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Exhibit 10.1 Employee Agreement Between Bank of Granite Corporation and
              Wesley W. Sturges

STATE OF NORTH CAROLINA

                                                            EMPLOYMENT AGREEMENT

COUNTY OF MECKLENBURG

         THIS EMPLOYMENT AGREEMENT (as amended, restated, supplemented or
otherwise modified from time to time, the "Agreement") is made and entered into
as of the 16th day of July, 2003, by and among BANK OF GRANITE CORPORATION
("Granite"), the BANK OF GRANITE ("Bank") and WESLEY W. STURGES (hereinafter
referred to as the "Officer").

                              W I T N E S S E T H:

         WHEREAS, the Officer is a party to an Employment Agreement with First
Commerce Bank, dated as of July 8, 2002 (the "Existing Employment Agreement");

         WHEREAS, First Commerce Corporation, the parent company of First
Commerce Bank, has merged into Granite (the "Merger"), the separate existence of
First Commerce Corporation has ceased and Granite is the surviving corporation;

         WHEREAS, the Officer and Granite desire to terminate the Existing
Employment Agreement in its entirety, on the terms and conditions set forth
herein;

         WHEREAS, the Bank is a North Carolina bank and a wholly-owned
subsidiary of Granite (references to "the Employers" herein shall be deemed to
refer to Granite and the Bank collectively);

         WHEREAS, the Employers desire to retain the Officer's services as an
executive employee of each of the Employers for the Term (as defined below), and
the Officer is willing to serve as an executive employee of each of the
Employers for such period; and

         WHEREAS, the parties desire to enter into this Agreement to set forth
the terms and conditions of the Officer's employment with the Employers.

         NOW, THEREFORE, for and in consideration of the premises and the mutual
promises, covenants and conditions hereinafter set forth, and other good and
valuable consideration, the receipt and sufficiency of which hereby are
acknowledged, the parties hereto hereby agree as follows:

         Section 1. Termination of Existing Employment Agreement. The Officer
hereby terminates the Existing Employment Agreement in its entirety.
Specifically, the Officer hereby agrees that he will not receive any payments or
other benefits under Section 9 of the Existing Employment Agreement or pursuant
to any "change in control" provisions in the Existing Employment Agreement.

         Section 2. Employment. Each of the Employers hereby agrees to employ
the Officer, and the Officer hereby agrees to serve as an executive employee of
each of the Employers, upon the terms and conditions stated herein. The Officer
will (i) for the period from the Commencement Date (as defined in SECTION 10) to
the second anniversary of the

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Commencement Date, serve as Executive Vice President of each of the Employers
with such duties, responsibility and authority as are assigned or delegated to
the Officer by the Board of Directors of Granite (the "Board"), the Board of
Directors of the Bank (the "Bank Board"), the Chief Executive Officer of Granite
or the Chief Executive Officer of the Bank, (ii) if approved by the Board and
the Bank Board, on and after the second anniversary of the Commencement Date,
serve as President and Chief Operating Officer of each of the Employers with
such duties, responsibility and authority as are assigned or delegated to the
Officer by the Board, the Bank Board, the Chief Executive Officer of Granite or
the Chief Executive Officer of the Bank, and (iii) have such other duties,
responsibilities and authority, and render to the Employers such other
management services, as are customary for persons having such executive offices
with a commercial bank or bank holding company and as are reasonably assigned to
him from time to time by the Board or the Bank Board. The Officer shall
faithfully and diligently discharge his duties and responsibilities under this
Agreement and shall use his best efforts to implement the policies established
by the Board and the Bank Board. Prior to the time the Officer may be elected to
the Board pursuant to SECTION 6, the Officer shall participate in meetings of
the Board and the Bank Board and their committees (except meetings that may take
place in executive session) as necessary to provide for full and knowledgeable
participation in the active management of the Employers by the Officer.

         The Officer hereby agrees to devote such number of hours of his working
time and endeavors to his duties and responsibilities hereunder as the Officer,
the Board, the Bank Board, the Chief Executive Officer of Granite or the Chief
Executive Officer of the Bank shall deem to be necessary to discharge such
duties and responsibilities. Except with prior consent of the Board, the Bank
Board or the Chief Executive Officer of Granite, the Officer shall not engage in
any other occupation which requires a significant amount of the Officer's
personal attention during Granite's regular business hours or which otherwise
interferes with the Officer's attention to or performance of his duties and
responsibilities under this Agreement. However, nothing herein contained shall
restrict or prevent the Officer from personally, and for the Officer's own
account or for the account of the Officer's immediate family, trading in stocks,
bonds, securities, real estate or other forms of investment so long as such
investment activities do not interfere with the Officer's attention to or
performance of his duties and responsibilities under this Agreement.

