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AMENDMENT
TO THE EXECUTIVE SUPPLEMENTAL RETIREMENT PLAN
EXECUTIVE AGREEMENT EFFECTIVE AUGUST 9, 2001
 THIS AMENDMENT,
 1.)
    
    Subparagraph II (F), Disability Benefit, shall be deleted in its
entirety and replaced with the following:F.
    
    Disability Benefit:In the event that there is a finding of any qualified period of disability for the
Executive, the Bank will deposit into the Contingent Disability Trust for the
Executive (hereafter Trust) an amount equal to the accrued liability retirement
account established on the Executives behalf pursuant to this Agreement. No other
benefits will be owed to the Executive under this Agreement during the Period of
Disability.An Executive is considered disabled if he or she is [1] unable to engage in any
substantial gainful activity by reason of any medically determinable physical or
mental impairment which can be expected to result in death or can be expected to
last for a continuous period of not less than twelve (12) months; or [2] by reason
of any medically determinable physical or mental impairment which can be expected
to result in death or can be expected to last for a continuous period of not less
than twelve (12) months, receiving income replacement benefits for a period of not
less than three (3) months under an accident and health plan covering the Executive
of 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 and the
Executive and such resolution shall be binding upon all parties to this Agreement.If the Executive is under a Period of Disability on the date the Executive reaches
Normal Retirement Age, this agreement shall automatically terminate and the
Executive shall not be entitled to any further benefits under this Agreement.If the Period of Disability ends prior to Normal Retirement Age and the Executive
returns to active employment with the Bank, the Bank will pay the
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Executive a reduced retirement benefit amount. The retirement benefit amount shall
be reduced by the ten (10) year annual annuity that would be payable from the Trust
assuming the trust assets earned on a net of four percent (4%) annually starting
from the date of the existence of said Trust.
 th
 IN WITNESS WHEREOF
 BANK OF GRANITEGranite Falls, North CarolinaBy:/s/ Lee S. London
    
    
    
    By:/s/ Karen B. Warlick
    
    Sr VPWitness
    
    
    
    Bank Officer other than Insured
    
    TitleBy:/s/ Lee S. London
    
    
    
    By:/s/ D. Mark StephensWitness
    
    
    
    D. Mark Stephens
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EXECUTIVE SUPPLEMENTAL RETIREMENT PLAN
 EXECUTIVE AGREEMENT
      I.
    
    DEFINITIONS
 A.
    
    Effective Date:The Effective Date of the Executive Plan shall be August 9, 2001.
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B.
    
    Plan Year:Any reference to the Plan Year shall mean a calendar year from January 1st to
December 31st. In the year of implementation, the term Plan Year shall mean the
period from the Effective Date to December 31st of the year of the Effective Date.C.
    
    Retirement Date:Retirement Date shall mean retirement from service with the Bank that becomes
effective on the first day of the calendar month following the month in which the
Executive reaches age sixty-five (65) or such later date as the Executive may
actually retire.D.
    
    Early Retirement Date:Early Retirement Date shall mean a retirement from service which is effective prior
to the Normal Retirement Age stated herein, provided the Executive has attained age
fifty (50) and has completed seven (7) full years of service with the Bank from the
date of first service subsequent to the Executive attaining age eighteen (18).E.
    
    Termination of Service:Termination of Service shall mean the Executives voluntary resignation of service
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 Plan
Year shall be equal to the excess (if any) of the Index (Subparagraph I [G]) for
that Plan Year over the Opportunity Cost (Subparagraph I [H]) for that Plan Year,
divided by a factor equal to 1.10 minus the marginal tax rate.G.
    
