<PAGE>
                              EMPLOYMENT AGREEMENT

         THIS  EMPLOYMENT   AGREEMENT   (sometimes  referred  to  below  as  the
"Agreement"),  Made and entered  into this the day of October 21,  1996,  by and
between  RONALD  D.  SMITH,  a  resident  of  Cabarrus  County,  North  Carolina
(hereinafter referred to as "Employee");  and CABARRUS BANK OF NORTH CAROLINA, a
corporation  with its principal office in Concord,  North Carolina  (hereinafter
referred to as "Employer").

         WHEREAS,  the  Employer  desires to secure the future  services  of the
Employee and to that end desires to enter into this  Employment  Agreement  with
Employee,  upon the terms and  conditions  herein set forth,  which replaces and
supersedes all prior employment contracts, agreements or understandings, if any,
between the Employee and the Employer; and,
         WHEREAS,  the Employee wishes to accept  employment and enter into this
Employment Agreement with Employer effective as of April 1, 1996;
         NOW,  THEREFORE,  in consideration of the mutual promises and covenants
hereinafter set forth, and of other good and valuable consideration, the receipt
and  sufficiency  of  which  are  mutually  acknowledged,  the  parties  hereto,
intending legally to be bound, agree as follows:
         Section 1.  Agreement of Employment.  Employer  hereby agrees to employ
the  Employee  and  Employee  hereby  agrees to become  and remain  employed  by
Employer  for the  term,  and upon  and  subject  to the  terms  and  conditions
hereafter set forth.
         Section 2. Term. Employer and Employee hereby agree that Employee shall
become  employed by Employer  under the terms of this  Agreement  as of April 1,
1996 (the  "Commencement  Date"),  and shall  remain  employed by Employer for a
period of six (6) years and six (6) months, unless sooner terminated pursuant to
the terms hereof (the "Employment Period").
         Section 3. Employee  Representations.  Employee  represents to Employer
that Employee is not subject to an employment agreement with any other employer,
nor to any other  agreements  under the terms of which he may be prohibited from
accepting employment with Employer, and that Employee may accept employment with
Employer effective as of the Commencement Date.
         Section 4.  Duties of Employee.
         (a). Subject to the supervision and pursuant to the orders,  advice and
         directions  of the Board of Directors of the Employer,  Employee  shall
         perform his assigned  duties as President of Employer and shall perform
         such other  duties as are  customarily  performed  by one holding  such
         positions in other,  the same or similar  businesses or  enterprises as
         that engaged in by Employer.  (b).  Employee agrees that he will at all
         times  faithfully,  industriously,  and to  the  best  of his  ability,
         experience  and  talents,  perform  all  of  the  duties  that  may  be
         reasonably required of and from him pursuant to the express and implied
         terms hereof, to the reasonable  satisfaction of the Board of Directors
         of  Employer.  Such duties shall be rendered at  Employer's  offices in
         Concord,  North  Carolina,  and at such  other  place or  places as the
         interests,   needs,   business  and  opportunities  of  Employer  shall
         reasonably  require or make advisable.  (c).  Employee hereby agrees to
         refrain  from  engaging  in any  ventures  or  enterprises  which might
         interfere  with the  performance  of his  express  and  implied  duties
         hereunder. Employee shall at all times conduct himself in a manner that
         will not  prejudice or injure the  reputation  of  Employer,  its other
         employees  or any of its  affiliates.  Section 5.  Employer's  Right to
         Benefits of Work  Performed.  Employer  shall be entitled to all of the
         benefits, emoluments, and profits  arising from or incident to  any and
         all work,  services,  and advice of the  Employee performed or rendered
         in the course of  Employee's  employment hereunder.
         Section 6.  Compensation, Expenses and Benefits.
