Exhibit 10.2
BANK OF GRANITE CORPORATION
2007 STOCK INCENTIVE PLAN
ARTICLE I
GENERAL PROVISIONS
          1.1       Purpose of the Plan. This Plan is intended to promote the
interests of the Company by giving Eligible Individuals the opportunity to
acquire a proprietary interest, or otherwise increase their proprietary
interest, in the Company as an incentive to provide or continue their Service.
Capitalized terms used in the Plan shall have the meanings given to them in
Appendix A attached hereto.
          1.2       Administration of the Plan.
          (a)       The Plan shall be administered by the Committee, which
shall, subject to the terms of the Plan and applicable law, have sole and
plenary power and authority to administer the Plan, including, but not limited
to, the power and authority to:
          (i)       select Eligible Individuals to whom Awards may be made;
          (ii)       determine whether and to what extent any type of Awards, or
combination thereof, are to be awarded to Eligible Individuals;
          (iii)       determine the number of shares of Common Stock to be
covered by an Award and the other terms and conditions of such Award (including,
but not limited to, the exercise price, any vesting condition, restriction or
limitation, any payments, rights or other matters to be calculated in connection
with any Awards, any deferred payment arrangement and any vesting acceleration
or forfeiture waiver regarding any Award and any securities or other rights
relating thereto);
          (iv)       determine whether performance criteria must be met as a
condition to any rights associated with any Award, establish any such
performance criteria and certify whether, and to what extent, such performance
criteria have been attained;
          (v)       modify, amend or adjust the terms and conditions of any
Award, including, but not limited to, modifications, amendments, adjustments to,
or replacement grants for, Awards if the Committee determines, in its sole
discretion, that the tax consequences of an Award to the Company or a
Participant differ from the consequences expected at the time an Award was
granted or changes, clarifications or interpretations of tax laws or regulations
permit Awards to be granted with more favorable tax consequences than originally
anticipated;
          (vi)       determine under what circumstances, and the methods by
which, an Award may be settled in cash, Common Stock, other securities, other
Awards or other property or canceled, forfeited or suspended;
          (vii)       adopt, alter and repeal such administrative rules,
guidelines and practices governing the Plan;

 

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          (viii)       interpret, administer, reconcile any inconsistency in,
correct any default in and supply any omission in, the terms and provisions of
the Plan and any Award issued under the Plan (and any other agreement, document,
instrument, instruction or other communication relating thereto); and
          (ix)       otherwise oversee the administration of the Plan and make
any other determination or take any other action the Committee deems necessary
or desirable for the administration of the Plan.
          (b)       Except to the extent prohibited by applicable law or the
applicable rules of a Stock Exchange, the Committee may allocate all or any
portion of its responsibilities and powers to any one or more of its members and
may delegate all or any part of its responsibilities and powers to any person or
persons selected by it. Any such allocation or delegation may be revoked by the
Committee at any time. Except to the extent prohibited by applicable law or the
applicable rules of a Stock Exchange, the authority of the Committee hereunder
may also be exercised by the Board at any time and from time to time.
          (c)       Any determination made in respect of any Award by the
Committee, the Board, or any other person pursuant to delegated authority under
the provisions of the Plan, shall be made in the sole discretion of the
Committee, the Board or such delegate at the time the Award is made or, unless
in contravention of any express term of the Plan, at any time thereafter. All
decisions made by the Committee, the Board or any delegate shall be final and
binding on all persons, including the Company and all Participants.
          (d)       Neither the Company nor any of its Affiliates makes any
representations with respect to the tax consequences of any Award to a
Participant, and by the acceptance of such Award, each Participant acknowledges
the same and agrees to hold the Company and its Affiliates harmless from any
adverse consequences to the Participant under the Code with respect to the Award
or any underlying Shares or other property, whether resulting from any action or
inaction or omission of the Company or its Affiliates pursuant to the Plan or
otherwise.
          (e)       The Committee will approve and oversee procedures to be
applied with respect to the granting of Awards (including the timing thereof) to
promote consistency in the Company’s practices with respect to the granting of
Awards and compliance with applicable laws, regulations and any applicable terms
of the Plan regarding the issuance, valuation, dating and accounting treatment
of Awards.
          1.3       Eligible Individuals. Only Employees are eligible to receive
Awards of Incentive Stock Options. The persons eligible to receive all other
Awards are (i) Employees, (ii) non-employee members of the Board or the board of
directors or other similar governing body of any Subsidiary, (iii) consultants
and other independent advisors who provide Services, directly or indirectly, to
the Company or any Subsidiary and (iv) to the extent permitted by law, any
person prospectively a member of categories (i), (ii) or (iii) above.
          1.4       Stock Subject to the Plan.
          (a)       The capital stock of the Company with respect to which
Awards may be made under the Plan shall be either currently authorized but
unissued shares of Common Stock or shares of Common Stock held by the Company as
treasury shares, including shares acquired by purchase. Subject to adjustment as
provided in Section 1.5 hereof, the maximum number of shares of Common Stock
that may