    Index:The Index for any Plan Year shall be the aggregate annual after-tax income from the
life insurance contract(s) described hereinafter as defined by FASB Technical
Bulletin 85-4. This Index shall be applied as if such insurance contract(s) were
purchased 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:
    
    ESP VIInsureds Age and Sex:
    
    44, MaleRiders:
    
    NoneRatings:
    
    NoneOption:
    
    LevelFace Amount:
    
    $243,000Premiums Paid:
    
    $81,500Number of Premium Payments:
    
    SingleAssumed Purchase Date:
    
    August 9, 2001Insurance Company:
    
    Mass Mutual Life Insurance CompanyPolicy Form:
    
    Adjustable LifePolicy Name:
    
    Strategic Life ExecutiveInsureds Age and Sex:
    
    44, MaleRiders:
    
    NoneRatings:
    
    NoneOption:
    
    LevelFace Amount:
    
    $220,050Premiums Paid:
    
    $81,500Number of Premium Payments:
    
    SingleAssumed Purchase Date:
    
    August 9, 2001
 If such contracts of life insurance are actually purchased by the Bank, then the
actual policies as of the dates they were actually purchased shall be used in
calculations under this Executive Plan. If such contracts of life insurance are
not purchased or are subsequently surrendered or lapsed, then the Bank shall
receive annual policy illustrations that assume the above-described policies were
purchased or had not subsequently surrendered or lapsed. Said illustration shall
be received from the respective insurance companies and will indicate the increase
in policy values for purposes of calculating the amount of the Index.In either case, references to the life insurance contracts are merely for purposes
of calculating a benefit. The Bank has no obligation to purchase such life
insurance and, if purchased, the Executive and the Executives beneficiary(ies)
shall have no ownership interest in such policy and shall always have no greater
interest in the benefits under this Executive Plan than that of an unsecured
creditor of the Bank.H.
    
    Opportunity Cost:The Opportunity Cost for any Plan Year shall be calculated by taking the sum of the
amount 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 to the Executive Plan (Paragraph II hereinafter) plus the amount
of all previous years after-tax Opportunity Cost, and
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multiplying that sum by the
average after tax yield of a one-year Treasury bill.
 I.
    
    Change of Control:Change of Control means the cumulative transfer of more than fifty percent (50%) of
the voting stock of the Bank or its owners from the Effective Date of this
Executive Plan. For the purposes of this Executive Plan, transfers on account of
deaths or gifts, transfers between family members or transfers to a qualified
retirement plan maintained by the Bank shall not be considered in determining
whether there has been a Change of Control.J.
    
    Normal Retirement Age:Normal Retirement Age shall mean the date on which the Executive attains age
sixty-five (65).K.
    
    Benefit Accounting:The Bank shall account for the benefit provided herein using the regulatory
accounting principles of the Banks primary federal regulator. The Bank shall
establish an accrued liability retirement account for the Executive into which
appropriate reserves shall be accrued.
 II.
    
    INDEX BENEFITS
 A.
    
    Retirement Benefits:Subject to Subparagraph II (E) hereinafter, an Executive who remains in the employ
of the Bank until the Normal Retirement Age (Subparagraph I [J]) shall be entitled
to 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 following
the Executives retirement and shall continue each Plan Year until the Executive
attains age seventy-four (74). Upon completion of the aforestated payments and
commencing subsequent thereto and subject to Subparagraph II (A) (i) hereinbelow,
the Index Retirement Benefit (Subparagraph I [F]) for each Plan Year subsequent to
the year in which the Executive attains age seventy-four (74), and including the
remaining portion of the Plan Year in which the Executive attains age seventy-four
(74) shall be paid to the Executive until the Executives death.
 (i)
    
