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                               GUARANTEE AGREEMENT

                                 by and between

                              UWHARRIE CAPITAL CORP

                                       and

                       STATE STREET BANK AND TRUST COMPANY
                      OF CONNECTICUT, NATIONAL ASSOCIATION

                         Dated as of September 26, 2002

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                               GUARANTEE AGREEMENT

     This GUARANTEE AGREEMENT (this "Guarantee"), dated as of September 26,
2002, is executed and delivered by Uwharrie Capital Corp, a North Carolina
corporation (the "Guarantor"), and State Street Bank and Trust Company of
Connecticut, National Association, a national banking association, organized
under the laws of the United States of America, as trustee (the "Guarantee
Trustee"), for the benefit of the Holders (as defined herein) from time to time
of the Capital Securities (as defined herein) of Uwharrie Statutory Trust I, a
Connecticut statutory trust (the "Issuer").

     WHEREAS, pursuant to an Amended and Restated Declaration of Trust (the
"Declaration"), dated as of the date hereof among State Street Bank and Trust
Company of Connecticut, National Association, not in its individual capacity but
solely as institutional trustee, the administrators of the Issuer named therein,
the Guarantor, as sponsor, and the holders from time to time of undivided
beneficial interests in the assets of the Issuer, the Issuer is issuing on the
date hereof those undivided beneficial interests, having an aggregate
liquidation amount of $5,000,000 (the "Capital Securities"); and

     WHEREAS, as incentive for the Holders to purchase the Capital Securities,
the Guarantor desires irrevocably and unconditionally to agree, to the extent
set forth in this Guarantee, to pay to the Holders of Capital Securities the
Guarantee Payments (as defined herein) and to make certain other payments on the
terms and conditions set forth herein;

     NOW, THEREFORE, in consideration of the purchase by each Holder of the
Capital Securities, which purchase the Guarantor hereby agrees shall benefit the
Guarantor, the Guarantor executes and delivers this Guarantee for the benefit of
the Holders.

                                   ARTICLE I

                         DEFINITIONS AND INTERPRETATION

     Section 1.1. Definitions and Interpretation. In this Guarantee, unless the
context otherwise requires:

     (a) capitalized terms used in this Guarantee but not defined in the
preamble above have the respective meanings assigned to them in this Section
1.1;

     (b) a term defined anywhere in this Guarantee has the same meaning
throughout;

     (c) all references to "the Guarantee" or "this Guarantee" are to this
Guarantee as modified, supplemented or amended from time to time;

     (d) all references in this Guarantee to "Articles" or "Sections" are to
Articles or Sections of this Guarantee, unless otherwise specified;

     (e) terms defined in the Declaration as at the date of execution of this
Guarantee have the same meanings when used in this Guarantee, unless otherwise
defined in this Guarantee or unless the context otherwise requires; and

     (f) a reference to the singular includes the plural and vice versa.

     "Affiliate" has the same meaning as given to that term in Rule 405 of the
Securities Act of 1933, as amended, or any successor rule thereunder.

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     "Beneficiaries" means any Person to whom the Issuer is or hereafter becomes
indebted or liable.

     "Capital Securities" has the meaning set forth in the recitals to this
Guarantee.

     "Common Securities" means the common securities issued by the Issuer to the
Guarantor pursuant to the Declaration.

     "Corporate Trust Office" means the office of the Guarantee Trustee at which
the corporate trust business of the Guarantee Trustee shall, at any particular
time, be principally administered, which office at the date of execution of this
Guarantee is located at 225 Asylum Street, Goodwin Square, Hartford, Connecticut
06103.

     "Covered Person" means any Holder of Capital Securities.

     "Debentures" means the debt securities of the Guarantor designated the
Floating Rate Junior Subordinated Deferrable Interest Debentures due 2032 held
by the Institutional Trustee (as defined in the Declaration) of the Issuer.

     "Declaration Event of Default" means an "Event of Default" as defined in
the Declaration.

     "Event of Default" has the meaning set forth in Section 2.4(a).

     "Guarantee Payments" means the following payments or distributions, without
duplication, with respect to the Capital Securities, to the extent not paid or
made by the Issuer: (i) any accrued and unpaid Distributions (as defined in the
Declaration) which are required to be paid on such Capital Securities to the
extent the Issuer shall have funds available therefor, (ii) the Redemption Price
to the extent the Issuer has funds available therefor, with respect to any
Capital Securities called for redemption by the Issuer, (iii) the Special
Redemption Price to the extent the Issuer has funds available therefor, with
respect to Capital Securities redeemed upon the occurrence of a Special Event,
and (iv) upon a voluntary or involuntary liquidation, dissolution, winding-up or
termination of the Issuer (other than in connection with the distribution of
Debentures to the Holders of the Capital Securities in exchange therefor as
provided in the Declaration), the lesser of (a) the aggregate of the liquidation
amount and all accrued and unpaid Distributions on the Capital Securities to the
date of payment, to the extent the Issuer shall have funds available therefor,
and (b) the amount of assets of the Issuer remaining available for distribution
to Holders in liquidation of the Issuer (in either case, the "Liquidation
Distribution").

     "Guarantee Trustee" means State Street Bank and Trust Company of
Connecticut, National Association, until a Successor Guarantee Trustee has been
appointed and has accepted such appointment pursuant to the terms of this
Guarantee and thereafter means each such Successor Guarantee Trustee.