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be delivered to Participants and their beneficiaries under the Plan shall be
750,000 shares of Common Stock.
          (b)       The shares of Common Stock that may be delivered to
Participants and their beneficiaries under the Plan are subject to the following
additional restrictions:
          (i)       The maximum number of shares of Common Stock that may be
issued in respect of Options intending to qualify as Incentive Stock Options
shall be 750,000 shares;
          (ii)       The maximum number of Shares that may be issued pursuant to
Awards of Restricted Stock or otherwise as outright grants of Common Stock
pursuant to Article VI hereof shall be 400,000 shares; and
          (iii)       For Awards that are intended to be “performance-based
compensation” (as that term is used for purposes of Section 162(m) of the Code)
(a “Qualifying Award”), no more than the following amounts may be granted
pursuant to such Qualifying Awards to any one individual during any one calendar
year period: for Common Stock, the greater of (1) 5,000 shares of Common Stock,
subject to adjustment as provided in Section 1.5 hereof, and (2) Common Stock
with a Fair Market Value of $100,000 as of the date of grant, and with respect
to Awards settled in cash, $100,000. The Committee, in its sole discretion, may
grant an Award to any Participant with the intent that such award be a
Qualifying Award. The right to receive or retain any award granted as a
Qualifying Award (other than an Option or SAR) shall be conditional upon the
achievement of specified performance goals during a calendar year or such other
period (a “Performance Period”) as may be established by the Committee.
Performance goals shall be established in writing by the Committee prior to the
beginning of each Performance Period, or at such other time no later than such
time as is permitted by the applicable provisions of the Code. Such performance
goals, which may vary from Participant to Participant and Award to Award, shall
be based upon the attainment of specific amounts of, or increases in, one or
more of the following: the Fair Market Value of Common Stock, revenues,
operating income, cash flow, earnings before or after income taxes (including
earnings before interest, taxes depreciation and amortization), net income, net
income before or after income taxes, earnings per share, stockholders’ equity,
return on equity, return on investment or capital, return on assets, share price
profitability or profit margins, loan growth, deposit growth, market share or
strategic business objectives consisting of one or more objectives based on
meeting business expansion goals and goals relating to acquisitions or
divestitures, all whether applicable to the Company or any relevant subsidiary
or any combination thereof as the Committee may deem appropriate. Each
performance goal may be expressed on an absolute and/or relative basis, may be
based on, or otherwise employ, comparisons based on internal targets, the past
performance of the Company and/or the past or current performance of other
companies, may provide for the inclusion, exclusion or averaging of specified
items in whole or in part, such as realized gains or losses on strategic
investments, discontinued operations, extraordinary items, accounting changes,
and unusual or nonrecurring items, and, in the case of earnings-based measures,
may use or employ comparisons relating to capital, stockholders’ equity and/or
shares outstanding, assets or net assets. Prior to the payment of any Award
granted as a Qualifying Award, the Committee shall certify in writing that the
performance goals were satisfied. In determining the actual size of a Qualifying
Award for a Performance Period, the Committee may, in its sole and plenary
discretion reduce or eliminate the amount of the Award earned in the Performance
Period, even if applicable Performance Goals have been attained.
          (c)       To the extent any shares of Common Stock covered by an Award
are not delivered to a Participant or beneficiary because the Award is forfeited
or canceled, or the shares of Common Stock are