         (a).  Employer  shall pay to Employee,  and Employee  shall accept from
         Employer,  during the Employment  Period,  and in consideration for the
         services  to be  performed  by  Employee,  a  salary  at  the  rate  of
         $91,249.00 per annum (the "Annual Salary"), less deductions required by
         law and Employee authorized deductions,  payable in such equal periodic
         installments  as Employer may determine,  but not less  frequently than
         monthly.  Provided,  however, that each year the salary of the Employee
         shall be reviewed  and a salary  amount set for the  following  year by
         mutual  agreement  with the Board of  Directors.  In the  event  that a
         mutual  agreement cannot be reached then the salary shall remain at the
         same level as that of the previous year. (b). In addition to the Annual
         Salary  described in Section 6(a) above,  Employer  agrees to reimburse
         Employee  promptly (in accordance with policies and procedures  adopted
         by the Board of Directors of Employer) for all reasonable and necessary
         expenses  incurred  by  Employee  in  connection  with  the  Employer's
         business,  including,  without limitation, all reasonable and necessary
         expenses of travel,  lodging,  entertainment,  and meals away from home
         incurred  by  Employee  in  the  course  of his  employment  hereunder.
         Employee  agrees to keep and  maintain  such  records of the  aforesaid
         expenses as Employer  may require and to account to Employer  therefore
         prior  to any  such  reimbursement.  Employee  shall  comply  with  all
         reasonable and lawful policies and procedures  applied by Employer from
         time to time to its  employees  generally and relating to or regulating
         the  nature  and extent of  reimbursement  expenses,  and the manner of
         accounting and reimbursement  therefor.  (c). Employer hereby agrees to
         make available to Employee,  during the Employment Period, all benefits
         which are generally  available to similarly  situated  employees of the
         Employer,  subject  to and on a basis  consistent  with the  terms  and
         conditions of such benefits.  In addition,  Employer  agrees to provide
         Employee with the following benefits:
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                  (1) A non-contributing qualified employee profit-sharing plan;
                  additionally, participation in the Employer's 401(K) Plan. (2)
                  A non-contributing  employee's group life insurance plan which
                  will provide life  insurance  for Employee in the amount equal
                  to two (2) times  Employee's  annual  salary  (or a maximum of
                  $250,000.00)  during all times that Employee remains an active
                  employee. (3) A non-contributing accident and health insurance
                  plan for the payment of medical care  expenses  for  Employee.
                  (4) A non-contributing  deferred compensation plan pursuant to
                  the terms of  Exhibit  "A"  attached.  (5) A  non-contributing
                  disability  income plan wherein the Employer  will provide the
                  Employee with the following  disability  income payable to age
                  65 and  after a ninety  (90) day  waiting  period:  disability
                  income equal to sixty percent (60%) of the  Employee's  annual
                  salary as it exists from time to time up to a maximum  benefit
                  of $5,000.00 per month.
                           The Employer,  in its sold discretion,  may apply for
                  additional  insurance  in its own name and for its own benefit
                  covering  the  Employee  for  life,   medical,  or  disability
                  insurance,  in any amount  deemed  advisable  and the Employee
                  shall have no right,  title or interest therein.  The Employee
                  shall submit to any required examination and shall execute and
                  assign and/or deliver such application and policies  necessary
                  to effectuate such insurance coverage.
                           The  Employee  may  require  the  Employee  to have a
                  thorough  annual  physical  examination and will reimburse the
                  Employee for the expense.
         Except as otherwise specifically set forth herein, nothing herein shall
         be construed to impose upon Employer any legal  obligation to establish
         or  maintain  any  particular  benefit  or  benefits  for  any  of  its
         employees.  (d).  Employee  shall also be eligible to receive an annual
         bonus based upon performance  criteria to be determined by the Board of
         Directors of the Employer. The Board of Directors of the Employer shall
         determine  the  performance  criteria to be meet by  Employee  for each
         fiscal year of Employer or other twelve (12) month period designated by
         the  Board  of  Directors  of the  Employer  during  the  term  of this
         Agreement  prior to the  commencement of each fiscal year or such other
         period and shall cause such criteria to be  communicated  in writing to
         Employee. The amount of Employee's bonus shall be determined based upon
         the level of achievement  of Employee as compared with the  established
         performance criteria. The final determination  concerning the levels of
         achievement  attained  by  Employee  and the amount of each such annual
         bonus shall be made by the Board of  Directors  of the  Employer in its
         sole  judgment.  Any bonus  earned  by the  Employee  pursuant  to this
         Section 6(d) shall be payable to Employee,  less deductions required by
         law  and  Employee  authorized  deductions,  no  later  than  March  31
         following the year to which such bonus relates.  The bonus provided for
         hereunder  shall be payable  with  respect  to the fiscal  year or such
         other period immediately  preceding the year in which the bonus is paid
         and shall not be payable if the Employee is terminated  for cause prior
         to the end of the fiscal year or such other  period for which the bonus
         is to be paid.  In the event  that the  Employee  dies,  is  terminated
         because of  illness  or  disability  as  provided  in Section 9 of this
         Agreement or is terminated  by the Employer  without cause prior to the
         end of the fiscal year or such other  period for which such bonus is to
         be paid, a pro rata portion of such bonus, if otherwise  earned,  shall
         nevertheless be paid to the Employee or his estate, as the case may be.
