Exhibit 10.9**EXECUTIVE SUPPLEMENTAL RETIREMENT****PLAN AGREEMENT**     **THIS AGREEMENT**is made and entered into this 30th day of March , 2005, byand between the Bank of Granite, a bank organized and existing under the laws of the State of NorthCarolina (hereinafter referred to as the “Bank”), and R. Scott Anderson, an Executive of the Bank(hereinafter referred to as the “Executive”).     **WHEREAS**, the Executive is now in the employ of the Bank and has for many years faithfullyserved the Bank. It is the consensus of the Board of Directors (hereinafter referred to as the“Board”) that the Executive’s employment has been of exceptional merit, in excess of thecompensation paid and an invaluable contribution to the profits and position of the Bank in itsfield of activity. The Board further believes that the Executive’s experience, knowledge ofcorporate affairs, reputation and industry contacts are of such value, and the Executive’scontinued employment so essential to the Bank’s future growth and profits, that it would suffersevere financial loss should the Executive terminate their employment;     **ACCORDINGLY**, the Board has adopted the Bank of Granite Executive Supplemental Retirement Plan(hereinafter referred to as the “Executive Plan”) and it is the desire of the Bank and theExecutive to enter into this Agreement under which the Bank will agree to make certain payments tothe Executive upon the Executive’s retirement or to the Executive’s beneficiary(ies) in the eventof the Executive’s death pursuant to the Executive Plan;     **FURTHERMORE**, it is the intent of the parties hereto that this Executive Plan be considered anunfunded arrangement maintained primarily to provide supplemental retirement benefits for theExecutive, and be considered a non-qualified benefit plan for purposes of the Employee RetirementIncome Security Act of 1974, as amended (“ERISA”). The Executive is fully advised of the Bank’sfinancial status; and     **THEREFORE**, in consideration of employment the Executive has performed in the past and those tobe performed in the future, and based upon the mutual promises and covenants herein contained, theBank and the Executive agree as follows:**I.** **DEFINITIONS** A. Effective Date:    The Effective Date of the Executive Plan shall be October 22, 2004.
 

 
 B. Plan Year:    Any reference to the “Plan Year” shall mean a calendar year from January 1st toDecember 31st. In the year of implementation, the term “Plan Year” shall mean theperiod from the Effective Date to December 31st of the year of the Effective Date.  C. Retirement Date:    Retirement Date shall mean retirement from employment with the Bank that becomeseffective on the first day of the calendar month following the month in which theExecutive reaches age sixty-five (65) or such later date as the Executive mayactually retire.  D. Early Retirement Date:    Early Retirement Date shall mean a retirement from employment which is effectiveprior to the Normal Retirement Age stated herein, provided the Executive hasattained age fifty (50) and has completed seven (7) full years of employment withthe Bank from the date of first employment subsequent to the Executive attainingage eighteen (18).  E. Termination of Employment:    Termination of Employment shall mean the Executive’s voluntary resignation ofemployment by the Executive or the Bank’s discharge of the Executive without cause,prior to the Early Retirement Date (Subparagraph I [D]) or Normal Retirement Age(Subparagraph I [J]).  F. Index Retirement Benefit:    The Index Retirement Benefit for each Executive in the Executive Plan for each PlanYear shall be equal to the excess (if any) of the Index (Subparagraph I [G]) forthat Plan Year over the Opportunity Cost (Subparagraph I [H]) for that Plan Year,divided by a factor equal to 1.00 minus the marginal tax rate.  G. Index:    The Index for any Plan Year shall be the aggregate annual after-tax income from thelife insurance contract(s) described hereinafter as defined by FASB TechnicalBulletin 85-4. This Index shall be applied as if such insurance contract(s) werepurchased on the Effective Date of the Executive Plan.
