Frederick H. Howdy

                                          DIRECTOR

-------------------------                 -----------------------------------
Witness                                   Charles E. Parker, Jr.

                                          DIRECTOR

/s/ William L. Wall                       /s/ Marshall T. Singleton
-------------------------                 -----------------------------------
Witness                                   Marshall T. Singleton

                                          DIRECTOR

-------------------------                 -----------------------------------
Witness                                   Frederick N. Holscher

                                          DIRECTOR

-------------------------                 -----------------------------------
Witness                                   Linley H. Gibbs, Jr.

                                          DIRECTOR

-------------------------                 -----------------------------------
Witness                                   Thomas A. Vann

<PAGE>

                      DIRECTOR'S RETIREMENT PLAN AGREEMENT

     THIS DIRECTOR'S RETIREMENT PLAN AGREEMENT (this "Agreement"), made and
entered into this ____ day of ____________, 1997, by and between Home Savings
Bank, SSB, an institution organized and existing under the laws of the State of
North Carolina (the "Bank"), and Marshall Singleton (the "Director").

                              W I T N E S S E T H:

     WHEREAS, the Bank recognizes the valuable services heretofore performed for
it by the Director and wishes to encourage his further services and assist him
in providing for the contingencies of retirement and death;

     WHEREAS, the parties hereto wish to provide the terms and conditions upon
which the Bank shall make certain payments to the Director or his designated
beneficiaries;

     WHEREAS, the parties hereto intend that this Agreement be considered an
unfunded arrangement maintained to provide deferred compensation benefits for
the Director;

     NOW, THEREFORE, in consideration of the premises and of the mutual promises
herein contained, the parties hereto agrees as follows:

     Section 1.  Retirement Benefits.  The Bank agrees that, except as otherwise
     ---------   -------------------
specifically provided herein, upon the later to occur of the Director's 70th
birthday and January 1, 2002 (the "Qualifying Date"), the Bank will pay the
Director $2,000.00 per month for a continuous period of 120 months.  Such
continuous monthly installment payments shall commence on a date to be
determined by the Bank, but in no event later than the first day of the sixth
calendar month following the calendar month in which the Qualifying Date shall
occur.

     Section 2.  Pre-Retirement Death Benefits.  Should the Director die while
     ---------   -----------------------------
serving as a director of the Bank and prior to the Qualifying Date, the Bank
will pay $2,000.00 per month for a continuous period of 120 months to such
beneficiary or beneficiaries as are designated by the Director to the Bank in
writing (the "Beneficiaries").  The first such monthly installment payment shall
be made on a date to be determined by the Bank, but in no event later than the
first day of the sixth calendar month following the calendar month in which the
Director died.  Notwithstanding the foregoing, if the Director dies as a result
of suicide on or before January 1, 1999, no benefits of whatever nature shall be
payable to the Beneficiaries under this Agreement.  In the event of the death of
the last living Beneficiary before all the unpaid payments shall have been made,
the balance of any payments which remain unpaid at the time of such
Beneficiary's death shall be commuted on the basis of six percent (6%) per annum
compounded interest and shall be paid in a single sum to the estate of the last
Beneficiary to die.  In the absence of any such beneficiary designation, any
amount remaining unpaid at the Director's death shall be commuted on the basis
of six percent (6%) per annum compounded interest and shall be paid in a single
sum to the Director's estate.
<PAGE>

     Section 3.  Post-Retirement Death Benefits.  In the event that the Director
     ---------   ------------------------------
should die after becoming entitled to receive monthly installment payments under
this Agreement but before all remaining installment payments have been made, the
Bank will pay all remaining installment payments to the Beneficiary or
Beneficiaries.  In the event of the death of the last living Beneficiary before
all installment payments have been made, the balance of any payments which
remain unpaid at the time of such Beneficiary's death shall be commuted on the
basis of six percent (6%) per annum compounded interest and shall be paid in a
single sum to the estate of the last Beneficiary to die.  In the absence of such
beneficiary designation, any payments remaining unpaid at the Director's death
shall be commuted on the basis of six percent (6%) per annum compounded interest
and shall be paid in a single a sum to the Director's estate.