     "Guarantor" means Uwharrie Capital Corp and each of its successors and
assigns.

     "Holder" means any holder, as registered on the books and records of the
Issuer, of any Capital Securities; provided, however, that, in determining
whether the Holders of the requisite percentage of Capital Securities have given
any request, notice, consent or waiver hereunder, "Holder" shall not include the
Guarantor or any Affiliate of the Guarantor.

     "Indemnified Person" means the Guarantee Trustee, any Affiliate of the
Guarantee Trustee, or any officers, directors, shareholders, members, partners,
employees, representatives, nominees, custodians or agents of the Guarantee
Trustee.

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     "Indenture" means the Indenture dated as of the date hereof between the
Guarantor and State Street Bank and Trust Company of Connecticut, National
Association, not in its individual capacity but solely as trustee, and any
indenture supplemental thereto pursuant to which the Debentures are to be issued
to the institutional trustee of the Issuer.

     "Issuer" has the meaning set forth in the opening paragraph to this
Guarantee.

     "Liquidation Distribution" has the meaning set forth in the definition of
"Guarantee Payments" herein.

     "Majority in liquidation amount of the Capital Securities" means Holder(s)
of outstanding Capital Securities, voting together as a class, but separately
from the holders of Common Securities, of more than 50% of the aggregate
liquidation amount (including the stated amount that would be paid on
redemption, liquidation or otherwise, plus accrued and unpaid Distributions to
the date upon which the voting percentages are determined) of all Capital
Securities then outstanding.

     "Obligations" means any costs, expenses or liabilities (but not including
liabilities related to taxes) of the Issuer other than obligations of the Issuer
to pay to holders of any Trust Securities the amounts due such holders pursuant
to the terms of the Trust Securities.

     "Officer's Certificate" means, with respect to any Person, a certificate
signed by one Authorized Officer of such Person. Any Officer's Certificate
delivered with respect to compliance with a condition or covenant provided for
in this Guarantee shall include:

          (a) a statement that the officer signing the Officer's Certificate has
     read the covenant or condition and the definitions relating thereto;

          (b) a brief statement of the nature and scope of the examination or
     investigation undertaken by the officer in rendering the Officer's
     Certificate;

          (c) a statement that the officer has made such examination or
     investigation as, in such officer's opinion, is necessary to enable such
     officer to express an informed opinion as to whether or not such covenant
     or condition has been complied with; and

          (d) a statement as to whether, in the opinion of the officer, such
     condition or covenant has been complied with.

     "Person" means a legal person, including any individual, corporation,
estate, partnership, joint venture, association, joint stock company, limited
liability company, trust, unincorporated association, or government or any
agency or political subdivision thereof, or any other entity of whatever nature.

     "Redemption Price" has the meaning set forth in the Indenture.

     "Responsible Officer" means, with respect to the Guarantee Trustee, any
officer within the Corporate Trust Office of the Guarantee Trustee including any
Vice President, Assistant Vice President, Secretary, Assistant Secretary or any
other officer of the Guarantee Trustee customarily performing functions similar
to those performed by any of the above designated officers and also, with
respect to a particular corporate trust matter, any other officer to whom such
matter is referred because of that officer's knowledge of and familiarity with
the particular subject.

     "Special Event" has the meaning set forth in the Indenture.

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     "Special Redemption Price" has the meaning set forth in the Indenture.

     "Successor Guarantee Trustee" means a successor Guarantee Trustee
possessing the qualifications to act as Guarantee Trustee under Section 3.1.

     "Trust Securities" means the Common Securities and the Capital Securities.

                                   ARTICLE II

                          POWERS, DUTIES AND RIGHTS OF
                                GUARANTEE TRUSTEE

     Section 2.1. Powers and Duties of the Guarantee Trustee.

     (a)  This Guarantee shall be held by the Guarantee Trustee for the benefit
of the Holders of the Capital Securities, and the Guarantee Trustee shall not
transfer this Guarantee to any Person except a Holder of Capital Securities
exercising his or her rights pursuant to Section 4.4(b) or to a Successor
Guarantee Trustee on acceptance by such Successor Guarantee Trustee of its
appointment to act as Successor Guarantee Trustee. The right, title and interest
of the Guarantee Trustee shall automatically vest in any Successor Guarantee
Trustee, and such vesting and cessation of title shall be effective whether or
not conveyancing documents have been executed and delivered pursuant to the
appointment of such Successor Guarantee Trustee.

     (b)  If an Event of Default actually known to a Responsible Officer of the
Guarantee Trustee has occurred and is continuing, the Guarantee Trustee shall
enforce this Guarantee for the benefit of the Holders of the Capital Securities.

     (c)  The Guarantee Trustee, before the occurrence of any Event of Default
and after curing all Events of Default that may have occurred, shall undertake
to perform only such duties as are specifically set forth in this Guarantee, and
no implied covenants shall be read into this Guarantee against the Guarantee
Trustee. In case an Event of Default has occurred (that has not been waived
pursuant to Section 2.4) and is actually known to a Responsible Officer of the
Guarantee Trustee, the Guarantee Trustee shall exercise such of the rights and
powers vested in it by this Guarantee, and use the same degree of care and skill
in its exercise thereof, as a prudent person would exercise or use under the
circumstances in the conduct of his or her own affairs.