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   Insurance Company: Jefferson Pilot Life Insurance CompanyPolicy Form: Flexible Premium Adjustable LifePolicy Name: Executive Security Plan 100Insured’s Age and Sex: 49, MaleRiders: NoneRatings: NoneOption: LevelFace Amount: $2,316,000Premiums Paid: $840,000Number of Premium Payments: SingleAssumed Purchase Date: October 22, 2004   If such contracts of life insurance are actually purchased by the Bank, then theactual policies as of the dates they were actually purchased shall be used incalculations under this Executive Plan. If such contracts of life insurance arenot purchased or are subsequently surrendered or lapsed, then the Bank shallreceive annual policy illustrations that assume the above-described policies werepurchased or had not subsequently surrendered or lapsed. Said illustration shallbe received from the respective insurance companies and will indicate the increasein policy values for purposes of calculating the amount of the Index.    In either case, references to the life insurance contracts are merely for purposesof calculating a benefit. The Bank has no obligation to purchase such lifeinsurance and, if purchased, the Executive and the Executive’s beneficiary(ies)shall have no ownership interest in such policy and shall always have no greaterinterest in the benefits under this Executive Plan than that of an unsecuredcreditor of the Bank.  H. Opportunity Cost:    The Opportunity Cost for any Plan Year shall be calculated by taking the sum of theamount of premiums for the life insurance policies described in the definition of“Index” plus the amount of any after-tax benefits paid to the Executive pursuant tothe Executive Plan (Paragraph II hereinafter) plus the amount of all previousyears’ after-tax Opportunity Cost, and multiplying that sum by the average aftertax yield of a one-year Treasury bill.    I**.**Change of Control:    Change of Control shall be defined as follows: a. the acquisition of more than fifty percent (50%) of the valueor voting power of the Bank’s stock by a person or group;
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 b. the acquisition in a period of twelve months or less of atleast thirty-five percent (35%) of the Bank’s stock by a person or group;  c. the replacement of a majority of the Bank’s board in a periodof twelve months or less by Directors who were not endorsed by a majority ofthe current board members; or  d. the acquisition in a period of twelve months or less of fortypercent (40%) or more of the Bank’s assets by an unrelated entity.   For the purposes of this Executive Plan, transfers on account of deaths or gifts,transfers between family members or transfers to a qualified retirement planmaintained by the Bank shall not be considered in determining whether there hasbeen a Change of Control.  J. Normal Retirement Age**:**    Normal Retirement Age shall mean the date on which the Executive attains agesixty-five (65).  K. Benefit Accounting:    The Bank shall account for the benefit provided herein using the regulatoryaccounting principles of the Bank’s primary federal regulator. The Bank shallestablish an accrued liability retirement account for the Executive into whichappropriate reserves shall be accrued.**II.** **INDEX BENEFITS** A. Retirement Benefits:    Subject to Subparagraph II (E) hereinafter, an Executive who remains in the employof the Bank until the Normal Retirement Age (Subparagraph I [J]) shall be entitledto receive an annual benefit amount equal to the amount set forth in Exhibit A-1.Said payments shall be made annually and shall commence thirty (30) days followingthe Executive’s retirement and shall continue each Plan Year until the Executiveattains age seventy-five (75). Upon completion of the aforestated payments andcommencing subsequent thereto and subject to Subparagraph II (A) (i) hereinbelow,the Index Retirement Benefit (Subparagraph I [F]) for each Plan Year subsequent tothe year in which the Executive attains age seventy-five (75), and including theremaining portion of the Plan Year in which the Executive attains age seventy-five(75) shall be paid to the Executive until the Executive’s death.