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not delivered because the Award is settled in cash or such shares are used to
satisfy any exercise price of such Award or any applicable tax withholding
obligation, such shares shall not be deemed to have been delivered for purposes
of determining the maximum number of shares of Common Stock available for
delivery under the Plan; provided, however, that in no event shall such
undelivered shares increase the number of shares that may be granted under the
Plan as Incentive Stock Options.
          1.5       Adjustments in Common Stock. Should any change be made to
the Common Stock by reason of any stock split, stock dividend, recapitalization,
combination of shares, exchange of shares, extraordinary distribution, split-up
or spin-off or other similar change, the Committee shall cause appropriate
adjustments to be made to (i) the maximum number and/or class of securities
issuable under the Plan and applicable sub-limits regarding specific types of
Awards and (ii) the number and/or class of securities and the exercise price per
share in effect under each outstanding Award, in order to preserve the value of
the Award. The adjustments determined by the Committee shall be final, binding
and conclusive.
          1.6       Settlement of Awards. The obligation to make payments and
distributions with respect to Awards may be (i) subject to such conditions,
restrictions and contingencies as the Committee shall determine, and
(ii) satisfied through cash payments, the delivery of shares of Common Stock,
the issuance of replacement Awards, or any combination thereof as the Committee
shall determine.
          1.7       Exchange and Buy Out Provisions; Limitations on Repricing.
The Committee may at any time offer to exchange or buy out any previously
granted Award for a payment in cash, shares of Common Stock, other Awards or
property based on such terms and conditions as the Committee shall determine and
communicate to a Participant at the time that such offer is made.
Notwithstanding the foregoing, a repricing (as defined for this purpose by Stock
Exchange rules and applicable interpretations thereof), of an Option or SAR
shall be permitted only with the approval of the Company’s stockholders to the
extent such approval is required under the rules of the Company’s Stock
Exchange.
          1.8       Substitute Awards. Awards may, in the discretion of the
Committee, be granted under the Plan in assumption of, or in substitution for,
outstanding awards previously granted by the Company or any of its affiliates or
a company acquired by the Company or any of its Affiliates or with which the
Company or any of its Affiliates combines (“Substitute Awards”). The number of
Shares underlying any Substitute Awards shall be counted against the aggregate
number of Shares available for Awards under the Plan; provided, however, that
Substitute Awards issued in connection with the assumption of, or in
substitution for, outstanding awards previously granted by an entity that is
acquired by the Company or any of its Affiliates or with which the Company or
any of its Affiliates combines shall not be counted against the aggregate number
of Shares available for Awards under the Plan; provided further, however, that
Substitute Awards issued in connection with the assumption of, or in
substitution for, outstanding stock options intended to qualify for special tax
treatment under Sections 421 and 422 of the Code that were previously granted by
an entity that is acquired by the Company or any of its Affiliates or with which
the Company or any of its Affiliates combines shall be counted against the
aggregate number of Shares available for Incentive Stock Options under the Plan.
ARTICLE II
OPTIONS
          2.1       General. The Award of an Option entitles the Participant to
purchase a specified number of shares of Common Stock at an exercise price
established by the Committee.

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          2.2       Award of Options. Each Option awarded under this Plan shall
be subject to such terms and conditions determined by the Committee. Each Option
shall be evidenced by one or more documents in the form approved by the
Committee, and such Award shall be effective as of the Grant Date. A
Participant’s entitlement to an Award may be conditioned on the Participant’s
execution of such documents as required by the Committee.
          2.3       Exercise Price. Subject to the terms and conditions set
forth herein, except as otherwise established by the Committee at the time an
Option is granted and set forth in the applicable Award Agreement, the exercise
price per share associated with each Option shall not be less than 100% of the
Fair Market Value per share of Common Stock on the Grant Date of the Award.
          2.4       Exercise Procedures. An Option shall be exercisable at the
times and in accordance with the procedures set forth herein and the procedures
established by the Committee and set forth in the documents evidencing the
Award.
          2.5       Payment of the Exercise Price.
          (a)       No Common Stock shall be delivered pursuant to any exercise
of an Option until payment in full of the aggregate exercise price therefor is
received by the Company, and the Participant has paid to the Company an amount
equal to any federal, state, local and foreign income and employment taxes
required to be withheld. Such payments may be made in cash (or its equivalent)
or, (1) by exchanging shares of Common Stock owned by the Participant (which are
not the subject of any pledge or other security interest) or (2) if there shall
be a public market for the Common Stock at such time, subject to such rules as
may be established by the Committee, through delivery of irrevocable
instructions to a broker to sell the Common Stock otherwise deliverable upon the
exercise of the Option and to deliver promptly to the Company an amount equal to
the aggregate Exercise Price, or by a combination of the foregoing; provided
that the combined value of all cash and cash equivalents and the Fair Market
Value of any such Common Stock so tendered to the Company as of the date of such
tender is at least equal to such aggregate exercise price and the amount of any
federal, state, local or foreign income or employment taxes required to be
withheld.
          (b)       Wherever in the Plan or any Award Agreement a Participant is
permitted to pay the exercise price of an Option or taxes relating to the
exercise of an Option by delivering shares of Common Stock, the Participant may,
subject to procedures satisfactory to the Committee, satisfy such delivery
requirement by presenting proof of beneficial ownership of such Common Stock, in
which case the Company shall treat the Option as exercised without further
payment and shall withhold such number of shares from the Common Stock acquired
by the exercise of the Option.
          2.6       Termination of Service. The Committee shall determine the
terms and conditions on which a Participant may exercise an Option following the
termination of such Participant’s Service, and such terms and conditions shall
be set forth in applicable Award Agreement.
          2.7       Incentive Stock Options. All Incentive Stock Options shall
be subject to the following:
          (a)       Incentive Stock Options may be awarded only to Employees;
          (b)       An Incentive Stock Option’s exercise price per share of
Common Stock shall not be less than 100% of the Fair Market Value per share of
Common Stock on the Grant Date of the Award;
          (c)       The aggregate Fair Market Value of the shares of Common
Stock (determined as of the respective Grant Date(s)) for which one or more
Incentive Stock Options awarded to any Employee under