         During the Term, the Officer shall maintain his primary residence at a
location permitting him to perform his duties and responsibilities at Granite's
offices in Mecklenburg County, North Carolina or, if so requested by the Board,
at Granite's principal offices in Hickory, North Carolina.

         Section 3. Compensation. For all services rendered by the Officer to
the Employers under this Agreement, the Bank shall pay the Officer a base salary
of no less than Two Hundred Thousand Dollars ($200,000) per annum for the first
two years of the Term and no less than Two Hundred Forty Thousand Dollars
($240,000) per annum thereafter ("Base Salary"), payable in cash not less
frequently than monthly. Such Base Salary shall be subject to customary
withholding taxes and such other employment taxes as are required by law. The
Officer's Base Salary shall not be decreased but may be increased as deemed
appropriate by the compensation committees of the Board and the Bank Board to
provide reasonable cost-of-living adjustments to the Officer and with due
consideration to keeping the Officer's salary comparable to the salaries

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of other senior executive officers holding similar positions with peer banks and
bank holding companies, and all references to Base Salary herein shall mean his
Base Salary as so increased.

         Section 4. Participation in Retirement and Employee Benefit Plan;
Fringe Benefits. During the Term, the Officer shall be entitled to participate
in any and all employee benefit programs and compensation plans from time to
time maintained by either of the Employers and available to senior executive
officers of either of the Employers, all in accordance with the terms and
conditions (including eligibility requirements) of such programs and plans and
the policies adopted by the Board or Bank Board in establishing such programs
and plans. The Officer shall be entitled to paid vacation leave in accordance
with the Employers' policy for the senior executive employees of the Employers
now or hereafter in effect.

         In addition to the other compensation and benefits described in this
Agreement, the Employers shall promptly reimburse the Officer for all reasonable
and duly documented expenses incurred by him in the performance of his duties
and responsibilities under this Agreement in accordance with the polices
established by the Board and the Bank Board. The Employers shall pay the
Officer's Tower Club membership fees and dues, any expenses incurred by the
Officer in connection with North Carolina Bankers Association meetings and, to
the extent approved in writing by Granite's Chief Executive Officer, American
Bankers Association annual meetings and other association meetings; provided,
however, that the Officer shall be responsible for all expenses for personal use
of the Tower Club. The Officer must file expense reports with respect to
reimbursable expenses in accordance with the Employers' policies.

         Section 5. Stock Options. Granite shall issue to Officer, within thirty
(30) days of the date of this Agreement, an incentive stock option to acquire
5,000 shares of Granite's common stock, par value $1.00 per share, pursuant to
the terms of Granite's 2001 Incentive Stock Option Plan (the "Granite Option
Plan"), which option will be for a term of five years and will vest 20% each
year beginning at the end of the first year following the grant date. The
Officer shall participate in subsequent issuances of incentive stock options
under the Granite Option Plan or any comparable plan adopted by Granite as
determined by the Board.

         Section 6. Additional Board Seats. As soon as reasonably practical
after the second anniversary of the Commencement Date, Granite shall give strong
consideration to recommending to the nominating committees of the Board and the
Bank Board that an additional director be added to each such Board of Directors
and that the Officer be nominated to serve as such additional director.

         Section 7. Appointment as President and Chief Operating Officer. If the
Officer is not named as President and Chief Operating Officer of each of the
Employers on or before the second anniversary of the Commencement Date, then the
Officer may elect to terminate his employment with the Employers, by written
notice to Granite within three (3) months following the date of the second
anniversary of the Commencement Date stating that the Officer is terminating his
employment pursuant to this SECTION 7 (the "SECTION 7 Termination Notice"), and,
in lieu of any salary or other benefits otherwise payable to the Officer under
this Agreement, (a) Granite shall pay the Officer $450,000 in cash within thirty
(30) days of Granite's receipt of the SECTION 7 Termination Notice, (b) all of
the incentive stock options issued to the Officer under this Agreement shall
become fully vested and exercisable immediately upon receipt by