         The pro  rata  portion  shall  be based  upon  the  number  of days the
         Employee  was  employed  by the  Employer  during  such  fiscal year as
         compared to 365.  Section 7.  Non-Competition.  (a).  While Employee is
         entitled by Employer  under this  Agreement and for two (2) years after
         the termination of the employment of Employee  hereunder for any reason
         whatever  other than  termination  of the  employment  of  Employee  by
         Employer  without cause  pursuant to Section  9(d),  Employee will not,
         directly or indirectly, own, manage, operate, control or participate in
         the  ownership,  management,  operation  or control of, or be connected
         with  as  an  officer,  employee,  partner,  director,  consultant,  or
         otherwise,  or have any financial  interest in, or aid or assist anyone
         else in the conduct of, any enterprise which engages in, or is about to
         engage in, or otherwise  carries on, any business  activity which is in
         competition with businesses conducted by the Employer or its affiliates
         in any  geographical  region in which the  Employer  or its  affiliates
         conducts such businesses during the term of this Agreement;  [provided,
         however,  that  notwithstanding  the  foregoing  the Employee  shall be
         entitled to acquire as a passive investment a proprietary  interest not
         to exceed 3% of the equity of any  publicly-held  company.]  (b). While
         Employee is employed by the  Employer  under this  Agreement  and for a
         period of two (2) years  after the  termination  of the  employment  of
         Employee  hereunder,  for  any  reason  whatever,  Employee  will  not,
         directly or indirectly,  employ,  solicit for employment,  or advise or
         recommend  to any other  person that such person  employ or solicit for
         employment, any person employed by the Employer or its affiliates. (c).
         While Employee is employed by the Employer under this Agreement and for
         a period of two (2) years after the  termination  of the  employment of
         Employee  hereunder,  for any  reason  whatever,  Employee  shall  not,
         directly or  indirectly,  solicit or advise or  recommend  to any other
         person that such person  solicit,  any  customer of the Employer or its
         affiliates  for the purpose of obtaining any business of such customer.
         (d). For purposes of this Section 7, "Employer"  shall also include the
         Employer's  parent company,  sister  companies,  subsidiaries and other
         affiliates.  Section 8. Nondisclosure of Confidential Information. (a).
<PAGE>
         Employee  covenants  and  agrees  to treat as  confidential  and not to
         disclose  and to use  only  for the  advancement  of the  interests  of
         Employer all  information,  plans,  records,  trade  secrets,  business
         secrets,  and  confidential  or other data of  Employer,  submitted  to
         Employee or complied,  received,  or otherwise  discovered  by Employee
         from time to time in the course of his  employment  by Employer for use
         in Employer's  business,  which Employee knows to have been acquired by
         him in confidence or which he knows would not otherwise be available to
         competitors of Employer or to members of the public and which would not
         otherwise  become known to said  competitors  or members of the public.
