FIRST SOUTH BANCORP INC
<DOCUMENT>
<TYPE>EX-10.10
<SEQUENCE>10
<FILENAME>frststh10ksb08ex10-10.txt
<TEXT>
                                                                Exhibit 10.10


                              EMPLOYMENT AGREEMENT

         This EMPLOYMENT  AGREEMENT (this "Agreement") is entered into effective
as of this 20th day of February, 2008, by and among First South Bancorp, Inc., a
South  Carolina  corporation  (the  "Corporation"),  First  South  Bank,  a bank
chartered  under  South  Carolina  law  and a  wholly  owned  subsidiary  of the
Corporation  (the "Bank"),  and Barry L. Slider,  President and Chief  Executive
Officer of the Corporation and the Bank (the  "Executive").  The Corporation and
the Bank are  referred to in this  Agreement  individually  and  together as the
"Employer."

         WHEREAS,  the Executive is the President and Chief Executive Officer of
the  Corporation  and  the  Bank,  possessing  unique  skills,   knowledge,  and
experience  relating  to  their  business,  and the  Executive  has  made and is
expected to continue to make major  contributions to the profitability,  growth,
and financial strength of the Corporation and affiliates,

         WHEREAS, the Employer desires to provide additional  inducement for the
Executive to continue  serving as President and Chief  Executive  Officer and to
set  forth  in this  Agreement  the  terms  and  conditions  of the  Executive's
employment,

         WHEREAS,  the Employer  desires to assure  itself of the  continuity of
management,  the Employer desires to establish  minimum  severance  benefits for
certain of its officers and other key employees,  including the Executive,  if a
change in control  occurs,  and the Employer  wishes to ensure that officers and
other key employees are not practically  disabled from discharging  their duties
if a proposed or actual transaction involving a change in control arises, and

         WHEREAS, none of the conditions or events included in the definition of
the term "golden parachute payment" that is set forth in Section 18(k)(4)(A)(ii)
of the  Federal  Deposit  Insurance  Act [12  U.S.C.  1828(k)(4)(A)(ii)]  and in
Federal   Deposit   Insurance   Corporation   Rule   359.1(f)(1)(ii)   [12   CFR
359.1(f)(1)(ii)]   exists  or,  to  the  best  knowledge  of  the  Employer,  is
contemplated insofar as the Employer or any affiliates are concerned.

         NOW THEREFORE, in consideration of these premises, the mutual covenants
contained  herein,  and other good and  valuable  consideration  the receipt and
sufficiency  of which are  hereby  acknowledged,  the  parties  hereto  agree as
follows.

                                    ARTICLE 1
                                   EMPLOYMENT

         1.1  Employment.  The Employer hereby employs the Executive to serve as
President and Chief Executive  Officer  according to the terms and conditions of
this  Agreement and for the period  stated in section 1.3. The Executive  hereby
accepts  employment  according to the terms and conditions of this Agreement and
for the period stated in section 1.3.

         1.2 Duties.  As President and Chief  Executive  Officer,  the Executive
shall serve under the  direction of the  Employer's  board of  directors  and in
accordance with the Employer's Articles of Incorporation and Bylaws, as each may

<PAGE>

be amended or restated from time to time. The Executive shall report directly to
the board of  directors.  The  Executive  shall serve the  Employer  faithfully,
diligently,  competently,  and  to the  best  of the  Executive's  ability.  The
Executive shall exclusively  devote full working time,  energy, and attention to
the business of the Employer and to the  promotion of the  Employer's  interests
throughout the term of this Agreement.  Without the written consent of the board
of directors of each of the  Corporation  and the Bank,  during the term of this
Agreement the Executive  shall not render  services to or for any person,  firm,
corporation,  or other  entity or  organization  in exchange  for  compensation,
regardless  of the form in which  the  compensation  is paid and  regardless  of
whether it is paid  directly or  indirectly  to the  Executive.  Nothing in this
section 1.2 shall prevent the Executive from managing  personal  investments and
affairs,  provided that doing so does not interfere with the proper  performance
of the Executive's duties and responsibilities under this Agreement.

         1.3 Term. The initial term of employment  under this Agreement shall be
three years,  commencing on the effective date first written above.  The term of
this Agreement shall  automatically be extended at the end of each month for one
additional  month unless the Bank's board of directors  determines that the term
shall not be extended. If the board of directors decides not to extend the term,
the board shall  promptly  notify the Executive in writing,  but this  Agreement
shall nevertheless  remain in force until its current term expires.  The board's
decision not to extend the term shall not - by itself - give the  Executive  any
rights  under  this   Agreement   to  claim  an  adverse   change  in  position,
compensation,  or circumstances  or otherwise to claim  entitlement to severance
benefits under Articles 4 or 5. References  herein to the term of this Agreement
mean the initial  term, as the same may be extended.  Unless sooner  terminated,
the  Executive's  employment and the term of this Agreement shall terminate when
the Executive attains age 65.

         1.4  Service on the Board of  Directors.  The  Executive  is  currently
serving as a director of each of the  Corporation  and the Bank. The Corporation
shall  nominate  the  Executive  for  election  as a  director  at such times as
necessary  so that the  Executive  will,  if elected by  stockholders,  remain a
director of the Corporation throughout the term of this Agreement. The Executive
hereby consents to serving as a director and to being named as a director of the
Corporation in documents filed with the Securities and Exchange Commission.  The
board of directors of each of the Corporation and the Bank shall undertake every
lawful effort to ensure that the Executive continues throughout the term of this
Agreement to be elected or reelected  as a director of the Bank.  The  Executive
shall be deemed to have  resigned as a director of each of the  Corporation  and
the Bank effective  immediately after termination of the Executive's  employment
under Article 3 of this Agreement, regardless of whether the Executive submits a
formal, written resignation as director.

                                    ARTICLE 2
                            COMPENSATION AND BENEFITS

         2.1 Base Salary. In consideration of the Executive's performance of the
obligations under this Agreement,  the Employer shall pay or cause to be paid to
the Executive a salary at the annual rate of not less than $242,700,  payable in
bi-weekly  installments  or otherwise  according to the  Employer's  regular pay
practices.  The Executive's  salary shall be reviewed annually by the Employer's


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<PAGE>

board of directors or the board  committee  having  jurisdiction  over executive
compensation.  The Executive's salary shall be increased no more frequently than
annually to account for cost of living increases. At the discretion of the board
of  directors  or  the  board   committee  with   jurisdiction   over  executive
compensation,  the  Executive's  salary also may be increased  beyond the amount
necessary  to account for cost of living  increases.  However,  the  Executive's
salary shall not be reduced.  All  compensation  under this  Agreement  shall be
subject to customary  withholding  taxes and such other  employment taxes as are
imposed by law. The Executive's  salary,  as the same may be increased from time
to time, is referred to in this Agreement as the "Base Salary."

