RESTATED EXECUTIVE SUPPLEMENTAL RETIREMENT
                              INCOME AGREEMENT
                            FOR CHARLES W. SMITH

                                GRANITE BANK
                            Keene, New Hampshire

                                August, 1996


                Financial Institution Consulting Corporation
                         700 Colonial Road, Suite 260
                          Memphis, Tennessee 38117
                            WATS: 1-800-873-0089
                             FAX: (901) 684-7411
                               (901) 684-7400


         RESTATED EXECUTIVE SUPPLEMENTAL RETIREMENT INCOME AGREEMENT
                            FOR CHARLES W. SMITH


      This Restated Executive Supplemental Retirement Income Agreement (the 
"Agreement"), effective as of the 12th day of August, 1996, amends and 
restates the Supplemental Executive's Retirement Plan for Granite Bank 
entered into on December 13, 1993, and formalizes the understanding by and 
between GRANITE BANK (the "Bank"), a commercial savings bank, and CHARLES W. 
SMITH (hereinafter referred to as "Executive"). Granite State Bankshares, 
Inc. (the "Holding Company") is a party to this Agreement for the sole 
purpose of guaranteeing the Bank's performance hereunder.

                            W I T N E S S E T H :

      WHEREAS, the Executive is employed by the Bank; and 

      WHEREAS, the Bank recognizes the valuable services heretofore 
performed by the Executive and wishes to encourage his continued employment; 
and

      WHEREAS, the Executive wishes to be assured that he will be entitled 
to a certain amount of additional compensation for some definite period of 
time from and after retirement from active service with the Bank or other 
termination of employment and wishes to provide his beneficiary with 
benefits from and after death; and 

      WHEREAS, the Bank and the Executive wish to provide the terms and 
conditions upon which the Bank shall pay such additional compensation to the 
Executive after retirement or other termination of employment and/or death 
benefits to his beneficiary after death; and 

      WHEREAS, the Bank has adopted this Restated Executive Supplemental 
Retirement Income Agreement which controls all issues relating to benefits 
as described herein; 

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

                                  SECTION I
                                 DEFINITIONS

      When used herein, the following words and phrases shall have the 
meanings below unless the context clearly indicates otherwise:

1.1   "Accrued Benefit Account" shall be represented by the bookkeeping 
      entries required to record the Executive's (i) Phantom Contributions 
      plus (ii) accrued interest, equal to the Interest Factor, earned to-
      date on such amounts. However, neither the existence of such 
      bookkeeping entries nor the Accrued Benefit Account itself shall be 
      deemed to create either a trust of any kind, or a fiduciary 
      relationship between the Bank and the Executive or any Beneficiary.  

1.2   "Act" means the Employee Retirement Income Security Act of 1974, as 
      amended from time to time.

1.3   "Bank" means GRANITE BANK and any successor thereto.

1.4   "Beneficiary" means the person or persons (and their heirs) designated 
      as Beneficiary in Exhibit B of this Agreement to whom the deceased 
      Executive's benefits are payable. If no Beneficiary is so designated, 
      then the Executive's Spouse, if living, will be deemed the 
      Beneficiary. If the Executive's Spouse is not living, then the 
      Children of the Executive will be deemed the Beneficiaries and will 
      take on a per stirpes basis. If there are no Children, then the Estate 
      of the Executive will be deemed the Beneficiary.

1.5   "Benefit Age" means the later of: (i) the Executive's sixty-second 
      (62nd) birthday or (ii) the actual date the Executive's full-time 
      service with the Bank terminates. The Board of Directors may, however, 
      in its sole discretion, amend clause (i) of this Subsection to lower 
      the Executive's Benefit Age in any instance in which the Executive's 
      employment terminates prior to Retirement Age and the Board of 
      Directors determines that such an amendment is advisable, based on the 
      circumstances of such termination, or amend clause (ii) of this 
      Subsection, upon the Executive's request, to permit the Executive to 
      commence receiving his Supplemental Retirement Income Benefit upon the 
      attainment of age sixty-two (62) despite the fact that the Executive's 
      full-time service with the Bank has not terminated.

1.6   "Benefit Eligibility Date" means the date on which the Executive is 
      entitled to receive any benefit(s) pursuant to Section(s) III or V of 
      this Agreement. It shall be the first day of the month following the 
      month in which the Executive attains his Benefit Age. 

1.7   "Board of Directors" means the board of directors of the Bank.

1.8   "Cause" means personal dishonesty, willful misconduct, willful 
      malfeasance, breach of fiduciary duty involving personal profit, 
      intentional failure to perform stated duties, willful violation of any 
      law, rule, regulation (other than traffic violations or similar 
      offenses), or final cease-and-desist order, material breach of any 
      provision of this Agreement, or gross negligence in matters of 
      material importance to the Bank.

1.9   "Change in Control" shall mean and include the following with respect 
      to the Bank or Holding Company: 

      (1)   a Change in Control of a nature that would be required to be 
            reported in response to Item 1(a) of the current report on Form 
            8-K, as in effect on the date hereof, pursuant to Section 13 or 
            15(d) of the Securities Exchange Act of 1934 (the "Exchange 
            Act"); or

      (2)   a change in control of the Bank or Holding Company within the 
            meaning of 12 C.F.R. [Section Sign] 225.41 of Regulation Y of 
            the Federal Reserve Board; or

      (3)   a Change in Control at such time as

            (i)   any "person" (as the term is used in Sections 13(d) and 
                  14(d) of the Exchange Act) or "group acting in concert" is 
                  or becomes the "beneficial owner" (as defined in Rule 13d-
                  3 under the Exchange Act), directly or indirectly, of 
                  securities of the Bank or the Holding Company representing 
                  Ten Percent (10.0%) or more of any class of equity 
                  securities of the Bank or the Holding Company (except for 
                  any securities purchased by the Bank's Employee Stock 
                  Ownership Plan and Trust) or any combination of common 
                  stock, or other securities, rights, options or warrants 
                  that are convertible into or otherwise carry the right to 
                  acquire, shares of any class of equity security that would 
                  constitute, upon such conversion or the exercise of such 
                  right, ten percent (10%) of any class of equity security 
                  of the Bank or the Holding Company after giving effect to 
                  such conversion or exercise; or

            (ii)  individuals who constitute the board of directors on the 
                  date hereof (the "Incumbent Board") cease for any reason 
                  to constitute at least a majority thereof, provided that 
                  any person becoming a director subsequent to the date 
                  hereof whose election was approved by a vote of at least 
                  three-quarters of the directors comprising the Incumbent 
                  Board, or whose nomination for election by the Holding 
                  Company's stockholders was approved by the Holding 
                  Company's nominating committee which is comprised of 
                  members of the Incumbent Board, shall be, for purposes of 
                  this clause (ii), considered as though he were a member of 
                  the Incumbent Board; or

            (iii) merger, consolidation, or sale of all or substantially all 
                  of the assets of the Holding Company occurs; or 

            (iv)  a proxy statement is issued soliciting proxies from the 
                  stockholders of the Holding Company by someone other than 
                  the current management of the Holding Company, seeking 
                  stockholder approval of a plan of reorganization, merger, 
                  or consolidation of the Holding Company with one or more 
                  corporations as a result of which the outstanding shares 
                  of the class of the Holding Company's securities are 
                  exchanged for or converted into cash or property or 
                  securities not issued by the Holding Company.

            The term "person" includes an individual, a group acting in 
      concert, a corporation, a partnership, an association, a joint 
      venture, a pool, a joint stock company, a trust, an unincorporated 
      organization or similar company, a syndicate or any other group formed 
      for the purpose of acquiring, holding or disposing of securities. The 
      term "acquire" means obtaining ownership, control, power to vote or 
      sole power of disposition of stock, directly or indirectly or through 
      one or more transactions or subsidiaries, through purchase, 
      assignment, transfer, exchange, succession or other means, including 
      (1) an increase in percentage ownership resulting from a redemption, 
      repurchase, reverse stock split or a similar transaction involving 
      other securities of the same class; and (2) the acquisition of stock 
      by a group of persons and/or companies acting in concert which shall 
      be deemed to occur upon the formation of such group, provided that an 
      investment advisor shall not be deemed to acquire the voting stock of 
      its advisee if the advisor (a) votes the stock only upon instruction 
      from the beneficial owner and (b) does not provide the beneficial 
      owner with advice concerning the voting of such stock. The term 
      "security" includes nontransferable subscription rights issued 
      pursuant to a plan of conversion, as well as a "security," as defined 
      in 15 U.S.C. [Section Sign] 78c(2)(1); and the term "acting in 
      concert" means (1) knowing participation in a joint activity or 
      interdependent conscious parallel action towards a common goal whether 
      or not pursuant to an express agreement, or (2) a combination or 
      pooling of voting or other interests in the securities of an issuer 
      for a common purpose pursuant to any contract, understanding, 
      relationship, agreement or other arrangement, whether written or 
      otherwise. Further, acting in concert with any person or company shall 
      also be deemed to be acting in concert with any person or company that 
      is acting in concert with such other person or company.