         (b).  Employee  agrees that upon  termination  of his  employment  with
         Employer,  for any reason,  voluntary or  involuntary,  with or without
         cause,  he  will  immediately  return  to the  Employer  any  property,
         customer lists, information forms, formulae,  plans, documents or other
         written or computer material or data,  software or firmware,  or copies
         of the same,  belonging to Employer or its affiliates,  or any of their
         customers,  within his possession,  and will not at any time thereafter
         copy,  reproduce or otherwise  facilitate the future  disclosure of the
         same.  Employee  further  agrees that he will not retain or use for his
         account at any time any trade names, trade mark, service mark, or other
         proprietary  business  designation used or owned in connection with the
         business of the Employer or its affiliates.  (c).  Employee agrees that
         all inventions,  designs,  improvements,  writings and discoveries made
         during  the  term of this  Agreement  and  pertaining  to the  business
         conducted  by the  Employer  shall  be the  exclusive  property  of the
         Employer.  Employee shall assist the Employer in obtaining  patents and
         copyrights on all such inventions, designs, improvements,  writings and
         discoveries  deemed  suitable for patent or copyright by the  Employer,
         and shall execute all  documents and do all things  necessary to obtain
         letters, patents, or copyrights, and to vest the Employer with full and
         exclusive title thereto, and protect the same against  infringements by
         others.  (d).  Notwithstanding  any provision of this  Agreement to the
         contrary,  the  obligation  of Employee  to vest in Employer  exclusive
         title to inventions,  designs,  improvements,  writings and discoveries
         shall  not  extend  or  apply  to  inventions,  designs,  improvements,
         writings  or  discoveries  developed  or made by  Employee  wholly  and
         completely  outside the course and scope of his  employment  under this
         Agreement,  entirely  on his own time,  and  without  using  Employer's
         equipment,  supplies, facilities or trade secret information.  Employee
         acknowledges and agrees that an exclusion under this Section 8(d) shall
         not apply where Employee's invention,  design, improvement,  writing or
         discovery: (1) relates,  directly or indirectly, to Employer's business
         or  businesses  or  actual  or  demonstrable  anticipated  research  or
         development;  or (2) results  from any work  performed  by Employee for
         Employer.  Employee shall bear the burden of proof in  establishing  an
         exclusion under this Section 8(d). (e). For purposes of this Section 8,
         the term "Employer"  shall also include the Employer's  parent company,
         sister  companies,   subsidiaries  and  other  affiliates.  Section  9.
         Termination.  If the term of this  Agreement has not sooner  expired by
         lapse of time, the term of Employee's employment hereunder shall termi-
         nate upon the occurrence of any of the following:
         (a).  Upon the death of the Employee.
         (b). As a result of the  disability  of Employee.  If it is  determined
         that  Employee is  disabled  and that such  disability  is likely to be
         permanent   (herein  referred  to  as  a  "Determination  of  Permanent
         Disability"),  Employer may terminate this Agreement.  Said termination
         shall not be effective  until such time as Employer  has given  written
         notice to  Employee,  at the  address  specified  in Section 11, of its
         intent to terminate  this  Agreement.  For the purposes of this Section
         9(b),  the term  "Disability"  shall mean the  Employee's  inability to
         perform functions  normally  performed for Employer by the Employee.  A
         "Determination  of Permanent  Disability" may be made at the request of
         either the Employer or Employee;  provided,  however, that in the event
         Employee is unable, due to his disability, to make such a requests, his
         spouse or other designee may make a request in his stead.  In the event
         of a request by either  Employee or Employer  for a  "Determination  of
         Permanent  Disability",  each of Employee and Employer shall  designate
         one doctor to participate in the determination; provided, however, that
         if  Employee  is  unable,  due  to  his  disability,  to  make  such  a
         designation, his spouse or other designee shall make the designation in
         his stead.  If the two doctors so designated  agree on a  determination
         required by this Section 9(b),  such  determination  shall be final. If
         the two doctors fail to agree,  they shall  designate a third doctor to
         make  the   determination   required  by  this  Section   9(b),   which
         determination  shall be final.  (c). At the election of  Employer,  for
         cause. "Cause" shall mean just and reasonable cause,  including without
         limitation,  (1) persistent  incompetency or  inefficiency,  failure to
         follow reasonable  instructions received from the Board of Directors of
         the  Employer  or  its  delegate,   willful   misconduct,   dishonesty,
         alcoholism,  addiction  to  drugs,  or  convictions  of a  felony  or a
         misdemeanor  (but  not  an  infraction),  (2)  material  breach  of any
         covenant  contained in this Agreement,  including  without  limitation,
         failure to devote  substantially  all business  time to the business of
         the Employer.  (d). At the election of Employer, for reasons other than
         for  cause.  "Cause"  shall  have the  definition  stated  above.  Upon
         termination   under  this  Section  9,  Employee's   right  to  further
         compensation and benefits under this Agreement shall cease;  provided, 
<PAGE>

         however, that Employee shall remain entitled to any unpaid compensation
         and  benefits  accrued  prior to such  termination  and to any  expense
         reimbursements   to  which  he  was   entitled  at  the  date  of  such
         termination,  and if Employee's  employment is terminated without cause
         or due to his death or disability,  such  termination  shall not affect
         Employee's or  Employee's  personal  representative's  right to receive
         additional payments pursuant to Section 6(d)
         of this Agreement.  Notwithstanding anything herein to the contrary, in
         the event that the  employment  of the  Employee is  terminated  by the
         Employer without cause during the term of this Agreement,  the Employer
         shall  continue to pay the Annual  Salary and provide the  benefits set
         forth in Section 6 of this Agreement  [except for the annual bonus, the
         payment of which is  controlled by Section 6(d)] for a period of twelve
         (12) months  after the  termination  of  Employee,  as  severance  pay.