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 (i) The Index Retirement Benefit Adjustment:    The Index Retirement Benefit payment as set forth hereinabove for thefirst Plan Year subsequent to the Executive attaining age seventy-five(75) shall be adjusted according to a number equal to the aggregate of theIndex Retirement Benefit (Subparagraph I [F]) for each Plan Year from theEffective Date of this agreement until the Plan Year the Executive attainsage seventy-five (75) over the aggregate of the benefit payments theExecutive actually received under the terms of this Executive Plan throughthat date. For example, if the Executive retires at age sixty-five (65)and the aggregate annual benefits received by the Executive until the PlanYear the Executive attains age seventy-five (75) were $900,000.00,and the aggregate Index Retirement Benefits for each Plan Year from theEffective Date of this agreement to the Plan Year the Executive’s attainsage seventy-five (75) were $1,000,000.00 then the Executive’sIndex Retirement Benefit in the first Plan Year said payment is payable tothe Executive would be increased by $100,000.00. If said numberis a deficit then the Index Retirement Benefit for the first Plan Yearsaid payment is payable to the Executive and each subsequent Plan Year’sbenefit (if necessary) shall be reduced until the entire deficit has beenrecovered by the Bank. For each year thereafter, the Index RetirementBenefit payment shall be paid as set forth in Subparagraph I (E). Forexample, if the Executive retires at age sixty-five (65) and the aggregateannual benefits to be received by the Executive until the Plan Year theExecutive attains age seventy-five (75) were $1,000,000.00, andthe aggregate Index Retirement Benefits for each Plan Year from theEffective Date of this agreement to the Plan Year the Executive attainsage seventy-five (75) were $900,000.00 and the Executive’s IndexRetirement Benefit was $90,000.00 in the first year, then theExecutive would not receive any Index Retirement Benefit in the firstyear, and the second years’ Index Retirement benefit would be reduced by$10,000.00. B. Early Retirement:    Subject to Subparagraph II (E), should the Executive elect Early Retirement or bedischarged without cause by the Bank subsequent to the Early Retirement Date[Subparagraph I (D)], the Executive shall be entitled to receive the annual benefitset forth in Exhibit A-2, actuarially reduced then further reduced by the fullnumber of years the Executive retires early prior to Normal Retirement Age, timessix and sixty seven one hundredths percent (6.67%) (For example, if Executiveretires at age 61,
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   the annual benefit set forth in Exhibit A-2 shall be actuariallyreduced then further reduced by 26.68%: 61 to 65 = 4 X 6.67%=26.68%.) Saidpayments shall be made annually and shall commence thirty (30) daysfollowing the Executive’s early retirement and shall continue until the Plan Yearin which the Executive attains age seventy-five (75). Upon completion of theaforestated payments and commencing subsequent thereto and subject to SubparagraphII (A) (i) hereinabove, the vested percentage set forth hereinabove of the IndexRetirement Benefit for each Plan Year subsequent to the year in which the Executiveattains age seventy-five (75), and including the remaining portion of the Plan Yearin which the Executive attains age seventy-five (75), shall be paid to theExecutive until the Executive’s death.  C. Termination of Employment:    Subject to Subparagraph II (E), should an Executive suffer a Termination ofEmployment subsequent to three (3) full years of employment with the Bank from theExecutive attaining age eighteen (18), the Executive shall be entitled to receivethe percentage set forth hereinbelow that corresponds to the number of full yearsthe Executive has been employed the Bank subsequent to the Executive attaining ageeighteen (18), times the annual benefit set forth in Exhibit A-1. Said paymentsshall commence thirty (30) days following the Executive’s Normal Retirement Age(Subparagraph I [J]) and shall continue until the Executive attains ageseventy-five (75). Upon completion of the aforestated payments and commencingsubsequent thereto and subject to Subparagraph II (A) (i) hereinabove the IndexRetirement Benefit for each Plan Year subsequent to the year in which the Executiveattains seventy-five (75), and including the remaining portion of the Plan Year inwhich the Executive attains age seventy-five (75), shall be paid to the Executiveuntil the Executive’s death.     Years of Vesting PercentageEmployment (to a maximum of 100%)0-2  0%3  20%4  40%5  60%6  80%7 or more  100% D. Death:    If the Executive dies while there is a balance in the Executive’s accrued liabilityretirement account, then the unpaid balance shall be paid in a lump sum to theindividual or individuals designated in writing by the