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Granite of the SECTION 7 Termination Notice, (c) the Employers and the Officer
will enter into the Consulting and Noncompetition Agreement (as defined below),
and (d) if the Officer has been relocated to Hickory or its vicinity prior to
Granite's receipt of the SECTION 7 Termination Notice and, within one year of
the date of such notice, he notifies Granite in writing of his intention to move
to another location outside of the Hickory area, the Employers shall reimburse
the Officer for his reasonable moving and relocation expenses incurred in
connection with such move (not to exceed the reasonable expenses that would be
required to move the Officer to Mecklenburg County, North Carolina); provided,
however, that such move must be completed by the first anniversary of the date
of the SECTION 7 Termination Notice. In addition, if the Employers have
terminated the Officer's employment under this Agreement for any reason other
than for "Cause" pursuant to SECTION 13(d) prior to the second anniversary of
the Commencement Date, in lieu of any salary or other benefits otherwise payable
to the Officer under this Agreement as a result of such termination, the Officer
shall receive the payments and other benefits set forth in this SECTION 7.
Notwithstanding anything to the contrary in this Agreement, if the Board and the
Bank Board fail to nominate the Officer for a position as President and Chief
Operating Officer because the Officer has died or become Disabled (as defined in
SECTION 13(c)) or for any reason that would constitute "Cause" pursuant to
SECTION 13(d), the Officer shall have no rights under this SECTION 7 and (ii) if
the payment pursuant to clause (a) above and other benefits contemplated by this
SECTION 7 would constitute a parachute payment (including, without limitation,
the vesting of any rights) within the meaning of Section 280G(b)(3) of the
Internal Revenue Code, as amended (the "Code"), but for the operation of this
clause (ii), such payment shall be reduced to the extent necessary to cause the
aggregate present value of all payments (including, without limitation, the
vesting of any rights) contemplated by this SECTION 7, not to exceed 2.99 times
the Base Amount (as defined below), all within the meaning of Code Section 280G.
The parties intend for the preceding sentence to be interpreted and applied to
prevent the Officer from receiving, pursuant to this SECTION 7, an excess
parachute payment within the meaning of Code Section 280G. For purposes of this
Section, "Base Amount" has the meaning given to it in Code Section 280G (which
amount is generally the average annual compensation payable during the most
recent five tax years ending before the year in which the Commencement Date
falls, as reflected on Forms W-2 for the relevant periods). For purposes of this
Section, "Consulting and Noncompetition Agreement" means an agreement, on terms
to be mutually agreed among the Officer and the Employers, pursuant to which the
Officer would agree to provide consulting services to the Employers for three
years following the termination of his employment by Employers concerning the
businesses he had managed for Employers during his employment, and agreeing not
to compete with the Employers on the terms described in SECTION 11(b) hereof,
and providing that the Officer would be paid $90,000 per year for three years in
exchange for his services and noncompetition covenants under such agreement.

         Section 8. Automobile. For the period from the Commencement Date
through the date the Officer's employment with the Employers is terminated, the
Employers shall provide the Officer an automobile leased by the Employers for
his use in connection with his employment under this Agreement. Such automobile
shall be similar in terms of make and model to the automobile used by the
Officer in connection with his employment with First Commerce Bank immediately
prior to the Commencement Date.

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         Section 9. Relocation Expenses. If and when the Board requests the
Officer to move his residence to Hickory, North Carolina or its vicinity, the
Employers shall reimburse the Officer for his reasonable moving and relocation
expenses.

         Section 10. Term. Unless sooner terminated as provided in this
Agreement and except as otherwise provided in SECTION 14, the term of this
Agreement and the Officer's employment hereunder shall be for a period
commencing on the date hereof (the "Commencement Date") and continuing until the
close of business on the third anniversary of the Commencement Date; provided,
however, that on each anniversary of the Commencement Date, the term shall be
extended for a period of one (1) year unless the Employers or the Officer gives
written notice at least ninety (90) days prior to such anniversary that the Term
shall not be extended and shall be fixed at its then existing duration (the
"Term").

         Section 11. Noncompetition and Confidentiality. The Officer hereby
acknowledges and agrees that: (i) in the course of his service as an executive
officer of the Employers, he will gain substantial knowledge of and familiarity
with the Employers' customers and its dealings with them, and other Confidential
Information (as defined below) concerning the Employers' business, all of which
constitute valuable and privileged assets that are particularly sensitive due to
the fiduciary responsibilities inherent in the banking business; and (ii) in
order to protect the Employers' interest in and to assure the benefit of their
businesses, it is reasonable and necessary to place certain restrictions on the
Officer's ability to Compete (as defined below) against the Employers and on his
disclosure of Confidential Information. For that purpose, and in consideration
of the Employers' agreements contained herein, the Officer covenants and agrees
as provided below:

         (a) Confidentiality Covenant. All Confidential Information shall be
considered and kept by the Officer as the confidential, private and proprietary
property of the Employers. At all times during and following the Term, and
except as shall be required in the course of the performance by the Officer of
his duties on behalf of the Employers or permitted by a direct, written
authorization of the Board or the Bank Board, as applicable, he will not divulge
any Confidential Information to any Person (as defined below) not employed by
one of the Employers or a subsidiary thereof (except as required by applicable
laws or regulations, rules or orders promulgated thereunder), remove any such
Confidential Information in written or other recorded form from the Employers'
premises, or make any use of any Confidential Information for his own purposes
or for the benefit of any Person other than the Employers. Following the
termination of the Officer's employment with the Employers, this SECTION 11(a)
shall not apply to the disclosure of any information which then is in the public
domain (provided that the Officer was not responsible, directly or indirectly,
for permitting such information to enter the public domain without the consent
required herein) or which was obtained by the Officer from a Person (as defined
below) who is not obligated under an agreement of confidentiality with respect
to such information.