         Notwithstanding anything herein to the contrary, the terms contained in
         Sections  7  and  8  hereof  shall  survive  the  termination  of  this
         Agreement.  In limitation of Employer's  obligations to Employee in the
         event that Employee is terminated by Employer pursuant to Section 9(d),
         should the Employee  become employed within the period during which the
         Annual Salary is being paid him, then in that event the Employer  shall
         receive  credit for, and shall not be obligated to pay Employee,  a sum
         equal to the gross  wages from  Employee's  new  employment  (including
         self-employment)   (but  not  including   unearned  income  [dividends,
         interest, etc.] or income that the Employee began receiving prior to or
         while in the employ of the Employer, it being the intent of the parties
         that the  Employer  receive  credit  for new and  earned  income of the
         Employee that replaces income previously earned from the Employer) that
         is paid to Employee.  [Example:  If Employer's monthly obligation is to
         pay  Employee  $5,000.00  per  month  in  gross  wages  (calculated  by
         reference  to his Annual  Salary as stated  above),  and if Employee is
         paid  $3,000.00  per month in gross  wages by his new  employer  (or by
         self-employment  as the case may be),  then  Employer's  obligation  to
         Employee is reduced to  $2,000.00  per  month.]  Should the gross wages
         paid to Employee in his new employment  equal or exceed the amount owed
         to him by Employer,  then Employer shall have no further obligations to
         Employee  hereunder.  For  purposes  of  allowing  Employer  to know of
         Employee's income, if any, following termination that requires Employer
         to continue to pay  Employee  his Annual  Salary,  during such time the
         Employee shall disclose to Employer by method  satisfactory to Employer
         the gross income earned by Employee.  Such disclosure  shall be made at
         least  quarterly.  During  such  period  the  Employee  shall  have the
         affirmative duty to use his best efforts to seek and obtain employment.

         Section 10. Change of Control.  If, at any time within  thirty-six (36)
months  following  a "Change in  Control"  as  defined  hereafter,  Employee  is
terminated by Employer  without cause  pursuant to Section 9(d),  Employer shall
continue to pay the Annual  Salary and provide the benefits set forth in Section
6 of  this  Agreement  for  a  period  of  twenty-four  (24)  months  after  the
termination  of Employee as severance  pay (this  compensation  to be in lieu of
that  severance  compensation  set forth in  Section 9 for  termination  without
cause).  Said Annual Salary shall be paid  periodically and on the same schedule
as that prior to Employee's termination.  In limitation of the foregoing, should
the Employee become employed within the period during which the Annual Salary is
being paid him, then in that event the Employer  shall  receive  credit for, and
shall not be  obligated  to pay  Employee,  a sum equal to the gross  wages from
Employee's  new  employment  (including   self-employment)  (but  not  including
unearned income  [dividends,  interest,  etc.] or income that the Employee began
receiving  prior to or while in the employ of the Employer,  it being the intent
of the parties that the Employer receive credit for new and earned income of the
Employee that replaces income  previously earned from the Employer) that is paid
to Employee.  [Example:  If  Employer's  monthly  obligation  is to pay Employee
$5,000.00 per month in gross wages (calculated by reference to his Annual Salary
as stated above), and if Employees is paid $3,000.00 per month in gross wages by
his new employer (or by  self-employment  as the case may be),  then  Employer's
obligation  to Employee  is reduced to  $2,000.00  per month.]  Should the gross
wages paid to Employee in his new employment  equal or exceed the amount owed to
him by Employer,  then  Employer  shall have no further  obligation  to Employee
hereunder.  For purposes of allowing  employer to know of Employee's  income, if
any,  following  termination that requires  Employer to continue to pay Employee
his Annual  Salary,  during such time the Employee shall disclose to Employer by
method  satisfactory  to Employer  the gross  income  earned by  Employee.  Such
disclosure  shall be made at least  quarterly.  During such period the  Employee
shall  have the  affirmative  duty to use his  best  efforts  to see and  obtain
employment.  Additionally,  in the  event  of such a  Section  9(d)  termination
occurring  within  thirty-six  (36) months  following  a Change of Control,  the
provisions of Section 7 shall not be effective,  and the vesting schedule in the
Employee's deferred compensation  agreement attached hereto as Exhibit "A" shall
automatically  be  accelerated  such that the Employee  shall be entitled to the
same  benefits  under the  agreement  as if the  Employee  had  remained  in the
employment of the Employer through August 31, 2002.