         2.2 Benefit  Plans and  Perquisites.  The  Executive  shall be entitled
throughout  the term of this Agreement (x) to participate in any and all officer
or employee  compensation,  bonus,  incentive,  and benefit plans in effect from
time to time, including without limitation plans providing pension,  retirement,
medical, dental,  disability,  and group life benefits and including stock-based
compensation,  incentive,  bonus, or purchase plans existing on the date of this
Agreement  or  adopted  after  the  date of this  Agreement,  provided  that the
Executive satisfies the eligibility requirements for any such plans or benefits,
and (y) to receive any and all other fringe benefits provided from time to time,
including the following fringe benefits -

         (a)  Club  dues.  The  Employer  shall  pay or  cause  to be  paid  the
Executive's  initiation and membership  assessments and dues in civic and social
clubs of the Executive's  choice.  The Executive shall be solely responsible for
personal expenses for use of the civic and clubs.

         (b) Reimbursement of business expenses. The Executive shall be entitled
to reimbursement for all reasonable  business  expenses incurred  performing the
obligations  under this  Agreement,  including but not limited to all reasonable
business travel and entertainment  expenses incurred while acting at the request
of or in the service of the Employer and  reasonable  expenses for attendance at
annual and other periodic meetings of trade associations.

         (c)  Use  of  automobile.  The  Executive  shall  have  the  use  of an
automobile  titled in the Employer's  name for use by the Executive to carry out
the Executive's duties, the insurance and maintenance expenses of which shall be
paid by the  Employer.  As additional  compensation,  the Executive may use such
automobile  for  personal  purposes,  provided  that the  Executive  renders  an
accounting  of business  and personal  use to the  Employer in  accordance  with
regulations under the Internal Revenue Code of 1986, as amended.

         (d) Long-term care insurance.  The Employer shall purchase and maintain
long-term care insurance for the benefit of the Executive, which policy shall be
fully  paid no  later  than  the date on which  the  Executive  attains  age 65,
provided the Executive remains employed by the Employer to age 65. The long-term
care  insurance  policy shall be owned by the Executive  exclusively.  If before
attaining age 65 the Executive's employment terminates involuntarily but without
Cause,  voluntarily  but  with  Good  Reason,  or  because  of  disability,  the
Executive's  right to the long-term  care  insurance  benefit under this section
2.2(d) shall be determined under section 4.2.

         (e) Disability  insurance.  The Employer shall  reimburse the Executive
for the Executive's cost to purchase and maintain disability insurance coverage.
The amount  reimbursed  by the Employer  shall be grossed up to  compensate  the


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<PAGE>

Executive  for  federal  and  state  income  taxes  imposed  as a result  of the
Employer's  reimbursement  of the  Executive's  cost. The  disability  insurance
policy shall be owned by the Executive exclusively.

         2.3 Vacation.  The  Executive  shall be entitled to sick leave and paid
annual vacation in accordance with policies established from time to time by the
Employer.

                                    ARTICLE 3
                             EMPLOYMENT TERMINATION

         3.1  Termination  Because  of  Death  or  Disability.  (a)  Death.  The
Executive's  employment  shall  terminate  automatically  on  the  date  of  the
Executive's death. If the Executive dies in active service to the Employer,  the
Executive's  estate shall  receive any sums due to the  Executive as Base Salary
and  reimbursement  of  expenses  through  the end of the  month in which  death
occurred,  any bonus earned or accrued through the date of death,  including any
unvested  amounts  awarded for previous  years,  and for twelve months after the
Executive's  death the Employer  shall provide  without cost to the  Executive's
family  continuing health care coverage under COBRA  substantially  identical to
that provided for the Executive before death.

         (b) Disability. By delivery of written notice 30 days in advance to the
Executive,  the  Employer  may  terminate  the  Executive's  employment  if  the
Executive is disabled.  For purposes of this  Agreement the  Executive  shall be
considered  "disabled" if an independent  physician selected by the Employer and
reasonably  acceptable to the Executive or the Executive's legal  representative
determines  that,  because of illness or  accident,  the  Executive is unable to
perform the Executive's duties and will be unable to perform those duties for 90
consecutive days. The Executive shall not be considered  disabled,  however,  if
the  Executive  returns to work on a  full-time  basis  within 30 days after the
Employer  gives notice of  termination  due to  disability.  If the Executive is
terminated by either of the  Corporation or the Bank because of disability,  the
Executive's  employment with the other shall also terminate at the same time. If
the Executive's employment terminates because of disability, the Executive shall
receive the Base Salary  earned  through the date on which  termination  becomes
effective, any bonus earned or accrued through the date of incapacity, including
any unvested  amounts awarded for previous years,  any payments the Executive is
eligible  to  receive  under  any  disability  insurance  program  in which  the
Executive  participates,  and such other  benefits to which the Executive may be
entitled under the Employer's benefit plans, policies, and agreements.

         3.2 Involuntary  Termination with Cause. The Employer may terminate the
Executive's employment with Cause. If the Executive's employment terminates with
Cause,  the Executive  shall  receive the Base Salary  through the date on which
termination  becomes  effective  and  reimbursement  of  expenses  to which  the
Executive is entitled when termination  becomes  effective.  If the Executive is
terminated  with Cause by either of the  Corporation  or the Bank, the Executive
shall be deemed  also to have  been  terminated  with  Cause by the  other.  The
Executive  shall not be deemed to have been  terminated  with  Cause  under this
Agreement  unless and until  there is  delivered  to the  Executive  a copy of a
resolution  duly adopted at a meeting of the board of directors  called and held
for such purpose,  which resolution shall (x) contain findings that, in the good
faith opinion of the board,  the  Executive  has  committed an act  constituting


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<PAGE>

Cause, and (y) specify the particulars  thereof.  The resolution of the board of
directors shall be deemed to have been duly adopted if and only if it is adopted
by the affirmative  vote of a majority of the directors of the Corporation  then
in office or a majority of the  directors of the Bank then in office,  in either
case  excluding  the  Executive,  at a  meeting  duly  called  and held for that
purpose.  Notice of the meeting and the proposed termination with Cause shall be
given to the  Executive  a  reasonable  time  before the  board's  meeting.  The
Executive and the Executive's  counsel (if the Executive chooses to have counsel
present)  shall have a  reasonable  opportunity  to be heard by the board at the
meeting.  Nothing in this Agreement  limits the  Executive's  or  beneficiaries'
right to contest the  validity or  propriety  of the  board's  determination  of
Cause. For purposes of this Agreement "Cause" means any of the following -