         (b) Noncompetition. In consideration of employment of the Officer,
during the Term and for a period of eighteen (18) months following the
termination of the Officer's employment with the Employers under this Agreement,
the Officer agrees that he will not, within: fifty (50) miles of any office of
the Employers or any of their subsidiaries; Burke County, North Carolina;
Mecklenburg County, North Carolina; Caldwell County, North Carolina; Catawba
County, North

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Carolina (collectively, the "Territory"); directly or indirectly, own, manage,
operate, join, control or participate in the management, operation or control
of, or be employed by, an independent contractor (as a consultant or otherwise)
of, or connected in any manner with, any Person who Competes with either of the
Employers or their subsidiaries, without the prior written consent of the Board.
Notwithstanding the foregoing, (i) the Officer shall be free, without such
consent, to purchase or hold as an investment or otherwise up to five percent
(5%) of the outstanding equity interests of any Person which has any class of
equity interests listed on any national securities exchange or which has
transactions in a class of its equity interests quoted on The Nasdaq Stock
Market or other over-the-counter market or inter-dealer quotation system, (ii)
the Officer may be employed by a Person who Competes with either of the
Employers or their subsidiaries in an area or unit of such Person's business
whose products, services or activities do not compete with the products or
activities of Granite, (iii) the Officer may be employed with a Person who
Competes with either of the Employers in a position that is not otherwise exempt
from the overtime provisions of the Fair Labor Standards Act to the extent such
position does not involve the exercise by the Officer of management or
supervisory responsibilities or utilize any Confidential Information, and (iv)
the covenants in this SECTION 11(b) shall cease to apply to the Officer upon the
sale or transfer of all or substantially all of the assets of either Employer
(except to an Affiliate of an Employer) or upon the occurrence of a transaction,
including a sale or transfer of capital stock or a merger involving either
Employer, after which a Person (other than a Person controlled by or under
common control with Granite prior to such transaction) acquires more than 50% of
the voting capital stock of either Employer.

         (c) Remedies for Breaches. The Officer understands and agrees that a
breach by him of the covenants contained in SECTION 11(a) or SECTION 11(b) will
be deemed a material breach of this Agreement and will cause irreparable injury
to the Employers, and that it would be difficult to ascertain the amount of
monetary damages that would result from any such breach. In the event of the
Officer's actual or threatened breach of the covenants contained in SECTION
11(a) or SECTION 11(b), either of the Employers shall be entitled to bring a
civil action seeking an injunction restraining the Officer from breaching or
continuing to breach those covenants or from any threatened breach thereof, or
any other legal or equitable relief relating to the breach of such covenants.
The Officer agrees that, if either of the Employers institutes any action or
proceeding against him seeking to enforce any of such covenants or to recover
other relief relating to an actual or threatened breach of any of such
covenants, he shall be deemed to have waived any claim or defense that such
Employer has an adequate remedy at law and shall not urge in any such action or
proceeding the claim or defense that an adequate remedy at law exists. The
exercise by an Employer of any such right, remedy, power or privilege, however,
shall not preclude such Employer from pursuing any other remedy or exercising
any other right, power or privilege available to it for any such breach, whether
at law or in equity, including the recovery of damages, all of which shall be
cumulative and in addition to all other rights, remedies, powers or privileges
of the Employers.

         If any provision or part of SECTION 11 is held to be unenforceable
because of the duration of such provision or the geographic area covered thereby
as provided in SECTION 11(b), the parties hereto agree to modify such provision,
or that the court making such determination shall have the power to modify such
provision, to reduce the duration or area of such provision or both, or to
delete specific words or phrases herefrom ("blue-penciling"), and, in its
reduced or blue-penciled form, such provision shall then be enforceable and
shall be enforced.

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         Notwithstanding anything contained to the contrary, the Officer agrees
that the provisions of SECTION 11(a) and SECTION 11(b) and the remedies provided
in this SECTION 11(c) for a breach shall be in addition to, and shall not be
deemed to supersede or to otherwise restrict, limit or impair, the rights of the
Employers under the Trade Secrets Protection Act contained in Article 24,
Chapter 66 of the North Carolina General Statutes, or any other state or federal
law or regulation dealing with or providing a remedy for this wrongful
disclosure, misuse or misappropriation of trade secrets or other proprietary or
confidential information.

         (d) Survival of Covenants. The Officer's covenants and agreements and
the Employers' rights and remedies provided for in this SECTION 11 shall survive
any termination of this Agreement or the Officer's employment with the
Employers.