            Notwithstanding the above definitions, the Boards, in their 
      absolute discretion, may make a finding that a Change in Control of 
      the Bank or the Holding Company has taken place without the occurrence 
      of any or all of the events enumerated above.

1.10  "Children" means all natural or adopted children of the Executive, and 
      issue of any predeceased child or children. 

1.11  "Code" means the Internal Revenue Code of 1986, as amended from time 
      to time.

1.12  "Contribution(s)" means those annual contributions which the Bank is 
      required to make to the Retirement Income Trust Fund on behalf of the 
      Executive in accordance with Subsection 2.1(a) and in the amounts set 
      forth in Exhibit A of the Agreement. 

1.13  (a) "Disability Benefit" means the benefit payable to the Executive 
      following a determination, in accordance with Subsection 6.1(a), that 
      he is no longer able, properly and satisfactorily, to perform his 
      duties at the Bank.

      (b) "Disability Benefit-Supplemental" (if applicable) means the 
      benefit payable to the Executive's Beneficiary upon the Executive's 
      death in accordance with Subsection 6.1(b). 

1.14  "Effective Date" of this Agreement shall be August 12, 1996.

1.15  "Estate" means the estate of the Executive.

1.16  "Holding Company" means Granite State Bankshares, Inc., a corporation 
      organized under the laws of the State of New Hampshire, the holding 
      company for the Bank, and any successor thereto.

1.17  "Interest Factor" means monthly compounding, discounting or 
      annuitizing, as applicable, at a rate set forth in Exhibit A.

1.18  "Payout Period" means the time frame during which certain benefits 
      payable hereunder shall be distributed. Payments shall be made in 
      monthly installments commencing on the first day of the month 
      following the occurrence of the event which triggers distribution and 
      continuing for the Executive's life or for a period of two hundred 
      forty (240) months, whichever is longer. Should the Executive make a 
      Timely Election to receive a lump sum benefit payment, the Executive's 
      Payout Period shall be deemed to be one (1) month. 

1.19  "Phantom Contributions" means those annual Contributions which the 
      Bank is no longer required to make on behalf of the Executive to the 
      Retirement Income Trust Fund. Rather, once the Executive has exercised 
      the withdrawal rights provided for in Subsection 2.2, the Bank shall 
      be required to record the annual amounts set forth in Exhibit A of the 
      Agreement in the Executive's Accrued Benefit Account, pursuant to 
      Subsection 2.1. 

1.20  "Plan Year" shall mean August 12, 1996 through December 31, 1996, for 
      the first Plan Year. Thereafter, the term shall mean the twelve (12) 
      month period commencing January 1, 1997 and each consecutive twelve 
      (12) month period thereafter.

1.21  "Retirement Age" means the Executive's sixty-second (62nd) birthday 
      provided, however, that the Executive's actual retirement from full-
      time employment may occur at any later date mutually agreed upon by 
      the parties.

1.22  "Retirement Income Trust Fund" means the trust fund account 
      established by the Executive and into which annual Contributions will 
      be made by the Bank on behalf of the Executive pursuant to Subsection 
      2.1. The contractual rights of the Bank and the Executive with respect 
      to the Retirement Income Trust Fund shall be outlined in a separate 
      writing to be known as the Charles W. Smith Grantor Trust agreement. 

1.23  "Spouse" means the individual to whom the Executive is legally married 
      at the time of the Executive's death, provided, however, that the term 
      "Spouse" shall not refer to an individual to whom the Executive is 
      legally married at the time of death if the Executive and such 
      individual have entered into a formal separation agreement or 
      initiated divorce proceedings.

1.24  "Supplemental Retirement Income Benefit" means an annual amount 
      (before taking into account federal and state income taxes), payable 
      in monthly installments throughout the Payout Period. Such benefit is 
      projected pursuant to the Agreement for the purpose of determining the 
      Contributions to be made to the Retirement Income Trust Fund (or 
      Phantom Contributions to be recorded in the Accrued Benefit Account). 
      The annual Contributions and Phantom Contributions have been 
      actuarially determined, using the assumptions set forth in Exhibit A, 
      in order to fund for the projected Supplemental Retirement Income 
      Benefit. The Supplemental Retirement Income Benefit for which 
      Contributions (or Phantom Contributions) are being made (or recorded) 
      is set forth in Exhibit A. 

1.25  "Timely Election" means the Executive has made an election to change 
      the form of his benefit payment(s) by filing with the Administrator a 
      Notice of Election to Change Form of Payment (Exhibit C of this 
      Agreement). In the case of benefits payable from the Accrued Benefit 
      Account, such election shall have been made prior to the event which 
      triggers distribution and at least two (2) years prior to the 
      Executive's Benefit Eligibility Date. In the case of benefits payable 
      from the Retirement Income Trust Fund, such election may be made at 
      any time. 

                                 SECTION II
                            BENEFITS - GENERALLY

2.1   (a) Retirement Income Trust Fund and Accrued Benefit Account. The 
      Executive shall establish the Charles W. Smith Grantor Trust into 
      which the Bank shall be required to make annual Contributions on the 
      Executive's behalf, pursuant to Exhibit A and this Section II of the 
      Agreement. A trustee shall be selected by the Executive. The trustee 
      shall maintain an account, separate and distinct from the Executive's 
      personal contributions, which account shall constitute the Retirement 
      Income Trust Fund. The trustee shall be charged with the 
      responsibility of investing all contributed funds. Distributions from 
      the Retirement Income Trust Fund of the Charles W. Smith Grantor Trust 
      may be made by the trustee to the Executive, for purposes of payment 
      of any income or employment taxes due and owing on Contributions by 
      the Bank to the Retirement Income Trust Fund, if any, and on any 
      taxable earnings associated with such Contributions which the 
      Executive shall be required to pay from year to year, under applicable 
      law, prior to actual receipt of any benefit payments from the 
      Retirement Income Trust Fund. If the Executive exercises his 
      withdrawal rights pursuant to Subsection 2.2, the Bank's obligation to 
      make Contributions to the Retirement Income Trust Fund shall cease and 
      the Bank's obligation to record Phantom Contributions in the Accrued 
      Benefit Account shall immediately commence pursuant to Exhibit A and 
      this Section II of the Agreement. To the extent this Agreement is 
      inconsistent with the Charles W. Smith Grantor Trust agreement, the 
      Charles W. Smith Grantor Trust Agreement shall supersede this 
      Agreement.

      The annual Contributions (or Phantom Contributions) required to be 
      made by the Bank to the Retirement Income Trust Fund (or recorded by 
      the Bank in the Accrued Benefit Account) have been actuarially 
      determined and are set forth in Exhibit A which is attached hereto and 
      incorporated herein by reference. Contributions shall be made by the 
      Bank to the Retirement Income Trust Fund (i) within seventy-five (75) 
      days of establishment of such trust, and (ii) within the first ten 
      (10) days of the beginning of each subsequent Plan Year, unless this 
      Section expressly provides otherwise. Phantom Contributions, if any, 
      shall be recorded in the Accrued Benefit Account within the first 
      thirty (30) days of the beginning of each applicable Plan Year, 
      unless this Section expressly provides otherwise. Phantom 
      Contributions shall accrue interest at a rate equal to the Interest 
      Factor, during the Payout Period, until the balance of the Accrued 
      Benefit Account has been fully distributed. Interest on any Phantom 
      Contribution shall not commence until such Payout Period commences.