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the Plan (or any other option plan of the Company or any parent or Subsidiary)
may for the first time become exercisable during any one calendar year shall not
exceed $100,000. To the extent an Employee holds two or more Incentive Stock
Options which become exercisable for the first time in the same calendar year,
the foregoing limitation on the exercisability of such Incentive Stock Options
shall be applied on the basis of the order in which such Options are awarded;
and
          (d)       If an Employee to whom an Incentive Stock Option is awarded
is a 10% Stockholder, then the Incentive Stock Option’s exercise price per share
of Common Stock shall not be less than 110% of the Fair Market Value per share
of Common Stock on the Grant Date of the Award, and the Incentive Stock Option’s
term shall not exceed five years from the date of the Award.
          (e)       If an Option is intended to be an Incentive Stock Option,
and if for any reason such Option (or any portion thereof) shall not qualify as
an Incentive Stock Option, then to the extent of such nonqualification, such
Option (or portion thereof) shall be regarded as a Non-Qualified Stock Option
appropriately granted under the Plan; provided that such Option (or portion
thereof) otherwise complies with the Plan’s requirements relating to
Non-Qualified Stock Options.
          2.8       Rights as Stockholder. Except as provided in this Plan or in
the applicable Award Agreement, a Participant holding Options shall not have,
with respect to such instruments, any of the rights of a stockholder of the
Company, including, the right to vote as a stockholder of the Company or any
right to receive dividends.
ARTICLE III
STOCK APPRECIATION RIGHTS
          3.1       General. The Award of a Stock Appreciation Right entitles
the Participant to receive, in Common Stock (unless otherwise provided in the
applicable Award Agreement), value equal to (or otherwise based on) the excess
of: (i) the Fair Market Value of a specified number of shares of Common Stock;
over (ii) the exercise price for such shares established by the Committee for
such Stock Appreciation Right, with cash payable for any fractional share of
Common Stock.
          3.2       Award of Stock Appreciation Rights. Each Stock Appreciation
Right awarded under this Plan shall be subject to such terms and conditions
determined by the Committee. Each Stock Appreciation Right shall be evidenced by
an Award Agreement, and such Award shall be effective as of the Grant Date. A
Participant’s entitlement to an Award may be conditioned on the Participant’s
execution of such documents as required by the Committee.
          3.3       Exercise Price. The exercise price per share associated with
each Stock Appreciation Right shall be fixed by the Committee and, subject to
the terms and conditions set forth herein, unless otherwise determined by the
Committee at the time of grant and set forth in the applicable Award Agreement
may not be less than the Fair Market Value per share of Common Stock on the
Grant Date of the Award.
          3.4       Exercise Procedures. A Stock Appreciation Right shall be
exercisable at the times and in accordance with the procedures set forth herein
and the procedures established by the Committee and set forth in the applicable
Award Agreement. Generally, a Stock Appreciation Right may be exercised by
surrendering the applicable portion of such Stock Appreciation Right and, upon
such exercise and surrender, the Participant shall be entitled to receive the
amount described in Section 3.1.

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          3.5       Termination of Service. The Committee shall determine the
terms and conditions on which a Participant may exercise a Stock Appreciation
Right following the termination of such Participant’s Service, and such terms
and conditions shall be set forth in the documents evidencing the Award.
          3.6       Rights as Stockholder. Except as provided in this Plan or in
the documents evidencing an Award of a Stock Appreciation Right, a Participant
holding a Stock Appreciation Right shall not have, with respect to such
instrument, any of the rights of a stockholder of the Company, including, the
right to vote as a stockholder of the Company or any right to receive dividends.
ARTICLE IV
RESTRICTED STOCK AND RESTRICTED STOCK UNITS
          4.1       General. An Award of Restricted Stock is a grant to a
Participant of a specified number of shares of Common Stock. An Award of
Restricted Stock Units is the right to receive a specified number of shares of
Common Stock at a future date upon satisfaction of the conditions specified in
the Award.
          4.2       Awards of Restricted Stock and Restricted Stock Units.
Restricted Stock and Restricted Stock Units awarded under this Plan shall be
subject to such terms and conditions determined by the Committee. Subject to the
provisions of this Plan, Awards of Restricted Stock and Restricted Stock Units
shall be evidenced by an Award Agreement, and such Award shall be effective as
of the Grant Date.
          4.3       Termination of Service. The Committee shall determine the
terms and conditions on which a Participant’s Restricted Stock or Restricted
Stock Units shall be forfeited or subject to repurchase following the
termination of such Participant’s Service, and such terms and conditions shall
be set forth in the documents evidencing the Award.
          4.4       Rights as Stockholder. Except as provided in this Plan or in
the documents evidencing an Award of Restricted Stock, a Participant holding
Restricted Stock shall have, with respect to the shares of Restricted Stock, all
of the rights of a stockholder of the Company holding the class or series of
capital stock that is the subject of the Restricted Stock, including, if
applicable, the right to vote the shares and the right to receive any dividends.
Unless otherwise determined by the Committee, any cash dividends paid in respect
of Restricted Stock shall be deferred and reinvested in additional Restricted
Stock, with such additional shares being subject to the same terms and
conditions as the Restricted Stock in respect of which such dividends were paid.
Except as provided in this Plan or in the documents evidencing an Award of a
Restricted Stock Units, a Participant holding Restricted Stock Units shall not
have, with respect to such instrument, any of the rights of a stockholder of the
Company, including, the right to vote as a stockholder of the Company or any
right to receive dividends.
ARTICLE V
PERFORMANCE UNITS
          5.1       General. A Performance Unit is the right to receive a
specified value, as established by the Committee at the time of the Award, based
on the extent to which specified performance goals are achieved.