                  1) an intentional act of fraud, embezzlement,  or theft by the
         Executive in the course of  employment.  For purposes of this Agreement
         no act or failure to act on the part of the  Executive  shall be deemed
         to  have  been  intentional  if it was due  primarily  to an  error  in
         judgment  or  negligence.  An act or failure to act on the  Executive's
         part shall be considered  intentional if it is not in good faith and if
         it is without a reasonable  belief that the action or failure to act is
         in the Employer's best interests, or

                  2) intentional  violation of any law or significant  policy of
         the Employer  that, in the  Employer's  sole  judgment,  has an adverse
         effect on the Employer, or

                  3) the Executive's gross negligence or gross neglect of duties
         in the performance of duties, or

                  4)  intentional  wrongful  damage  by  the  Executive  to  the
         business or property of the Employer,  including without limitation the
         Employer's  reputation,  which in the Employer's  sole judgment  causes
         material harm to the Employer, or

                  5) a breach by the Executive of fiduciary duties or misconduct
         involving  dishonesty,  in  either  case  whether  in  the  Executive's
         capacity as an officer or as a director, or

                  6) a breach by the  Executive of this  Agreement  that, in the
         Employer's  sole judgment,  is a material  breach,  which breach is not
         corrected  by the  Executive  within ten days after  receiving  written
         notice of the breach, or

                  7)  removal  of  the   Executive   from  office  or  permanent
         prohibition of the Executive from  participating  in the Bank's affairs
         by an order  issued  under  section  8(e)(4)  or (g)(1) of the  Federal
         Deposit Insurance Act, 12 U.S.C. 1818(e)(4) or (g)(1), or

                  8)  conviction of the Executive for or plea of no contest to a
         felony  or  conviction  of or  plea  of  no  contest  to a  misdemeanor
         involving moral turpitude, or the actual incarceration of the Executive
         for seven consecutive days or more, or

                  9) the  occurrence  of any event that results in the Executive
         being  excluded  from  coverage,  or having  coverage  limited  for the
         Executive as compared to other  executives of the  Employer,  under the


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<PAGE>

         Employer's  blanket bond or other fidelity or insurance policy covering
         its directors, officers, or employees.

         3.3 Voluntary  Termination by the Executive Without Good Reason. If the
Executive terminates employment without Good Reason, the Executive shall receive
the Base Salary and expense  reimbursement  to which the  Executive  is entitled
through the date on which termination becomes effective.

         3.4  Involuntary  Termination  Without Cause and Voluntary  Termination
with Good Reason.  With written notice to the Executive 90 days in advance,  the
Employer may terminate the  Executive's  employment  without Cause.  Termination
shall take effect at the end of the 90-day period.  With advance  written notice
to the  Employer as provided in  paragraph  (b),  the  Executive  may  terminate
employment  with  Good  Reason.   If  the  Executive's   employment   terminates
involuntarily  without Cause or voluntarily but with Good Reason,  the Executive
shall be entitled to the benefits specified in Article 4 of this Agreement.  For
purposes of this  Agreement a voluntary  termination  by the  Executive  will be
considered a voluntary  termination with Good Reason if the conditions stated in
both paragraphs (a) and (b) are satisfied -

         (a) a voluntary  termination  by the  Executive  will be  considered  a
voluntary termination with Good Reason if any of the following occur without the
Executive's  advance  written  consent,  and the term Good Reason shall mean the
occurrence  of any of the  following  without the  Executive's  advance  written
consent -

                  1) a material diminution of the Executive's Base Salary, or

                  2) a material diminution of the Executive's authority, duties,
         or responsibilities, or

                  3)  a  material  diminution  in  the  authority,   duties,  or
         responsibilities of the supervisor to whom the Executive is required to
         report,  including  a  requirement  that  the  Executive  report  to  a
         corporate  officer or  employee  instead of  reporting  directly to the
         board of directors, or

                  4)  a  material  diminution  in  the  budget  over  which  the
         Executive retains authority, or

                  5) a material  change in the geographic  location at which the
         Executive must perform services for the Employer, or

                  6) any other action or inaction  that  constitutes  a material
         breach by the Employer of this Agreement.

         (b) the Executive  must give notice to the Employer of the existence of
one or more of the  conditions  described in paragraph  (a) within 90 days after
the initial  existence of the  condition,  and the  Employer  shall have 30 days
thereafter  to remedy the  condition.  In addition,  the  Executive's  voluntary


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<PAGE>

termination because of the existence of one or more of the conditions  described
in paragraph (a) must occur within 24 months after the initial  existence of the
condition.

                                    ARTICLE 4
                             SEVERANCE COMPENSATION

         4.1 Cash Severance after Termination  Without Cause or Termination with
Good Reason. (a) Subject to the possibility that cash severance after employment
termination might be delayed under section 4.1(b), if the Executive's employment
terminates  involuntarily  but  without  Cause or if the  Executive  voluntarily
terminates employment with Good Reason, 30 days after employment termination the
Employer shall pay to the Executive in a single lump sum cash in an amount equal
to (x) three times the Executive's  Base Salary on the date notice of employment
termination is given, without discount for the time value of money, plus (y) any
bonus  earned by the  Executive  or  accrued  by the  Employer  on behalf of the
Executive  through  the  date  employment  termination  becomes  effective.  The
Employer  and the  Executive  acknowledge  and agree that the  compensation  and
benefits  under  this  section  4.1 shall not be  payable  if  compensation  and
benefits are payable or shall have been paid to the Executive under Article 5 of
this Agreement.

         (b) If when employment  termination occurs the Executive is a specified
employee  within the meaning of section  409A of the  Internal  Revenue  Code of
1986, and if the cash severance payment under section 4.1(a) would be considered
deferred  compensation  under section 409A, and finally if an exemption from the
six-month delay requirement of section  409A(a)(2)(B)(i)  is not available,  the
Executive's  cash  severance  payment under section  4.1(a) shall be paid to the
Executive  in a single lump sum on the first day of the seventh  month after the
month  in  which  the  Executive's  employment  terminates.  References  in this
Agreement to section 409A of the  Internal  Revenue Code of 1986 include  rules,
regulations, and guidance of general application issued by the Department of the
Treasury under Internal Revenue Code section 409A.

         4.2 Post-Termination Insurance Coverage. (a) Subject to section 4.2(b),
if the  Executive's  employment  terminates  involuntarily  but  without  Cause,
voluntarily but with Good Reason,  or because of disability,  the Employer shall
continue or cause to be continued at the Employer's expense and on behalf of the
Executive  and  the  Executive's  dependents  medical  insurance  coverage,  the
long-term  care  insurance  benefit under  section  2.2(d),  and the  disability
reimbursement  and gross-up  benefit  under section  2.2(e),  in each case as in
effect  during and in accordance  with the same  schedule  prevailing in the two
years  preceding  the  date of the  Executive's  termination.  The  medical  and
disability  (including income tax gross up) insurance  benefits provided by this
section 4.2(a) shall  continue  until the first to occur of (w) the  Executive's
return to employment with the Employer or another employer providing  equivalent
or superior insurance  benefits,  (x) the Executive's  attainment of age 65, (y)
the Executive's death, or (z) the end of the term remaining under this Agreement
when the Executive's employment terminates. The long-term care insurance benefit
under section 2.2(d) shall continue until the policy is fully paid. If continued
long-term care insurance benefits under section 2.2(d) constitute taxable income
to the  Executive,  the Employer  shall  reimburse the Executive for federal and


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<PAGE>

state income taxes imposed on the Executive that are  attributable  to continued
maintenance of the long-term care insurance coverage,  and the amount reimbursed
by the Employer  shall be grossed up to compensate the Executive for federal and
state income taxes imposed as a result of the Employer's reimbursement.