      The Administrator shall review the schedule of annual Contributions 
      (or Phantom Contributions) provided for in Exhibit A (i) within thirty 
      (30) days prior to the close of each Plan Year and (ii) if the 
      Executive is employed by the Bank until attaining Retirement Age, on 
      or immediately before attainment of such Retirement Age. Such review 
      shall consist of an evaluation of the accuracy of all assumptions used 
      to establish the schedule of Contributions (or Phantom Contributions). 
      Provided that (i) the Executive has not exercised his withdrawal 
      rights pursuant to Subsection 2.2 and (ii) the investments contained 
      in the Retirement Income Trust Fund have been deemed reasonable by the 
      Bank, the Administrator shall prospectively amend or supplement the 
      schedule of Contributions provided for in Exhibit A should the 
      Administrator determine during any such review that an increase in or 
      supplement to the schedule of Contributions is necessary in order to 
      adequately fund the Retirement Income Trust Fund so as to provide an 
      annual benefit (or to provide the lump sum equivalent of such benefit, 
      as applicable) equal to the Supplemental Retirement Income Benefit, on 
      an after-tax basis, commencing at Benefit Age and payable for the 
      duration of the Payout Period.

      (b) Withdrawal Rights Not Exercised. 

      (1) Contributions Made Annually
      If the Executive does not exercise any withdrawal rights pursuant to 
      Subsection 2.2, the annual Contributions to the Retirement Income 
      Trust Fund shall continue each year, unless this Subsection 2.1(b) 
      specifically states otherwise, until the earlier of (i) the last Plan 
      Year that Contributions are required pursuant to Exhibit A, or (ii) 
      the Plan Year of the Executive's termination of employment.

      (2) Termination Following a Change in Control
      If the Executive does not exercise his withdrawal rights pursuant to 
      Subsection 2.2 and a Change in Control occurs at the Bank, followed 
      within thirty-six (36) months by either (i) the Executive's 
      involuntary termination of employment, or (ii) Executive's voluntary 
      termination of employment after: (A) a material change in the 
      Executive's function, duties, or responsibilities, which change would 
      cause the Executive's position to become one of lesser responsibility, 
      importance, or scope from the position the Executive held at the time 
      of the Change in Control, (B) a relocation of the Executive's 
      principal place of employment by more than thirty (30) miles from its 
      location prior to the Change in Control, or (C) a material reduction 
      in the benefits and perquisites to the Executive from those being 
      provided at the time of the Change in Control, the Contribution set 
      forth below shall be required of the Bank.  The Bank shall be required 
      to make a final Contribution to the Retirement Income Trust Fund 
      within ten (10) days of the Executive's termination of employment 
      equal to the present value (using the Interest Factor) of all 
      remaining Contributions which would have been required to be made on 
      behalf of Executive if Executive had remained in the employ of the 
      Bank until Benefit Age; provided, however, in no event shall the 
      Contribution be less than an amount which is sufficient to provide the 
      Executive with after-tax benefits (assuming a constant tax rate equal 
      to the rate in effect as of the date of Executive's termination) 
      beginning at his Benefit Age, equal in amount to that benefit which 
      would have been payable to the Executive if no secular trust had been 
      implemented and the benefit obligation had been accrued under APB 
      Opinion No. 12, as amended by FAS 106. 
 .
      (3) Termination For Cause
      If the Executive does not exercise his withdrawal rights pursuant to 
      Subsection 2.2, and is terminated for Cause pursuant to Subsection 
      5.2, no further Contribution(s) to the Retirement Income Trust Fund 
      shall be required of the Bank, and if not yet made, no Contribution 
      shall be required for the Plan Year in which such termination for 
      Cause occurs.

      (4) Involuntary Termination of Employment.
      If the Executive does not exercise his withdrawal rights pursuant to 
      Subsection 2.2, and the Executive's employment with the Bank is 
      involuntarily terminated for any reason, including a termination due 
      to disability of the Executive but excluding termination for Cause, or 
      termination following a Change in Control, within ten (10) days of 
      such involuntary termination of employment, the Bank shall be required 
      to make an immediate lump sum Contribution to the Executive's 
      Retirement Income Trust Fund in an amount equal to the: (i) the full 
      Contribution required for the Plan Year in which such involuntary 
      termination occurs, if not yet made, plus (ii) the present value 
      (computed using a discount rate equal to the Interest Factor) of the 
      lesser of (A) the next five (5) years Contributions to the Retirement 
      Income Trust Fund or (B) all remaining Contributions to the Retirement 
      Income Trust Fund; provided however, that, if necessary, an amount 
      shall be contributed to the Retirement Income Trust Fund which is 
      sufficient to provide the Executive with after tax benefits (assuming 
      a constant tax rate equal to the rate in effect as of the date of the 
      Executive's termination) beginning at his Benefit Age, equal in amount 
      to that benefit which would have been payable to the Executive if no 
      secular trust had been implemented and the benefit obligation had been 
      accrued under APB Opinion No. 12, as amended by FAS 106.

      (5) Death During Employment.
      If the Executive does not exercise any withdrawal rights pursuant to 
      Subsection 2.2, and dies while employed by the Bank, and if, following 
      the Executive's death, the assets of the Retirement Income Trust Fund 
      are insufficient to provide the Supplemental Retirement Income Benefit 
      to which the Executive is entitled, the Bank shall be required to make 
      a Contribution to the Retirement Income Trust Fund equal to the sum of 
      the remaining Contributions set forth on Exhibit A, after taking into 
      consideration any payments under any life insurance policies that may 
      have been obtained on the Executive's life by the Retirement Income 
      Trust Fund. Such final contribution shall be payable in a lump sum to 
      the Retirement Income Trust Fund within thirty (30) days of the 
      Executive's death.

      (c) Withdrawal Rights Exercised. 

      (1) Phantom Contributions Made Annually.
      If the Executive exercises his withdrawal rights pursuant to 
      Subsection 2.2, no further Contributions to the Retirement Income 
      Trust Fund shall be required of the Bank. Thereafter, Phantom 
      Contributions shall be recorded annually in the Executive's Accrued 
      Benefit Account within ten (10) days of the beginning of each Plan 
      Year, commencing with the first Plan Year following the Plan Year in 
      which the Executive exercises his withdrawal rights. Such Phantom 
      Contributions shall continue to be recorded annually, unless this 
      Subsection 2.1(c) specifically states otherwise, until the earlier of 
      (i) the last Plan Year that Phantom Contributions are required 
      pursuant to Exhibit A, or (ii) the Plan Year of the Executive's 
      termination of employment.

      (2) Termination Following a Change in Control
      If the Executive exercises his withdrawal rights pursuant to 
      Subsection 2.2, Phantom Contributions shall commence in the Plan Year 
      following the Plan Year in which the Executive first exercises his 
      withdrawal rights. If a Change in Control occurs at the Bank, and 
      within thirty-six (36) months of such Change in Control, the 
      Executive's employment is either (i) involuntarily terminated, or (ii) 
      voluntarily terminated by the Executive after: (A) a material change 
      in the Executive's function, duties, or responsibilities, which change 
      would cause the Executive's position to become one of lesser 
      responsibility, importance, or scope from the position the Executive 
      held at the time of the Change in Control, (B) a relocation of the 
      Executive's principal place of employment by more than thirty (30) 
      miles from its location prior to the Change in Control, or (C) a 
      material reduction in the benefits and perquisites to the Executive 
      from those being provided at the time of the Change in Control, the 
      Phantom Contribution set forth below shall be required of the Bank. 
      The Bank shall be required to record a lump sum Phantom Contribution 
      in the Accrued Benefit Account within ten (10) days of the Executive's 
      termination of employment. The amount of such final Phantom 
      Contribution shall be actuarially determined based on the Phantom 
      Contribution required, at such time, in order to provide a benefit via 
      this Agreement equivalent to the Supplemental Retirement Income 
      Benefit, on an after-tax basis, commencing on the Executive's Benefit 
      Eligibility Date and continuing for the duration of the Payout Period. 
      (Such actuarial determination shall reflect the fact that amounts 
      shall be payable from both the Accrued Benefit Account as well as the 
      Retirement Income Trust Fund and shall also reflect the amount and 
      timing of any withdrawal(s) made by the Executive from the Retirement 
      Income Trust Fund pursuant to Subsection 2.2.)

