Exhibit 10.16



 





Exhibit 10.16




STATE OF NORTH CAROLINA

COUNTY OF CALDWELL




CHANGE OF CONTROL AGREEMENT




     THIS CHANGE OF CONTROL AGREEMENT (hereinafter referred to as this “Agreement”) is entered into
as of the 1st day of January, 2002, by and among BANK OF GRANITE
CORPORATION (the “Corporation”), a Delaware corporation, or its successors, the
Corporation’s wholly-owned subsidiary BANK OF GRANITE (the “Bank”), a banking association
organized under the laws of the state of North Carolina, or its successors, (hereinafter the
Corporation and the Bank, or their successors, are collectively referred to as the “Company”), and
D. MARK STEPHENS (the “Officer”), an individual residing in Catawba County, North
Carolina.



     WHEREAS, the Officer has heretofore been employed by the Company with the title of “Senior
Vice President & Chief Information Officer of Bank of Granite”; and



     WHEREAS, the services of the Officer, the Officer’s experience and knowledge of the affairs of
the Company and reputation and contacts in the industry are extremely valuable to the Company; and



     WHEREAS, the Company wishes to attract and retain such well-qualified executives and it is in
the best interest of the Company and of the Officer to secure the continued services of the Officer
notwithstanding any change of control of the Corporation or the Bank; and



     WHEREAS, the Company considers the establishment and maintenance of a sound and vital
management team to be part of their overall corporate strategy and to be essential to protecting
and enhancing the best interest of the Company and the its shareholders; and



     WHEREAS, the parties desire to enter into this Agreement to provide the Officer with security
in the event of a change of control of the Corporation or the Bank to ensure the continued loyalty
of the Officer during any change of control in order to maximize shareholder value as well as the
continued safe and sound operation of the Company.



     WHEREAS, the Officer, the Company acknowledge and agree that this Agreement is not an
employment agreement but is limited to circumstances giving rise to a change of control of the
Corporation or the Bank as set forth herein.



     NOW, THEREFORE, for and in consideration of the premises and mutual promises, covenants, and
conditions hereinafter set forth, and other good and valuable consideration, the receipt and
sufficiency of which hereby are acknowledged, the parties hereby do agree as follows:




	 	1.	 	Term. The initial term of this Agreement shall be for the period
commencing upon the effective date of this Agreement and ending 

two (2)
calendar years from the effective date of this Agreement. At each anniversary date of
this Agreement, the term automatically shall be extended for an additional two
(2) calendar years on the same terms and conditions set forth herein, unless the
Company shall give written





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	 	 	 	notice to the Officer of its intention not to extend this Agreement for an additional
two (2) calendar years, which notice shall be given at least thirteen (13)
months prior to the next anniversary date.






	 	2.	 	Change of Control.
	 
	 	 	 	(a) In the event of a termination of the Officer’s employment in connection with, or
within twenty-four (24) months after, a “Change of Control” (as defined in
Subparagraph (e) below) of the Corporation or the Bank, for reasons other than for
“cause” (as defined in Subparagraph (b) below), the Officer shall be entitled to receive
the sum set forth in Subparagraph (d) below. Said sum shall be payable as provided in
Subparagraph (f) below, provided, however, that the Officer is employed on a full-time
basis by the Bank at the effective time of the “Change of Control”, except as provided
in Subparagraph (j) below.
	 
	 	 	 	(b) For purposes of this Agreement, termination “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 Company, (b) the conviction of a felony, (c) the unreasonable failure
or refusal of the Officer to perform to the best of his ability on a reasonable basis
his 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
Company.
	 