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   Executive and filed with theBank. In the absence of or a failure to designate a beneficiary, the unpaidbalance shall be paid in a lump sum to the personal representative of theExecutive’s estate. If, upon death, theExecutive shall have received the total balance of the Executive’s accruedliability retirement account, then no further benefit shall be due hereunder. Inany event, upon the death of the Executive, the Executive’s beneficiary shall notbe entitled to receive any Index Retirement Benefit.  E. Termination of Employment and Discharge for Cause:    The Bank may elect to terminate the Executive “for cause” immediately upon writtennotice to the Executive. For purposes of this Agreement, “for cause” shall mean(a) any dishonest, illegal or other act of moral turpitude (such as theft, fraud orembezzlement) by the Executive which is materially detrimental to the interest andwell-being of the Bank, (b) the conviction of a felony, (c) the unreasonablefailure or refusal of the Executive to perform to the best of the Executive’sability on a reasonable basis the Executive’s duties hereunder, or (d) anyviolation by the Executive of any state or federal law, rule or regulation relatingto banking, financial institutions or securities laws, the violation of which wouldbe materially detrimental to the interest and well-being of the Bank. Should theExecutive suffer a Termination of Employment prior to three (3) full years ofemployment subsequent to the Executive attaining age eighteen (18) or upon thetermination of the Executive “for cause”, this Agreement and all of the Bank’sobligations hereunder shall terminate immediately, except for obligations whichhave accrued prior thereto as provided in Subparagraphs II (D) and (F) in the caseof the Executive’s death or disability.  F. Disability Benefit:    In the event that there is a finding of any qualified period of disability for theExecutive, the Bank will deposit into the Contingent Disability Trust for Executive(hereafter “Trust”) an amount equal to the accrued liability retirement accountestablished on the Executive’s behalf pursuant to this Agreement. No otherbenefits will be owed to the Executive under this Agreement during the Period ofDisability.    An Executive is considered disabled if he or she is: [1] unable to engage in anysubstantial gainful activity by reason of any medically determinable physical ormental impairment which can be expected to result in death or can be expected tolast for a continuous period of not less than twelve (12) months; or [2] by reasonof any medically determinable physical or mental impairment which can be expectedto result in death or can be expected to last for a continuous period of not lessthan twelve (12) months, receiving
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   income replacement benefits for a period of notless than three (3) months under an accident and health plan covering the Executiveof the Bank. If there is a dispute regarding whether the Executive is disabled,such dispute shall be resolved by a physician mutually selected by the Bank andthe Executive and such resolution shall be binding upon all parties to thisAgreement.    If the Executive is under a Period of Disability on the date the Executive reachesNormal Retirement Age, this agreement shall automatically terminate and theExecutive shall not be entitled to any further benefits under this Agreement.    If the Period of Disability ends prior to Normal Retirement Age and the Executivereturns to active employment with the Bank, the Bank will pay the Executive areduced retirement benefit amount. The retirement benefit amount shall be reducedby the ten (10) year annual annuity that would be payable from the Trust assumingthe trust assets earned on a net of four percent (4%) annually starting from thedate of the existence of said Trust.  G. Death Benefit:    Except as set forth above, there is no death benefit provided under this Agreement.**III.** **RESTRICTIONS UPON FUNDING**   The Bank shall have no obligation to set aside, earmark or entrust any fund or money withwhich to pay its obligations under this Executive Plan. The Executive, theirbeneficiary(ies), or any successor in interest shall be and remain simply a generalcreditor of the Bank in the same manner as any other creditor having a general claim formatured and unpaid compensation.   The Bank reserves the absolute right, at its sole discretion, to either fund theobligations undertaken by this Executive Plan or to refrain from funding the same and todetermine the extent, nature and method of such funding. Should the Bank elect to fundthis Executive Plan, in whole or in part, through the purchase of life insurance, mutualfunds, disability policies or annuities, the Bank reserves the absolute right, in its solediscretion, to terminate such funding at any time, in whole or in part. At no time shallany Executive be deemed to have any lien nor right, title or interest in or to any specificfunding investment or to any assets of the Bank.   If the Bank elects to invest in a life insurance, disability or annuity policy upon thelife of the Executive, then the Executive shall assist the Bank by freely submitting