      (3) Termination For Cause
      If the Executive is terminated for Cause pursuant to Subsection 5.2, 
      the entire balance of the Executive's Accrued Benefit Account at the 
      time of such termination, which shall include any Phantom 
      Contributions which have been recorded plus interest accrued on such 
      Phantom Contributions, shall be forfeited.

      (4) Involuntary Termination of Employment.
      If the Executive exercises his withdrawal rights pursuant to 
      Subsection 2.2, and the Executive's employment with the Bank is 
      involuntarily terminated for any reason including termination due to 
      disability of the Executive, but excluding termination for Cause, or 
      termination following a Change in Control, within ten (10) days of 
      such involuntary termination of employment, the Bank shall be required 
      to record a final Phantom Contribution in an amount equal to: (i) the 
      full Phantom Contribution required for the Plan Year in which such 
      involuntary termination occurs, if not yet made, plus (ii) the present 
      value (computed using a discount rate equal to the Interest Factor) of 
      the lesser of (A) the next five (5) years Contributions to the 
      Retirement Income Trust Fund or (B) all remaining Phantom 
      Contributions.

      (5) Death During Employment.
      If the Executive exercises his withdrawal rights pursuant to 
      Subsection 2.2, and dies while employed by the Bank, Phantom 
      Contributions included on Exhibit A shall be required of the Bank. 
      Such Phantom Contributions shall commence in the Plan Year following 
      the Plan Year in which the Executive exercises his withdrawal rights 
      and shall continue through the Plan Year in which the Executive dies. 
      The Bank shall also be required to record a final Phantom Contribution 
      within thirty (30) days of the Executive's death. The amount of such 
      final Phantom Contribution shall be actuarially determined based on 
      the Phantom Contribution required at such time (if any), in order to 
      provide a benefit via this Agreement equivalent to the Supplemental 
      Retirement Income Benefit commencing within thirty (30) days of the 
      date the Administrator receives notice of the Executive's death and 
      continuing for the duration of the Payout Period. (Such actuarial 
      determination shall reflect the fact that amounts shall be payable 
      from the Accrued Benefit Account as well as the Retirement Income 
      Trust Fund and shall also reflect the amount and timing of any 
      withdrawal(s) made by the Executive pursuant to Subsection 2.2.)

2.2   Withdrawals From Retirement Income Trust Fund.
      Exercise of withdrawal rights by the Executive pursuant to the Charles 
      W. Smith Grantor Trust agreement shall terminate the Bank's obligation 
      to make any further Contributions to the Retirement Income Trust Fund, 
      and the Bank's obligation to record Phantom Contributions pursuant to 
      Subsection 2.1(c) shall commence. For purposes of this Subsection 2.2, 
      "exercise of withdrawal rights" shall mean those withdrawal rights to 
      which the Executive is entitled under Article III of the Charles W. 
      Smith Grantor Trust agreement and shall exclude any distributions made 
      by the trustee of the Retirement Income Trust Fund to the Executive 
      for purposes of payment of income taxes in accordance with Subsection 
      2.1 of this Agreement and the tax reimbursement formula contained in 
      the trust document, or other trust expenses properly payable from the 
      Charles W. Smith Grantor Trust pursuant to the provisions of the trust 
      document.

2.3   Benefits Payable From Retirement Income Trust Fund
      Notwithstanding anything else to the contrary in this Agreement, in 
      the event that the trustee of the Retirement Income Trust Fund 
      purchases a life insurance policy with the Contributions to and, if 
      applicable, earnings of the Trust, and such life insurance policy is 
      intended to continue in force beyond the Payout Period for the 
      disability or retirement benefits payable from the Retirement Income 
      Trust Fund pursuant to this Agreement, then the Trustee shall have 
      discretion to determine the portion of the cash value of such policy 
      available for purposes of annuitizing the Retirement Income Trust Fund 
      to provide the disability or retirement benefits payable under this 
      Agreement, after taking into consideration the amounts reasonably 
      believed to be required in order to maintain the cash value of such 
      policy to continue such policy in effect until the death of the 
      Executive and payment of death benefits thereunder.

                                 SECTION III
                             RETIREMENT BENEFIT

3.1   (a) Normal form of payment.
      If (i) the Executive is employed with the Bank until reaching his 
      Retirement Age, and (ii) the Executive has not made a Timely Election 
      to receive a lump sum benefit, this Subsection 3.1(a) shall be 
      controlling with respect to retirement benefits.

      Upon attaining his Benefit Age, the Retirement Income Trust Fund shall 
      become available to the Executive for any lump sum or period 
      distributions which the Executive may desire, provided reasonable 
      notice of such distribution(s) is communicated by the Executive to the 
      trustee of the Retirement Income Trust Fund. In the event the 
      Executive dies at any time after attaining his Benefit Age, but prior 
      to complete liquidation of the Retirement Income Trust Fund, the 
      balance of the Retirement Income Trust Fund shall be paid to the 
      Executive's Beneficiary in a lump sum.

      The Executive's Accrued Benefit Account (if applicable), is measured 
      as of the Executive's Benefit Age, shall be annuitized (using the 
      Interest Factor) into monthly installments and shall be payable for 
      the Payout Period. Such benefit payments shall commence on the 
      Executive's Benefit Eligibility Date. In the event the Executive dies 
      at any time after attaining his Benefit Age, but prior to commencement 
      or completion of all the payments due and owing hereunder, (i) the 
      Bank shall pay to the Executive's Beneficiary the same monthly 
      installments (or a continuation of such monthly installments if they 
      have already commenced) for the balance of months remaining in the 
      Payout Period, or (ii) the Executive's Beneficiary may request to 
      receive the remainder of any unpaid benefit payments in a lump sum 
      payment. If a lump sum payment is requested by the Beneficiary, the 
      amount of such lump sum payment shall be equal to the unpaid balance 
      of the Executive's Accrued Benefit Account. Payment in such lump sum 
      form shall be made only if the Executive's Beneficiary (i) obtains 
      Board of Director approval, and (ii) notifies the Administrator in 
      writing of such election within ninety (90) days of the Executive's 
      death. Such lump sum payment, if approved by the Board of Directors, 
      shall be made within thirty (30) days of such Board of Director 
      approval.

      (b) Alternative payout option.
      If (i) the Executive is employed with the Bank until reaching his 
      Retirement Age, and (ii) the Executive has made a Timely Election to 
      receive a lump sum benefit, this Subsection 3.1(b) shall be 
      controlling with respect to retirement benefits. 

      The balance of the Retirement Income Trust Fund, measured as of the 
      Executive's Benefit Age, shall be paid to the Executive in a lump sum 
      on his Benefit Eligibility Date. In the event the Executive dies after 
      becoming eligible for such payment (upon attainment of his Benefit 
      Age), but before the actual payment is made, his Beneficiary shall be 
      entitled to receive the lump sum benefit in accordance with this 
      Subsection 3.1(b) within thirty (30) days of the date the 
      Administrator receives notice of the Executive's death.

      The balance of the Executive's Accrued Benefit Account (if 
      applicable), measured as of the Executive's Benefit Age, shall be paid 
      to the Executive in a lump sum on his Benefit Eligibility Date. In the 
      event the Executive dies after becoming eligible for such payment 
      (upon attainment of his Benefit Age), but before the actual payment is 
      made, his Beneficiary shall be entitled to receive the lump sum 
      benefit in accordance with this Subsection 3.1(b) within thirty (30) 
      days of the date the Administrator receives notice of the Executive's 
      death.

                                 SECTION IV
                        PRE-RETIREMENT DEATH BENEFIT

4.1   (a) Normal form of payment.
      If (i) the Executive dies while employed by the Bank, and (ii) the 
      Executive has not made a Timely Election to receive a lump sum 
      benefit, this Subsection 4.1(a) shall be controlling with respect to 
      pre-retirement death benefits.

      The balance of the Executive's Retirement Income Trust Fund, measured 
      as of the later of (i) the Executive's death, or (ii) the date any 
      final lump sum Contribution is made pursuant to Subsection 2.1(b), 
      shall be paid to the Executive's Beneficiary in a lump sum within 
      thirty (30) days of the date the Administrator receives notice of the 
      Executive's death.