         (b) If (w) under the terms of the applicable policy or policies for the
insurance  benefits  specified in section  4.2(a) it is not possible to continue
the Executive's coverage or (x) when employment termination occurs the Executive
is a  specified  employee  within the  meaning of section  409A of the  Internal
Revenue Code of 1986, if any of the continued  insurance  benefits  specified in
section 4.2(a) would be considered deferred compensation under section 409A, and
finally  if an  exemption  from  the  six-month  delay  requirement  of  section
409A(a)(2)(B)(i) is not available for that particular insurance benefit, instead
of providing  continued  medical and disability  (including income tax gross up)
insurance benefits for the Executive under section 4.2(a) the Employer shall pay
to the  Executive  in a single  lump sum an amount in cash equal to the  present
value of the  Employer's  projected cost to maintain that  particular  insurance
benefit  had the  Executive's  employment  not  terminated,  assuming  continued
coverage for the lesser of 36 months or the number of months until the Executive
attains  age 65. The  lump-sum  payment  shall be made 30 days after  employment
termination  or, if section  4.1(b)  applies and a  six-month  delay is required
under Internal  Revenue Code section 409A, on the first day of the seventh month
after the month in which the Executive's employment terminates.

         If (y) under the terms of the long-term care insurance policy it is not
possible to continue the Executive's coverage or (z) when employment termination
occurs the Executive is a specified  employee within the meaning of section 409A
of the Internal  Revenue Code of 1986, if  continuation  of the  long-term  care
insurance benefit would be considered deferred  compensation under section 409A,
and finally if an exemption  from the  six-month  delay  requirement  of section
409A(a)(2)(B)(i) is not available for that particular insurance benefit, instead
of providing the continued long-term care insurance benefit under section 4.2(a)
(including  income tax gross up), the Employer  shall pay to the  Executive in a
single lump sum an amount in cash equal to the present  value of the  Employer's
projected cost to maintain the long-term care insurance policy (including income
tax gross up) until the Executive  attains age 65. The lump-sum payment shall be
made 30 days after  employment  termination  or, if section 4.1(b) applies and a
six-month  delay is required  under  Internal  Revenue Code section 409A, on the
first  day of the  seventh  month  after  the  month  in which  the  Executive's
employment terminates.

                                    ARTICLE 5
                           CHANGE IN CONTROL BENEFITS

         5.1 Change in Control  Benefits.  If a Change in Control  occurs during
the  term of this  Agreement,  the  Employer  shall  make or  cause to be made a
lump-sum  payment to the Executive in an amount in cash equal to three times the
Executive's annual compensation.  For this purpose annual compensation means (x)
the Executive's Base Salary when the Change in Control occurs plus (y) any bonus
or incentive  compensation earned for the calendar year ended immediately before
the year in which the Change in Control occurs,  regardless of when the bonus or
incentive  compensation  earned  for the  preceding  calendar  year is paid  and
regardless  of whether  all or part of the bonus or  incentive  compensation  is
subject to elective  deferral.  Annual  compensation shall be calculated without
regard to any  deferrals  under  qualified  or  nonqualified  plans,  but annual


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<PAGE>

compensation  shall not  include  interest  or other  earnings  credited  to the
Executive under qualified or nonqualified  plans and annual  compensation  shall
not include any compensation  earned in the Executive's  capacity as a director.
The amount  payable to the Executive  hereunder  shall not be reduced to account
for the time value of money or discounted to present value. The payment required
under this  section  5.1 is payable no later than five  business  days after the
Change in Control.  If the Executive receives payment under this section 5.1 the
Executive shall not be entitled to any cash severance benefits under section 4.1
of this  Agreement.  The  Executive  shall be entitled  to  benefits  under this
section 5.1 on no more than one occasion.

         5.2 Change in Control Defined.  For purposes of this Agreement  "Change
in  Control"  means a change in  control as defined  in  Internal  Revenue  Code
section  409A and  rules,  regulations,  and  guidance  of  general  application
thereunder issued by the Department of the Treasury, including -

         (a)  Change in  ownership:  a change in  ownership  of the  Corporation
occurs on the date any one person or group accumulates  ownership of Corporation
stock  constituting more than 50% of the total fair market value or total voting
power of Corporation stock,

         (b) Change in  effective  control:  (x) any one person or more than one
person  acting  as a group  acquires  within  a  12-month  period  ownership  of
Corporation  stock  possessing  30%  or  more  of  the  total  voting  power  of
Corporation stock, or (y) a majority of the Corporation's  board of directors is
replaced during any 12-month  period by directors whose  appointment or election
is not  endorsed  in  advance  by a  majority  of  the  Corporation's  board  of
directors, or

         (c) Change in ownership of a substantial portion of assets: a change in
ownership of a substantial  portion of the  Corporation's  assets occurs if in a
12-month  period  any one  person  or more  than one  person  acting  as a group
acquires  from the  Corporation  assets  having a total gross fair market  value
equal to or  exceeding  40% of the total gross fair  market  value of all of the
Corporation's  assets  immediately  before the acquisition or acquisitions.  For
this  purpose,  gross fair  market  value  means the value of the  Corporation's
assets, or the value of the assets being disposed of, determined  without regard
to any liabilities associated with the assets.

         5.3 Gross-Up for Taxes.  (a)  Additional  payment to account for Excise
Taxes. If the Executive  receives the lump sum payment under section 5.1 of this
Agreement and acceleration of benefits under any other benefit, compensation, or
incentive  plan or  arrangement  with the  Employer  (collectively,  the  "Total
Benefits"),  and if any part of the Total  Benefits is subject to the Excise Tax
under  section 280G and section  4999 of the Internal  Revenue Code (the "Excise
Tax"), the Employer shall pay or cause to be paid to the Executive the following
additional amounts,  consisting of (x) a payment equal to the Excise Tax payable
by the  Executive  under  section  4999 on the Total  Benefits  (the "Excise Tax
Payment") and (y) a payment equal to the amount  necessary to provide the Excise
Tax  Payment  net of all  income,  payroll,  and  excise  taxes.  Together,  the
additional  amounts  described  in clauses  (x) and (y) are  referred to in this
Agreement as the  "Gross-Up  Payment  Amount."  Payment of the Gross-Up  Payment
Amount shall be made in addition to the amount set forth in section 5.1.



