Exhibit 10.7
FORM OF
AMENDED AND RESTATED
BANK OF GRANITE
SALARY CONTINUATION PLAN
     THIS PLAN is made and entered into this 1st day of January, 2008, by and
between Bank of Granite, a bank organized and existing under the laws of the
State of North Carolina (hereinafter referred to as the “Bank”), and certain
Executives of the Bank (hereinafter referred to as the “Participant”), who are
members of a select group of management and highly compensated employees of the
Bank. This Plan shall amend and restate the Executive Supplemental Retirement
Plan Executive Agreement previously agreed to between the Participant and the
Bank.
Purpose of the Plan
     The purpose of this Plan is to further the growth and development of the
Bank by providing the Participant with supplemental retirement income, and
thereby encourage the Participant’s productive efforts on behalf of the Bank and
the Bank’s shareholders, and to align the interests of the Participant and those
shareholders.
     The Bank adopts this Plan and agrees to make certain payments to the
Participant, or the Participant’s Beneficiary, at retirement, death, or upon
some other qualifying event pursuant to the terms of this Plan.
     It is intended that the Plan be “unfunded” for purposes of the Employee
Retirement Income Security Act of 1974, as amended (“ERISA”) and not be
construed to provide income to the participant or beneficiary under the Internal
Revenue Code of 1986, as amended (the “Code”), particularly Section 409A of the
Code prior to actual receipt of benefits.

I.   EFFECTIVE DATE       The Effective Date of this Plan shall be January 1,
2008.   II.   BENEFITS       This Plan provides a stated benefit to the
Participant, as described in the Participation Agreement. Upon a Participant’s
Retirement or other qualifying event, the benefit will be paid in a form
selected by the Participant among three actuarially equivalent choices: 10-year
period certain; 15-year period certain; or a lump sum.       The benefits
provided by this Plan are granted by the Bank as a fringe benefit to the
Participant and are not part of any salary reduction plan or an arrangement
deferring a bonus or a salary increase. The Participant has no option to take
any current payment or bonus in lieu of these salary continuation benefits
except as set forth hereinafter.

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III.   DEFINITIONS

  A.   Beneficiary:         The Participant shall have the right to name a
Beneficiary of the Death Benefit. The Participant shall have the right to name
such Beneficiary at any time prior to the Participant’s death and submit it to
the Plan Administrator (or Plan Administrator’s representative) on the form
provided. Once received and acknowledged by the Plan Administrator, the form
shall be effective. The Participant may change a Beneficiary designation at any
time by submitting a new form to the Plan Administrator. Any such change shall
follow the same rules as for the original Beneficiary designation and shall
automatically supersede the existing Beneficiary form on file with the Plan
Administrator.         If the Participant dies without a valid Beneficiary
designation on file with the Plan Administrator, death benefits shall be paid to
the Participant’s estate.         If the Plan Administrator determines in its
discretion that a benefit is to be paid to a minor, to a person declared
incompetent, or to a person incapable of handling the disposition of that
person’s property, the Plan Administrator may direct distribution of such
benefit to the guardian, legal representative or person having the care or
custody of such minor, incompetent person or incapable person. The Plan
Administrator may require proof of incompetence, minority or guardianship as it
may deem appropriate prior to distribution of the benefit. Any distribution of a
benefit shall be a distribution for the account of the Participant and the
Beneficiary, as the case may be, and shall be a complete discharge of any
liability under the Plan for such distribution amount.     B.   Change in
Control:         “Change in Control” shall mean a change in ownership or control
of the Bank as defined in Treasury Regulation Section 1.409A-3(i)(5) or any
subsequently applicable Treasury Regulation.     C.   Disability or Disabled:  
      “Disability or Disabled” shall mean the Participant: (i) is 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 (ii) is, 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