     (d)  No provision of this Guarantee shall be construed to relieve the
Guarantee Trustee from liability for its own negligent action, its own negligent
failure to act, or its own willful misconduct, except that:

          (i)  prior to the occurrence of any Event of Default and after the
     curing or waiving of all such Events of Default that may have occurred:

               (A) the duties and obligations of the Guarantee Trustee shall be
          determined solely by the express provisions of this Guarantee, and the
          Guarantee Trustee shall not be liable except for the performance of
          such duties and obligations as are specifically set forth in this
          Guarantee, and no implied covenants or obligations shall be read into
          this Guarantee against the Guarantee Trustee; and

               (B) in the absence of bad faith on the part of the Guarantee
          Trustee, the Guarantee Trustee may conclusively rely, as to the truth
          of the statements and the correctness of the opinions expressed
          therein, upon any certificates or opinions furnished

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          to the Guarantee Trustee and conforming to the requirements of this
          Guarantee; but in the case of any such certificates or opinions that
          by any provision hereof are specifically required to be furnished to
          the Guarantee Trustee, the Guarantee Trustee shall be under a duty to
          examine the same to determine whether or not they conform to the
          requirements of this Guarantee;

          (ii)  the Guarantee Trustee shall not be liable for any error of
     judgment made in good faith by a Responsible Officer of the Guarantee
     Trustee, unless it shall be proved that such Responsible Officer of the
     Guarantee Trustee or the Guarantee Trustee was negligent in ascertaining
     the pertinent facts upon which such judgment was made;

          (iii) the Guarantee Trustee shall not be liable with respect to any
     action taken or omitted to be taken by it in good faith in accordance with
     the written direction of the Holders of not less than a Majority in
     liquidation amount of the Capital Securities relating to the time, method
     and place of conducting any proceeding for any remedy available to the
     Guarantee Trustee, or relating to the exercise of any trust or power
     conferred upon the Guarantee Trustee under this Guarantee; and

          (iv)  no provision of this Guarantee shall require the Guarantee
     Trustee to expend or risk its own funds or otherwise incur personal
     financial liability in the performance of any of its duties or in the
     exercise of any of its rights or powers, if the Guarantee Trustee shall
     have reasonable grounds for believing that the repayment of such funds is
     not reasonably assured to it under the terms of this Guarantee or security
     and indemnity, reasonably satisfactory to the Guarantee Trustee, against
     such risk or liability is not reasonably assured to it.

     Section 2.2. Certain Rights of Guarantee Trustee.

     (a)  Subject to the provisions of Section 2.1:

          (i)   The Guarantee Trustee may conclusively rely, and shall be fully
     protected in acting or refraining from acting upon, any resolution,
     certificate, statement, instrument, opinion, report, notice, request,
     direction, consent, order, bond, debenture, note, other evidence of
     indebtedness or other paper or document believed by it to be genuine and to
     have been signed, sent or presented by the proper party or parties.

          (ii)  Any direction or act of the Guarantor contemplated by this
     Guarantee shall be sufficiently evidenced by an Officer's Certificate.

          (iii) Whenever, in the administration of this Guarantee, the Guarantee
     Trustee shall deem it desirable that a matter be proved or established
     before taking, suffering or omitting any action hereunder, the Guarantee
     Trustee (unless other evidence is herein specifically prescribed) may, in
     the absence of bad faith on its part, request and conclusively rely upon an
     Officer's Certificate of the Guarantor which, upon receipt of such request,
     shall be promptly delivered by the Guarantor.

          (iv)  The Guarantee Trustee shall have no duty to see to any
     recording, filing or registration of any instrument (or any re-recording,
     refiling or re-registration thereof).

          (v)   The Guarantee Trustee may consult with counsel of its selection,
     and the advice or opinion of such counsel with respect to legal matters
     shall be full and complete authorization and protection in respect of any
     action taken, suffered or omitted by it hereunder in good faith and

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     in accordance with such advice or opinion. Such counsel may be counsel to
     the Guarantor or any of its Affiliates and may include any of its
     employees. The Guarantee Trustee shall have the right at any time to seek
     instructions concerning the administration of this Guarantee from any court
     of competent jurisdiction.

          (vi)   The Guarantee Trustee shall be under no obligation to exercise
     any of the rights or powers vested in it by this Guarantee at the request
     or direction of any Holder, unless such Holder shall have provided to the
     Guarantee Trustee such security and indemnity, reasonably satisfactory to
     the Guarantee Trustee, against the costs, expenses (including attorneys'
     fees and expenses and the expenses of the Guarantee Trustee's agents,
     nominees or custodians) and liabilities that might be incurred by it in
     complying with such request or direction, including such reasonable
     advances as may be requested by the Guarantee Trustee; provided, however,
     that nothing contained in this Section 2.2(a)(vi) shall relieve the
     Guarantee Trustee, upon the occurrence of an Event of Default, of its
     obligation to exercise the rights and powers vested in it by this
     Guarantee.

          (vii)  The Guarantee Trustee shall not be bound to make any
     investigation into the facts or matters stated in any resolution,
     certificate, statement, instrument, opinion, report, notice, request,
     direction, consent, order, bond, debenture, note, other evidence of
     indebtedness or other paper or document, but the Guarantee Trustee, in its
     discretion, may make such further inquiry or investigation into such facts
     or matters as it may see fit.

          (viii) The Guarantee Trustee may execute any of the trusts or powers
     hereunder or perform any duties hereunder either directly or by or through
     agents, nominees, custodians or attorneys, and the Guarantee Trustee shall
     not be responsible for any misconduct or negligence on the part of any
     agent or attorney appointed with due care by it hereunder.