                                       9
<PAGE>

         Calculating the Excise Tax. For purposes of determining  whether any of
the Total  Benefits  will be  subject  to the  Excise  Tax and for  purposes  of
determining the amount of the Excise Tax,

                  1) Determination of "parachute payments" subject to the Excise
         Tax: any other  payments or benefits  received or to be received by the
         Executive  as a result of the  Change  in  Control  or the  Executive's
         employment  termination  (whether  under the terms of this Agreement or
         any other  agreement or any other benefit plan or arrangement  with the
         Employer,  any person whose actions  result in a Change in Control,  or
         any  person  affiliated  with the  Employer  or such  person)  shall be
         treated  as  "parachute   payments"   within  the  meaning  of  section
         280G(b)(2)  of the Internal  Revenue  Code,  and all "excess  parachute
         payments" within the meaning of section  280G(b)(1) shall be treated as
         subject  to the Excise  Tax,  unless in the  opinion  of the  certified
         public  accounting firm that is retained by the Employer as of the date
         immediately  before the Change in Control (the "Accounting  Firm") such
         other  payments  or benefits  do not  constitute  (in whole or in part)
         parachute  payments,  or such excess parachute  payments  represent (in
         whole  or  in  part)  reasonable  compensation  for  services  actually
         rendered  within  the  meaning of section  280G(b)(4)  of the  Internal
         Revenue  Code in excess of the "base  amount"  (as  defined  in section
         280G(b)(3) of the Internal  Revenue Code), or are otherwise not subject
         to the Excise Tax,

                  2)  Calculation  of benefits  subject to the Excise  Tax:  the
         amount of the Total  Benefits  that  shall be treated as subject to the
         Excise Tax shall be equal to the lesser of (x) the total  amount of the
         Total Benefits reduced by the amount of such Total Benefits that in the
         opinion of the Accounting Firm are not parachute  payments,  or (y) the
         amount of excess  parachute  payments  within  the  meaning  of section
         280G(b)(1) (after applying clause (1), above), and

                  3) Value of noncash benefits and deferred payments:  the value
         of any noncash  benefits or any  deferred  payment or benefit  shall be
         determined by the Accounting  Firm in accordance with the principles of
         sections 280G(d)(3) and (4) of the Internal Revenue Code.

         Assumed  Marginal  Income Tax Rate.  For  purposes of  determining  the
Gross-Up  Payment  Amount,  the Executive  shall be deemed to pay federal income
taxes at the highest  marginal rate of federal  income  taxation in the calendar
years in which  the  Gross-Up  Payment  Amount is to be made and state and local
income taxes at the highest  marginal rate of taxation in the state and locality
of the Executive's residence on the date of the Change in Control or termination
of employment, net of the reduction in federal income taxes that can be obtained
from  deduction of such state and local taxes  (calculated  by assuming that any
reduction  under  section  68 of the  Internal  Revenue  Code in the  amount  of
itemized  deductions  allowable  to the  Executive  applies  first to reduce the
amount of such state and local income taxes that would  otherwise be  deductible
by the Executive, and applicable federal FICA and Medicare withholding taxes).



                                       10
<PAGE>

         Return of Reduced  Excise Tax Payment or Payment of  Additional  Excise
Tax. If the Excise Tax is later determined to be less than the amount taken into
account  hereunder when the Change in Control  occurred or when the  Executive's
employment  terminated,  the  Executive  shall repay to the  Employer - when the
amount of the reduction in Excise Tax is finally determined - the portion of the
Gross-Up Payment Amount  attributable to the reduction (plus that portion of the
Gross-Up Payment Amount attributable to the Excise Tax, federal, state and local
income taxes and FICA and  Medicare  withholding  taxes  imposed on the Gross-Up
Payment  Amount being repaid by the  Executive to the extent that the  repayment
results in a reduction in Excise Tax, FICA and Medicare withholding taxes and/or
a federal, state or local income tax deduction).

         If the Excise Tax is later  determined to be more than the amount taken
into  account  hereunder  when  the  Change  in  Control  occurred  or when  the
Executive's  employment  terminated  (due,  for  example,  to  a  payment  whose
existence or amount  cannot be  determined  at the time of the Gross-Up  Payment
Amount), the Employer shall make an additional payment to the Executive for that
excess (plus any interest,  penalties or additions  payable by the Executive for
the excess) when the amount of the excess is finally determined.

         (b)   Responsibilities   of  the   Accounting   Firm   and  the   Bank.
Determinations  Shall Be Made by the Accounting Firm.  Subject to the provisions
of section  5.3(a),  all  determinations  required to be made under this section
5.3(b) - including  whether and when a Gross-Up Payment Amount is required,  the
amount of the Gross-Up  Payment Amount and the  assumptions to be used to arrive
at the determination (collectively,  the "Determination") - shall be made by the
Accounting Firm, which shall provide detailed  supporting  calculations  both to
the Employer and the  Executive  within 15 business days after receipt of notice
from the  Employer  or the  Executive  that  there has been a  Gross-Up  Payment
Amount, or such earlier time as is requested by the Employer.

         Fees  and  Expenses  of the  Accounting  Firm  and  Agreement  with the
Accounting  Firm.  All fees and expenses of the  Accounting  Firm shall be borne
solely by the Employer. The Employer shall enter into any agreement requested by
the  Accounting  Firm  in  connection  with  the  performance  of  its  services
hereunder.

         Accounting  Firm's  Opinion.  If the Accounting Firm determines that no
Excise Tax is payable by the Executive,  the  Accounting  Firm shall furnish the
Executive with a written opinion to that effect,  and to the effect that failure
to report Excise Tax, if any, on the Executive's  applicable  federal income tax
return will not result in the imposition of a negligence or similar penalty.

         Accounting   Firm's   Determination   Is  Binding;   Underpayment   and
Overpayment.  The  Determination  by the Accounting Firm shall be binding on the
Employer and the Executive.  Because of the  uncertainty in determining  whether
any of the Total  Benefits  will be subject to the Excise Tax at the time of the
Determination,  it is possible that a Gross-Up  Payment  Amount that should have
been made will not have been made by the  Employer  ("Underpayment"),  or that a
Gross-Up  Payment  Amount  will be made  that  should  not have been made by the
Employer ("Overpayment").  If, after a Determination by the Accounting Firm, the
Executive is required to make a payment of additional Excise Tax, the Accounting
Firm shall determine the amount of the Underpayment.  The Underpayment (together


                                       11
<PAGE>

with  interest at the rate  provided in section  1274(d)(2)(B)  of the  Internal
Revenue  Code) shall be paid  promptly by the  Employer to or for the benefit of
the Executive.  If the Gross-Up  Payment Amount exceeds the amount  necessary to
reimburse  the Executive  for the Excise Tax  according to section  5.3(a),  the
Accounting Firm shall determine the amount of the  Overpayment.  The Overpayment
(together  with  interest at the rate provided in section  1274(d)(2)(B)  of the
Internal  Revenue  Code) shall be paid  promptly by the  Executive to or for the
benefit of the Employer.  Provided that the Executive's  expenses are reimbursed
by the Employer,  the Executive shall cooperate with any reasonable  requests by
the  Employer in any  contests or disputes  with the  Internal  Revenue  Service
relating to the Excise Tax.

