EXHIBIT 10.78

CAPITALBANK

SALARY CONTINUATION AGREEMENT

THIS AGREEMENT is adopted this 1st day of June, 2004, by and between
CAPITALBANK, a state-chartered commercial bank located in Greenwood, South
Carolina (the “Company”), and CHASE CHRISTOPHER (the “Executive”).

INTRODUCTION

To encourage the Executive to remain an employee of the Company, the Company is
willing to provide salary continuation benefits to the Executive. The Company
will pay the benefits from its general assets.

AGREEMENT

The Company and the Executive agree as follows:

Article 1

Definitions

Whenever used in this Agreement, the following words and phrases shall have the
meanings specified:

1.1 “Benefit Amount” means $17,159 (Seventeen Thousand One Hundred Fifty-nine
Dollars). Commencing one the first day of the second Plan Year, and on the first
day of each Plan Year thereafter, the Benefit Amount shall be increased four
percent (4.0%) from the previous Plan Year.

1.2 “Change of Control” means the first to occur of the following:

 

  a. Any person or entity, or any two or more persons or entities acting as a
group as defined in Section 13(d)(3) of the Federal Securities and Exchange Act
of 1934, shall acquire ownership of fifty (50%) percent or more of the
outstanding voting stock of the Company; or

 

  b. The acquisition of, or sale of, all or substantially all of the assets of
the Company, except to an Affiliate as defined hereinbelow; or

 

  c. The merger of the Company into another entity that is not an Affiliate as
defined hereinbelow, and the Company is not the survivor of such merger.

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For purposes hereof, an “Affiliate” is any entity controlling, controlled by, or
under common control with the Company. For this purpose, “control” means legal
or beneficial ownership of fifty (50%) percent or more of the equity or voting
interests in an entity.

1.3 “Code” means the Internal Revenue Code of 1986, as amended.

1.4 “Disability” means the Executive’s suffering a sickness, accident or injury
which has been determined by the carrier of any individual or group disability
insurance policy covering the Executive, or by the Social Security
Administration, to be a disability rendering the Executive totally and
permanently disabled. The Executive must submit proof to the Company of the
carrier’s or Social Security Administration’s determination upon the request of
the Company.

1.5 “Early Termination” means the Termination of Employment before Normal
Retirement Age for reasons other than death, Disability, Termination for Cause
or following a Change in Control.

1.6 “Early Termination Date” means the month, day and year in which Early
Termination occurs.

1.7 “Effective Date” means June 1, 2004.

1.8 “Normal Retirement Age” means the August 31st immediately following the
Executive’s 65th birthday.

1.9 “Normal Retirement Date” means the later of the Normal Retirement Age or
Termination of Employment.

1.10 “Plan Year” means a twelve-month period commencing on September 1st and
ending on August 31st of the following year. The initial Plan Year shall
commence on the Effective Date of this Agreement.

1.11 “Termination for Cause” means Termination of Employment by the Company for
reasons that shall include, but not be limited to, the commission of any of the
following by the Executive: dishonesty; theft; unethical business conduct;
indictment for a felony; indictment for a misdemeanor involving moral turpitude;
drug or alcohol addiction; lack of competence in the performance of any duty on
behalf of the Company; violation of the terms and provisions of this Agreement;
insubordination or failure to comply with reasonable instructions of the
Company; material violation by Executive of any federal or state banking law,
rule or regulation; causing or permitting, whether intentionally or negligently,
the Company to materially violate and federal or state banking law, rule or
regulation; if Executive is suspended and/or temporarily prohibited from
participating in the conduct of the Company’s affairs by notice served under
Section 8(e) of the Federal Deposit Insurance Act (12 U.S.C., Section 1818(e));
or failure of Executive to relocate his residence in accordance with Section 5
of the Executive’s employment agreement in effect on the Effective Date or as
subsequently amended.

 

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1.12 “Termination of Employment” means that the Executive ceases to be employed
by the Company for any reason, voluntary or involuntary, other than by reason of
a leave of absence approved by the Company.

1.13 “Vesting Percentage” means a cumulative ten percent (10%) for each Year of
Service until a maximum of one hundred percent (100%) after ten (10) Years of
Service.

1.14 “Year(s) of Service” means a full 12-month period of continuous employment
(including an approved leave of absence) beginning with the Executive’s date of
hire by the Company.

Article 2

Lifetime Benefits

2.1 Normal Retirement Benefit. Upon Termination of Employment on or after the
Normal Retirement Age for reasons other than death, the Company shall pay to the
Executive the benefit described in this Section 2.1 in lieu of any other benefit
under this Agreement.

2.1.1 Amount of Benefit. The annual benefit under this Section 2.1 is the
Benefit Amount.

2.1.2 Payment of Benefit. The Company shall pay the annual benefit to the
Executive in 12 equal monthly installments commencing with the month following
the Executive’s Normal Retirement Date, paying the annual benefit to the
Executive for a period of ten years.

2.2 Early Termination Benefit. Upon Early Termination, the Company shall pay to
the Executive the benefit described in this Section 2.2 in lieu of any other
benefit under this Agreement.