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      period of not less than three (3) months under an accident and health plan
covering employees of the Bank. Medical determination of Disability may be made
by either the Social Security Administration or by the provider of an accident
or health plan covering Participants of the Bank, provided that the definition
of Disability applied under such disability insurance programs complies with the
requirements of Section 409A. Upon the request of the Plan Administrator, the
Participant must submit proof to the Plan Administrator of the Social Security
Administration’s or provider’s determination.     D.   Discharge For Cause:    
    The term “For Cause” shall mean any of the following that result in an
adverse effect on the Bank: (i) the conviction of a felony or gross misdemeanor
involving fraud or dishonesty; (ii) the willful violation of any banking law,
rule, or banking regulation; (iii) an intentional failure to perform stated
duties; or (iv) a breach of fiduciary duty involving personal profit. If a
dispute arises as to discharge “For Cause,” such dispute shall be resolved by
arbitration as set forth in this Plan.     E.   Final Salary:         Final
Salary shall mean the Executive’s annualized cash compensation, in the final
calendar year of Executive’s employment, relating to services performed during
any calendar year, excluding distributions from nonqualified deferred
compensation plans, bonuses, commissions, overtime, fringe benefits, stock
options, relocation expenses, incentive payments, non-monetary awards, and
automobile and other allowances paid to an Executive for employment services
rendered (whether or not such allowances are included in the Executive’s gross
income). Final Salary shall be calculated before reduction for compensation
voluntarily deferred or contributed by the Executive pursuant to all qualified
or non-qualified plans of the Bank and shall be calculated to include amounts
not otherwise included in the Executive’s gross income under Code Sections 125,
402(e)(3), 402(h), or 403(b) pursuant to plans established by the Bank;
provided, however, that all such amounts will be included in compensation only
to the extent that had there been no such plan, the amount would have been
payable in cash to the Executive.     F.   Normal Retirement Age:        
“Normal Retirement Age” shall mean the date specified in the Participation
Agreement.     G.   Participant:         Any eligible individual who fulfills
the eligibility and enrollment requirements of Paragraph IV.     H.  
Participation Agreement:         A written agreement between the Bank and a
Participant setting forth certain

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      provisions and elections relative to the Plan, establishing the amount of
benefits and the manner and method of paying benefits under the Plan,
incorporating the terms and conditions of the Plan and establishing the
Participant’s participation in the Plan.     I.   Plan Year:         Any
reference to “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.     J.   Separation from Service:         “Separation from Service” shall
mean the Participant has experienced a termination of employment with the Bank.
For purposes of this Plan, whether a termination of employment or service has
occurred is determined based on whether the facts and circumstances indicate
that the Bank and Participant reasonably anticipated that no further services
would be performed after a certain date or that the level of bona fide services
the Participant would perform after such date (whether as an Participant or as
an independent contractor) would permanently decrease to no more than twenty
percent (20%) of the average level of bona fide services performed (whether as
an Participant or an independent contractor) over the immediately preceding
thirty-six (36) month period (or the full period of services to the Bank if the
Participant has been providing services to the Bank less than 36 months). Facts
and circumstances to be considered in making this determination include, but are
not limited to, whether the Participant continues to be treated as a Participant
for other purposes (such as continuation of salary and participation in
Participant benefit programs), whether similarly situated service providers have
been treated consistently, and whether the Participant is permitted, and
realistically available, to perform services for other service recipients in the
same line of business. The Participant will be presumed not to have separated
from service where the level of bona fide services performed continues at a
level that is fifty percent (50%) or more of the average level of service
performed by the Participant during the immediately preceding thirty-six
(36) month period.     K.   Discount Rate:         “Discount Rate” is equal to
the December 31st Citigroup Pension Liability Index Rate of the prior year.