         Accounting Firm Conflict of Interest. If the Accounting Firm is serving
as  accountant or auditor for the  individual,  entity,  or group  effecting the
Change in Control,  the  Executive  may appoint  another  nationally  recognized
public accounting firm to make the  Determinations  required hereunder (in which
case the term  "Accounting  Firm" as used in this  Agreement  shall be deemed to
refer to the accounting firm appointed by the Executive under this paragraph).

                                    ARTICLE 6
                        CONFIDENTIALITY AND CREATIVE WORK

         6.1 Non-disclosure. The Executive covenants and agrees not to reveal to
any person,  firm, or  corporation  any  confidential  information of any nature
concerning the Employer or its business,  or anything  connected  therewith.  As
used in this  Article  6 the term  "confidential  information"  means all of the
Employer's  and  the  Employer's   affiliates'   confidential   and  proprietary
information and trade secrets in existence on the date hereof or existing at any
time during the term of this Agreement, including but not limited to -

         (a) the whole or any portion or phase of any business plans,  financial
information, purchasing data, supplier data, accounting data, or other financial
information,

         (b) the whole or any portion or phase of any research  and  development
information,  design  procedures,  algorithms or processes,  or other  technical
information,

         (c) the  whole  or any  portion  or  phase  of any  marketing  or sales
information,  sales records, customer lists, prices, sales projections, or other
sales information, and

         (d)  trade  secrets,  as  defined  from time to time by the laws of the
State of South Carolina.

Notwithstanding the foregoing,  confidential  information  excludes  information
that - as of the date hereof or at any time after the date hereof - is published
or disseminated  without  obligation of confidence or that becomes a part of the
public domain (x) by or through action of the Employer, or (y) otherwise than by
or at the  direction  of the  Executive.  This  section  6.1 does  not  prohibit
disclosure  required by an order of a court  having  jurisdiction  or a subpoena


                                       12
<PAGE>

from an appropriate  governmental  agency or disclosure made by the Executive in
the  ordinary  course  of  business  and  within  the  scope of the  Executive's
authority.

         6.2 Return of Materials.  The Executive  agrees to deliver or return to
the Employer upon  termination,  upon expiration of this  Agreement,  or as soon
thereafter  as possible,  all written  information  and any other  similar items
furnished by the Employer or prepared by the  Executive in  connection  with the
Executive's  services  hereunder.  The Executive  will retain no copies  thereof
after   termination  of  this  Agreement  or  termination  of  the   Executive's
employment.

         6.3 Creative Work. The Executive agrees that all creative work and work
product, including but not limited to all technology, business management tools,
processes,  software,  patents,  trademarks,  and  copyrights  developed  by the
Executive  during the term of this  Agreement,  regardless of when or where such
work or work product was produced, constitutes work made for hire, all rights of
which are owned by the Employer.  The Executive  hereby  assigns to the Employer
all rights,  title,  and interest,  whether by way of copyrights,  trade secret,
trademark, patent, or otherwise, in all such work or work product, regardless of
whether the same is subject to  protection  by patent,  trademark,  or copyright
laws.

         6.4 Affiliates'  Confidential  Information is Covered;  Confidentiality
Obligation  Survives  Termination.  For  purposes  of this  Agreement,  the term
"affiliate"  of the Employer  includes any entity that  directly,  or indirectly
through one or more  intermediaries,  controls,  is  controlled  by, or is under
common control with the  Corporation or the Bank. The rights and obligations set
forth in this Article 6 shall survive termination of this Agreement.

         6.5 Injunctive Relief. The Executive acknowledges that it is impossible
to  measure  in money the  damages  that  will  accrue  to the  Employer  if the
Executive  fails  to  observe  the  obligations   imposed  by  this  Article  6.
Accordingly,  if the  Employer  institutes  an action to enforce the  provisions
hereof, the Executive hereby waives the claim or defense that an adequate remedy
at law is available to the Employer, and the Executive agrees not to urge in any
such  action the claim or defense  that an adequate  remedy at law  exists.  The
confidentiality  and remedies  provisions of this Article 6 shall be in addition
to and shall not be  deemed to  supersede  or  restrict,  limit,  or impair  the
Employer's  rights  under  applicable  state or federal  statute  or  regulation
dealing  with or  providing a remedy for the  wrongful  disclosure,  misuse,  or
misappropriation of trade secrets or proprietary or confidential information.

                                    ARTICLE 7
                    COMPETITION AFTER EMPLOYMENT TERMINATION

         7.1  Covenant Not to Solicit  Employees.  The  Executive  agrees not to
solicit  the  services of any officer or employee of the Bank for one year after
the Executive's employment termination.

         7.2 Covenant Not to Compete. (a) The Executive covenants and agrees not
to  compete  directly  or  indirectly  with  the  Employer  for one  year  after
employment termination. For purposes of this section -



                                       13
<PAGE>

         1) the term "compete" means

                  (a)      providing financial products or services on behalf of
                           any financial  institution for any person residing in
                           the territory,

                  (b)      assisting  (other  than  through the  performance  of
                           ministerial   or  clerical   duties)  any   financial
                           institution  in  providing   financial   products  or
                           services to any person residing in the territory, or

                  (c)      inducing or attempting to induce any person who was a
                           customer   of  the   Employer  at  the  date  of  the
                           Executive's  employment termination to seek financial
                           products   or   services   from   another   financial
                           institution.

         2) the words "directly or indirectly" means -

                  (a)      acting   as   a   consultant,    officer,   director,
                           independent contractor,  or employee of any financial
                           institution in  competition  with the Employer in the
                           territory, or

                  (b)      communicating to such financial institution the names
                           or addresses or any financial information  concerning
                           any person who was a customer  of the  Employer  when
                           the Executive's employment terminated.

         3)       the term  "customer"  means any person to whom the Employer is
                  providing  financial  products  or services on the date of the
                  Executive's employment termination.

         4)       the term  "financial  institution"  means  any  bank,  savings
                  association,  or bank or savings  association holding company,
                  or any other institution, the business of which is engaging in
                  activities  that are financial in nature or incidental to such
                  financial  activities as described in section 4(k) of the Bank
                  Holding Company Act of 1956, other than the Employer or any of
                  its affiliated corporations.