      The Executive's Accrued Benefit Account (if applicable), measured as 
      of the later of (i) the Executive's death or (ii) the date any final 
      lump sum Phantom Contribution is recorded in the Accrued Benefit 
      Account pursuant to Subsection 2.1(c), shall be annuitized (using the 
      Interest Factor) into monthly installments and shall be payable to the 
      Executive's Beneficiary for the Payout Period. Such benefit payments 
      shall commence within thirty (30) days of the date the Administrator 
      receives notice of the Executive's death, or if later, within thirty 
      (30) days after any final lump sum Phantom Contribution is recorded in 
      the Accrued Benefit Account in accordance with Subsection 2.1(c). The 
      Executive's Beneficiary may request to receive the remainder of any 
      unpaid monthly benefit payments due from the Accrued Benefit Account 
      in a lump sum payment. If a lump sum payment is requested by the 
      Beneficiary, the amount of such lump sum payment shall be equal to the 
      balance of the Executive's Accrued Benefit Account. Payment in such 
      lump sum form shall be made only if the Executive's Beneficiary (i) 
      obtains Board of Director approval, and (ii) notifies the 
      Administrator in writing of such election within ninety (90) days of 
      the Executive's death. Such lump sum payment, if approved by the Board 
      of Directors, shall be payable within thirty (30) days of such Board 
      of Director approval. 

      (b) Alternative payout option.
      If (i) the Executive dies while employed by the Bank, and (ii) the 
      Executive has made a Timely Election to receive a lump sum benefit, 
      this Subsection 4.1(b) shall be controlling with respect to pre-
      retirement death benefits.

      The balance of the Executive's Retirement Income Trust Fund, measured 
      as of the later of (i) the Executive's death, or (ii) the date any 
      final lump sum Contribution is made pursuant to Subsection 2.1(b), 
      shall be paid to the Executive's Beneficiary in a lump sum within 
      thirty (30) days of the date the Administrator receives notice of the 
      Executive's death.

      The balance of the Executive's Accrued Benefit Account (if 
      applicable), measured as of the later of (i) the Executive's death, or 
      (ii) the date any final Phantom Contribution is recorded pursuant to 
      Subsection 2.1(c), shall be paid to the Executive's Beneficiary in a 
      lump sum within thirty (30) days of the date the Administrator 
      receives notice of the Executive's death.

                                  SECTION V
              BENEFIT(S) IN THE EVENT OF TERMINATION OF SERVICE
                           PRIOR TO RETIREMENT AGE

5.1   Voluntary or Involuntary Termination of Service Other Than for Cause. 
      In the event the Executive's service with the Bank is voluntarily or 
      involuntarily terminated prior to Retirement Age, for any reason 
      including a Change in Control, but excluding (i) any disability 
      related termination for which the Board of Directors has approved 
      early payment of benefits pursuant to Subsection 6.1, (ii) the 
      Executive's pre-retirement death, which shall be covered in Section 
      IV, or (iii) termination for Cause, which shall be covered in 
      Subsection 5.2, the Executive (or his Beneficiary) shall be entitled 
      to receive benefits in accordance with this Subsection 5.1. Payments 
      of benefits pursuant to this Subsection 5.1 shall be made in 
      accordance with Subsection 5.1 (a) or 5.1 (b) below, as applicable.

      (a) Normal form of payment.
      (1) Executive Lives Until Benefit Age 
      If (i) after such termination, the Executive lives until attaining his 
      Benefit Age, and (ii) the Executive has not made a Timely Election to 
      receive a lump sum benefit, this Subsection 5.1(a)(1) shall be 
      controlling with respect to retirement benefits.

      Upon attaining his Benefit Age, the Retirement Income Trust Fund shall 
      become available to the Executive for any lump sum or period 
      distributions which the Executive may desire, provided reasonable 
      notice of such distribution(s) is communicated by the Executive to the 
      trustee of the Retirement Income Trust Fund. In the event the 
      Participant dies at any time after attaining his Benefit Age, but 
      prior to complete liquidation of the Retirement Income Trust Fund, the 
      balance of the Retirement Income Trust Fund shall be paid to the 
      Executive 's Beneficiary in a lump sum.

      The Executive's Accrued Benefit Account (if applicable), measured as 
      of the Executive's Benefit Age, shall be annuitized (using the 
      Interest Factor) into monthly installments and shall be payable for 
      the Payout Period. Such benefit payments shall commence on the 
      Executive's Benefit Eligibility Date. In the event the Executive dies 
      at any time after attaining his Benefit Age, but prior to commencement 
      or completion of all the payments due and owing hereunder, (i) the 
      Bank shall pay to the Executive's Beneficiary the same monthly 
      installments (or a continuation of such monthly installments if they 
      have already commenced) for the balance of months remaining in the 
      Payout Period, or (ii) the Executive's Beneficiary may request to 
      receive the remainder of any unpaid benefit payments in a lump sum 
      payment. If a lump sum payment is requested by the Beneficiary, the 
      amount of such lump sum payment shall be equal to the unpaid balance 
      of the Executive's Accrued Benefit Account. Payment in such lump sum 
      form shall be made only if the Executive's Beneficiary (i) obtains 
      Board of Director approval, and (ii) notifies the Administrator in 
      writing of such election within ninety (90) days of the Executive's 
      death. Such lump sum payment, if approved by the Board of Directors, 
      shall be made within thirty (30) days of such Board of Director 
      approval.

      (2) Executive Dies Prior to Benefit Age
      If (i) after such termination, the Executive dies prior to attaining 
      his Benefit Age, and (ii) the Executive has not made a Timely Election 
      to receive a lump sum benefit, this Subsection 5.1(a)(2) shall be 
      controlling with respect to retirement benefits. 

      The Retirement Income Trust Fund, measured as of the date of the 
      Executive's death, shall be paid to the Executive's Beneficiary in a 
      lump sum. Such benefit payment shall commence within thirty (30) days 
      of the date the Administrator receives notice of the Executive's 
      death. 

      The Executive's Accrued Benefit Account (if applicable), measured as 
      of the date of the Executive's death, shall be annuitized (using the 
      Interest Factor) into monthly installments and shall be payable for 
      the Payout Period. Such payments shall commence within thirty (30) 
      days of the date the Administrator receives notice of the Executive's 
      death. The Executive's Beneficiary may request to receive the unpaid 
      balance of the Executive's Accrued Benefit Account in the form of a 
      lump sum payment. If a lump sum payment is requested by the 
      Beneficiary, payment of the balance of the Accrued Benefit Account in 
      such lump sum form shall be made only if the Executive's Beneficiary 
      (i) obtains Board of Director approval, and (ii) notifies the 
      Administrator in writing of such election within ninety (90) days of 
      the Executive's death. Such lump sum payment, if approved by the Board 
      of Directors, shall be made within thirty (30) days of such Board of 
      Director approval.

      (b) Alternative Payout Option.
      (1) Executive Lives Until Benefit Age
      If (i) after such termination, the Executive lives until attaining his 
      Benefit Age, and (ii) the Executive has made a Timely Election to 
      receive a lump sum benefit, this Subsection 5.1(b)(1) shall be 
      controlling with respect to retirement benefits. 

      The balance of the Retirement Income Trust Fund, measured as of the 
      Executive's Benefit Age, shall be paid to the Executive in a lump sum 
      on his Benefit Eligibility Date. In the event the Executive dies after 
      becoming eligible for such payment (upon attainment of his Benefit 
      Age), but before the actual payment is made, his Beneficiary shall be 
      entitled to receive the lump sum benefit in accordance with this 
      Subsection 5.1(b)(1) within thirty (30) days of the date the 
      Administrator receives notice of the Executive's death.

      The balance of the Executive's Accrued Benefit Account (if 
      applicable), measured as of the Executive's Benefit Age, shall be paid 
      to the Executive in a lump sum on his Benefit Eligibility Date. In the 
      event the Executive dies after becoming eligible for such payment 
      (upon attainment of his Benefit Age), but before the actual payment is 
      made, his Beneficiary shall be entitled to receive the lump sum 
      benefit in accordance with this Subsection 5.1(b)(1) within thirty 
      (30) days of the date the Administrator receives notice of the 
      Executive's death.