<PAGE>
         Notwithstanding  anything  in  this  Agreement  to  the  contrary,  the
Employee may, at any time following a change of control,  voluntarily  leave the
employment of the Employer.  In such an event the  provisions of Section 7 shall
be effective,  and the vesting schedule in the Employee's deferred  compensation
agreement attached hereto as Exhibit "A" shall automatically be accelerated such
that the Employee  shall be entitled to the same benefits under the agreement as
if the Employee had remained in the  employment of the Employer  through  August
31,  2002.   Additionally,   the  Employee  shall  be  entitled  to  any  unpaid
compensation  and benefits  accrued prior to the Employee leaving the employment
of the Employer and to any expense reimbursements to which he was entitled prior
to ending his employment.  He shall not be paid any salary which was not accrued
prior to the Employee  leaving the  employment of the Employer.  He shall not be
paid an annual bonus pursuant to Section 6 for the year he leaves the employment
of the Employer.
         A "change in control"  shall be deemed to have occurred if and when any
"person" (as such term is used in Sections  13(d) and 14(d)(2) of the Securities
and  Exchange  Act of  1934) is or  becomes  a  beneficial  owner,  directly  or
indirectly,  of  securities of the Employer or its parent  company  representing
greater than fifty percent (50%) of the combined  voting power of the Employer's
or  its  parent  company's  then  outstanding  securities.  Notwithstanding  the
foregoing,  no "change in control" shall be deemed to have occurred by virtue of
any transaction  which results in the Employee and/or a member or members of the
Employer's  present Board of Directors  (i.e.  existing on March 1, 1996),  or a
group of  persons  including  the  Employee  and/or a member or  members  of the
Employer's present Board of Directors,  acquiring,  directly or indirectly, more
than fifty percent (50%) of the combined  voting power of the  Employer's or its
parent company's outstanding securities.  In limitation of the provisions in the
preceding  sentence,  a "change in control"  shall be deemed to have occurred if
the member or members of the  Employer's  present Board of Directors do not own,
control or constitute a material portion of the acquiring  "person".  "Material"
shall  mean  ownership  or  control  of at  least  twenty  percent  (20%) of the
acquiring person.
         Any dispute or  controversy  arising under or in  connection  with this
Section 10 shall be settled  exclusively  by  arbitration  in the State of North
Carolina in accordance  with the rules of the American  Arbitration  Association
then in effect.
         Section 11. Enforcement of Employee Restrictions. Employee acknowledges
that he has carefully  read and considered the provisions of this Agreement and,
having done so,  agrees that the  restrictions  set forth in this  Agreement  in
Sections 7 and 8 (including,  but not limited to, the period of restriction  and
the geographical  area of restriction set forth therein) are fair and reasonable
and are necessarily required for the protection of the interests of the Employer
and its  affiliates.  Employee  further  acknowledges  that due to the nature of
Employer's business, more limited restrictions than those found herein would not
be reasonable or  appropriate.  The Employee  covenants and agrees with Employer
that the  Employer  shall be  entitled to an  accounting  and  repayment  of all
profits, compensation, commissions, remunerations or benefits which the Employee
directly or indirectly has realized and/or may realize as a result,  growing out
of or in connection with any such  violations;  such remedy to be in addition to
and not in  limitation of any  injunctive  relief or other rights or remedies to
which  Employer or its  affiliates is or may be entitled to at law or in equity.