     Section 4.  Termination Benefits.  Should the Director voluntarily resign
     ---------   --------------------
as a director prior to the Qualifying Date, he or his Beneficiaries, as
applicable, shall be entitled to receive, commencing on a date to be determined
by the Bank, but in no event later than the first day of the sixth calendar
month following the month in which the earlier of the Director's death or 70th
birthday shall occur, the percentage of the amount of the monthly installment
payment stated in Section 1 of this Agreement determined under the following
table:

                                PERCENTAGE OF MONTHLY INSTALLMENT
                                PAYMENT STATED IN SECTION 1 OF THIS
FULL NUMBER OF YEARS SERVED AS  AGREEMENT TO WHICH DIRECTOR IS
DIRECTOR AFTER JANUARY 1, 1997  ENTITLED
- ------------------------------  -----------------------------------

            1                                  10%
            2                                  20%
            3                                  30%
            4                                  40%
            5                                  50%
            6                                  60%
            7                                  70%
            8                                  80%
            9                                  90%
            10                                100%

          Section 5.  Benefits Not Transferable.  Neither the Director, his
          ---------   -------------------------
Beneficiaries nor any other person claiming any right or interest under this
Agreement through the Director or any Beneficiary shall have any right to
commute, assign, transfer or otherwise convey the right to receive any benefits
hereunder.

                                       2
<PAGE>

          Section 6.  Binding Upon Successors.  This Agreement and the Bank's
          ---------   -----------------------
obligations hereunder shall be binding upon the Bank's successors and permitted
assigns. The Bank may not assign its rights or obligations under this Agreement
without the Director's prior written consent. In addition, the Bank shall not
enter into any agreement providing for the merger of the Bank with and into
another business entity or the sale of more than a majority of the Bank's assets
to another business entity, person or group persons that does not specifically
provide that such successor by merger or purchaser(s) of assets shall assume and
satisfy each and every obligation of the Bank to the Director under this
Agreement. In the case of an asset sale, such assumption shall not relieve the
Bank of its liability to fulfill such obligations.

          Except as otherwise provided in Section 1, 2, 3 or 4, as applicable,
in the event that, on or before the occurrence of the Qualifying Date, the
Director's service as director of the Bank is terminated for any reason
coincident with or within twenty-four (24) months following a Change in Control
as defined in Section 7 hereof, then the provisions of Section 1 shall be deemed
applicable except that the Qualifying Date shall be deemed to be the date that
such merger or asset sale shall be consummated.

          Section 7.  Benefits Payable Only From General Corporate Assets;
          ---------   ----------------------------------------------------
Unsecured General Creditors Status of Director.  The payments to the Director or
- ----------------------------------------------
his Beneficiary or Beneficiaries hereunder shall be made from assets which for
all purposes shall continue to be a part of the general, unrestricted assets of
the Bank; no person shall have any interest in any such assets by virtue of the
provisions of this Agreement.  The Bank's obligations hereunder shall be an
unfunded and unsecured promise to pay money in the future.  To the extent that
any person acquires a right to receive payments from the Bank under the
provisions hereof, such right shall be no greater than the right of any
unsecured general creditor of the Bank; no such person shall have nor require
any legal or equitable right, interest or claim in or to any property or assets
of the Bank.

          In the event that, in its discretion, the Bank purchases an insurance
policy or policies insuring the life of the Director (or any other property), in
order to allow the Bank to recover the cost of providing benefits, in whole or
in part, hereunder, neither the Director, nor any Beneficiary, shall have any
rights whatsoever therein or in the proceeds therefrom.  The Bank shall be the
sole owner and beneficiary of such insurance policy and shall possess and may
exercise all incidents of ownership therein.

          Notwithstanding any other provision of this Agreement that may be
contrary or inconsistent herewith, not later than ten business days after a
Change in Control (as defined in the last paragraph of this Section 7), the Bank
shall (i) deposit in a grantor trust (the "Trust") that is designed in
accordance with Revenue Procedure 92-64 and has a trustee independent of the
Bank, the Company and any successor to their interest, an amount equal to the
present value of all benefits that may become payable under this Agreement,
unless the Director has previously provided a written release of any claims
under this Agreement, and (ii) provide the trustee of the Trust with a written
direction to hold said amount and any investment return thereon in a

                                       3
<PAGE>

segregated account for the benefit of the Director, and to follow the procedures
set forth in the next paragraph as to the payment of such amounts from the
Trust.