         5)       "financial  product or  service"  means any product or service
                  that a financial  institution or a financial  holding  company
                  could offer by engaging in any  activity  that is financial in
                  nature  or  incidental  to  such a  financial  activity  under
                  section 4(k) of the Bank Holding  Company Act of 1956 and that
                  is offered by the  Employer or an affiliate on the date of the
                  Executive's employment termination,  including but not limited
                  to banking  activities and activities that are closely related
                  and a proper incident to banking.

         6)       the  term  "person"  means  any  individual  or   individuals,
                  corporation, partnership, fiduciary or association.

         7)       the term "territory" means the area within a 15-mile radius of
                  any  office  of the  Employer  at the date of the  Executive's
                  employment termination.

                                       14
<PAGE>

         (b)      If any provision of this section or any word, phrase,  clause,
                  sentence  or  other  portion   thereof   (including,   without
                  limitation,   the  geographical   and  temporal   restrictions
                  contained  therein) is held to be unenforceable or invalid for
                  any reason,  the unenforceable or invalid provision or portion
                  shall be modified or deleted so that the provisions hereof, as
                  modified,  are legal and  enforceable  to the  fullest  extent
                  permitted under applicable law.

         7.3 Injunctive and Other Relief. Because of the unique character of the
services to be rendered by the Executive  hereunder,  the Executive  understands
that the  Employer  would not have an  adequate  remedy at law for the  material
breach  or  threatened  breach  by the  Executive  of any  one  or  more  of the
Executive's covenants in this Article 7. Accordingly,  the Executive agrees that
the  Employer's  remedies  for a material  breach or  threatened  breach of this
Article  7  include  but  are  not  limited  to  (x)  forfeiture  of  any  money
representing accrued salary,  contingent payments,  or other fringe benefits due
and payable to the  Executive,  (y)  forfeiture of any severance  benefits under
sections 4.1 and 4.2 of this Employment  Agreement,  and (z) a suit in equity by
the Employer to enjoin the  Executive  from the breach or  threatened  breach of
such  covenants.  The  Executive  hereby  waives  the claim or  defense  that an
adequate remedy at law is available to the Bank and the Executive  agrees not to
urge in any such  action the claim or  defense  that an  adequate  remedy at law
exists. Nothing herein shall be construed to prohibit the Employer from pursuing
any other or additional remedies for the breach or threatened breach.

         7.4  Article  7  Survives  Termination  But Is Void  After a Change  in
Control.  The rights and  obligations  set forth in this Article 7 shall survive
termination of this Agreement.  However, Article 7 shall become null and void if
a Change in Control occurs before employment termination.

                                    ARTICLE 8
                                  MISCELLANEOUS

         8.1  Successors   and  Assigns.   (a)  This  Agreement  is  binding  on
successors. This Agreement shall be binding upon the Employer and any successor,
including any persons acquiring  directly or indirectly all or substantially all
of the business or assets of the Employer by  purchase,  merger,  consolidation,
reorganization,  or otherwise. But this Agreement and the Employer's obligations
under this Agreement are not otherwise assignable, transferable, or delegable by
the Employer. By agreement in form and substance  satisfactory to the Executive,
the Employer  shall  require any  successor to all or  substantially  all of the
business or assets of the Employer expressly to assume and agree to perform this
Agreement  in the same  manner  and to the same  extent  the  Employer  would be
required to perform had no succession occurred.

         (b) This  Agreement  is  enforceable  by the  Executive's  heirs.  This
Agreement  shall inure to the benefit of and be enforceable  by the  Executive's
personal or legal representatives, executors, administrators, successors, heirs,
distributees, and legatees.

         (c) This Agreement is personal and is not assignable. This Agreement is
personal in nature. Without written consent of the other parties, no party shall
assign,  transfer, or delegate this Agreement or any rights or obligations under
this  Agreement  except as  expressly  provided  herein.  Without  limiting  the


                                       15
<PAGE>

generality or effect of the foregoing, the Executive's right to receive payments
hereunder is not assignable or  transferable,  whether by pledge,  creation of a
security interest,  or otherwise,  except for a transfer by the Executive's will
or by the  laws of  descent  and  distribution.  If the  Executive  attempts  an
assignment or transfer that is contrary to this section 8.1, the Employer  shall
have no liability to pay any amount to the assignee or transferee.

         8.2 Governing Law,  Jurisdiction  and Forum.  This  Agreement  shall be
construed  under  and  governed  by the  internal  laws of the  State  of  South
Carolina,  without  giving  effect to any  conflict  of laws  provision  or rule
(whether of the State of South  Carolina or any other  jurisdiction)  that would
cause the  application of the laws of any  jurisdiction  other than the State of
South Carolina. By entering into this Agreement, the Executive acknowledges that
the  Executive  is subject to the  jurisdiction  of both the  federal  and state
courts in the State of South  Carolina.  Any actions or  proceedings  instituted
under this  Agreement  shall be brought  and tried  solely in courts  located in
Spartanburg  County,  South Carolina or in the federal court having jurisdiction
in Spartanburg, South Carolina. The Executive expressly waives the right to have
any such actions or proceedings brought or tried elsewhere.

         8.3 Entire Agreement. This Agreement sets forth the entire agreement of
the parties concerning the employment of the Executive by the Employer. Any oral
or written statements,  representations,  agreements,  or understandings made or
entered into before or  contemporaneously  with the execution of this  Agreement
are hereby rescinded, revoked, and rendered null and void by the parties.

         8.4 Notices. All notices,  requests,  demands, and other communications
hereunder  shall be in  writing  and shall be deemed to have been duly  given if
delivered  by hand or mailed,  certified  or  registered  mail,  return  receipt
requested,  with postage  prepaid.  Unless otherwise  changed by notice,  notice
shall be properly  addressed to the Executive if addressed to the address of the
Executive  on the books and records of the  Employer at the time of the delivery
of such notice, and properly addressed to the Employer if addressed to the Board
of  Directors,  First South  Bancorp,  Inc.,  1450 John B. White Sr.  Boulevard,
Spartanburg, South Carolina 29306.

         8.5 Severability.  If there is a conflict between any provision of this
Agreement and any statute,  regulation,  or judicial precedent, the latter shall
prevail,  but the affected  provisions of this Agreement  shall be curtailed and
limited solely to the extent  necessary to bring them within the requirements of
law.  If any  provision  of this  Agreement  is held  by a  court  of  competent
jurisdiction  to  be  indefinite,   invalid,  void  or  voidable,  or  otherwise
unenforceable,  the remainder of this Agreement shall continue in full force and
effect unless that would clearly be contrary to the intentions of the parties or
would result in an injustice.