    The Index Retirement Benefit Adjustment:
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The Index Retirement Benefit payment as set forth hereinabove for the
first Plan Year subsequent to the Executive attaining age seventy-four
(74) shall be adjusted according to a number equal to the aggregate of the
Index Retirement Benefit (Subparagraph I [F]) for each Plan Year from the
Effective Date of this agreement until the Plan Year the Executive attains
age seventy-four (74) over the aggregate of the benefit payments the
Executive actually received under the terms of this Executive Plan through
that date. For example, if the Executive retires at age sixty-five (65)
and the aggregate annual benefits received by the Executive until the Plan
Year the Executive attains age seventy-four (74) were $900,000.00,
and the aggregate Index Retirement Benefits for each Plan Year from the
Effective Date of this agreement to the Plan Year the Executives attains
age seventy-four (74) were $1,000,000.00 then the Executives
Index Retirement Benefit in the first Plan Year said payment is payable to
the Executive would be increased by $100,000.00. If said number
is a deficit, then the Index Retirement Benefit for the first Plan Year
said payment is payable to the Executive and each subsequent Plan Years
benefit (if necessary) shall be reduced until the entire deficit has been
recovered by the Bank. For each year thereafter, the Index Retirement
Benefit payment shall be paid as set forth in Subparagraph I (E). For
example, if the Executive retires at age sixty-five (65) and the aggregate
annual benefits to be received by the Executive until the Plan Year the
Executive attains age seventy-four (74) were $1,000,000.00, and
the aggregate Index Retirement Benefits for each Plan Year from the
Effective Date of this agreement to the Plan Year the Executive attains
age seventy-four (74) were $900,000.00 and the Executives Index
Retirement Benefit was $90,000.00 in the first year, then the
Executive would not receive any Index Retirement Benefit in the first
year, 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 be
discharged without cause by the Bank subsequent to the Early Retirement Date
[Subparagraph I (D)], the Executive shall be entitled to receive the annual benefit
set forth in Exhibit A-2 reduced by the full number of years the Executive retires
early prior to Normal Retirement Age, times six and sixty seven one hundredths
percent (6.67%) (For example, if Executive retires at age 61, the annual benefit
set forth in Exhibit A-2 shall be reduced by 26.68%: 61-65 = 4 X 6.67%=26.68%.)
Said payments shall be made annually and shall commence
thirty (30) days following the Executives early retirement and shall continue
until the Plan Year in which the Executive attains age seventy-four (74). Upon
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completion of the aforestated payments and commencing subsequent thereto and
subject to Subparagraph II (A) (i) hereinabove, the vested percentage set forth
hereinabove of the Index Retirement Benefit for each Plan Year subsequent to the
year in which the Executive attains age seventy-four (74), and including the
remaining portion of the Plan Year in which the Executive attains age seventy-four
(74), shall be paid to the Executive until the Executives death.
 C.
    
    Termination of Service:Subject to Subparagraph II (E), should an Executive suffer a Termination of Service
subsequent to three (3) full years of service with the Bank from the Executive
attaining age eighteen (18), the Executive shall be entitled to receive the
percentage set forth hereinbelow that corresponds to the number of full years the
Executive has served the Bank subsequent to the Executive attaining age eighteen
(18), times the annual benefit set forth in Exhibit A-1. Said payments shall
commence thirty (30) days following the Executives Normal Retirement Age
(Subparagraph I [J]) and shall continue until the Executive attains age
seventy-four (74). Upon completion of the aforestated payments and commencing
subsequent thereto and subject to Subparagraph II (A) (i) hereinabove the Index
Retirement Benefit for each Plan Year subsequent to the year in which the Executive
attains seventy-four (74), and including the remaining portion of the Plan Year in
which the Executive attains age seventy-four (74), shall be paid to the Executive
until the Executives death.
 Years of
    
    Vesting PercentageService
    
    (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 liability
retirement account, then the unpaid balance shall be paid in a lump sum to the
individual or individuals designated in writing by the Executive and filed with the
Bank. In the absence of or a failure to designate a beneficiary, the unpaid
balance shall be paid in a lump sum to the personal representative of the
Executives estate. If, upon death, the Executive shall have received the total
balance of the Executives accrued liability retirement account, then no further
benefit shall be due hereunder. In any event, upon the death of the Executive, the
Executives beneficiary shall not be entitled to receive any Index Retirement
Benefit.
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E.
    