          (ix)   Any action taken by the Guarantee Trustee or its agents
     hereunder shall bind the Holders of the Capital Securities, and the
     signature of the Guarantee Trustee or its agents alone shall be sufficient
     and effective to perform any such action. No third party shall be required
     to inquire as to the authority of the Guarantee Trustee to so act or as to
     its compliance with any of the terms and provisions of this Guarantee, both
     of which shall be conclusively evidenced by the Guarantee Trustee's or its
     agent's taking such action.

          (x)    Whenever in the administration of this Guarantee the Guarantee
     Trustee shall deem it desirable to receive instructions with respect to
     enforcing any remedy or right or taking any other action hereunder, the
     Guarantee Trustee (i) may request instructions from the Holders of a
     Majority in liquidation amount of the Capital Securities, (ii) may refrain
     from enforcing such remedy or right or taking such other action until such
     instructions are received, and (iii) shall be protected in conclusively
     relying on or acting in accordance with such instructions.

          (xi)   The Guarantee Trustee shall not be liable for any action taken,
     suffered, or omitted to be taken by it in good faith, without negligence,
     and reasonably believed by it to be authorized or within the discretion or
     rights or powers conferred upon it by this Guarantee.

     (b) No provision of this Guarantee shall be deemed to impose any duty or
obligation on the Guarantee Trustee to perform any act or acts or exercise any
right, power, duty or obligation conferred or imposed on it, in any jurisdiction
in which it shall be illegal or in which the Guarantee Trustee shall be
unqualified or incompetent in accordance with applicable law to perform any such
act or acts or to exercise any such right, power, duty or obligation. No
permissive power or authority available to the Guarantee Trustee shall be
construed to be a duty.

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     Section 2.3. Not Responsible for Recitals or Issuance of Guarantee. The
recitals contained in this Guarantee shall be taken as the statements of the
Guarantor, and the Guarantee Trustee does not assume any responsibility for
their correctness. The Guarantee Trustee makes no representation as to the
validity or sufficiency of this Guarantee.

     Section 2.4. Events of Default; Waiver.

     (a) An Event of Default under this Guarantee will occur upon the failure of
the Guarantor to perform any of its payment or other obligations hereunder.

     (b) The Holders of a Majority in liquidation amount of the Capital
Securities may, voting or consenting as a class, on behalf of the Holders of all
of the Capital Securities, waive any past Event of Default and its consequences.
Upon such waiver, any such Event of Default shall cease to exist, and shall be
deemed to have been cured, for every purpose of this Guarantee, but no such
waiver shall extend to any subsequent or other default or Event of Default or
impair any right consequent thereon.

     Section 2.5. Events of Default; Notice.

     (a) The Guarantee Trustee shall, within 90 days after the occurrence of an
Event of Default, transmit by mail, first class postage prepaid, to the Holders
of the Capital Securities and the Guarantor, notices of all Events of Default
actually known to a Responsible Officer of the Guarantee Trustee, unless such
defaults have been cured before the giving of such notice, provided, however,
that the Guarantee Trustee shall be protected in withholding such notice if and
so long as a Responsible Officer of the Guarantee Trustee in good faith
determines that the withholding of such notice is in the interests of the
Holders of the Capital Securities.

     (b) The Guarantee Trustee shall not be deemed to have knowledge of any
Event of Default unless the Guarantee Trustee shall have received written notice
from the Guarantor or a Holder of the Capital Securities (except in the case of
a payment default), or a Responsible Officer of the Guarantee Trustee charged
with the administration of this Guarantee shall have obtained actual knowledge
thereof.

                                  ARTICLE III

                                GUARANTEE TRUSTEE

     Section 3.1. Guarantee Trustee; Eligibility.

     (a) There shall at all times be a Guarantee Trustee which shall:

         (i)  not be an Affiliate of the Guarantor, and

         (ii) be a corporation organized and doing business under the laws of
     the United States of America or any State or Territory thereof or of the
     District of Columbia, or Person authorized under such laws to exercise
     corporate trust powers, having a combined capital and surplus of at least
     50 million U.S. dollars ($50,000,000), and subject to supervision or
     examination by Federal, State, Territorial or District of Columbia
     authority. If such corporation publishes reports of condition at least
     annually, pursuant to law or to the requirements of the supervising or
     examining authority referred to above, then, for the purposes of this
     Section 3.1(a)(ii), the combined capital and surplus of such corporation
     shall be deemed to be its combined capital and surplus as set forth in its
     most recent report of condition so published.

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     (b) If at any time the Guarantee Trustee shall cease to be eligible to so
act under Section 3.1(a), the Guarantee Trustee shall immediately resign in the
manner and with the effect set out in Section 3.2(c).

     (c) If the Guarantee Trustee has or shall acquire any "conflicting
interest" within the meaning of Section 310(b) of the Trust Indenture Act, the
Guarantee Trustee shall either eliminate such interest or resign to the extent
and in the manner provided by, and subject to this Guarantee.

     Section 3.2. Appointment, Removal and Resignation of Guarantee Trustee.

     (a) Subject to Section 3.2(b), the Guarantee Trustee may be appointed or
removed without cause at any time by the Guarantor except during an Event of
Default. (b) The Guarantee Trustee shall not be removed in accordance with
Section 3.2(a) until a Successor Guarantee Trustee has been appointed and has
accepted such appointment by written instrument executed by such Successor
Guarantee Trustee and delivered to the Guarantor.

