<PAGE>

                         CABARRUS BANK OF NORTH CAROLINA
                      DEFERRED COMPENSATION AGREEMENT WITH
                                 RONALD D. SMITH

         THIS PLAN AND AGREEMENT, Executed this _18__ day of __February_,  1993,
by and  between  CABARRUS  BANK OF  NORTH  CAROLINA,  a North  Carolina  banking
corporation  (hereinafter referred to as the "Company"),  and RONALD D. SMITH, a
citizen and resident of Cabarrus County, North Carolina (hereinafter referred to
as the "Employee"):

                               W I T N E S S E T H:

         WHEREAS, the Company believes it is in the best interest of the Company
and the  Employee  to  maintain  a plan for the  purpose  of  providing  certain
benefits for the Employee;

         NOW, THEREFORE, it is mutually agreed as follows:

                                    ARTICLE I

                                   EMPLOYMENT

         The Company may employ the Employee at such rate of compensation and on
such terms as may be agreed to by the parties.  Nothing in this Agreement  shall
be construed to grant any employment rights to the Employee.


                                   ARTICLE II

                                    BENEFITS

         The Company  shall be obligated to provide  benefits to the Employee as
follows:

         A. Upon  retirement  from the Company at age 65, or retirement from the
Company at some later  date,  the  Employee  shall  receive a monthly  income of
$2,500.00 for 120 consecutive  months beginning on the first business day of the
calendar  month next  succeeding  the  Employee's  retirement  date.  Should the
Company  allow  retirement  prior to the Employee  reaching the age of 65 years,
then the payments described above shall begin upon the Employee reaching the age
of 65 years;  however,  the  Company  may allow  payments to begin at the actual
retirement date in its sole discretion.

         In the event the  Employee  dies after the monthly  payments  begin but
prior to receiving  all 120 monthly  payments then his  beneficiary(s)  shall be
entitled to receive all remaining payments.

         B. If the Employee shall die before the aforesaid retirement date while
in the  employ of the  Company,  the  Company  agrees  to make the said  monthly
payments  set  forth in  sub-paragraph  A.  above to the  beneficiary(s)  of the
Employee as per Article IV of this agreement.

         C. Upon permanent  disability  before retirement at age 65 while in the
employ of the  Company,  the  Employee  shall  receive  no  benefits  under this
Deferred  Compensation  Plan  until  the age of 65 at  which  time  the  monthly
payments set forth in  sub-paragraph  A above shall begin. If the Employee shall
die after becoming  permanently  disabled while in the employ of the Company but
before the age of 65 then the  monthly  payments  set forth in  sub-paragraph  A
above  shall  begin  at  the   Employee's   death  and  shall  be  made  to  his
beneficiary(s) as per Article IV of this Agreement.  The "permanent  disability"
of the Employee shall be determined by the Company's Board of Directors.

         D. Should the employee leave the employ of the Company after August 31,
2002,  for any reason then the Employee  shall receive a monthly  income for 120
months as set forth below.  Said payments shall begin and shall be paid pursuant
to the applicable schedule and procedures set forth in sub-paragraphs A, B and C
above.  For  purposes  of  applying  sub-paragraph  A. it shall be  conclusively
presumed that the Employee will retire at age 65.

         Date Employment Ends               Monthly Payment

         After August 31, 2002                       $1,250.00
         After August 31, 2003                       $1,500.00
         After August 31, 2004                       $1,750.00
         After August 31, 2005                       $2,000.00
         After August 31, 2006                       $2,250.00
         After August 31, 2007                       $2,500.00

<PAGE>

                                   ARTICLE III

                               SOURCE OF PAYMENTS


         Nothing herein shall require the Company to purchase any life insurance
contract or any other property to secure its obligation under this Agreement, or
if the Company should purchase such contract or other property,  to exercise any
option,  election or right  under such  contract  or other  property,  or if the
Company wishes to exercise any option,  election or right under such contract or
other  property,  to exercise such option,  election or right in any  particular
manner. The Company's obligation hereunder is totally unsecured.

         The  Employee,  beneficiary  and any other person or persons  having or
claiming a right to payments  hereunder  or to any  interest  in this  Agreement
shall rely solely on the unsecured promise of the Company set forth herein,  and
nothing in this Agreement  shall be construed to give the Employee,  beneficiary
or any other person or persons any rights, title, interest or claim in or to any
specific asset, fund, reserve,  account or property of any kind whatsoever owned
by the Company or in which it might have any right,  title or interest now or in
the future,  but Employee  shall have the right to enforce his claim against the
Company in the same manner as any unsecured creditor.


                                   ARTICLE IV

                                   BENEFICIARY

         The death  beneficiary  of the Employee  shall be the person,  persons,
trust  or  charitable  entity,  living  or in  existence  at the  time  for  any
distribution  hereunder,  which the Employee shall have most recently designated
as highest in  priority on a form,  provided  for that  purpose by the  Company,
signed by the  Employee,  filed with the Company,  and attached to the Company's
original copy of this document as "Exhibit A". The death or non-existence of any
such beneficiary  either before or after receipt of any distribution  hereunder,
shall  terminate  the entire  interest  of such  beneficiary  in and to the then
undistributed  portion of such Employee's account and such undistributed portion
shall  thereafter be  distributed  to or for the benefit of the  beneficiary  or
beneficiaries  designated  as next highest in priority by such  Employee.  If no
such  beneficiary  be  thus  designated,  or  if  all  of  the  thus  designated
beneficiaries  do not survive or are no longer in existence at any time prior to
the  complete   distribution  of  such  account,   such  account,  or  the  then
undistributed  balance  thereof,  shall be named in the Employee's last will and
testament,  except  as to the  extent  to which the  specific  bequests  of such
document  are paid by the  Employee's  other  resources;  or if there is no such
document then in existence, under the laws of descent and distribution, to those
persons who would be entitled to the Employee's  personal  property,  and in the
proportions  to which they would be so entitled,  had such Employee died, at the
time for such  distribution,  intestate  and a  resident  of the  State of North
Carolina.