      (2) Executive Dies Prior to Benefit Age
      If (i) after such termination, the Executive dies prior to attaining 
      his Benefit Age, and (ii) the Executive has made a Timely Election to 
      receive a lump sum benefit, this Subsection 5.1(b)(2) shall be 
      controlling with respect to pre-retirement death benefits. 

      The balance of the Retirement Income Trust Fund, measured as of the 
      date of the Executive's death, shall be paid to the Executive's 
      Beneficiary within thirty (30) days of the date the Administrator 
      receives notice of the Executive's death.

      The balance of the Executive's Accrued Benefit Account (if 
      applicable), measured as of the date of the Executive's death, shall 
      be paid to the Executive's Beneficiary within thirty (30) days of the 
      date the Administrator receives notice of the Executive's death.

5.2   Termination For Cause.
      If the Executive is terminated for Cause, all benefits under this 
      Agreement, other than those which can be paid from previous 
      Contributions to the Retirement Income Trust Fund (and earnings on 
      such Contributions), shall be forfeited. Furthermore, no further 
      Contributions (or Phantom Contributions, as applicable) shall be 
      required of the Bank for the year in which such termination for Cause 
      occurs (if not yet made). The Executive shall be entitled to receive a 
      benefit in accordance with this Subsection 5.2. 

      The balance of the Executive's Retirement Income Trust Fund shall be 
      paid to the Executive in a lump sum on his Benefit Eligibility Date. 
      In the event the Executive dies prior to his Benefit Eligibility Date, 
      his Beneficiary shall be entitled to receive the balance of the 
      Executive's Retirement Income Trust Fund in a lump sum within thirty 
      (30) days of the date the Administrator receives notice of the 
      Executive's death. 

                                 SECTION VI
                               OTHER BENEFITS

6.1   (a) Disability Benefit. 
      If the Executive's service is terminated prior to Retirement Age due 
      to a disability which meets the criteria set forth below, the 
      Executive may request to receive the Disability Benefit in lieu of the 
      retirement benefit(s) available pursuant to Section 5.1 (which is 
      (are) not available prior to the Executive's Benefit Eligibility 
      Date).

      In any instance in which: (i) it is determined by a duly licensed, 
      independent physician selected by the Bank, that the Executive is no 
      longer able, properly and satisfactorily, to perform his regular 
      duties as an officer, because of ill health, accident, disability or 
      general inability due to age, (ii) the Executive requests payment 
      under this Subsection in lieu of Subsection 5.1, and (iii) Board of 
      Director approval is obtained to allow payment under this Subsection, 
      in lieu of Subsection 5.1, the Executive shall be entitled to the 
      following lump sum benefit(s). The lump sum benefit(s) to which the 
      Executive is entitled shall include: (i) the balance of the Retirement 
      Income Trust Fund, plus (ii) the balance of the Accrued Benefit 
      Account (if applicable). The benefit(s) shall be paid within thirty 
      (30) days following the date of the Executive's request for such 
      benefit is approved by the Board of Directors. In the event the 
      Executive dies after becoming eligible for such payment(s) but before 
      the actual payment(s) is (are) made, his Beneficiary shall be entitled 
      to receive the benefit(s) provided for in this Subsection 6.1(a) 
      within thirty (30) days of the date the Administrator receives notice 
      of the Executive's death.

      (b) Disability Benefit - Supplemental.
      Furthermore, if Board of Director approval is obtained within thirty 
      (30) days of the Executive's death, the Bank shall make a direct, lump 
      sum payment to the Executive's Beneficiary in an amount equal to the 
      sum of all remaining Contributions (or Phantom Contributions) set 
      forth in Exhibit A, but not required pursuant to Subsection 2.1(b) (or 
      2.1(c)) due to the Executive's disability-related termination.  Such 
      lump sum payment, if approved by the Board of Directors, shall be 
      payable to the Executive's Beneficiary within thirty (30) days of such 
      Board of Director approval.

6.2   Additional Death Benefit - Burial Expense. Upon the Executive's death, 
      the Executive's Beneficiary shall also be entitled to receive a one-
      time lump sum death benefit in the amount of Thirty Thousand Dollars 
      ($30,000.00). This benefit shall be paid directly from the Bank to the 
      Beneficiary and shall be provided specifically for the purpose of 
      providing payment for burial and/or funeral expenses of the Executive. 
      Such death benefit shall be payable within thirty (30) days from the 
      date the Administrator receives notice of the Executive's death. The 
      Executive's Beneficiary shall not be entitled to such benefit if the 
      Executive is terminated for Cause prior to death. 

                                 SECTION VII
                           BENEFICIARY DESIGNATION

      The Executive shall make an initial designation of primary and 
      secondary Beneficiaries upon execution of this Agreement and shall 
      have the right to change such designation, at any subsequent time, by 
      submitting to (i) the Administrator, and (ii) the trustee of the 
      Retirement Income Trust Fund, in substantially the form attached as 
      Exhibit B to this Agreement, a written designation of primary and 
      secondary Beneficiaries. Any Beneficiary designation made subsequent 
      to execution of this Agreement shall become effective only when 
      receipt is acknowledged in writing by the Administrator.

                                SECTION VIII
                         EXECUTIVE'S RIGHT TO ASSETS

      The rights of the Executive, any Beneficiary, or any other person 
      claiming through the Executive under this Agreement, shall be solely 
      those of an unsecured general creditor of the Bank. The Executive, the 
      Beneficiary, or any other person claiming through the Executive, shall 
      only have the right to receive from the Bank those payments or amounts 
      so specified under this Agreement. The Executive agrees that he, his 
      Beneficiary, or any other person claiming through him shall have no 
      rights or interests whatsoever in any asset of the Bank, including any 
      insurance policies or contracts which the Bank may possess or obtain 
      to informally fund this Agreement. Any asset used or acquired by the 
      Bank in connection with the liabilities it has assumed under this 
      Agreement shall not be deemed to be held under any trust for the 
      benefit of the Executive or his Beneficiaries, unless such asset is 
      contained in the rabbi trust described in Section XII of this 
      Agreement. Any such asset shall be and remain, a general, unpledged 
      asset of the Bank in the event of the Bank's insolvency.

                                 SECTION IX
                          RESTRICTIONS UPON FUNDING

      The Bank shall have no obligation to set aside, earmark or entrust any 
      fund or money with which to pay its obligations under this Agreement, 
      other than those Contributions required to be made to the Retirement 
      Income Trust Fund. The Executive, his Beneficiaries or any successor 
      in interest to him shall be and remain simply a general unsecured 
      creditor of the Bank in the same manner as any other creditor having a 
      general claim for matured and unpaid compensation. The Bank reserves 
      the absolute right in its sole discretion to either purchase assets to 
      meet its obligations undertaken by this Agreement or to refrain from 
      the same and to determine the extent, nature, and method of such asset 
      purchases. Should the Bank decide to purchase assets such as life 
      insurance, mutual funds, disability policies or annuities, the Bank 
      reserves the absolute right, in its sole discretion, to replace such 
      assets from time to time or to terminate its investment in such assets 
      at any time, in whole or in part. At no time shall the Executive be 
      deemed to have any lien, right, title or interest in or to any 
      specific investment or to any assets of the Bank. If the Bank elects 
      to invest in a life insurance, disability or annuity policy upon the 
      life of the Executive, then the Executive shall assist the Bank by 
      freely submitting to a physical examination and by supplying such 
      additional information necessary to obtain such insurance or 
      annuities.

                                  SECTION X
                               ACT PROVISIONS

10.1  Named Fiduciary and. The Bank shall be the Named Fiduciary and 
      Administrator (the "Administrator") of this Agreement. As 
      Administrator, the Bank shall be responsible for the management, 
      control and administration of the Agreement as established herein. The 
      Administrator may delegate to others certain aspects of the management 
      and operational responsibilities of the Agreement, including the 
      employment of advisors and the delegation of ministerial duties to 
      qualified individuals.