     (c) The Guarantee Trustee appointed to office shall hold office until a
Successor Guarantee Trustee shall have been appointed or until its removal or
resignation. The Guarantee Trustee may resign from office (without need for
prior or subsequent accounting) by an instrument in writing executed by the
Guarantee Trustee and delivered to the Guarantor, which resignation shall not
take effect until a Successor Guarantee Trustee has been appointed and has
accepted such appointment by an instrument in writing executed by such Successor
Guarantee Trustee and delivered to the Guarantor and the resigning Guarantee
Trustee.

     (d) If no Successor Guarantee Trustee shall have been appointed and
accepted appointment as provided in this Section 3.2 within 60 days after
delivery of an instrument of removal or resignation, the Guarantee Trustee
resigning or being removed may petition any court of competent jurisdiction for
appointment of a Successor Guarantee Trustee. Such court may thereupon, after
prescribing such notice, if any, as it may deem proper, appoint a Successor
Guarantee Trustee.

     (e) No Guarantee Trustee shall be liable for the acts or omissions to act
of any Successor Guarantee Trustee.

     (f) Upon termination of this Guarantee or removal or resignation of the
Guarantee Trustee pursuant to this Section 3.2, the Guarantor shall pay to the
Guarantee Trustee all amounts owing to the Guarantee Trustee under Sections 7.2
and 7.3 accrued to the date of such termination, removal or resignation.

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                                   ARTICLE IV

                                    GUARANTEE

     Section 4.1. Guarantee.

     (a) The Guarantor irrevocably and unconditionally agrees to pay in full to
the Holders the Guarantee Payments (without duplication of amounts theretofore
paid by the Issuer), as and when due, regardless of any defense (except the
defense of payment by the Issuer), right of set-off or counterclaim that the
Issuer may have or assert. The Guarantor's obligation to make a Guarantee
Payment may be satisfied by direct payment of the required amounts by the
Guarantor to the Holders or by causing the Issuer to pay such amounts to the
Holders.

     (b) The Guarantor hereby also agrees to assume any and all Obligations of
the Issuer and in the event any such Obligation is not so assumed, subject to
the terms and conditions hereof, the Guarantor hereby irrevocably and
unconditionally guarantees to each Beneficiary the full payment, when and as
due, of any and all Obligations to such Beneficiaries. This Guarantee is
intended to be for the benefit of, and to be enforceable by, all such
Beneficiaries, whether or not such Beneficiaries have received notice hereof.

     Section 4.2. Waiver of Notice and Demand. The Guarantor hereby waives
notice of acceptance of this Guarantee and of any liability to which it applies
or may apply, presentment, demand for payment, any right to require a proceeding
first against the Issuer or any other Person before proceeding against the
Guarantor, protest, notice of nonpayment, notice of dishonor, notice of
redemption and all other notices and demands.

     Section 4.3. Obligations Not Affected. The obligations, covenants,
agreements and duties of the Guarantor under this Guarantee shall in no way be
affected or impaired by reason of the happening from time to time of any of the
following:

     (a) the release or waiver, by operation of law or otherwise, of the
performance or observance by the Issuer of any express or implied agreement,
covenant, term or condition relating to the Capital Securities to be performed
or observed by the Issuer;

     (b) the extension of time for the payment by the Issuer of all or any
portion of the Distributions, Redemption Price, Special Redemption Price,
Liquidation Distribution or any other sums payable under the terms of the
Capital Securities or the extension of time for the performance of any other
obligation under, arising out of or in connection with, the Capital Securities
(other than an extension of time for payment of Distributions, Redemption Price,
Special Redemption Price, Liquidation Distribution or other sum payable that
results from the extension of any interest payment period on the Debentures or
any extension of the maturity date of the Debentures permitted by the
Indenture);

     (c) any failure, omission, delay or lack of diligence on the part of the
Holders to enforce, assert or exercise any right, privilege, power or remedy
conferred on the Holders pursuant to the terms of the Capital Securities, or any
action on the part of the Issuer granting indulgence or extension of any kind;

     (d) the voluntary or involuntary liquidation, dissolution, sale of any
collateral, receivership, insolvency, bankruptcy, assignment for the benefit of
creditors, reorganization, arrangement, composition or readjustment of debt of,
or other similar proceedings affecting, the Issuer or any of the assets of the
Issuer;

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     (e) any invalidity of, or defect or deficiency in, the Capital Securities;

     (f) the settlement or compromise of any obligation guaranteed hereby or
hereby incurred; or

     (g) any other circumstance whatsoever that might otherwise constitute a
legal or equitable discharge or defense of a guarantor, it being the intent of
this Section 4.3 that the obligations of the Guarantor hereunder shall be
absolute and unconditional under any and all circumstances.

     There shall be no obligation of the Holders to give notice to, or obtain
consent of, the Guarantor with respect to the happening of any of the foregoing.

     Section 4.4. Rights of Holders.

     (a) The Holders of a Majority in liquidation amount of the Capital
Securities have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the Guarantee Trustee in respect of this
Guarantee or to direct the exercise of any trust or power conferred upon the
Guarantee Trustee under this Guarantee; provided, however, that (subject to
Section 2.1) the Guarantee Trustee shall have the right to decline to follow any
such direction if the Guarantee Trustee being advised by counsel determines that
the action or proceeding so directed may not lawfully be taken or if the
Guarantee Trustee in good faith by its board of directors or trustees, executive
committees or a trust committee of directors or trustees and/or Responsible
Officers shall determine that the action or proceedings so directed would
involve the Guarantee Trustee in personal liability.