In the event that  notwithstanding the foregoing,  any part of the covenants set
forth  in this  Agreement  shall be held to be  invalid  or  unenforceable,  the
remaining parts hereof shall  nevertheless  continue to be valid and enforceable
as though the invalid and  unenforceable  part had not been included herein.  In
the event that any provisions of this  Agreement  relating to the time period or
geographical  restriction shall be declared by a court of competent jurisdiction
to exceed the maximum time periods or geographical  areas which such court deems
reasonable  or  enforceable,   such  time  periods  or  geographical   areas  of
restriction  shall be deemed to become and thereafter be the maximum time period
or geographical areas which such court deems reasonable and enforceable.
         Section 12. Notices.  All notices required or permitted hereunder shall
be deemed to be duly given if in writing  and  delivered  personally  or sent by
United  States  registered or certified  mail,  postage  pre-paid,  addressed to
Employer at:
                                    c/o John R. Boger, Jr.
                                    Chairman, Cabarrus Bank of North Carolina
                                    71 McCathern Blvd., S.E.
                                    Concord, N.C. 28025

and addressed to Employee at:
                                    Ronald D. Smith
                                    5367 Lynchburg Dr.
                                    Concord, North Carolina  28025
or at such changed addresses as the parties may designate in writing.
<PAGE>

         Section 13.  Miscellaneous.
                  (a). Headings.   Headings,  titles and captions  contained  in
         this Employment  Agreement are inserted only as a matter of convenience
         and reference and in no  way define,  limit,  extend,  or describe  the
         scope of this Agreement or the intent of any provisions hereof.
                  (b).  Gender.  The use in this  Agreement  of  gender-specific
         words or  phrases shall be deemed to include the masculine, feminine or
         neuter genders, as the context may require.
                  (c).  Entire  Agreement.  This writing  constitutes the entire
         agreement   between  the  parties   hereto  and  supersedes  any  prior
         understanding  or agreements  among them respecting the subject matter.
         There are no extraneous representations,  arrangements, understandings,
         or  agreements,  oral or written,  in respect of the subject  matter of
         this Agreement,  among the parties hereto, except those fully expressed
         herein.
                  (d). Amendments. No amendments,  changes,  alterations,  modi-
         fications,  additions and qualifications of the terms of this Agreement
         shall be made or  binding unless made in writing  and signed by all the
         parties hereto.
                  (e).  Waiver.  The failure of  either party to  enforce at any
         time any of the provisions of  this  Agreement  shall not be  construed
         as a waiver of such provisions or of the right of such party thereafter
         to enforce any such provisions.
                  (f).   Invalidity   and   Severability.   The   invalidity  or
         unenforceability  of any particular  provision of this Agreement  shall
         not affect the  enforceability  of other  provisions  hereof,  and this
         Agreement  shall be  constructed  in all respects as if such invalid or
         unenforceable provisions were omitted.
                  (g).  Governing  Law.  This  Agreement  shall be construed and
         governed in  accordance  with the laws of the State of North  Carolina.
         Employer  hereby consents to the  jurisdiction  of any local,  state or
         federal court located in the State of North Carolina, and hereby waives
         personal  service  of  process  and  consents  to service of process by
         certified or registered mail directed to Employee at Employee's address
         stated in Section 11 of this Agreement.  Employee further  specifically
         consents to venue in Lincoln County.
                  (h). Burden and Benefit.  This Agreement shall be binding upon
         and  inure to the  benefit  of the  parties  hereto  and  their  heirs,
         successors  and assigns.  IN WITNESS  WHEREOF,  the parties hereto have
         executed this Agreement as of the date and year first above written.
                                    EMPLOYER:
                                    Cabarrus Bank of North Carolina

                                    By:   \S\John R. Boger, Jr.
                                        ----------------------------
                                             John R. Boger, Jr.

                                    Title: Chairman
                                        ----------------------------           


                                    EMPLOYEE:
                                    \S\ Ronald D. Smith
                                    -----------------------    (SEAL)
                                        Ronald D. Smith