IV.   PARTICIPATION IN PLAN

  A.   Eligibility:         An Employee becomes eligible to participate in the
Plan upon meeting certain

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      criteria and being selected by the Bank as part of a “select group of
management or highly compensated employees” of the Bank.     B.   Enrollment in
the Plan:         Any Eligible Individual selected to participate in the Plan
shall be enrolled upon submitting any forms, including the Participation
Agreement, required by the Plan Administrator within 30 days of notification of
eligibility in the Plan. All such forms shall be submitted to the Plan
Administrator or the Plan Administrator’s authorized representative.

V.   VESTING

    The Participant shall be vested in the Accumulated Benefit Obligation set
forth in Paragraph C of the Participation Agreement according to the following
schedule:

      Total Years     of Service     with the Bank*   Vested (to a maximum of
100%)
0-2
  0%
3
  20%
4
  40%
5
  60%
6
  80%
7 or more
  100%

 

*   A “Year of Service” shall mean any full 12-month period of active employment
during which the Participant has worked a minimum of 1,000 hours.

VI.   RESTRICTIONS ON FUNDING       The Bank shall have no obligation to set
aside, earmark or entrust any fund or money with which to pay its obligations
under this Plan. The Participant, their Beneficiary, 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 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 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 the Participant be
deemed to have any lien, right, title or interest in any specific funding
investment or assets of the Bank.       If the Bank elects to invest in a life
insurance, disability or annuity policy on the life of

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    the Participant, then the Participant shall assist the Bank by freely
submitting to a physical exam and supplying such additional information
necessary to obtain such insurance or annuities.   VII.   MISCELLANEOUS

  A.   Alienability and Assignment Prohibition:         Neither the Participant
nor any Beneficiary under this 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 Participant or the Participant’s Beneficiary,
nor be transferable by operation of law in the event of bankruptcy, insolvency
or otherwise.     B.   Applicable Law:         The validity and interpretation
of this Plan shall be governed by the laws of the State of North Carolina.    
C.   Binding Obligation of the Bank and any Successor in Interest:         The
Bank 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 Plan. This Plan shall be binding upon the
parties hereto, their successors, assignees, beneficiaries, heirs and personal
representatives.     D.   Gender:         Whenever in this Plan words are used
in the masculine or neutral gender, they shall be read and construed as in the
masculine, feminine or neutral gender, whenever they should so apply.     E.  
Headings:         Headings and subheadings in this Plan are inserted for
reference and convenience only and shall not be deemed a part of this Plan.    
F.   Not a Contract of Employment:         This Plan shall not be deemed to
constitute a contract of employment between the parties hereto, nor shall any
provision hereof restrict the right of the Bank to discharge the Participant, or
restrict the right of the Participant to terminate employment.     G.  
Opportunity to Consult with Independent Advisors:         The Participant
acknowledges that he has been afforded the opportunity to consult

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      with independent advisors of his choosing including, without limitation,
accountants or tax advisors and legal counsel regarding both the benefits
granted to him under the terms of this Plan and the: (i) terms and conditions
which may affect the Participant’s right to these benefits; and (ii) personal
tax effects of such benefits including, without limitation, the effects of any
federal or state taxes, Section 280G of the Code, Section 409A of the Code and
guidance or regulations thereunder, and any other taxes, costs, expenses or
liabilities whatsoever related to such benefits, which in any of the foregoing
instances the Participant acknowledges and agrees shall be the sole
responsibility of the Participant notwithstanding any other term or provision of
this Plan. The Participant further acknowledges and agrees that the Bank shall
have no liability whatsoever related to any such personal tax effects or other
personal costs, expenses, or liabilities applicable to the Participant and
further specifically waives any right for himself or herself, and his or her
heirs, beneficiaries, legal representative, agents, successor and assign to
claim or assert liability on the part of the Bank related to the matters
described above in this paragraph. The Participant further acknowledges that he
has read, understands and consents to all of the terms and conditions of this
Plan, and that he enters into this Plan with a full understanding of its terms
and conditions.     H.   Partial Invalidity:         If any term, provision,
covenant, or condition of this 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 Plan shall remain in full force and effect
notwithstanding such partial invalidity.     I.   Permissible Acceleration
Provision:         Under Treasury Regulation Section 1.409A-3(j)(4), a payment
of deferred compensation may not be accelerated except as provided in
regulations by the Internal Revenue Code. This Plan allows all permissible
payment accelerations under 1.409A-3(j)(4) that include but are not limited to
payments necessary to comply with a domestic relations order, payments necessary
to comply with certain conflict of interest rules, payments intended to pay
employment taxes, and other permissible payments as allowed by statute or
regulation.     J.   Subsequent Changes to Time and Form of Payment:         The
Bank may permit subsequent changes to the time and form of payment. Any such
change shall be considered made only when it becomes irrevocable under the terms
of the Plan. Any subsequent time and form of payment changes will be considered
irrevocable not later than thirty (30) days following acceptance of the change
by the Plan Administrator, subject to the following rules:

  a.   the subsequent change may not take effect until at least twelve
(12) months after the date on which the change is made;

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  b.   the payment (except in the case of death, disability, or unforeseeable
emergency) upon which the change is made is deferred for a period of not less
than five (5) years from the date such payment would otherwise have been paid;
and     c.   in the case of a payment made at a specified time, the change must
be made not less than twelve (12) months before the date the payment is
scheduled to be paid.

  K.   Tax Withholding:         The Bank shall withhold any taxes that are
required to be withheld from the benefits provided under this Plan. The
Participant acknowledges that the Bank’s sole liability regarding taxes is to
forward any amounts withheld to the appropriate taxing authority(ies).     L.  
Restriction on Timing of Distribution:         Notwithstanding any provision of
this Plan to the contrary, distributions hereunder may not commence earlier than
six (6) months after the date of a Separation from Service, as that term is used
under Section 409A if, pursuant to Internal Revenue Code Section 409A, the
Participant is considered a “specified employee” (under Internal Revenue Code
Section 416(i)), of a corporation, any stock of which is publicly traded on an
established securities market or otherwise. In the event a distribution is
delayed pursuant to this paragraph, the originally scheduled payment shall be
delayed for six (6) months, and shall commence instead on the first day of the
seventh month following Separation from Service. If payments are scheduled to be
made in installments, the first six (6) months of installment payments shall be
delayed, aggregated, and paid instead on the first day of the seventh month,
after which all installment payments shall be made on their regular schedule. If
payment is scheduled to be made in a lump sum, the lump sum payment shall be
delayed for six (6) months and instead be made on the first day of the seventh
month.

VIII.   ADMINISTRATIVE AND CLAIMS PROVISIONS

  A.   Plan Administrator:         The “Plan Administrator” of this Plan shall
be Bank of Granite. As Plan Administrator, the Bank shall be responsible for the
management, control and administration of the Plan. The Plan Administrator may
delegate to others certain aspects of the management and operation
responsibilities of the Plan including the employment of advisors and the
delegation of ministerial duties to qualified individuals.     B.   Claims
Procedure:

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  a.   Filing a Claim for Benefits:         Any insured, Beneficiary, or other
individual, (“Claimant”) entitled to benefits under this Plan will file a claim
request with the Plan Administrator. The Plan Administrator will, upon written
request of a Claimant, make available copies of all forms and instructions
necessary to file a claim for benefits or advise the Claimant where such forms
and instructions may be obtained. If the claim relates to disability benefits,
then the Plan Administrator shall designate a sub-committee to conduct the
initial review of the claim (and applicable references below to the Plan
Administrator shall mean such sub-committee).     b.   Denial of Claim:        
A claim for benefits under this Plan will be denied if the Bank determines that
the Claimant is not entitled to receive benefits under the Plan. Notice of a
denial shall be furnished the Claimant within a reasonable period of time after
receipt of the claim for benefits by the Plan Administrator. This time period
shall not exceed more than ninety (90) days after the receipt of the properly
submitted claim. In the event that the claim for benefits pertains to
disability, the Plan Administrator shall provide written notice within
forty-five (45) days. However, if the Plan Administrator determines, in its
discretion, that an extension of time for processing the claim is required, such
extension shall not exceed an additional ninety (90) days. In the case of a
claim for disability benefits, the forty-five (45) day review period may be
extended for up to thirty (30) days if necessary due to circumstances beyond the
Plan Administrator’s control, and for an additional thirty (30) days, if
necessary. Any extension notice shall indicate the special circumstances
requiring an extension of time and the date by which the Plan Administrator
expects to render the determination on review.     c.   Content of Notice:      
  The Plan Administrator shall provide written notice to every Claimant who is
denied a claim for benefits which notice shall set forth the following:

  (i.)   The specific reason or reasons for the denial;     (ii.)   Specific
reference to pertinent Plan provisions on which the denial is based;     (iii.)
  A description of any additional material or information necessary for the
Claimant to perfect the claim, and any explanation of why such material or
information is necessary; and

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  (iv.)   Any other information required by applicable regulations, including
with respect to disability benefits.

  d.   Review Procedure:         The purpose of the Review Procedure is to
provide a method by which a Claimant may have a reasonable opportunity to appeal
a denial of a claim to the Plan Administrator for a full and fair review. The
Claimant, or his duly authorized representative, may:

  (i.)   Request a review upon written application to the Plan Administrator.
Application for review must be made within sixty (60) days of receipt of written
notice of denial of claim. If the denial of claim pertains to disability,
application for review must be made within one hundred eighty (180) days of
receipt of written notice of the denial of claim;     (ii.)   Review and copy
(free of charge) pertinent Plan documents, records and other information
relevant to the Claimant’s claim for benefits;     (iii.)   Submit issues and
concerns in writing, as well as documents, records, and other information
relating to the claim.

  e.   Decision on Review:         A decision on review of a denied claim shall
be made in the following manner:

  (i.)   The Plan Administrator may, in its sole discretion, hold a hearing on
the denied claim. If the Claimant’s initial claim is for disability benefits,
any review of a denied claim shall be made by members of the Plan Administrator
other than the original decision maker(s) and such person(s) shall not be a
subordinate of the original decision maker(s). The decision on review shall be
made promptly, but generally not later than sixty (60) days after receipt of the
application for review. In the event that the denied claim pertains to
disability, such decision shall not be made later than forty-five (45) days
after receipt of the application for review. If the Plan Administrator
determines that an extension of time for processing is required, written notice
of the extension shall be furnished to the Claimant prior to the termination of
the initial sixty (60) day period. In no event shall the extension exceed a
period of sixty (60) days from the end of the initial period. In the event the
denied claim pertains to disability, written notice of such extension shall be
furnished to the Claimant prior to the

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      termination of the initial forty-five (45) day period. In no event shall
the extension exceed a period of thirty (30) days from the end of the initial
period. The extension notice shall indicate the special circumstances requiring
an extension of time and the date by which the Plan Administrator expects to
render the determination on review.     (ii.)   The decision on review shall be
in writing and shall include specific reasons for the decision written in an
understandable manner with specific references to the pertinent Plan provisions
upon which the decision is based.     (iii.)   The review will take into account
all comments, documents, records and other information submitted by the Claimant
relating to the claim without regard to whether such information was submitted
or considered in the initial benefit determination. Additional considerations
shall be required in the case of a claim for disability benefits. For example,
the claim will be reviewed without deference to the initial adverse benefits
determination and, if the initial adverse benefit determination was based in
whole or in part on a medical judgment, the Plan Administrator will consult with
a health care professional with appropriate training and experience in the field
of medicine involving the medical judgment. The health care professional who is
consulted on appeal will not be the same individual who was consulted during the
initial determination or the subordinate of such individual. If the Plan
Administrator obtained the advice of medical or vocational experts in making the
initial adverse benefits determination (regardless of whether the advice was
relied upon), the Plan Administrator will identify such experts.     (iv.)   The
decision on review will include a statement that the Claimant is entitled to
receive, upon request and free of charge, reasonable access to, and copies of,
all documents, records or other information relevant to the Claimant’s claim for
benefits.