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  to aphysical exam and supplying such additional information necessary to obtain such insuranceor annuities.**IV.** **CHANGE OF CONTROL**   Upon a Change of Control (Subparagraph I [I]), if the Executive subsequently suffers aTermination of Employment (Subparagraph I [E]), then the Executive shall receive thebenefits promised in this Executive Plan upon attaining Normal Retirement Age, as if theExecutive had been continuously employed by the Bank until the Executive’s NormalRetirement Age. The Executive will also remain eligible for all promised death benefits inthis Executive Plan. In addition, no sale, merger, or consolidation of the Bank or itsowners shall take place unless the new or surviving entity expressly acknowledges theobligations under this Executive Plan and agrees to abide by its terms. **V.** **MISCELLANEOUS** A. Alienability and Assignment Prohibition:    Neither the Executive, nor the Executive’s surviving spouse, nor any otherbeneficiary(ies) under this Executive Plan shall have any power or right totransfer, assign, anticipate, hypothecate, mortgage, commute, modify or otherwiseencumber in advance any of the benefits payable hereunder nor shall any of saidbenefits be subject to seizure for the payment of any debts, judgments, alimony orseparate maintenance owed by the Executive or the Executive’s beneficiary(ies), norbe transferable by operation of law in the event of bankruptcy, insolvency orotherwise. In the event the Executive or any beneficiary attempts assignment,commutation, hypothecation, transfer or disposal of the benefits hereunder, theBank’s liabilities shall forthwith cease and terminate.  B. Binding Obligation of the Bank and any Successor in Interest:    The Bank or its owners shall not merge or consolidate into or with another bank orsell substantially all of its assets to another bank, firm or person until suchbank, firm or person expressly agree, in writing, to assume and discharge theduties and obligations of the Bank under this Executive Plan. This Executive Planshall be binding upon the parties hereto, their successors, beneficiaries, heirsand personal representatives.  C. Amendment or Revocation:    It is agreed by and between the parties hereto that, during the lifetime of theExecutive, this Executive Plan may be amended or revoked at any time
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 ** ** or times, inwhole or in part, by the mutual written consent of the Executive and the Bank.  D. Gender:   Whenever in this Executive Plan words are used in the masculine or neuter gender,they shall be read and construed as in the masculine, feminine or neuter gender,whenever they should so apply.  E. Effect on Other Bank Benefit Plans:    Nothing contained in this Executive Plan shall affect the right of the Executive toparticipate in or be covered by any qualified or non-qualified pension,profit-sharing, group, bonus or other supplemental compensation or fringe benefitplan constituting a part of the Bank’s existing or future compensation structure.  F. Headings:    Headings and subheadings in this Executive Plan are inserted for reference andconvenience only and shall not be deemed a part of this Executive Plan.  G. Applicable Law:    The validity and interpretation of this Agreement shall be governed by the laws ofthe State of North Carolina.  H. 12 U.S.C. § 1828(k):    Any payments made to the Executive pursuant to this Executive Plan, or otherwise,are subject to and conditioned upon their compliance with 12 U.S.C. § 1828(k) orany regulations promulgated thereunder.  I. Partial Invalidity:    If any term, provision, covenant, or condition of this Executive Plan is determinedby an arbitrator or a court, as the case may be, to be invalid, void, orunenforceable, such determination shall not render any other term, provision,covenant, or condition invalid, void, or unenforceable, and the Executive Planshall remain in full force and effect notwithstanding such partial invalidity.