	 	 	 	(c) The Officer shall have the right to terminate this Agreement upon the occurrence of
any of the following events (the “Termination Events”) within twenty-four (24)
months following a Change of Control of the Company or the Bank:






	 	(i)	 	Officer is assigned any duties and/or responsibilities that are
inconsistent with his duties or responsibilities at the time of the Change of
Control;
	 
	 	(ii)	 	Officer’s annual base salary is reduced below the amount in
effect as of the effective date of a Change of Control;
	 
	 	(iii)	 	Officer’s life insurance, medical or hospitalization
insurance, disability insurance, stock option plans, stock purchase plans,
deferred compensation plans, management retention plans, retirement plans, or
similar plans or benefits being provided by the Company to the Officer as of
the effective date of the Change of Control are reduced in their level, scope,
or coverage, or any such insurance, plans, or benefits are eliminated, unless
such reduction or elimination applies proportionately to all salaried employees
of the Company who participated in such benefits prior to such Change of
Control; or
	 
	 	(iv)	 	Officer is required to transfer performance of his day-to-day
services required hereunder to a location which is more than fifty (50) miles
from the Officer’s current principal work location, without the Officer’s
express written consent.




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A Termination Event shall be deemed to have occurred on the date such action or
event is implemented or takes effect.




(d) In the event that the Officer terminates this Agreement pursuant to this Paragraph
2, the Company will be obligated (1) to pay or cause to be paid to the Officer an amount
equal to two (2) times the Officer’s then current salary and (2) to continue for
a period of two (2) years after such termination all benefits the Officer was
receiving and entitled to at such termination date under the Company’s benefit programs
and plans, including, but not limited to, vacation, personal leave, participation and
vesting in incentive stock option plans, participation and vesting in profit sharing and
supplemental retirement benefit plans, medical, disability, life and accident insurance
coverage and reasonable costs of continuing education and other fees associated with the
maintenance and renewal of professional licenses (all said benefits being hereinafter
referred to as the “Fringe Benefits”). The Officer, in his sole discretion, may elect
to receive the cash dollar equivalent of such benefits.




(e) For the purposes of this Agreement, the term Change of Control shall mean any of the
following events:




	 	(i)	 	After the effective date of this Agreement, any “person” (as
such term is defined 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 Corporation or the Bank, or acquires control of in any
manner the election of a majority of the directors of the Corporation or the
Bank;
	 
	 	(ii)	 	The Corporation or the Bank consolidates or merges with or into
another corporation, association, or entity, or is otherwise reorganized, where
the Corporation or the Bank is not the surviving corporation in such
transaction and the holders of the voting securities of the Corporation or the
Bank 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 Corporation or
the Bank are sold or otherwise transferred to or are acquired by any other
corporation, association, or other person, entity, or group.






Notwithstanding the other provisions of this Paragraph 2, a transaction or event
shall not be considered a Change of Control if, prior to the consummation or
occurrence of such transaction or event, the Officer and the Company agree in
writing that the same shall not be treated as a Change of Control for purposes of
this Agreement.




	 	(f)	 	Amounts payable pursuant to this Paragraph 2 shall be paid, at the
option of the Officer, either in one lump sum or in twenty-four (24) equal
monthly payments.
	 
	 	(g)	 	Following a Termination Event which gives rise to the Officer’s rights
hereunder, the Officer shall have two (2) years from the date of occurrence
of the




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	 	 	 	Termination Event to terminate this Agreement pursuant to this Paragraph 2. Any
such termination shall be deemed to have occurred only upon delivery to the
Corporation or Bank, or any successors thereto, of written notice of termination,
which describes the Change of Control and Termination Event. If the Officer does
not so terminate this Agreement within such two (2) year period, the Officer
shall thereafter have no further rights hereunder with respect to that Termination
Event, but shall retain rights, if any, hereunder with respect to any other
Termination Event as to which such period has not expired.






	 	(h)	 	It is the intent of the parties hereto that all payments made pursuant
to this Agreement be deductible by the Corporation or the Bank for federal income
tax purposes and not result in the imposition of an excise tax on the Officer.
Notwithstanding anything contained in this Agreement to the contrary, any payments
to be made to or for the benefit of the Officer which are deemed to be “parachute
payments” as that term is defined in Section 280G(b)(2) of the Internal Revenue
Code, as amended (the “Code”), shall be modified or reduced to the extent deemed to
be necessary by the Company’s Board of Directors to avoid the imposition of an
excise tax on the Officer under Section 4999 of the Code or the disallowance of a
deduction to the Company under Section 280G(a) of the Code.
	 