10.2  Claims Procedure and Arbitration. In the event that benefits under 
      this Agreement are not paid to the Executive (or to his Beneficiary in 
      the case of the Executive's death) and such claimants feel they are 
      entitled to receive such benefits, then a written claim must be made 
      to the Administrator within sixty (60) days from the date payments are 
      refused. The Administrator shall review the written claim and, if the 
      claim is denied, in whole or in part, it shall provide in writing, 
      within ninety (90) days of receipt of such claim, its specific reasons 
      for such denial, reference to the provisions of this Agreement upon 
      which the denial is based, and any additional material or information 
      necessary to perfect the claim. Such writing by the Administrator 
      shall further indicate the additional steps which must be undertaken 
      by claimants if an additional review of the claim denial is desired. 

      If claimants desire a second review, they shall notify the 
      Administrator in writing within sixty (60) days of the first claim 
      denial. Claimants may review this Agreement or any documents relating 
      thereto and submit any issues and comments, in writing, they may feel 
      appropriate. In its sole discretion, the Administrator shall then 
      review the second claim and provide a written decision within sixty 
      (60) days of receipt of such claim. This decision shall state the 
      specific reasons for the decision and shall include reference to 
      specific provisions of this Agreement upon which the decision is 
      based.

      If claimants continue to dispute the benefit denial based upon 
      completed performance of this Agreement or the meaning and effect of 
      the terms and conditions thereof, then claimants may submit the 
      dispute to a Board of Arbitration for final arbitration. Said Board of 
      Arbitration shall consist of one member selected by the claimant, one 
      member selected by the Bank, and the third member selected by the 
      first two members. The Board of Arbitration shall operate under any 
      generally recognized set of arbitration rules. The parties hereto 
      agree that they, their heirs, personal representatives, successors and 
      assigns shall be bound by the decision of such Board of Arbitration 
      with respect to any controversy properly submitted to it for 
      determination.

                                 SECTION XI
                                MISCELLANEOUS

11.1  No Effect on Employment Rights. Nothing contained herein will confer 
      upon the Executive the right to be retained in the service of the Bank 
      nor limit the right of the Bank to discharge or otherwise deal with 
      the Executive without regard to the existence of the Agreement.

11.2  State Law. The Agreement is established under, and will be construed 
      according to, the laws of the state of New Hampshire, to the extent 
      such laws are not preempted by the Act and valid regulations published 
      thereunder.

11.3  Severability. In the event that any of the provisions of this 
      Agreement or portion thereof, are held to be inoperative or invalid by 
      any court of competent jurisdiction, then: (1) insofar as is 
      reasonable, effect will be given to the intent manifested in the 
      provisions held invalid or inoperative, and (2) the validity and 
      enforceability of the remaining provisions will not be affected 
      thereby.

11.4  Incapacity of Recipient. In the event the Executive is declared 
      incompetent and a conservator or other person legally charged with the 
      care of his person or Estate is appointed, any benefits under the 
      Agreement to which such Executive is entitled shall be paid to such 
      conservator or other person legally charged with the care of his 
      person or Estate. 

11.5  Unclaimed Benefit. The Executive shall keep the Bank informed of his 
      current address and the current address of his Beneficiaries. The Bank 
      shall not be obligated to search for the whereabouts of any person. If 
      the location of the Executive is not made known to the Bank as of the 
      date upon which any payment of any benefits from the Accrued Benefit 
      Account may first be made, the Bank shall delay payment of the 
      Executive's benefit payment(s) until the location of the Executive is 
      made known to the Bank; however, the Bank shall only be obligated to 
      hold such benefit payment(s) for the Executive until the expiration of 
      thirty-six (36) months. Upon expiration of the thirty-six (36) month 
      period, the Bank may discharge its obligation by payment to the 
      Executive's Beneficiary. If the location of the Executive's 
      Beneficiary is not made known to the Bank by the end of an additional 
      two (2) month period following expiration of the thirty-six (36) month 
      period, the Bank may discharge its obligation by payment to the 
      Executive's Estate. If there is no Estate in existence at such time or 
      if such fact cannot be determined by the Bank, the Executive and his 
      Beneficiary(ies) shall thereupon forfeit any rights to the balance, if 
      any, of the Executive's Accrued Benefit Account provided for such 
      Executive and/or Beneficiary under this Agreement.

11.6  Limitations on Liability. Notwithstanding any of the preceding 
      provisions of the Agreement, no individual acting as an employee or 
      agent of the Bank, or as a member of the Board of Directors shall be 
      personally liable to the Executive or any other person for any claim, 
      loss, liability or expense incurred in connection with the Agreement.

11.7  Gender. Whenever in this Agreement words are used in the masculine or 
      neuter gender, they shall be read and construed as in the masculine, 
      feminine or neuter gender, whenever they should so apply.

11.8  Effect on Other Corporate Benefit Agreements. Nothing contained in 
      this Agreement shall affect the right of the Executive to participate 
      in or be covered by any qualified or non-qualified pension, profit 
      sharing, group, bonus or other supplemental compensation or fringe 
      benefit agreement constituting a part of the Bank's existing or future 
      compensation structure.

11.9  Suicide. Notwithstanding anything to the contrary in this Agreement, 
      if the Executive's death results from suicide, whether sane or insane, 
      within twenty-six (26) months after execution of this Agreement, all 
      further Contributions to the Retirement Income Trust Fund (or Phantom 
      Contributions recorded in the Accrued Benefit Account) shall thereupon 
      cease, and no Contribution (or Phantom Contribution) shall be made by 
      the Bank to the Retirement Income Trust Fund (or recorded in the 
      Accrued Benefit Account) in the year such death resulting from suicide 
      occurs (if not yet made). All benefits other than those available from 
      previous Contributions to the Retirement Income Trust Fund under this 
      Agreement shall be forfeited, and this Agreement shall become null and 
      void. The balance of the Retirement Income Trust Fund, measured as of 
      the Executive's date of death, shall be paid to the Beneficiary within 
      thirty (30) days of the date the Administrator receives notice of the 
      Executive's death. 

11.10 Inurement. This Agreement shall be binding upon and shall inure to the 
      benefit of the Bank, its successors and assigns, and the Executive, 
      his successors, heirs, executors, administrators, and Beneficiaries.

11.11 Headings. Headings and sub-headings in this Agreement are inserted for 
      reference and convenience only and shall not be deemed a part of this 
      Agreement.

11.12 Establishment of a Rabbi Trust. The Bank shall establish a rabbi trust 
      into which the Bank shall contribute assets which shall be held 
      therein, subject to the claims of the Bank's creditors in the event of 
      the Bank's "Insolvency" (as defined in such rabbi trust agreement), 
      until the contributed assets are paid to the Executive and/or his 
      Beneficiary in such manner and at such times as specified in this 
      Agreement. It is the intention of the Bank that the contribution or 
      contributions to the rabbi trust shall provide the Bank with a source 
      of funds to assist it in meeting the liabilities of this Agreement.

11.13 Source of Payments. All payments provided in this Agreement shall be 
      timely paid in cash or check from the general funds of the Bank or the 
      assets of the rabbi trust, to the extent made from the Accrued Benefit 
      Account. The Holding Company, however guarantees payment and provision 
      of all amounts and benefits due to the Executive from the Accrued 
      Benefit Account or Contribution to the Retirement Income Trust Fund 
      and, if such Contributions, amounts and benefits due from the Bank are 
      not timely paid or provided by the Bank, such amounts and benefits 
      shall be paid or provided by the Holding Company.

                                 SECTION XII
                         AMENDMENT/PLAN TERMINATION

12.1  Amendment or Plan Termination. The Bank intends this Agreement to be 
      permanent, but reserves the right to amend or terminate the Agreement 
      when, in the sole opinion of the Bank, such amendment or termination 
      is advisable. However, any termination of the Agreement which is done 
      in anticipation of or pursuant to a "Change in Control", as defined in 
      Subsection 1.9, shall be deemed to trigger Subsection 2.1(b)(2) (or 
      2.1(c)(2), as applicable) of the Agreement notwithstanding the 
      Executive's continued employment, and benefit(s) shall be paid from 
      the Retirement Income Trust Fund (and Accrued Benefit Account, if 
      applicable) in accordance with Subsection 13.2 below and with 
      Subsections 2.1(b)(2) (or 2.1(c)(2), as applicable). Any amendment or 
      termination of the Agreement by the Bank shall be made pursuant to a 
      resolution of the Board of Directors of the Bank and shall be 
      effective as of the date of such resolution. No amendment or 
      termination of the Agreement by the Bank shall directly or indirectly 
      deprive the Executive of all or any portion of the Executive's 
      Retirement Income Trust Fund (and Accrued Benefit Account, if 
      applicable) as of the effective date of the resolution amending or 
      terminating the Agreement.