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  f.   Exhaustion of Remedies:         A Claimant must follow the claims review
procedures under this Plan and exhaust his or her administrative remedies before
taking any further action with respect to a claim for benefits.

  C.   Arbitration:         If claimants continue to dispute the benefit denial
based upon completed performance of this Plan or the meaning and effect of the
terms and conditions thereof, then claimants may submit the dispute to an
Arbitrator for final arbitration. The Arbitrator shall be selected by mutual
agreement of the Bank and the claimants. The Arbitrator shall operate under any
generally recognized set of arbitration rules. The parties hereto agree that
they and their heirs, personal representatives, successors and assigns shall be
bound by the decision of such Arbitrator with respect to any controversy
properly submitted to it for determination.         Where a dispute arises as to
the Bank’s discharge of the Participant “For Cause,” such dispute shall likewise
be submitted to arbitration as above described and the parties hereto agree to
be bound by the decision thereunder.

IX.   TERMINATION OR MODIFICATION OF PLAN BY REASON OF CHANGES IN THE LAW, RULES
OR REGULATIONS       The Bank may, in its sole and absolute discretion,
terminate or modify this Plan, provided that any such termination or
modification shall not reduce the Participant’s vested or earned benefit, where
applicable.

          IN WITNESS WHEREOF, the parties hereto acknowledge that each has
carefully read this Plan and executed the original thereof effective as of the
first day set forth hereinabove, and that, upon execution, each has received a
conforming copy.

                          BANK OF GRANITE             Granite Falls, North
Carolina    
 
               
 
      By:        
 
Witness
         
 
(Bank Officer other than Participant)    
 
                             President & Chief Executive Officer                
  Witness       Title    

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BANK OF GRANITE
AMENDED AND RESTATED
SALARY CONTINUATION PLAN
PARTICIPATION AGREEMENT

             
Participant Name:
      SSN:    
 
 
 
     
 
 
Mailing Address:
               
 
 

                      City   State   Zip Code

Participant’s Date of Birth:                                         
Purpose and Effect of this Agreement
The purpose of this Participation Agreement is (1) to indicate Participant’s
acceptance of all terms and provisions of the Bank of Granite Amended and
Restated Salary Continuation Plan (“Plan”); (2) to describe the specific
benefits promised to Participant; and (3) to set forth any additional terms and
conditions binding upon the Participant. Participant shall be bound by the
specific terms of this Participation Agreement and the terms of the Plan.
Capitalized terms shall have the meanings assigned to them in the Plan
documents.
Additional Definitions
Normal Retirement Age:
“Normal Retirement Age” shall mean the date on which the Participant attains age
Sixty-five (65).
Retirement Date:
“Retirement Date” shall mean the later of the Participant’s Normal Retirement
Age or Separation from Service.
Benefits
Benefits, as described below, shall be paid out upon the first to occur of the
following events. Upon the occurrence of one of the listed events, the benefit
described shall be paid in lieu of any other benefit under this Participation
Agreement.