     (b) Any Holder of Capital Securities may institute a legal proceeding
directly against the Guarantor to enforce the Guarantee Trustee's rights under
this Guarantee, without first instituting a legal proceeding against the Issuer,
the Guarantee Trustee or any other Person. The Guarantor waives any right or
remedy to require that any such action be brought first against the Issuer, the
Guarantee Trustee or any other Person before so proceeding directly against the
Guarantor.

     Section 4.5. Guarantee of Payment. This Guarantee creates a guarantee of
payment and not of collection.

     Section 4.6. Subrogation. The Guarantor shall be subrogated to all (if any)
rights of the Holders of Capital Securities against the Issuer in respect of any
amounts paid to such Holders by the Guarantor under this Guarantee; provided,
however, that the Guarantor shall not (except to the extent required by
mandatory provisions of law) be entitled to enforce or exercise any right that
it may acquire by way of subrogation or any indemnity, reimbursement or other
agreement, in all cases as a result of payment under this Guarantee, if, after
giving effect to any such payment, any amounts are due and unpaid under this
Guarantee. If any amount shall be paid to the Guarantor in violation of the
preceding sentence, the Guarantor agrees to hold such amount in trust for the
Holders and to pay over such amount to the Holders.

     Section 4.7. Independent Obligations. The Guarantor acknowledges that its
obligations hereunder are independent of the obligations of the Issuer with
respect to the Capital Securities and that the Guarantor shall be liable as
principal and as debtor hereunder to make Guarantee Payments pursuant to the
terms of this Guarantee notwithstanding the occurrence of any event referred to
in subsections (a) through (g), inclusive, of Section 4.3 hereof.

     Section 4.8. Enforcement by a Beneficiary. A Beneficiary may enforce the
obligations of the Guarantor contained in Section 4.1(b) directly against the
Guarantor and the Guarantor waives any right or remedy to require that any
action be brought against the Issuer or any other person or entity

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before proceeding against the Guarantor. The Guarantor shall be subrogated to
all rights (if any) of any Beneficiary against the Issuer in respect of any
amounts paid to the Beneficiaries by the Guarantor under this Guarantee;
provided, however, that the Guarantor shall not (except to the extent required
by mandatory provisions of law) be entitled to enforce or exercise any rights
that it may acquire by way of subrogation or any indemnity, reimbursement or
other agreement, in all cases as a result of payment under this Guarantee, if at
the time of any such payment, and after giving effect to such payment, any
amounts are due and unpaid under this Guarantee.

                                   ARTICLE V

                    LIMITATION OF TRANSACTIONS; SUBORDINATION

     Section 5.1. Limitation of Transactions. So long as any Capital Securities
remain outstanding, if (a) there shall have occurred and be continuing an Event
of Default or a Declaration Event of Default or (b) the Guarantor shall have
selected an Extension Period as provided in the Declaration and such period, or
any extension thereof, shall have commenced and be continuing, then the
Guarantor shall not and shall not permit any Affiliate to (x) declare or pay any
dividends or distributions on, or redeem, purchase, acquire, or make a
liquidation payment with respect to, any of the Guarantor's or such Affiliate's
capital stock (other than payments of dividends or distributions to the
Guarantor) or make any guarantee payments with respect to the foregoing or (y)
make any payment of principal of or interest or premium, if any, on or repay,
repurchase or redeem any debt securities of the Guarantor or any Affiliate that
rank pari passu in all respects with or junior in interest to the Debentures
(other than, with respect to clauses (x) and (y) above, (i) repurchases,
redemptions or other acquisitions of shares of capital stock of the Guarantor in
connection with any employment contract, benefit plan or other similar
arrangement with or for the benefit of one or more employees, officers,
directors or consultants, in connection with a dividend reinvestment or
stockholder stock purchase plan or in connection with the issuance of capital
stock of the Guarantor (or securities convertible into or exercisable for such
capital stock) as consideration in an acquisition transaction entered into prior
to the occurrence of the Event of Default, Declaration Event of Default or
Extension Period, as applicable, (ii) as a result of any exchange or conversion
of any class or series of the Guarantor's capital stock (or any capital stock of
a subsidiary of the Guarantor) for any class or series of the Guarantor's
capital stock or of any class or series of the Guarantor's indebtedness for any
class or series of the Guarantor's capital stock, (iii) the purchase of
fractional interests in shares of the Guarantor's capital stock pursuant to the
conversion or exchange provisions of such capital stock or the security being
converted or exchanged, (iv) any declaration of a dividend in connection with
any stockholders' rights plan, or the issuance of rights, stock or other
property under any stockholders' rights plan, or the redemption or repurchase of
rights pursuant thereto, (v) any dividend in the form of stock, warrants,
options or other rights where the dividend stock or the stock issuable upon
exercise of such warrants, options or other rights is the same stock as that on
which the dividend is being paid or ranks pari passu with or junior to such
stock and any cash payments in lieu of fractional shares issued in connection
therewith, or (vi) payments under this Guarantee).

     Section 5.2. Ranking. This Guarantee will constitute an unsecured
obligation of the Guarantor and will rank subordinate and junior in right of
payment to all present and future Senior Indebtedness (as defined in the
Indenture) of the Guarantor. By their acceptance thereof, each Holder of Capital
Securities agrees to the foregoing provisions of this Guarantee and the other
terms set forth herein.