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          5.2       Awards of Performance Units. Performance awarded under this
Plan shall be subject to such terms and conditions determined by the Committee.
Subject to the provisions of this Plan, Awards of Performance Units shall be
evidenced by one or more documents in the form approved by the Committee. The
performance goals applicable to a Performance Unit shall be among those
specified in, and established pursuant to, Section 1.4(b)(iii) with respect to
Qualified Awards. Performance Units shall be earned contingent upon the
attainment of such performance goals. At the time of the Award of each
Performance Unit, the Committee shall establish, with respect to each such
Award, a Performance Period during which performance shall be measured.
          5.3       Performance Unit Value. Each Performance Unit shall have a
maximum dollar value established by the Committee at the time of the Award.
Performance Units earned will be determined by the Committee in respect of a
Performance Period in relation to the degree of attainment of applicable
performance goals. The measure of a Performance Unit may, in the discretion of
the Committee, be equal to the Fair Market Value of one share of Common Stock.
          5.4       Settlement of Performance Units. Following the end of
Performance Period, a Participant holding Performance Units will be entitled to
receive payment of an amount, not exceeding the maximum value of the Performance
Units, based on the achievement of the performance goals for such Performance
Period, as determined by the Committee. Payment of Performance Units shall be
made in cash or Common Stock, as determined by the Committee.
ARTICLE VI
OTHER AWARDS
          6.1       Common Stock Related Awards. The Committee may, in its sole
and plenary discretion, grant to any Participant such other awards that may be
denominated or payable in, valued in whole or in part by reference to, or
otherwise based on or related to, Common Stock or factors that may influence the
value of such Common Stock, including, without limitation, convertible or
exchangeable debt securities, other rights convertible or exchangeable into
Common Stock, purchase rights for Common Stock, awards with value and payment
contingent upon the performance of the Company or specified subsidiaries,
Affiliates or other business units thereof or other factors determined by the
Committee. The Committee shall determine the terms and conditions of such awards
in its sole and plenary discretion.
          6.2       Bonus Shares. The Committee also may, in its sole and
plenary discretion, grant Common Stock as a bonus, or may grant other awards in
lieu of obligations of the Company or a subsidiary to pay cash or deliver other
property under this Plan or under other plans or compensatory arrangements. The
Committee shall determine the terms and conditions of such awards in its sole
and plenary discretion.
ARTICLE VII
TRANSFERABILITY
          7.1       Transfer Restrictions. Except as set forth in Section 7.2 or
as otherwise determined by the Committee, Awards may be transferred only by will
or the laws of inheritance upon the death of a Participant and may not be
assigned, pledged, hypothecated or transferred in any manner. Upon any