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A. Retirement Benefit: Upon the Participant’s Retirement Date, the Bank shall
pay the Participant an annual benefit amount equal to                     
percent (___%) of Final Salary, not to exceed an annual benefit of
                                         and 00/100th Dollars
($                    ). Distribution of the benefit shall commence 30 days
following Participant’s Retirement Date and shall be paid to the Participant as
set forth in the attached Distribution Election Form.
B. Disability Benefit: Upon Participant’s Disability prior to the Normal
Retirement Age, the Bank shall pay to the Participant an amount equal to the
vested percentage of the Accumulated Benefit Obligation (as this term is used
under Financial Accounting Standards Board Statement No. 87 (FAS 87)) as of the
date of Participant’s Disability. Vesting is determined pursuant to the vesting
schedule set forth in Section V of the Plan. Distribution of the benefit shall
commence 30 days following Participant’s Disability and shall be made in a
single lump sum.
C. Early Termination of Service Benefit: Upon Separation from Service prior to
the Normal Retirement Age, the Bank shall pay to the Participant an amount equal
to the vested percentage of the Accumulated Benefit Obligation (as this term is
used under Financial Accounting Standards Board Statement No. 87 (FAS 87)) as of
the date of Participant’s termination. Vesting is determined pursuant to the
vesting schedule set forth in Section V of the Plan. Distribution of the benefit
shall commence 30 days following Participant’s Separation from Service and shall
be made in a single lump sum.
D. Change in Control Benefit: Upon a Change in Control, followed within two
(2) years by the Participant’s voluntary or involuntary Separation from Service,
the Bank shall pay the Participant an amount equal to one hundred percent (100%)
of the Retirement Benefit described in Paragraph A herein, as if Participant had
remained a full-time employee of the Bank until Normal Retirement Age. If a
percentage of Participant’s Final Salary was to be used to calculate the
Retirement Benefit, the Bank shall use Participant’s Final Salary as of the date
of Separation from Service to calculate the Change in Control Benefit under this
Paragraph D. If the Participant suffers a Separation from Service more than
2 years and one day after a Change in Control, this Paragraph D shall no longer
apply and any benefit shall be paid out under the terms of the remaining
paragraphs in this Participation Agreement. Distribution of any benefit
hereunder shall commence 30 days following a Separation from Service and shall
be made in a single lump sum.
E. Death Benefit: In the event the Participant dies while actively employed by
the Bank on a full-time basis, the Bank will pay the Participant’s designated
Beneficiary an amount equal to the full Retirement Benefit described in
Paragraph A herein, as if Participant had remained a full-time employee of the
Bank until Normal Retirement Age. If a percentage of Participant’s Final Salary
was used to calculate the Retirement Benefit, the Bank shall use Participant’s
Final Salary as of the date of death to calculate the Death Benefit under this
Paragraph E. Distribution of the benefit shall commence 60 days following a
Separation from Service and shall be made in a single lump sum to the
Participant’s designated Beneficiary.
In the event Participant dies after retirement payments have commenced under
Paragraph A herein, the Bank shall continue to make payments to the
Participant’s designated Beneficiary on the same schedule as if Participant had
lived.

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F. Discharge for Cause. Notwithstanding any provision of this Agreement to the
contrary, the Participant shall forfeit any right to a benefit under this
Agreement if the Bank terminates the Participant’s employment for cause.
“Discharge for Cause” shall be as defined in the Plan.
G. Lump Sum Payments. All lump sum distributions under this Plan shall be
discounted to present value using a reasonable Discount Rate.

             
 
Date
     
 
Participant    

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BANK OF GRANITE
AMENDED AND RESTATED
SALARY CONTINUATION PLAN
Distribution Election Form
For:
                                         (“Participant”)
I elect to receive my lifetime equivalent Retirement Benefit (Paragraph A of the
Participation Agreement) as follows:
                     in equal annual installments for 10 years (default).
                     in equal annual installments for 15 years.
                     in a lump sum
(In each case, the amount will be calculated at the date of retirement using a
reasonable Discount Rate)
In the absence of an election, the distribution will default to 10-year
installment payments.
I understand that this election will not take effect until January 1, 2009, and
that if I retire under Paragraph A before January 1, 2009, I will be paid
according to the terms of the prior agreement. I also understand that any
further changes to this election are required to comply with the rules governing
subsequent changes to form and timing under Section 409A of the Internal Revenue
Code.

         
 
      Accepted by:
 
       
 
Participant
     
 
 For the Bank
 
       
 
Date
     
 
 Date

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