         (e) Covenants of SECTION 11(a) and SECTION 11(b) are Essential and
Independent Covenants. The covenants by the Officer in SECTION 11(a) and SECTION
11(b) are essential elements of this Agreement, and without the Officer's
agreement to comply with such covenants, the Employers would not have entered
into this Agreement or employed or continued the employment of the Officer. The
Employers and the Officer have independently consulted their respective counsel
and have been advised in all respects concerning the reasonableness and
propriety of such covenants, with specific regard to the nature of the business
conducted by the Employers. The Officer's covenants in SECTION 11(a) and SECTION
11(b) are independent covenants and the existence of any claim by the Officer
against either Employer under this Agreement or otherwise, shall not excuse the
Officer's breach of any covenant in SECTION 11(a) and SECTION 11(b). If the
Officer's employment hereunder expires or is terminated, this Agreement shall
continue in full force and effect as is necessary or appropriate to enforce the
covenants and agreements of the Officer in SECTION 11(a) and SECTION 11(b).

         (f) Definitions. For purposes of this Agreement:

                  (i) "Confidential Information" means any and all data,
         figures, projections, estimates, lists, files, records, documents,
         manuals or other such materials or information (financial or otherwise)
         regulatory examinations, financial results and condition, lending and
         deposit operations, customers (including lists of customers and
         information regarding their accounts and business dealings with either
         of the Employers), policies and procedures, computer system and
         software, shareholders, employees, officers and directors of or
         relating to either of the Employers and generated, compiled or
         maintained by or on behalf of either of the Employers; provided,
         however, that Confidential Information shall not include any
         information that is in the public domain other than through actions of
         the Officer in violation of this Agreement or through the improper act
         of a Person who owes a duty of confidentiality to the Employers or any
         of their subsidiaries.

                  (ii) A Person that "Competes" means a Person that (A) solicits
         or secures deposits from any Person, (B) solicits or makes loans to any
         Person, (C) offers or engages in the provisions of trust services, (D)
         induces or attempts to induce any Person who was a customer of either
         of the Employers or their subsidiaries or any of its Affiliates at the
         time of the termination of the Officer's employment to change the
         customer's depository, loan, trust, or other banking relationship from
         either of the Employers or their

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         subsidiaries to another financial institution or financial services
         entity, (E) provides credit card services, or (F) otherwise provides
         any type of commercial banking or trust services, in each case within
         the Territory.

                  (iii) "Person" means (A) an individual or a corporation,
         partnership (limited or general), trust, limited liability company,
         business, association (mutual or stock, and including a mutual holding
         company), joint venture, pool, syndicate, unincorporated organization
         or any other form of entity; and (B) any Affiliate (as defined below)
         of any individual or entity listed in item (A).

                  (iv) "Affiliate" means any Person who controls, is under
         control with, or is controlled by the Person to whom reference is being
         made; and for the purposes of this definition of Affiliate, control
         shall be deemed to exist in a Person who beneficially owns ten percent
         (10%) or more of the outstanding equity interests (or options, warrants
         or other rights to acquire such equity interests) of another Person.

         Section 12. Standards. The Officer, in the execution of his duties and
responsibilities under this Agreement, shall at all times and in all respects
comply with the policies of the Board, the Bank Board and the Chief Executive
Officer of Granite, including any code of business conduct or code of ethics
adopted by the Board or the Bank Board for application to the Employers'
employees, and with all applicable statutes and with all rules, regulations,
administrative orders, statements or policy and other pronouncements or
standards promulgated by any Regulatory Authority (as defined below).

         Section 13. Termination and Termination Pay.

         (a) The Officer may terminate his employment under this Agreement at
any time upon sixty (60) days' written notice to the Board and the Board Board.
Subject to SECTION 7, upon such termination, the Officer shall be entitled to
receive payment of his Base Salary and all benefits and other compensation
earned, vested, accrued or accruing through the effective date of such
termination; provided, however, that the Board and the Bank Board, in their sole
discretion, may elect for the Officer not to serve out part or all of said
notice period.

         (b) The Officer's employment under this Agreement shall be terminated
upon his death. Upon any such termination, the Officer's estate shall be
entitled to receive promptly payment of his Base Salary and all benefits and
other compensation earned, vested, accrued or accruing through the date of his
death.

         (c) The Officer's employment under this Agreement shall be terminated
upon his becoming Disabled (as defined below). During the Term, the Employers
shall provide the Officer with the benefits of a disability insurance policy or
policies comparable to the policy provided to other senior executive officers of
the Bank from time to time, subject to the eligibility requirements related to
such insurance, and providing a disability benefit to the Officer of not less
than $8,580 per month. For purposes of this Agreement, "Disabled" means that,
for a period of 120 consecutive days, or an aggregate of 180 days during any
12-month period, the Officer is unable to perform satisfactorily his duties and
responsibilities under this Agreement by reason of physical incapacity or mental
impairment, as determined by an impartial and reputable

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physician practicing within Mecklenburg County, North Carolina, selected by
mutual agreement of the Officer and the Bank, or failing such agreement, by two
(2) physicians practicing within Mecklenburg County, North Carolina (one (1)
shall be selected by the Bank and one (1) selected by the Officer), and the
determination of such physician or physicians as to whether the Officer has
become Disabled shall be final and binding on the Officer and the Employers. The
Bank shall pay the reasonable fees and expenses of such physician or physicians
in making any determination required under this SECTION 13(c).