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attempt to assign, pledge, hypothecate or transfer an Option, a Stock
Appreciation Right, Restricted Stock or Restricted Stock Unit, such Award shall
immediately be cancelled and terminated.
          7.2       Transfer Exceptions. The Committee, may, in its sole
discretion, to the extent permitted by applicable law, permit Awards to be
assigned in whole or in part during a Participant’s lifetime as a gift or
without consideration to (i) one or more members of the Participant’s immediate
family, (ii) a trust in which Participant and/or one or more of such family
members hold more than 50% of the beneficial interest, (iii) an entity in which
more than 50% of the voting interests are owned by the Participant and/or one or
more of such family members or (iv) such other transferees as may be permitted
by the Committee. The terms applicable to the assigned Awards shall be the same
as those in effect for such Award immediately prior to the assignment.
ARTICLE VIII
CHANGE OF CONTROL TRANSACTIONS
          8.1       General.
          (a)       The Committee may, in its sole and absolute discretion and
on such terms and conditions as it may establish, determine that prior to or in
connection with the consummation of a Change of Control, (i) any or all
outstanding Awards shall become fully exercisable (if applicable), vested (if
applicable) and transferable.
          (b)       Unless otherwise determined by the Committee, upon
consummation of a Change of Control in which the Company is not the surviving
entity, (i) all outstanding exercisable Awards, to the extent not exercised,
shall terminate and cease to be outstanding, except to the extent expressly
assumed by the successor entity (or parent thereof), and (ii) all unvested
Awards shall be forfeited and cancelled.
          (c)       Unless otherwise determined by the Committee, upon
consummation of a Change of Control in which the Company is the surviving
entity, all Awards shall remain outstanding in full force and effect on the same
terms and conditions.
          8.2       Settlement of Awards in Change of Control Transactions. The
Committee may, in its sole and absolute discretion in connection with a Change
of Control, cancel any outstanding Award and pay or deliver, or cause to be paid
or delivered, to the holder thereof an amount in cash or securities having a
value (as determined by the Committee) equal to the product of (i) the number of
shares of Common Stock or other amount of other property subject to such Award,
and (ii) the amount, if any, by which (A) the formula or fixed price per share
paid to holders of Common Stock pursuant to such Change of Control, exceeds
(B) any exercise price associated with such Award.
          8.3       Termination of Consent and Purchase Rights. In connection
with any Change of Control, the Committee shall have the right to provide for
the immediate termination of any consent, repurchase or first refusal rights of
the Company in respect of any outstanding Awards.
          8.4       Right to Consummate Change of Control Transactions. The
issuance of Awards under the Plan shall in no way affect the right of the
Company to adjust, reclassify, reorganize or otherwise change its capital or
business structure or to merge, enter into a share exchange, dissolve, liquidate
or sell or transfer all or any part of its business or assets.

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ARTICLE IX
MISCELLANEOUS
          9.1       No Right to Company Assets. Neither a Participant nor any
other person shall, by reason of participation in the Plan, acquire any right in
or title to any assets, funds or property of the Company or any parent or
Subsidiary, including, without limitation, any specific funds, assets, or other
property which the Company or any parent or Subsidiary, in its sole discretion,
may set aside in anticipation of a liability under the Plan. A Participant shall
have only a contractual right to the Common Stock or amounts, if any, payable
under the Plan, unsecured by any assets of the Company or any parent or
Subsidiary, and nothing contained in the Plan shall constitute a guaranty that
the assets of the Company or any parent or Subsidiary shall be sufficient to pay
any benefits to any person.
          9.2       No Rights to Awards. No Participant or other Person shall
have any claim to be granted any Award, and there is no obligation for
uniformity of treatment of Participants or holders or beneficiaries of Awards.
The terms and conditions of Awards and the Committee’s determinations and
interpretations with respect thereto need not be the same with respect to each
Participant and may be made selectively among Participants, whether or not such
Participants are similarly situated.
          9.3       No Employment Rights. The Plan does not constitute a
contract of employment, and the selection of an Eligible Individual to receive
an Award will not give a Participant the right to be retained in the employ of
the Company or any parent or Subsidiary, nor any right or claim to any benefit
under the Plan, unless such right or claim has specifically accrued under the
terms of the Plan.
          9.4       Form and Time of Elections. Unless otherwise specified
herein, each election required or permitted to be made by any Participant or
other person entitled to benefits under the Plan, and any permitted
modification, or revocation thereof, shall be in writing filed with the
Committee at such times, in such form, and subject to such restrictions and
limitations, not inconsistent with the terms of the Plan, as the Committee shall
require.
          9.5       Tax Withholding. All distributions under the Plan are
subject to withholding of all applicable taxes, and the Committee may condition
the delivery of any shares or other benefits under the Plan on satisfaction of
the applicable withholding obligations. The Committee, in its discretion, and
subject to such requirements as the Committee may impose prior to the occurrence
of such withholding, may permit such withholding obligations to be satisfied
through cash payment by the Participant, through the surrender of shares of
Common Stock which the Participant already owns, or through the surrender of
shares of Common Stock to which the Participant is otherwise entitled under the
Plan.
          9.6 Effective Date and Term. The Plan shall become effective when
adopted by the Board, but no Award made under the Plan may be exercised, and no
shares of Common Stock shall be issued pursuant to any Award, until the Plan is
approved by the Company’s stockholders. In addition, no Incentive Stock Option
shall be deemed to have been awarded unless and until this Plan is approved by
the Company’s stockholders. If stockholder approval is not obtained within 12
months after the date of the Board’s adoption of the Plan, then all Awards made
previously under the Plan shall terminate and cease to be outstanding. No
further Awards may be made under the Plan upon the earlier of (i) the expiration
of the ten-year period from the date the Plan is adopted by the Board, (ii) the
date on which all shares of Common Stock available for issuance under the Plan
shall have been issued.
          9.7       Amendment of the Plan. The Board shall have complete and
exclusive power and authority to amend or modify the Plan in any or all
respects, except that no such amendment or