     The right of the Guarantor to participate in any distribution of assets of
any of its subsidiaries upon any such subsidiary's liquidation or reorganization
or otherwise is subject to the prior claims of creditors of that subsidiary,
except to the extent the Guarantor may itself be recognized as a creditor of
that subsidiary. Accordingly, the Guarantor's obligations under this Guarantee
will be effectively

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<PAGE>

subordinated to all existing and future liabilities of the Guarantor's
subsidiaries, and claimants should look only to the assets of the Guarantor for
payments hereunder. This Guarantee does not limit the incurrence or issuance of
other secured or unsecured debt of the Guarantor, including Senior Indebtedness
of the Guarantor, under any indenture that the Guarantor may enter into in the
future or otherwise.

                                   ARTICLE VI

                                   TERMINATION

     Section 6.1. Termination. This Guarantee shall terminate as to the Capital
Securities (i) upon full payment of the Redemption Price or Special Redemption
Price of all Capital Securities then outstanding, (ii) upon the distribution of
all of the Debentures to the Holders of all of the Capital Securities or (iii)
upon full payment of the amounts payable in accordance with the Declaration upon
dissolution of the Issuer. This Guarantee will continue to be effective or will
be reinstated, as the case may be, if at any time any Holder of Capital
Securities must restore payment of any sums paid under the Capital Securities or
under this Guarantee.

                                  ARTICLE VII

                                 INDEMNIFICATION

     Section 7.1. Exculpation.

     (a) No Indemnified Person shall be liable, responsible or accountable in
damages or otherwise to the Guarantor or any Covered Person for any loss, damage
or claim incurred by reason of any act or omission performed or omitted by such
Indemnified Person in good faith in accordance with this Guarantee and in a
manner that such Indemnified Person reasonably believed to be within the scope
of the authority conferred on such Indemnified Person by this Guarantee or by
law, except that an Indemnified Person shall be liable for any such loss, damage
or claim incurred by reason of such Indemnified Person's negligence or willful
misconduct with respect to such acts or omissions.

     (b) An Indemnified Person shall be fully protected in relying in good faith
upon the records of the Issuer or the Guarantor and upon such information,
opinions, reports or statements presented to the Issuer or the Guarantor by any
Person as to matters the Indemnified Person reasonably believes are within such
other Person's professional or expert competence and who, if selected by such
Indemnified Person, has been selected with reasonable care by such Indemnified
Person, including information, opinions, reports or statements as to the value
and amount of the assets, liabilities, profits, losses, or any other facts
pertinent to the existence and amount of assets from which Distributions to
Holders of Capital Securities might properly be paid.

     Section 7.2. Indemnification.

     (a) The Guarantor agrees to indemnify each Indemnified Person for, and to
hold each Indemnified Person harmless against, any and all loss, liability,
damage, claim or expense incurred without negligence or willful misconduct on
the part of the Indemnified Person, arising out of or in connection with the
acceptance or administration of the trust or trusts hereunder, including, but
not limited to, the costs and expenses (including reasonable legal fees and
expenses) of the Indemnified Person defending itself against, or investigating,
any claim or liability in connection with the exercise or performance of any of
the Indemnified Person's powers or duties hereunder. The obligation to indemnify
as set forth in this Section 7.2 shall survive the resignation or removal of the
Guarantee Trustee and the termination of this Guarantee.

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<PAGE>

     (b) Promptly after receipt by an Indemnified Person under this Section 7.2
of notice of the commencement of any action, such Indemnified Person will, if a
claim in respect thereof is to be made against the Guarantor under this Section
7.2, notify the Guarantor in writing of the commencement thereof; but the
failure so to notify the Guarantor (i) will not relieve the Guarantor from
liability under paragraph (a) above unless and to the extent that the Guarantor
did not otherwise learn of such action and such failure results in the
forfeiture by the Guarantor of substantial rights and defenses and (ii) will
not, in any event, relieve the Guarantor from any obligations to any Indemnified
Person other than the indemnification obligation provided in paragraph (a)
above. The Guarantor shall be entitled to appoint counsel of the Guarantor's
choice at the Guarantor's expense to represent the Indemnified Person in any
action for which indemnification is sought (in which case the Guarantor shall
not thereafter be responsible for the fees and expenses of any separate counsel
retained by the Indemnified Person or Persons except as set forth below);
provided, however, that such counsel shall be reasonably satisfactory to the
Indemnified Person. Notwithstanding the Guarantor's election to appoint counsel
to represent the Guarantor in an action, the Indemnified Person shall have the
right to employ separate counsel (including local counsel), and the Guarantor
shall bear the reasonable fees, costs and expenses of such separate counsel if
(i) the use of counsel chosen by the Guarantor to represent the Indemnified
Person would present such counsel with a conflict of interest, (ii) the actual
or potential defendants in, or targets of, any such action include both the
Indemnified Person and the Guarantor and the Indemnified Person shall have
reasonably concluded that there may be legal defenses available to it and/or
other Indemnified Person(s) which are different from or additional to those
available to the Guarantor, (iii) the Guarantor shall not have employed counsel
satisfactory to the Indemnified Person to represent the Indemnified Person
within a reasonable time after notice of the institution of such action or (iv)
the Guarantor shall authorize the Indemnified Person to employ separate counsel
at the expense of the Guarantor. The Guarantor will not, without the prior
written consent of the Indemnified Persons, settle or compromise or consent to
the entry of any judgment with respect to any pending or threatened claim,
action, suit or proceeding in respect of which indemnification or contribution
may be sought hereunder (whether or not the Indemnified Persons are actual or
potential parties to such claim or action) unless such settlement, compromise or
consent includes an unconditional release of each Indemnified Person from all
liability arising out of such claim, action, suit or proceeding.