	 	(i)	 	In the event any dispute shall arise between the Officer and the
Company as to the terms or interpretation of this Agreement, including this
Paragraph 2, whether instituted by formal legal proceedings or otherwise, including
any action taken by the Officer to enforce the terms of this Paragraph 2 or in
defending against any action taken by the Corporation or the Bank, the Bank shall
reimburse the Officer for all costs and expenses, proceedings or actions, in the
event the Officer prevails in any such action.
	 
	 	(j)	 	It is further agreed that the payment agreed in this Paragraph 2 to be
paid by the Company to the Officer shall be due and paid to the Officer should a
Change of Control (as defined above) be agreed to by the Corporation or the Bank or
be consummated within six (6) months of the Officer’s involuntary termination of
employment with the Corporation or the Bank for reasons other than for “cause” as
such term is defined in Subparagraph 2(b) hereof.






	 	3.	 	Successors and Assigns. This Agreement shall inure to the benefit of
and be binding upon any corporate or other successor of the Corporation or the Bank,
which shall acquire, directly or indirectly, by conversion, merger, consolidation,
purchase, or otherwise, all or substantially all of the assets of the Corporation or
the Bank.
	 
	 	4.	 	Modification; Waiver; Amendments. No provision of this Agreement may
be modified, waived or discharged unless such waiver, modification or discharge is
agreed to in writing and signed by the Officer, the Company, except as herein otherwise
provided. No waiver by any party hereto, at any time, of any breach by any party
hereto, or compliance with, any condition or provision of this Agreement to be
performed by such party shall be deemed a waiver of similar or dissimilar provisions or
conditions at the same or at any prior or subsequent time. No amendments or additions
to this Agreement shall be binding unless in writing and signed by the parties, except
as herein otherwise provided.




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	 	5.	 	Applicable Law. This Agreement shall be governed in all respects
whether as to validity, construction, capacity, performance, or otherwise, by the laws
of North Carolina, except to the extent that federal law shall be deemed to apply.
	 
	 	6.	 	Severability. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision hereof shall not
affect the validity or enforceability of the other provision hereof.





     IN TESTIMONY WHEREOF, the Company have caused this Agreement to be executed under seal and in
such form as to be binding, all by authority of their Board(s) of Directors first duly given, and
the individual party hereto has set said party’s hand hereto and has adopted as said party’s seal
the typewritten word “SEAL” appearing beside said party’s name, this the day and year first above
written.



	 	 	 	 	 	 	 	 	 	 	 
	(Corporate Seal)	 	 	 	BANK:	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	ATTEST:	 	 	 	Bank of Granite	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By:

	 	/s/ Charles M. Snipes
 

Charles M. Snipes
	 	 	 	By:
	 	/s/ John A. Forlines, Jr.
 

John A. Forlines, Jr.
	 	 
	 

	 	President and Chief Executive Officer
	 	 	 	 	 	Chairman	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	(Corporate Seal)	 	 	 	CORPORATION:	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	ATTEST:	 	 	 	Bank of Granite Corporation	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By:

	 	/s/ Charles M. Snipes
	 	 	 	By:
	 	/s/ John A. Forlines, Jr.	 	 
	 

	 	 
	 	 	 	 	 	 	 	 
	 

	 	Charles M. Snipes
	 	 	 	 	 	John A. Forlines, Jr.	 	 
	 

	 	President
	 	 	 	 	 	Chairman and Chief Executive Officer	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	OFFICER:	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	By:
	 	/s/ D. Mark Stephens	 	 
	 

	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	D. Mark Stephens	 	 







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