Exhibit 10.1                                    Filed Pursuant to Rule 424(b)(3)
                                                      Registration No. 333-33527

                           PROSPECTUS SUPPLEMENT NO. 3
                      (to Prospectus dated August 13, 1997)

                             FOUR OAKS FINCORP, INC.
                  Dividend Reinvestment and Stock Purchase Plan

         This  Prospectus  Supplement  No. 3 is part of,  and  should be read in
conjunction with, the prospectus relating to our Dividend Reinvestment and Stock
Purchase Plan dated August 13, 1997 and the Prospectus  Supplement dated October
4,  2004  and  the   Prospectus   Supplement   dated   December  18,  2006  (the
"Prospectus"). This Prospectus Supplement No. 3 describes certain changes to the
Plan  and  supersedes  the  information  in the  Prospectus  only to the  extent
inconsistent with the Prospectus. The changes to the Plan include:

         Features.  Participants in the Plan may now elect to make optional cash
payments  from  $20.00 to  $2,500.00  per quarter for  additional  Common  Stock
purchases.  This changes the maximum  optional cash payment  allowable under the
Plan from $1,000.00 to $2,500.00 per quarter.

         The  Prospectus,   together  with  Prospectus   Supplement  No.  1  and
Prospectus  Supplement No. 2 and this Prospectus  Supplement No. 3,  constitutes
the prospectus required to be delivered by Section 5(b) of the Securities Act of
1933,  as amended,  with  respect to the offers and sales of Four Oaks  Fincorp,
Inc. Common Stock offered hereby.

         The  Prospectus   will  be  provided  upon  the  request  of  any  Plan
participant.

          This Prospectus Supplement No. 3 is dated September 22, 2008.