    Termination of Service and Discharge for Cause:The Bank may elect to terminate the Officer for cause immediately upon written
notice to the Officer. For purposes of this Agreement, for cause shall mean (a)
any dishonest, illegal or other act of moral turpitude (such as theft, fraud or
embezzlement) by the Officer which is materially detrimental to the interest and
well-being of the Bank, (b) the conviction of a felony, (c) the unreasonable
failure or refusal of the Officer to perform to the best of the Officers ability
on a reasonable basis the Officers duties hereunder, or (d) any violation by the
Officer of any state or federal law, rule or regulation relating to banking,
financial institutions or securities laws, the violation of which would be
materially detrimental to the interest and well-being of the Bank. Should the
Executive suffer a Termination of Service prior to three (3) full years of service
subsequent to the Executive attaining age eighteen (18) or upon the termination of
the Officer for cause, this Agreement and all of the Banks obligations hereunder
shall terminate immediately, except for obligations which have accrued prior
thereto as provided in Subparagraphs II (D) and (F) in the case of the Officers
death or disability.F.
    
    Disability Benefit:In the event the Executive becomes disabled prior to any Termination of Service,
and the Executives employment is terminated because of such disability, the
Executive, upon submission to the Bank of written documentation and verification of
disability, shall be entitled to one hundred percent (100%) of the benefits in
Subparagraph II (A) above. Such benefit shall begin at the Executives Normal
Retirement Age as set forth in said Subparagraph II (A). Disability shall be
defined as the Executive not being able to perform the duties of the Executives
own job and shall be as further defined in the Banks long term disability policy
in effect at the time of said disability. If no such policy exists at the time of
disability, then disability shall be as defined in the long term disability policy
last in effect. If there is a dispute regarding whether the Executive is disabled,
such dispute shall be resolved by a physician selected by the Bank and such
resolution shall be binding upon all parties to this Agreement.G.
    
    Death Benefit:Except as set forth above, there is no death benefit provided under this Agreement.
 III. RESTRICTIONS UPON FUNDING
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The Bank shall have no obligation to set aside, earmark or entrust any fund or money with
which to pay its obligations under this Executive Plan. The Executive, their
beneficiary(ies), or any successor in interest shall be and remain simply a general
creditor of the Bank in the same manner as any other creditor having a general claim for
matured and unpaid compensation.The Bank reserves the absolute right, at its sole discretion, to either fund the
obligations undertaken by this Executive Plan or to refrain from funding the same and to
determine the extent, nature and method of such funding. Should the Bank elect to fund
this Executive Plan, in whole or in part, through the purchase of life insurance, mutual
funds, disability policies or annuities, the Bank reserves the absolute right, in its sole
discretion, to terminate such funding at any time, in whole or in part. At no time shall
any Executive be deemed to have any lien nor right, title or interest in or to any specific
funding investment or to any assets of the Bank.If the Bank elects to invest in a life insurance, disability or annuity policy upon the
life of the Executive, then the Executive shall assist the Bank by freely submitting to a
physical exam and supplying such additional information necessary to obtain such insurance
or annuities.IV.
    
    CHANGE OF CONTROLUpon a Change of Control (Subparagraph I [I]), if the Executive subsequently suffers a
Termination of Service (Subparagraph I [E]), then the Executive shall receive the benefits
promised in this Executive Plan upon attaining Normal Retirement Age, as if the Executive
had been continuously employed by the Bank until the Executives Normal Retirement Age.
The Executive will also remain eligible for all promised death benefits in this Executive
Plan. In addition, no sale, merger, or consolidation of the Bank or its owners shall take
place unless the new or surviving entity expressly acknowledges the obligations 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 other
beneficiary(ies) under this Executive Plan shall have any power or right to
transfer, assign, anticipate, hypothecate, mortgage, commute, modify or
otherwise encumber in advance any of the benefits payable hereunder nor shall any
of said benefits be subject to seizure for the payment of any debts, judgments,
alimony or separate maintenance owed by the Executive or the Executives
beneficiary(ies), nor be transferable by operation of law in the event of
bankruptcy, insolvency or otherwise. In the event the Executive or any beneficiary
attempts assignment, commutation, hypothecation, transfer or disposal of the
benefits hereunder, the Banks liabilities shall forthwith cease and terminate.
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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 or
sell substantially all of its assets to another bank, firm or person until such
bank, firm or person expressly agrees, in writing, to assume and discharge the
duties and obligations of the Bank under this Executive Plan. This Executive Plan
shall be binding upon the parties hereto, their successors, beneficiaries, heirs
and personal representatives.C.
    