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modification that is prohibited absent stockholder approval under applicable
laws, regulations, or Stock Exchange requirements shall be effective unless such
required stockholder approval is obtained.
          9.8       Amendment, Modification and Cancellation of Outstanding
Awards. The Committee may amend, modify, suspend, cancel, terminate,
discontinue, waive any conditions or rights under, any Award, Award Agreement or
related documents in any manner, prospectively or retroactively; provided,
unless otherwise provided in the applicable Award Agreement, however, except as
set forth in the Plan, that no such amendment, modification, alteration,
suspension, discontinuation, cancellation or termination that would materially
impair the rights of any Participant under any outstanding Award shall not to
that extent be effective without the consent of the impaired Participant or such
Participant’s representative or beneficiary.
          9.9       Adjustment of Awards Upon the Occurrence of Certain Unusual
or Nonrecurring Events. In addition to, and without limiting authority otherwise
granted to the Committee hereunder, the Committee is hereby authorized to make
adjustments in the terms and conditions of, and the criteria included in, Awards
in recognition of unusual or nonrecurring events (including, without limitation,
the events described in Section 1.5 or the occurrence of a Change of Control)
affecting the Company, any Affiliate, or the financial statements of the Company
or any Affiliate, or of changes in applicable rules, rulings, regulations or
other requirements of any governmental body or securities exchange, accounting
principles or law (i) whenever the Committee, in its sole and plenary
discretion, determines that such adjustments are appropriate or desirable,
including, without limitation, providing for a substitution or assumption of
Awards, accelerating the exercisability of, lapse of restrictions on, or
termination of, Awards or providing for a period of time for exercise prior to
the occurrence of such event, (ii) if deemed appropriate or desirable by the
Committee, in its sole and plenary discretion, by providing for a cash payment
to the holder of an Award in consideration for the cancellation of such Award,
including, in the case of an outstanding Option or SAR, a cash payment to the
holder of such Option or SAR
          9.10       Governing Law. This Plan shall be governed and construed in
accordance with the laws of the State of Delaware, without regard to conflicts
of law principles thereof.
          9.11       Severability. If any provision of this Plan or the
application thereof to any person or circumstance shall be invalid or
unenforceable to any extent, the remainder of this Plan and the application of
such provision to other persons or circumstances shall not be affected thereby
and shall be enforced to the greatest extent permitted by law.
          9.12       Indemnification. No member of the Board, the Committee or
any employee of the Company (each such person, a “Covered Person”) shall be
liable for any action taken or omitted to be taken or any determination made in
good faith with respect to the Plan or any Award hereunder. Each Covered Person
shall be indemnified and held harmless by the Company against and from (i) any
loss, cost, liability or expense (including attorneys’ fees) that may be imposed
upon or incurred by such Covered Person in connection with or resulting from any
action, suit or proceeding to which such Covered Person may be a party or in
which such Covered Person may be involved by reason of any action taken or
omitted to be taken under the Plan or any Award Agreement and (ii) any and all
amounts paid by such Covered Person, with the Company’s approval, in settlement
thereof, or paid by such Covered Person in satisfaction of any judgment in any
such action, suit or proceeding against such Covered Person; provided that the
Company shall have the right, at its own expense, to assume and defend any such
action, suit or proceeding, and, once the Company gives notice of its intent to
assume the defense, the Company shall have sole control over such defense with
counsel of the Company’s choice. The foregoing right of indemnification shall
not be available to a Covered Person to the extent that a court of competent
jurisdiction in a final judgment or other final adjudication, in either case not
subject to further appeal, determines that the acts or omissions of such Covered
Person giving rise to the indemnification

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claim resulted from such Covered Person’s bad faith, fraud or willful criminal
act or omission or that such right of indemnification is otherwise prohibited by
law or by the Company’s Certificate of Incorporation or Bylaws. The foregoing
right of indemnification shall not be exclusive of any other rights of
indemnification to which Covered Persons may be entitled under the Company’s
Certificate of Incorporation or Bylaws, as a matter of law, or otherwise, or any
other power that the Company may have to indemnify such persons or hold them
harmless.