      Notwithstanding the above, if the Executive does not exercise any 
      withdrawal rights pursuant to Subsection 2.2, and if at any time after 
      the final Contribution is made to the Retirement Income Trust Fund the 
      Executive elects to terminate the Retirement Income Trust Fund and 
      receive a distribution of the assets of the Retirement Income Trust 
      Fund, then upon such distribution this Agreement shall terminate.

12.2  Executive's Right to Payment Following Plan Termination. In the event 
      of a termination of the Agreement, the Executive shall be entitled to 
      the balance, if any, of his Retirement Income Trust Fund (and Accrued 
      Benefit Account, if applicable). However, if such termination is done 
      in anticipation of or pursuant to a "Change in Control," such 
      balance(s) shall include the final Contribution (or final Phantom 
      Contribution) made (or recorded) pursuant to Subsection 2.1(b)(2) (or 
      2.1(c)(2)). Payment of the balance(s) of the Executive's Retirement 
      Income Trust Fund (and Accrued Benefit Account, if applicable) shall 
      not be dependent upon his continuation of employment with the Bank 
      following the termination date of the Agreement. Payment of the 
      balance(s) of the Executive's Retirement Income Trust Fund (and 
      Accrued Benefit Account, if applicable) shall be made in a lump sum 
      within thirty (30) days of the date of termination of the Agreement.

                                SECTION XIII
                                  EXECUTION

13.1  This Agreement and the Charles W. Smith Grantor Trust agreement set 
      forth the entire understanding of the parties hereto with respect to 
      the transactions contemplated hereby, and any previous agreements or 
      understandings between the parties hereto regarding the subject matter 
      hereof are merged into and superseded by this Agreement and the 
      Charles W. Smith Grantor Trust agreement. 

13.2  This Agreement shall be executed in triplicate, each copy of which, 
      when so executed and delivered, shall be an original, but all three 
      copies shall together constitute one and the same instrument.

      IN WITNESS WHEREOF, the Bank and the Executive have caused this 
Agreement to be executed on the day and date first above written.

ATTEST:                                GRANITE BANK:

                                       By: /s/ William Smedley
                                           _____________________________

/s/ Charles B. Paquette                    Chairman, Personnel Committee
_____________________________              _____________________________
Secretary                                             (Title)


ATTEST:                                GRANITE STATE BANKSHARES, INC.

/s/ Charles B. Paquette                By: /s/ William Smedley
_____________________________              _____________________________
Secretary
                                           Chairman, Personnel Committee
                                           _____________________________
                                                      (Title)



WITNESS:                               EXECUTIVE:

/s/ Stacey W. Cole                         /s/ Charles W. Smith
_____________________________              ____________________________



                          CONDITIONS, ASSUMPTIONS,
                                     AND
             SCHEDULE OF CONTRIBUTIONS AND PHANTOM CONTRIBUTIONS

1.    Interest Factor - for purposes of: 

      a.    the Accrued Benefit Account - shall be Six percent (6%) per 
            annum, compounded monthly.

      b.    the Retirement Income Trust Fund - for purposes of annuitizing 
            the balance of the Retirement Income Trust Fund over the Payout 
            Period, the trustee of the Charles W. Smith Grantor Trust shall 
            exercise discretion in selecting the appropriate rate given the 
            nature of the investments contained in the Retirement Income 
            Trust Fund and the expected return associated with the 
            investments. 

2.    The amount of the annual Contributions (or Phantom Contributions) to 
      the Retirement Income Trust Fund (or Accrued Benefit Account) has been 
      based on the annual incremental accounting accruals which would be 
      required of the Bank through the earlier of the Executive's death or 
      Retirement Age, (i) pursuant to APB Opinion No. 12, as amended by FAS 
      106 and (ii) assuming a discount rate equal to Six percent (6%) per 
      annum, in order to provide the unfunded, non-qualified Supplemental 
      Retirement Income Benefit.

3.    Supplemental Retirement Income Benefit means an actuarially determined 
      annual amount equal to One Hundred Eighty Four Thousand Seven Hundred 
      Ninety Seven Dollars ($184,797.00) at age 62.

      The Supplemental Retirement Income Benefit:

      *     the definition of Supplemental Retirement Income Benefit has 
            been incorporated into the Agreement for the sole purpose of 
            actuarially establishing the amount of annual Contributions (or 
            Phantom Contributions) to the Retirement Income Trust Fund (or 
            Accrued Benefit Account). The amount of any actual retirement, 
            pre-retirement or disability benefit payable pursuant to the 
            Agreement will be a function of (i) the amount and timing of 
            Contributions (or Phantom Contributions) to the Retirement 
            Income Trust Fund (or Accrued Benefit Account) and (ii) the 
            actual investment experience of such Contributions (or the 
            monthly compounding rate of Phantom Contributions).  

                                  Exhibit A

4.    Schedule of Annual Gross Contributions/Phantom Contributions

      Plan Year                              Amount

      1996                                   $358,748
      1997                                    256,873
      1998                                    256,873
      1999                                    256,873
      2000                                    256,873
      2001                                    256,873
      2002                                    256,873
      2003                                    256,873
      2004                                    256,873
      2005                                    256,873*
      2006                                    256,873**
      2007                                    256,873**
      2008                                    256,873**

*     If retirement occurs at age 62, the contribution for Plan Year 2005 
      would be $161,869.
**    Contributions/Phantom Contributions for the years 2005, 2006, and 2007 
      shall only be required if Executive actually continues in the 
      employment of the Bank during those years and shall not be required if 
      Executive's employment terminates prior to such years due to 
      retirement, death, disability, a Change in Control of the Bank or 
      Holding Company, or other voluntary or involuntary termination of 
      employment.


                             Exhibit A - Cont'd.



                EXECUTIVE SUPPLEMENTAL RETIREMENT INCOME AGREEMENT
                           BENEFICIARY DESIGNATION

      The Executive, under the terms of the Executive Supplemental 
Retirement Income Agreement executed by the Bank, dated the 12th day of 
August, 1996, hereby designates the following Beneficiary(ies) to receive 
any guaranteed payments or death benefits under such Agreement, following 
his death:


PRIMARY BENEFICIARY:       Bankers Trust Company and Tara Smith, as 
                           successor co-trustees of the Charles William 
                           Smith Trust executed on the 25th day
                           of March, 1996.

SECONDARY BENEFICIARY:     __________________________________


      This Beneficiary Designation hereby revokes any prior Beneficiary 
Designation which may have been in effect.

      Such Beneficiary Designation is revocable.


DATE: December 16, 1996

/s/ Stacey W. Cole                     /s/ Charles W. Smith
_____________________________          ______________________________
(WITNESS)                                         EXECUTIVE

/s/ William Smedley
_____________________________      
(WITNESS)

                                  Exhibit B



             EXECUTIVE SUPPLEMENTAL RETIREMENT INCOME AGREEMENT
                NOTICE OF ELECTION TO CHANGE FORM OF PAYMENT

TO:      Bank
         Attention:

      I hereby give notice of my election to change the form of payment of 
my Supplemental Retirement Income Benefit, as specified below. I understand 
that such notice, in order to be effective, must be submitted in accordance 
with the time requirements described in my Executive Supplemental Retirement 
Income Agreement. 

[ ]   I hereby elect to change the form of payment of my benefits from 
      monthly installments throughout my Payout Period to a lump sum benefit 
      payment.

[ ]   I hereby elect to change the form of payment of my benefits from a 
      lump sum benefit payment to monthly installments throughout my Payout 
      Period. Such election hereby revokes my previous notice of election to 
      receive a lump sum form of benefit payments.

                                       ______________________________
                                       Executive

                                       ______________________________
                                       Date

                                       Acknowledged
                                       By: __________________________

                                       Title: _______________________

                                       ______________________________
                                       Date

                                  Exhibit C