    Amendment or Revocation:It is agreed by and between the parties hereto that, during the lifetime of the
Executive, this Executive Plan may be amended or revoked at any time or times, in
whole 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 to
participate in or be covered by any qualified or non-qualified pension,
profit-sharing, group, bonus or other supplemental compensation or fringe benefit
plan 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 and
convenience 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 of
the State of North Carolina.H.
    
    12 U.S.C. § 1828(k):
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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) or
any regulations promulgated thereunder.I.
    
    Partial Invalidity:If any term, provision, covenant, or condition of this Executive Plan is determined
by an arbitrator or a court, as the case may be, to be invalid, void, or
unenforceable, such determination shall not render any other term, provision,
covenant, or condition invalid, void, or unenforceable, and the Executive Plan
shall remain in full force and effect notwithstanding such partial invalidity.J.
    
    Employment:No provision of this Executive Plan shall be deemed to restrict or limit any
existing employment agreement by and between the Bank and the Executive, nor shall
any conditions herein create specific employment rights to the Executive nor limit
the right of the Employer to discharge the Executive with or without cause. In a
similar fashion, no provision shall limit the 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 Bank
of Granite, until its resignation or removal by the Board. As Named Fiduciary and
Plan Administrator, the Bank shall be responsible for the management, control and
administration of the Executive Plan. The Named Fiduciary may delegate to others
certain aspects of the management and operation responsibilities of the Executive
Plan including the employment of advisors and the delegation of ministerial duties
to qualified individuals.B.
    
    Claims Procedure and Arbitration:In the event a dispute arises over benefits under this Executive Plan and benefits
are not paid to the Executive (or to the Executives beneficiary(ies) in the case
of the Executives death) and such claimants feel they are entitled to receive such
benefits, then a written claim must be made to the Named Fiduciary and Plan
Administrator named above within sixty (60) days from the date payments are
refused. The Named Fiduciary and Plan Administrator shall review the written claim
and if the claim is denied, in whole or in part, they shall provide in writing
within sixty (60) days of receipt of such claim the specific reasons for such
denial, reference to the provisions of this Executive Plan upon which the denial is
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based and any additional material or information necessary to perfect the claim.
Such written notice shall further indicate the additional steps to be taken by
claimants if a further review of the claim denial is desired. A claim shall be
deemed denied if the Named Fiduciary and Plan Administrator fail to take any action
within the aforesaid sixty-day period.
    VII.
    
    TERMINATION OR MODIFICATION OF AGREEMENT BY REASON OF CHANGES IN THE LAW, RULES OR REGULATIONSThe Bank is entering into this Agreement upon the assumption that certain existing tax
laws, rules and regulations will continue in effect in their current form. If any said
assumptions 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 a Change of Control (Subparagraph I [I]), this paragraph shall become
null and void effective immediately upon said Change of Control.
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BANK OF GRANITEGranite Falls, North CarolinaBy:/s/ Raquel A. Sedano
    
    
    
    By:/s/ Kim T. Hutchens
    
    Sr VPWitness
    
    
    
    Bank Officer Other than Insured
    
    TitleBy:/s/ Raquel A. Sedano
    
    
    
    By:/s/ D. Mark StephensWitness
    
    
    
    D. Mark Stephens
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BENEFICIARY DESIGNATION FORM
FOR THE EXECUTIVE SUPPLEMENTAL
RETIREMENT PLAN AGREEMENT
 PRIMARY DESIGNATION:
 Name
    
    Address
    
    Relationship
  
  
 
 
 SECONDARY (CONTINGENT) DESIGNATION:
 
  /s/ D. Mark Stephens

D. Mark Stephens
    
    
    
    1/26/02

Date
 15