         (d) The Board and the Bank Board may terminate the Officer's employment
under this Agreement at anytime for any reason with or without Cause (as defined
below); provided, however, that, subject to SECTION 7, upon any such
termination, the Officer shall continue to receive his Base Salary for the
applicable Payment Period (as defined below); and, provided further that,
subject to SECTION 7, any such termination by the Board and the Bank Board shall
not prejudice the Officer's right to receive all compensation (in addition to
Base Salary) or benefits payable to, or receivable by, him under this Agreement
during the applicable Payment Period. The Officer shall receive his Base Salary
and all other compensation or benefits payable to, or receivable by, him under
this Agreement for the following periods (each a "Payment Period") upon any of
the following events: (i) following any termination without Cause (except as
described in the following item (ii)), the Payment Period shall be the remainder
of the Term; (ii) following the second written notice to the Officer from the
Board and the Bank Board of a less than satisfactory performance rating (which
rating and second notice may not be given less than one hundred eighty-one (181)
days after the first such rating and written notice), the Payment Period shall
be six (6) months; and (iii) following any termination for Cause, there shall be
no Payment Period.

         For purposes of this Agreement, "Cause" means:

                  (i) A determination by the Board and the Bank Board, acting
         reasonably and in good faith, that the Officer has (A) breached in any
         material respect any material term or condition of this Agreement, or
         (B) engaged in willful misconduct that is having or is reasonably
         likely to have a material adverse effect on the Employers' business,
         reputation or business prospects. Prior to any termination by the Board
         of the Officer's employment for Cause under this subparagraph, the
         Board and the Bank Board shall give the Officer written notice
         describing the basis for termination and, if during a period of thirty
         (30) days following such notice the Officer cures or corrects the same
         to the reasonable satisfaction of the Board and the Bank Board, then
         the Officer's employment shall not be terminated and this Agreement
         shall remain in full force and effect. Notwithstanding the above, if
         the Board has given written notice to the Officer on two previous
         occasions of (x) the same or a substantially similar material breach,
         failure, refusal or event of willful misconduct or (y) a material
         breach, failure, refusal or event of willful misconduct that the Board
         determines in good faith to be of substantially similar import, then
         termination for Cause under this SECTION 13(d) shall be effective
         immediately and the Officer shall have no right to cure or correct such
         material breach or event of willful misconduct;

                  (ii) The violation by the Officer of any applicable federal or
         state law, or any applicable rule, regulation, order or statement of
         policy promulgated thereunder by any governmental agency or authority
         having jurisdiction over either Employer, including

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         without limitation the Federal Deposit Insurance Corporation, the North
         Carolina Commissioner of Banks, the Board of Governors of the Federal
         Reserve Board or any other banking regulator (a "Regulatory
         Authority"), that results from the Officer's gross negligence, willful
         misconduct or intentional disregard of such law, rule, regulation,
         order or policy statement and that has or is reasonably likely to have
         a material adverse effect on any of the Employers' businesses or their
         respective reputations or business prospects.

                  (iii) The Officer's commission in the course of his employment
         with the Employers of an act of fraud, embezzlement, dishonesty or
         theft (whether or not resulting in criminal prosecution or conviction);

                  (iv) The Officer is convicted of or indicted for, or enters a
         guilty plea or a plea of no contest with respect to, any felony or any
         criminal offense involving dishonesty or breach of trust, or the
         occurrence of any event described in Section 19 of the Federal Deposit
         Insurance Act or any other event or circumstance that disqualifies the
         Officer from serving as an employee or executive officer of either of
         the Employers or any of their Affiliates;

                  (v) The issuance by a Regulatory Authority of a final and
         non-appealable finding or order removing, suspending, or prohibiting
         the Officer from participating in the conduct of either of the
         Employer's affairs;

                  (vi) The Officer's appropriation (or attempted appropriation)
         of a business opportunity of either Employer, including any attempt to
         secure or securing a material personal profit in connection with any
         transaction entered into on behalf of either Employer; or

                  (vii) The occurrence of any event resulting in the Officer
         being excluded from coverage, or having coverage limited as to the
         Officer as compared to other covered officers or employees, under the
         Employers' then current "blanket bond" or other fidelity bond or
         insurance policy covering its directors, officers or employees or the
         directors, officers or employees of its Affiliates.