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APPENDIX A
DEFINED TERMS
          The following terms shall have the following meanings under the Plan:
          “Affiliate” means (a) any entity that, directly or indirectly, is
controlled by, controls or is under common control with, the Company and (b) any
entity in which the Company has a significant equity interest, in either case as
determined by the Committee.
          “Award” means the issuance of an Option, Stock Appreciation Right,
Restricted Stock, Restricted Stock Units, Performance Units or other awards
described in Article VI hereof.
          “Award Agreement” means agreements, contracts or other instrument or
communications evidencing any Award, which may, but need not, require execution
or acknowledgement by a Participant.
          “Board” means the Board of Directors of the Company.
          A “Change of Control” shall (a) have the meaning set forth in an Award
Agreement or (b) if there is no definition set forth in an Award Agreement, mean
the occurrence of any of the following events:
          (i)       any “person” (as such term is defined in Section 7(j)(8)(A)
of the Change in Bank Control Act of 1978), directly or indirectly, acquires
beneficial ownership of voting stock, or acquires irrevocable proxies or any
combination of voting stock and irrevocable proxies, representing fifty percent
(50%) or more of any class of voting securities of the Company, or acquires
control of in any manner the election of a majority of the directors of the
Company;
          (ii)       the Company consolidates or merges with or into another
corporation, association, or entity, or is otherwise reorganized, where the
Company is not the surviving corporation in such transaction and the holders of
the voting securities of the Company immediately prior to such acquisition own
less than a majority of the voting securities of the surviving entity
immediately after the transaction; or
          (iii)       all or substantially all of the assets of the Company are
sold or otherwise transferred to or are acquired by any other corporation,
association, or other person, entity, or group.
          “Code” means the Internal Revenue Code of 1986, as amended.
          “Committee” means the Compensation Committee of the Board or such
other committee of the Board as the Board may designate.
          “Common Stock” means the common stock of the Company.
          “Company” means Bank of Granite Corporation, a Delaware corporation,
and any successor corporation to all or substantially all the assets or voting
capital stock of Bank of Granite Corporation that shall by appropriate action
adopt the Plan.
          “Eligible Individuals” means the individuals described in Section 1.3.
          “Employee” means an individual who is in the employ of the Company (or
any Subsidiary), subject to the control and direction of the employer entity as
to both the work to be performed and the manner and method of performance.

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          “Exchange Act” means the Securities Exchange Act of 1934, as amended.
          “Fair Market Value” means, (a) with respect to property other than
Common Stock on any relevant date, the fair market value of such property
determined by methods or procedures as shall be established from time to time by
the Committee and (b), with respect to any share of Common Stock on any relevant
date shall be determined in accordance with the following provisions:
          (i)       If the Common Stock is at the time neither listed on any
Stock Exchange nor traded on the Nasdaq National Market, then the Fair Market
Value shall be determined by the Committee after taking into account such
factors as the Committee shall deem appropriate.
          (ii)       If the Common Stock is at the time traded on any Nasdaq
market, then the Fair Market Value shall be the closing selling price per share
of Common Stock on the date in question, as such price is reported by the
National Association of Securities Dealers on such Nasdaq market.
          (iii)       If the Common Stock is at the time listed on any Stock
Exchange, then the Fair Market Value shall be the closing selling price per
share of Common Stock on date in question on the Stock Exchange determined by
the Committee to be the primary market for the Common Stock, as such price is
officially quoted in the composite tape of transactions on such exchange.
     “Grant Date” with respect to an Award means the grant date for such Award
as determined for financial statement reporting purposes pursuant to Financial
Accounting Standards Board Statement of Financial Accounting Standards No.
(revised 2004) Share-Based Payment, as modified or supplemented or interpreted).
     “Incentive Stock Option” means an Option that satisfies the requirements of
Section 422 of the Code.
     “Non-Qualified Stock Option” means an Option that does not satisfy the
requirements of Section 422 of the Code.
     “Option” means an Incentive Stock Option or Non-Qualified Stock Option
issued under the Plan.
     “Participant” means any person to whom an Award is made under the Plan.
     “Plan” means the Bank of Granite Corporation 2007 Stock Incentive Plan, as
set forth herein.
     “Restricted Stock” means Common Stock awarded to a Participant pursuant to
the Plan.
     “Restricted Stock Units” mean the right to receive a specified number of
shares of Common Stock at a future date upon satisfaction of specified
conditions.
     “Service” means the provision of services to the Company (or any
Subsidiary) by a person in the capacity of an Employee, a non-employee member of
the board of directors or a consultant or independent advisor.
     “Stock Exchange” means The NASDAQ Stock Market, or should the Company’s
Common Stock cease to be listed on The NASDAQ Stock Market, any other stock
exchange, automated quotation system or trading market on which the Company’s
Common Stock is then primarily listed or traded.

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     “Subsidiary” means any corporation or limited liability company with
respect to which the Company owns, directly or indirectly, equity interests
possessing 50% or more of the total combined voting power of all classes of
equity of such entity.
     “10% Stockholder” means the owner of Common Stock (as determined under
Section 424(d) of the Code) possessing more than 10% of the total combined
voting power of all classes of Common Stock of the Company (or any parent or
Subsidiary).

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