     Section 7.3. Compensation; Reimbursement of Expenses. The Guarantor agrees:

     (a) to pay to the Guarantee Trustee from time to time such compensation for
all services rendered by it hereunder as the parties shall agree to from time to
time (which compensation shall not be limited by any provision of law in regard
to the compensation of a trustee of an express trust); and

     (b) except as otherwise expressly provided herein, to reimburse the
Guarantee Trustee upon request for all reasonable expenses, disbursements and
advances incurred or made by it in accordance with any provision of this
Guarantee (including the reasonable compensation and the expenses and
disbursements of its agents and counsel), except any such expense, disbursement
or advance as may be attributable to its negligence or willful misconduct.

     The provisions of this Section 7.3 shall survive the resignation or removal
of the Guarantee Trustee and the termination of this Guarantee.

                                  ARTICLE VIII

                                  MISCELLANEOUS

     Section 8.1. Successors and Assigns. All guarantees and agreements
contained in this Guarantee shall bind the successors, assigns, receivers,
trustees and representatives of the Guarantor and

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<PAGE>

shall inure to the benefit of the Holders of the Capital Securities then
outstanding. Except in connection with any merger or consolidation of the
Guarantor with or into another entity or any sale, transfer or lease of the
Guarantor's assets to another entity, in each case, to the extent permitted
under the Indenture, the Guarantor may not assign its rights or delegate its
obligations under this Guarantee without the prior approval of the Holders of at
least a Majority in liquidation amount of the Capital Securities.

     Section 8.2. Amendments. Except with respect to any changes that do not
adversely affect the rights of Holders of the Capital Securities in any material
respect (in which case no consent of Holders will be required), this Guarantee
may be amended only with the prior approval of the Holders of not less than a
Majority in liquidation amount of the Capital Securities. The provisions of the
Declaration with respect to amendments thereof apply to the giving of such
approval.

     Section 8.3. Notices. All notices provided for in this Guarantee shall be
in writing, duly signed by the party giving such notice, and shall be delivered,
telecopied or mailed by first class mail, as follows:

     (a) If given to the Guarantee Trustee, at the Guarantee Trustee's mailing
address set forth below (or such other address as the Guarantee Trustee may give
notice of to the Holders of the Capital Securities and the Guarantor):

     State Street Bank and Trust Company of Connecticut, National Association
     225 Asylum Street, Goodwin Square
     Hartford, Connecticut  06103
     Attention:  Corporate Trust Department
     Telecopy:  860-244-1889

     With a copy to:

     State Street Bank and Trust Company
     P.O. Box 778
     Boston, Massachusetts  02102-0778
     Attention:  Paul D. Allen, Corporate Trust Department
     Telecopy:  617-662-1462

     (b) If given to the Guarantor, at the Guarantor's mailing address set forth
below (or such other address as the Guarantor may give notice of to the Holders
of the Capital Securities and to the Guarantee Trustee):

     Uwharrie Capital Corp
     134 North First Street
     Albermarle, North Carolina 28002-0338
     Attention:  Barbara S. Williams
     Telecopy:  704-983-6462

     (c) If given to any Holder of the Capital Securities, at the address set
forth on the books and records of the Issuer.

     All such notices shall be deemed to have been given when received in
person, telecopied with receipt confirmed, or mailed by first class mail,
postage prepaid, except that if a notice or other document is refused delivery
or cannot be delivered because of a changed address of which no notice was
given,

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<PAGE>

such notice or other document shall be deemed to have been delivered on the date
of such refusal or inability to deliver.

     Section 8.4. Benefit. This Guarantee is solely for the benefit of the
Beneficiaries and, subject to Section 2.1(a), is not separately transferable
from the Capital Securities.

     Section 8.5. Governing Law. THIS GUARANTEE SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK,
WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES THEREOF (OTHER THAN SECTION 5-1401
OF THE NEW YORK GENERAL OBLIGATIONS LAW).

     Section 8.6. Counterparts. This Guarantee may be executed in one or more
counterparts, each of which shall be an original, but all of which taken
together shall constitute one and the same instrument.

     Section 8.7 Separability. In case one or more of the provisions contained
in this Guarantee shall for any reason be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provisions of this Guarantee, but this Guarantee
shall be construed as if such invalid or illegal or unenforceable provision had
never been contained herein.

                     Signatures appear on the following page

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<PAGE>

     THIS GUARANTEE is executed as of the day and year first above written.

                                             UWHARRIE CAPITAL CORP, as Guarantor

                                             By:  /s/ Roger L. Dick
                                                  ------------------------------
                                                      Name:  Roger L. Dick
                                                      Title: CEO

                                             STATE STREET BANK AND TRUST COMPANY
                                             OF CONNECTICUT, NATIONAL
                                             ASSOCIATION, as Guarantee Trustee

                                             By:  /s/ Paul D. Allen
                                                  ------------------------------
                                                      Name:  Paul D. Allen
                                                      Title: Vice President

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