         Section 14. Additional Regulatory Requirements and Events.

         (a) If any Regulatory Authority suspends and/or prohibits the Officer
from participating in the conduct of the affairs of Granite or the Bank, the
Employers' obligations hereunder shall be suspended as of the date of notice of
such action unless stayed by appropriate proceedings. If the suspension or
prohibition is lifted or dismissed, all of the Employers' obligations that were
suspended shall be reinstated. If such suspension or prohibition becomes final
and non-appealable, this Agreement shall terminate, and such termination shall
be deemed a termination for Cause (as defined in SECTION 13(d) above).

         (b) The Employers' obligations to provide compensation or other
benefits to the Officer under this Agreement shall be terminated or limited to
the extent required by any final regulation or order of the Federal Deposit
Insurance Corporation that limits or prohibits any

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<PAGE>

"golden parachute payment" as defined therein, but only to the extent that the
compensation or payments to be provided by the Employers under this Agreement
are so prohibited or limited.

         (c) Notwithstanding anything contained in this Agreement to the
contrary, it is understood and agreed that the Employers shall not be required
to make any payment or take any action under this Agreement if (i) Granite or
the Bank is declared by any Regulatory Authority to be insolvent, in default or
operating in an unsafe or unsound manner, (ii) such payment or action is
prohibited by or would violate any applicable rules, regulations, orders or
statements of policy, whether now existing or hereafter promulgated, of any
Regulatory Authority, or (iii) such payment or action otherwise would be
prohibited by any Regulatory Authority; provided that if only one of Granite or
the Bank is prohibited from fulfilling its obligations under this Agreement in
one of the circumstances described above, the other shall remain obligated to
fulfill such obligations.

         Section 15. Representations and Warranties by the Officer. The Officer
represents and warrants to the Employers that the execution and delivery by the
Officer of this Agreement do not, and the performance by the Officer of his
obligations hereunder will not, with or without the giving of notice or the
passage of time, or both, (a) violate any judgment, writ, injunction or order of
any court, arbitrator or governmental agency applicable to the Officer or (b)
conflict with, result in the breach of any provisions of or the termination of,
or constitute a default under, any agreement to which the Officer is a party or
by which he is or may be bound.

         Section 16. Post-Employment Cooperation. After the termination of his
employment hereunder, the Officer agrees to cooperate with and provide
assistance to the Employers and their legal counsel in connection with any
litigation (including arbitration or administrative hearings) or investigation
affecting an Employer, in which, in the reasonable judgment of the Employers'
counsel, the Officer's assistance or cooperation is needed. The Employers will
reimburse the Officer for his reasonable out-of-pocket expenses in connection
with providing such assistance.

         Section 17. Notices. All notices, consents, waivers and other
communications under this Agreement must be in writing and shall be deemed to
have been duly given when (a) delivered by hand (with written confirmation of
receipt), (b) sent by facsimile (with written confirmation of receipt), provided
that a copy is mailed by registered mail, return receipt requested or (c) when
received by the addressee, if sent by a nationally recognized overnight delivery
service (receipt requested), in each case to the appropriate addresses and
facsimile numbers set forth below (or to such other addresses and facsimile
numbers as a party may designate by notice to the other parties):

   If to the Employers:   Bank of Granite Corporation
                          Bank of Granite
                          P.O. Box 128
                          Granite Falls, North Carolina 28630
                          Attention: John A. Forlines, Jr.
                          Facsimile No.: (828) 496-2116

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<PAGE>

   With a copy to:        Robinson, Bradshaw & Hinson, P.A.
                          101 N. Tryon Street, Suite 1900
                          Charlotte, North Carolina  28246
                          Attention: Henry H. Ralston
                          Facsimile No.(704) 378-4000

   If to the Officer:     Wesley W. Sturges
                          2700 Tanglewood Lane
                          Charlotte, North Carolina 28211

   With a copy to:        Brooks, Pierce, McLendon, Humphrey & Leonard, L.L.P.
                          2000 Renaissance Place
                          230 North Elm Street
                          Greensboro, North Carolina  27420
                          Attention:  Robert A. Singer
                          Facsimile No.: (336) 378-1001

         Section 18. Successors and Assigns.

         (a) This Agreement shall inure to the benefit of and be binding upon
the Employers and the Officer and their respective successors and assigns. Each
of Granite and the Bank will require any successor to it (whether direct or
indirect, by stock or asset purchase, merger, consolidation or otherwise) to all
or substantially all of its business or more than fifty percent (50%) of its
assets to assume expressly and agree to perform this Agreement in the same
manner and to the same extent it would be required to perform it if no such
succession had taken place. As used in this paragraph, "Granite" and the "Bank"
shall mean Granite and the Bank as hereinbefore defined and any successor to
their respective businesses and/or assets as aforesaid which assumes and agrees
to perform this Agreement by operation of law, or otherwise.