          At any time or from time to time following the Change in Control, the
Director may provide the trustee of the Trust with a written schedule directing
that the trustee pay to the Director amounts designated in the schedule as being
payable pursuant to this Agreement.  Within three business days after receiving
said notice, the trustee of the Trust shall send a copy of the notice to the
Bank via overnight and registered mail (return receipt requested).  On the fifth
business day after mailing said notice to the Bank, the trustee of the Trust
shall pay the Director the amount designated therein in immediately available
funds, unless prior thereto the Bank provides the trustee with a written notice
directing the trustee to withhold such payment.  In the latter event, the
trustee shall submit the dispute to non-appealable binding arbitration for a
determination of the amount payable to the Director pursuant to this Agreement,
and the costs of such arbitration (including any attorneys' fees incurred by the
Director) shall be paid by the Bank.  The trustee shall choose the arbitrator to
settle the dispute, and such arbitrator shall be bound by the rules of the
American Arbitration Association in making his determination.  The parties and
the trustee shall be bound by the results of the arbitration and, within three
days of the determination by the arbitrator, the trustee shall pay from the
Trust the amounts required to be paid to the Director and/or the Bank, and in no
event shall the trustee be liable to either party for making the payments as
determined by the arbitrator.

          Upon receiving the Director's release of all claims under this
Agreement, the trustee of the Trust shall pay to the Bank or its successor in
interest the entire balance remaining in the segregated account maintained for
the benefit of the Director.  The Director shall thereafter have no further
interest in the Trust pursuant to this Agreement.

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

                                       4
<PAGE>

          Section 8.  Additional Benefits.  The benefits and rights provided
          ---------   -------------------
under this Agreement are independent of those benefits and rights provided under
other agreements between the parties hereto, and shall not affect, reduce or
diminish the right of Director to participate in any current or future benefit
plan or supplemental compensation arrangement.

          Section 9.  No Contract of Employment.  Nothing contained herein shall
          ---------   -------------------------
be construed to be a contract of employment or as conferring upon the Director
the right to continue as a director of the Bank.  It is expressly understood by
the parties hereto that this Agreement relates exclusively to supplemental
retirement payments for the Director, and is not intended to be an employment or
services agreement.

          Section 10.  Amendment.  This Agreement may not be amended, altered or
          ----------   ---------
modified, except by a written instrument signed by the parties hereto or their
respective successors, and may not be otherwise terminated except as provided
herein.

          Section 11.  Governing Law.  This Agreement, and the rights of the
          ----------   -------------
parties hereunder, shall be governed by and construed in accordance with the
laws of the State of North Carolina.

          IN WITNESS WHEREOF, the parties have executed this Director's
Retirement Plan Agreement as of the day and year first above written.

                                              HOME SAVINGS BANK, SSB

Attest:

                                              By:
- ------------------------------                   ------------------------

[Corporate Seal]                              Title:
                                                    ---------------------

                                              DIRECTOR:

                                                                         (Seal)
                                              ---------------------------

                                       5
<PAGE>

                          BENEFICIARY DESIGNATION FORM

As beneficiary to receive any death benefits payable on my behalf from Home
Savings Bank, SSB, 1311 Carolina Avenue, Washington, North Carolina  27889,
I designate the following:

NAME PRIMARY       DATE OF BIRTH      ADDRESS                RELATIONSHIP

--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------

CONTINGENT, if any

--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------

Note:  If more than one primary beneficiary is named, the benefit will be paid
in equal shares to those living.  Should the contingent beneficiaries be
eligible to receive the benefits, such benefits will be paid in equal shares to
such living contingent beneficiaries.

Each amount payable after my death shall be paid exclusively to the Primary
Beneficiary if living at the time such payments become due.  The right is
reserved to the Primary Beneficiary to change contingent beneficiaries after my
death.  For the purposes of this agreement, the term "contingent beneficiaries"
shall include any beneficiary who is not receiving payments.  A new Contingent
beneficiary may be designated from time to time by filing at the Corporate
Headquarters of Home Savings Bank, SSB, 1311 Carolina Avenue, Washington, North
Carolina  27889, written notice thereof in such form as the Bank may require.
When such notice is received at the Corporate Headquarters of Home Savings Bank,
SSB, the change shall be effective on the date the notice was signed, whether or
not the Primary Beneficiary is living at the time of the receipt, but without
prejudice to Home Savings Bank, SSB on account of any payment made by it before
receipt of the written notice at its Corporate Headquarters.

Name of Spouse if not given above:
                                  ----------------------------------------------

Witness:
        ---------------------------------      ---------------------------------
                                               Signature of Employee/Director

Date:
      -----------------------------------

Note:  The original will be retained by Home Savings Bank, SSB, one copy by the
Employee/Director and one copy returned to Housley Kantarian & Bronstein, P.C.

                                       6
<PAGE>

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