         8.6  Captions and  Counterparts.  The  captions in this  Agreement  are
solely for convenience and do not define, limit, or describe the scope or intent
of this Agreement. This Agreement may be executed in several counterparts,  each
of which  shall be  deemed to be an  original  but all of which  together  shall
constitute one and the same instrument.

         8.7 No Duty to Mitigate.  The Employer hereby acknowledges that it will
be difficult  and could be impossible  (x) for the Executive to find  reasonably


                                       16
<PAGE>

comparable  employment  after  employment  termination,  and (y) to measure  the
amount  of  damages  the  Executive  may  suffer  as a  result  of  termination.
Additionally,  the Employer acknowledges that its general severance pay plans do
not provide for  mitigation,  offset,  or  reduction  of any  severance  payment
received  thereunder.  The  Employer  further  acknowledges  that the payment of
severance  benefits  under this  Agreement is reasonable and shall be liquidated
damages.  The  Executive  shall not be required  to  mitigate  the amount of any
payment  provided for in this Agreement by seeking other  employment.  Moreover,
the amount of any payment provided for in this Agreement shall not be reduced by
any compensation  earned or benefits provided as the result of employment of the
Executive or as a result of the Executive being  self-employed  after employment
termination.

         8.8 Amendment and Waiver. This Agreement may not be amended,  released,
discharged,  abandoned,  changed,  or  modified  in  any  manner,  except  by an
instrument in writing signed by each of the parties  hereto.  The failure of any
party  hereto to enforce  at any time any of the  provisions  of this  Agreement
shall not be  construed  to be a waiver of any such  provision,  nor  affect the
validity  of this  Agreement  or any part  thereof  or the  right  of any  party
thereafter to enforce each and every such provision.  No waiver or any breach of
this Agreement shall be held to be a waiver of any other or subsequent breach.

         8.9 Payment of Legal Fees. The Employer is aware that after a Change in
Control  management  could  cause or attempt to cause the  Employer to refuse to
comply with its obligations under this Agreement, or could institute or cause or
attempt  to cause the  Employer  to  institute  litigation  seeking to have this
Agreement declared unenforceable,  or could take or attempt to take other action
to  deny  Executive  the  benefits  intended  under  this  Agreement.  In  these
circumstances  the purpose of this Agreement  would be frustrated.  The Employer
desires that the Executive not be required to incur the expenses associated with
the enforcement of rights under this  Agreement,  whether by litigation or other
legal action,  because the cost and expense thereof would substantially  detract
from the  benefits  intended  to be  granted  to the  Executive  hereunder.  The
Employer  desires that the  Executive  not be forced to negotiate  settlement of
rights under this Agreement under threat of incurring expenses.  Accordingly, if
after a Change  in  Control  occurs it  appears  to the  Executive  that (x) the
Employer has failed to comply with any of its obligations  under this Agreement,
or (y) the  Employer  or any other  person has taken any action to declare  this
Agreement  void or  unenforceable,  or instituted  any litigation or other legal
action designed to deny, diminish, or to recover from the Executive the benefits
intended to be provided to the  Executive  hereunder,  the Employer  irrevocably
authorizes the Executive from time to time to retain counsel of the  Executive's
choice, at the Employer's  expense as provided in this section 8.9, to represent
the  Executive in the  initiation  or defense of any  litigation  or other legal
action,   whether  by  or  against  the  Employer  or  any  director,   officer,
stockholder,  or other person affiliated with the Employer, in any jurisdiction.
Despite  any  existing  or  previous  attorney-client  relationship  between the
Employer  and any counsel  chosen by the  Executive  under this section 8.9, the
Employer  irrevocably consents to the Executive entering into an attorney-client
relationship with that counsel,  and the Employer and the Executive agree that a


                                       17
<PAGE>

confidential  relationship  shall exist  between the Executive and that counsel.
The fees and expenses of counsel  selected from time to time by the Executive as
provided in this section  shall be paid or  reimbursed  to the  Executive by the
Employer on a regular,  periodic basis upon  presentation  by the Executive of a
statement  or  statements  prepared  by counsel  in  accordance  with  counsel's
customary practices, up to a maximum aggregate amount of $500,000,  whether suit
be  brought  or not,  and  whether  or not  incurred  in trial,  bankruptcy,  or
appellate  proceedings.  The Employer's  obligation to pay the Executive's legal
fees  provided by this section 8.9 operates  separately  from and in addition to
any legal fee reimbursement  obligation the Employer may have with the Executive
under any  separate  severance  or other  agreement.  Despite  anything  in this
Agreement to the contrary, however, the Employer shall not be required to pay or
reimburse  Executive's legal expenses if doing so would violate section 18(k) of
the Federal  Deposit  Insurance  Act [12 U.S.C.  1828(k)]  and Rule 359.3 of the
Federal Deposit Insurance Corporation [12 CFR 359.3].

         8.10 Compliance  with Internal  Revenue Code Section 409A. The Employer
and the Executive  intend that their  exercise of authority or discretion  under
this  Agreement  shall comply with section 409A of the Internal  Revenue Code of
1986. If when the Executive's employment terminates the Executive is a specified
employee,  as defined in section 409A of the Internal  Revenue Code of 1986, and
if any payments under this Agreement,  including Articles 4 or 5, will result in
additional  tax or  interest  to the  Executive  because of section  409A,  then
despite any contrary  provision of this  Agreement  the  Executive  shall not be
entitled to the payments until the earliest of (x) the date that is at least six
months after  termination of the  Executive's  employment for reasons other than
the Executive's death, (y) the date of the Executive's death, or (z) any earlier
date that does not result in additional  tax or interest to the Executive  under
section 409A.  As promptly as possible  after the end of the period during which
payments  are delayed  under this  provision,  the entire  amount of the delayed
payments  shall be paid to the  Executive in a single lump sum. If any provision
of this  Agreement  does not  satisfy the  requirements  of section  409A,  such
provision  shall  nevertheless  be  applied  in a manner  consistent  with those
requirements.  If any provision of this Agreement would subject the Executive to
additional  tax or interest  under section 409A,  the Employer  shall reform the
provision.   However,   the  Employer  shall  maintain  to  the  maximum  extent
practicable the original intent of the applicable  provision without  subjecting
the  Executive  to  additional  tax or interest,  and the Employer  shall not be
required  to incur  any  additional  compensation  expense  as a  result  of the
reformed provision.

         IN WITNESS WHEREOF, the parties have executed this Employment Agreement
as of the date first written above.

EXECUTIVE                                     FIRST SOUTH BANK

------------------------                      By:  ---------------------------
Barry L. Slider
                                              Its: ---------------------------



                                              FIRST SOUTH BANCORP, INC.

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

                                              Its: ---------------------------
</TEXT>
</DOCUMENT>