         (b) The Employers are contracting for the unique and personal skills of
the Officer. Therefore, the Officer shall be precluded from assigning or
delegating his rights, duties or responsibilities hereunder.

         Section 19. Modification; Waiver; Amendments. No provision of this
Agreement may be modified, waived or discharged unless such waiver, modification
or discharge is agreed to in writing and signed by each Employer and the
Officer. No waiver by any party hereto, at any time, of any breach by any other
party hereto of, or compliance with, any condition or provision of this
Agreement to be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at any prior or
subsequent time. No amendments or additions to this Agreement shall be binding
unless in writing and signed by each Employer and the Officer, except as herein
otherwise provided. Notwithstanding any provision hereof, the Board or the Bank
Board may increase any compensation or benefit payable to, or receivable by, the
Officer under this Agreement.

         Section 20. Applicable Law. This Agreement shall be governed in all
respects, whether as to validity, construction, capacity, performance or
otherwise, by the laws of North Carolina, except to the extent that federal law
shall be deemed to govern.

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<PAGE>

         Section 21. Jurisdiction. Any action or proceeding seeking to enforce
any provision of, or based on any right arising out of, this Agreement may be
brought against any of the parties in the courts of the State of North Carolina,
County of Mecklenburg, or, if it has or can acquire jurisdiction, in the United
States District Court for the Western District of North Carolina, and each of
the parties consents to the jurisdiction of such courts (and of the appropriate
appellate courts) in any such action or proceeding and waives any objection to
venue laid therein. Process in any action or proceeding referred to in the
preceding sentence may be served on either party anywhere in the world.

         Section 22. Section Headings; Construction. The headings of Sections in
this Agreement are provided for convenience only and shall not affect its
construction or interpretation. All references to "Sections" refer to the
corresponding Sections of this Agreement unless otherwise specified. All words
used in this Agreement shall be construed to be of such gender or number as the
circumstances require. Unless otherwise expressly provided, the word "including"
does not limit the preceding words or terms.

         Section 23. Mitigation and Offset. If Officer's employment is
terminated at any time during the first two years of the Commencement Date, or
if terminated pursuant to a SECTION 7 Termination Notice, Officer shall not be
required to mitigate the amount of any payment provided for in this Agreement by
seeking other employment and, except for payments under the Consulting and
Noncompetition Agreement or payments under the company's disability insurance
policy, and except as provided in SECTION 7 hereof, no such payment shall be
offset or reduced by the amount of any compensation or benefits provided to
Officer in any subsequent employment. If Officer's employment hereunder is
terminated after the second anniversary of the Commencement Date and not
pursuant to a SECTION 7 Termination Notice, any payments and benefits that
Officer is entitled to after such termination pursuant to this Agreement (except
for any reimbursement of expenses pursuant to SECTION 16 hereof) shall be
reduced by the amount and to the extent of any compensation or benefits provided
to Officer by any subsequent employment, but Officer shall not be under an
affirmative duty in such circumstances to seek alternative employment.

         Section 24. Disputes. In the event any dispute shall arise between the
Officer and Granite, the Bank or the Board (and the Bank Board) as to the terms
or interpretation of this Agreement, whether instituted by formal legal
proceedings or otherwise, including any action taken by the Officer to enforce
the terms of this Agreement or in defending against any action taken by Granite
and/or the Bank, unless the Officer shall have received no recovery or other
relief on his claims or shall have not prevailed on his defenses, the Employers
shall reimburse the Officer for all costs and expenses, including reasonable
attorneys' fees, incurred by him in such disputes or proceedings.

         Section 25. Severability. The provisions of this Agreement shall be
deemed severable and the invalidity or unenforceability of any provision shall
not affect the validity or enforceability of the other provisions hereof.

         Section 26. Entire Agreement. This Agreement contains the entire
agreement of the parties with respect to the transactions described herein and
supersedes any and all other oral or written agreement(s) heretofore made, and
there are no representations or inducements by or to,

                                       48

<PAGE>

or any agreements between, any of the parties hereto other than those contained
herein in writing.

                         [Signatures on following page]

                                       49

<PAGE>

         IN WITNESS WHEREOF, the parties have executed this Agreement under seal
to be effective as of the day and year first hereinabove written.

                           BANK OF GRANITE CORPORATION

                           By: /s/ John A. Forlines, Jr.
                               -------------------------------
                           Name: John A. Forlines, Jr.
                           Title: Chairman and CEO

                           BANK OF GRANITE

                           By: /s/ Charles M. Snipes
                               --------------------------------
                           Name: Charles M. Snipes
                           Title: President & CEO

                           WESLEY W. STURGES

                           /s/ Wesley W. Sturges
                           ------------------------------------

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