Document:

exv10w39

Exhibit 10.39

March 5, 2009

Cummins Inc.

One American Square, Suite 1800

Indianapolis, Indiana 46282

Attention: Marya M. Rose, Vice President, General Counsel

                    and Corporate Secretary

			
	Re:	 	Extension of Standby Purchase Commitment

Dear Marya:

     This letter memorializes the agreement to modify the Standby Purchase Agreement between
Cummins Inc. (“Cummins”) and Irwin Financial Corporation (“IFC”) dated as of October 13, 2008 (the
“Agreement”) in order to extend its outside expiration date to April 30, 2009.

     By signing this letter in the space provided below, Cummins and IFC agree that the reference
to “December 31, 2008” in Section 12(a)(i) of the Agreement is hereby changed to “April 30, 2009.”
Except for this date change, the Agreement remains unmodified and in full force and effect.

     Please confirm that the foregoing correctly sets forth our agreement by signing this letter in
the space provided below.

	 	 	 	 	 
	 	Sincerely,

IRWIN FINANCIAL CORPORATION

 	 
	 	By:  	/s/  William I. Miller
 	 
	 	 	William I. Miller, Chairman and CEO 	 

Agreed as of the date first written above:

CUMMINS INC.

	 	 	 	 	 
	By: 

Its:

	 	/s/ Theodore M. Solso
 

Chairman and CEOEX-10.3

Exhibit 10.3

DIRECTOR FEES

On May 19, 2008, the Board of Directors of Bank of Granite Corporation (the “Company”) approved
changes in the Company’s director fees for 2008, as recommended by the Board of Director’s
Compensation Committee and its Nominating and Corporate Governance Committee. Beginning in May
2008, the Chairman will receive $42,000 annually, payable in monthly installments of $3,500, in
lieu of the annual retainer and meeting fees paid to other non-employee directors. Also
beginning in May 2008, the Vice-Chairman will receive a supplemental annual payment of $4,000 in
addition to the annual retainer and meeting fees paid to other non-employee directors.

The fees paid to each non-employee director other than the Chairman and Vice-Chairman remain
unchanged as approved by the Board on Directors on April 17, 2006. Each will receive an annual
retainer in the amount of $10,000 and a meeting fee, payable quarterly, in the amount of $500
for each Board meeting attended. Non-employee committee members will continue to receive a
meeting fee, payable quarterly, in the amount of $250 for each committee meeting attended.
Non-employee committee chairpersons will continue to receive a meeting fee, payable quarterly,
in the amount of $400 for each committee meeting they conduct, which is in lieu of the $250
committee meeting fee paid to the other non-employee committee members in attendance.EX-10.7

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

- 16 -

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