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 J. Employment:    No provision of this Executive Plan shall be deemed to restrict or limit anyexisting employment agreement by and between the Bank and the Executive, nor shallany conditions herein create specific employmentrights to the Executive nor limit the right of the Employer to discharge theExecutive with or without cause. In a similar fashion, no provision shall limitthe Executive’s rights to voluntarily sever the Executive’s employment at any time.**VI.** **ERISA PROVISION** A. Named Fiduciary and Plan Administrator:    The “Named Fiduciary and Plan Administrator” of this Executive Plan shall be Bankof Granite, until its resignation or removal by the Board. As Named Fiduciary andPlan Administrator, the Bank shall be responsible for the management, control andadministration of the Executive Plan. The Named Fiduciary may delegate to otherscertain aspects of the management and operation responsibilities of the ExecutivePlan including the employment of advisors and the delegation of ministerial dutiesto qualified individuals.  B. Claims Procedure and Arbitration:    In the event a dispute arises over benefits under this Executive Plan and benefitsare not paid to the Executive (or to the Executive’s beneficiary(ies) in the caseof the Executive’s death) and such claimants feel they are entitled to receive suchbenefits, then a written claim must be made to the Named Fiduciary and PlanAdministrator named above within sixty (60) days from the date payments arerefused. The Named Fiduciary and Plan Administrator shall review the written claimand if the claim is denied, in whole or in part, they shall provide in writingwithin sixty (60) days of receipt of such claim the specific reasons for suchdenial, reference to the provisions of this Executive Plan upon which the denial isbased and any additional material or information necessary to perfect the claim.Such written notice shall further indicate the additional steps to be taken byclaimants if a further review of the claim denial is desired. A claim shall bedeemed denied if the Named Fiduciary and Plan Administrator fail to take any actionwithin the aforesaid sixty (60) day period.    If claimants desire a second review they shall notify the Named Fiduciary andPlan Administrator in writing within sixty (60) days of the first claim denial.Claimants may review this Executive Plan or any documents relating thereto andsubmit any written issues and comments it may feel
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appropriate. In their sole discretion, the Named Fiduciary and PlanAdministrator shall then review the second claim and provide a written decisionwithin sixty (60) days of receipt of such claim. This decision shall likewisestate the specific reasons for the decision and shall include reference to specificprovisions of the Plan Agreement upon which the decision is based.If claimants continue to dispute the benefit denial based upon completedperformance of this Executive Plan or the meaning and effect of the terms andconditions thereof, then claimants may submit the dispute to an arbitrator forfinal arbitration. The arbitrator shall be selected by mutual agreement of theBank and the claimants. The arbitrator shall operate under any generallyrecognized set of arbitration rules. The parties hereto agree that they and theirheirs, personal representatives, successors and assigns shall be bound by thedecision of such arbitrator with respect to any controversy properly submitted toit for determination.Where a dispute arises as to the Bank’s discharge of the Executive “for cause,”such dispute shall likewise be submitted to arbitration as above described and theparties hereto agree to be bound by the decision thereunder.**VII.** **TERMINATION OR MODIFICATION OF AGREEMENT BY REASON OF CHANGES IN THE LAW, RULES ORREGULATIONS**   The Bank is entering into this Agreement upon the assumption that certain existing taxlaws, rules and regulations will continue in effect in their current form. If any saidassumptions should change and said change has a detrimental effect on this Executive Plan,then the Bank reserves the right to terminate or modify this Agreement accordingly. Upon aChange of Control (Subparagraph I [I]), this paragraph shall become null and void effectiveimmediately upon said Change of Control.**IN WITNESS WHEREOF**, the parties hereto acknowledge that each has carefully read this Agreement andexecuted the original thereof on the first day set forth hereinabove, and that upon execution, eachhas received a conforming copy.             **BANK OF GRANITE**    Granite Falls, North Carolina         /s/ Jatana M. Bremer   By: /s/ Samuel M. Black SVP       Witness     (Bank Officer other than Insured) Title         /s/ Jatana M. Bremer   /s/ R. Scott Anderson     Witness   R. Scott Anderson
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**BENEFICIARY DESIGNATION FORM**