                                    ARTICLE V

                                  MISCELLANEOUS

         This  Agreement  shall be subject to, and  governed by, the laws of the
State of North  Carolina.  Any disputes  arising under this  Agreement  shall be
settled exclusively by binding  arbitration  pursuant to the applicable rules of
the American Arbitration Association.

         In the  event  any parts of this  Agreement  are found to be void,  the
remaining  provisions of this Agreement  shall  nevertheless be binding with the
same effect as though the void parts were deleted.

         Whenever in this Agreement,  words, including pronouns, are used in the
masculine,  they shall be read and construed in the feminine or neuter  whenever
they will so apply, and whenever in this Agreement,  words,  including pronouns,
are used in the  singular  or plural,  they shall be read and  construed  in the
plural or singular, respectively, wherever they would so apply.

         This Agreement shall be binding upon the parties  hereto,  their heirs,
executors, administrators, successors and assigns.

         This Agreement may be amended or revoked at any time or times, in whole
or in part, by the mutual written consent of the Employee and the Company.


                                   ARTICLE VI

                                    FIDUCIARY

         The Company is hereby designated as the named fiduciary hereunder,  and
shall be  responsible  for the  management  and  control  of the  operation  and
administration  of this plan  including any and all decisions  pertaining to the
granting or denial of benefit claims and any and all decisions pertaining to the
review of denials of benefit claims.

<PAGE>

                                   ARTICLE VII

                     FUNDING POLICY AND CLAIMS FOR BENEFITS

         The Company shall  establish a funding policy and method for this Plan,
and shall at least  annually  review such funding  policy and method to make any
necessary  adjustments  thereto in order to ensure that such funding  policy and
method at all times shall remain consistent with the objectives of this Plan and
the requirements of law.

         Claims  for  benefits  under  this Plan shall be made in writing to the
Company.  If such claim for benefits is wholly or partially denied,  the Company
shall,  within a  reasonable  period of time,  but no later  than 90 days  after
receipt  of the  claim,  notify the  claimant  of the denial of the claim.  Such
notice of denial  (i) shall be in  writing,  (ii)  shall be  written in a manner
calculated to be  understood  by the  claimant,  and (iii) shall contain (a) the
specific reason or reasons for the denial of the claim, (b) a specific reference
to the  pertinent  plan  provisions  upon  which  the  denial  is  based,  (c) a
description of any additional material or information necessary for the claimant
to  perfect  the  claim,  along  with an  explanation  of why such  material  or
information  is  necessary,  and (d) an  explanation  of the plan's claim review
procedure.

         Within 120 days of the receipt by the claimant of the written notice of
denial of the claim,  or such later  time as shall be deemed  reasonable  taking
into  account  the  nature  of the  benefit  subject  to the claim and any other
attendant  circumstances,  the  claimant  may file a  written  request  with the
Company  that it conduct a full and fair review of the denial of the  claimant's
claim for benefits,  including the conducting of a hearing,  if deemed necessary
by the Company.  In connection  with the claimant's  appeal of the denial of his
benefit,  the claimant may review pertinent  documents and may submit issues and
comments in writing.

         The Company  shall  deliver to the  claimant a written  decision on the
claim promptly,  but not later than 60 days, after the receipt of the claimant's
request for review,  except that if there are special circumstances (such as the
need to hold a hearing) which require an extension of time for  processing,  the
aforesaid  sixty (60) day period  shall be extended to 120 days.  Such  decision
shall be (a) written in a manner  calculated  to be  understood by the claimant,
(b)  include  specific  reasons  for  the  decision,  and (c)  contain  specific
references to the pertinent plan provisions upon which the decision is based.


                                  ARTICLE VIII

                                 ADMINISTRATION

         The  Secretary of the Company shall  maintain a copy of this  Agreement
and any amendments thereto.

         IN WITNESS  WHEREOF,  the parties  hereto have hereunto set their hands
the day and year first above written.

                                       CABARRUS BANK OF NORTH CAROLINA


                                       By/s/ James E. Burt, III
                                       -------------------------
                                             James E. Burt, III      
                                             President



                                        EMPLOYEE


                                         /s/ Ronald D. Smith     (Seal)
                                        -------------------------------
                                             Ronald D. Smith

<PAGE>


                                    EXHIBIT A

                         LINCOLN BANK OF NORTH CAROLINA
                         DEFERRED COMPENSATION AGREEMENT
                                 WITH RON SMITH

         I,  Ronald D.  Smith,  hereby  list my  beneficiaries  under  this Plan
according to priority pursuant to Article VI of this Plan:

         1st Priority:     ____Kathryn P. Smith____________________

         *2nd Priority:    ____Bradley K. Smith____________________

         *3rd Priority:    ____Christopher M. Smith_________________

         4th Priority:     ______________________________________

         5th Priority:     ______________________________________

* 2nd and 3rd Priorities are Equal Beneficiaries