2.2.1 Amount of Benefit. The benefit under this Section 2.2 is the Early
Termination Annual Benefit set forth in Schedule A for the Plan Year ending
immediately prior to the Early Termination Date (except during the first Plan
Year, the benefit is the amount set forth for Plan Year 1), determined by
multiplying the Accrual Balance set forth in Schedule A for the Plan Year ending
immediately prior to the Early Termination Date by the Vesting Percentage
achieved at the Early Termination Date. Any increase in the annual benefit under
Section 2.1.1 shall require the recalculation of Schedule A. This benefit is
determined by calculating a one-hundred twenty month fixed annuity from the
vested Accrual Balance, crediting interest on the unpaid balance at an annual
rate of six (6.0%), compounded monthly.

2.2.2 Payment of Benefit. The Company shall pay the annual benefit to the
Executive in 12 equal monthly installments commencing with the month following
the Normal Retirement Age, paying the annual benefit to the Executive for a
period of ten years.

 

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2.3 Disability Benefit. If the Executive terminates employment due to Disability
prior to Normal Retirement Age, the Company shall pay to the Executive the
benefit described in this Section 2.3 in lieu of any other benefit under this
Agreement.

2.3.1 Amount of Benefit. The benefit under this Section 2.3 is the Disability
Lump-sum Benefit set forth in Schedule A for the Plan Year ending immediately
prior to the date in which the Termination of Employment occurs (except during
the first Plan Year, the benefit is the amount set forth for Plan Year 1),
determined by vesting the Executive in 100 percent of the Accrual Balance. Any
increase in the annual benefit under Section 2.1.1 shall require the
recalculation of Schedule A.

2.3.2 Payment of Benefit. The Company shall pay the Accrual Balance to the
Executive in a lump sum within 90 days following Termination of Employment.

2.4 Change of Control Benefit. Upon Termination of Employment following a Change
of Control, the Company shall pay to the Executive the benefit described in this
Section 2.4 in lieu of any other benefit under this Agreement.

2.4.1 Amount of Benefit. The benefit under this Section 2.4 is the Change in
Control Annual Benefit set forth in Schedule A for the Plan Year ending
immediately prior to the date in which Termination of Employment occurs (except
during the first Plan Year, the benefit is the amount set forth for Plan Year
1), determined by vesting the Executive in the Normal Retirement Benefit
described in Section 2.1.1 calculated as if the Executive had remained employed
by the Company until the Normal Retirement Age.

2.4.2 Payment of Benefit. The Company shall pay the annual benefit to the
Executive in 12 equal monthly installments commencing with the month following
the Normal Retirement Age, paying the annual benefit to the Executive for a
period of ten years.

Article 3

Death Benefits

3.1 Death During Active Service. If the Executive dies while in the active
service of the Company, the Company shall pay to the Executive’s beneficiary the
benefit described in this Section 3.1. This benefit shall be paid in lieu of the
benefits under Article 2.

3.1.1 Amount of Benefit. The benefit under this Section 3.1 is the Accrual
Balance set forth in Schedule A for the Plan Year ending immediately prior to
the Early Termination Date.

3.1.2 Payment of Benefit. The Company shall pay the benefit to the Executive’s
beneficiary in a lump sum within 90 days following the Executive’s death.

3.2 Death During Payment of a Lifetime Benefit. If the Executive dies after any
Lifetime Benefit payments have commenced under this Agreement but before
receiving all such payments, the Company shall pay the remaining Accrual Balance
at the time of the Executive’s death to the Executive’s beneficiary in a lump
sum within 90 days of the Executive’s death.

 

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3.3 Death After Termination of Employment But Before Payment of a Lifetime
Benefit Commences. If the Executive is entitled to a Lifetime Benefit under this
Agreement, but dies prior to the commencement of said benefit payments, the
Company shall pay the Accrual Balance at the time of the Executive’s death to
the Executive’s beneficiary in a lump sum within 90 days of the Executive’s
death.

Article 4

Beneficiaries

4.1 Beneficiary Designations. The Executive shall designate a beneficiary by
filing a written designation with the Company. The Executive may revoke or
modify the designation at any time by filing a new designation. However,
designations will only be effective if signed by the Executive and received by
the Company during the Executive’s lifetime. The Executive’s beneficiary
designation shall be deemed automatically revoked if the beneficiary predeceases
the Executive, or if the Executive names a spouse as beneficiary and the
marriage is subsequently dissolved. If the Executive dies without a valid
beneficiary designation, all payments shall be made to the Executive’s estate.

4.2 Facility of Payment. If a benefit is payable to a minor, to a person
declared incompetent, or to a person incapable of handling the disposition of
his or her property, the Company may pay such benefit to the guardian, legal
representative or person having the care or custody of such minor, incompetent
person or incapable person. The Company may require proof of incompetence,
minority or guardianship as it may deem appropriate prior to distribution of the
benefit. Such distribution shall completely discharge the Company from all
liability with respect to such benefit.

Article 5

General Limitations

5.1 Termination for Cause. Notwithstanding any provision of this Agreement to
the contrary, the Company shall not pay any benefit under this Agreement if the
Executive is subject to a Termination for Cause.

5.2 Suicide or Misstatement. The Company shall not pay any benefit under this
Agreement if the Executive commits suicide within three years after the date of
this Agreement. In addition, the Company shall not pay any benefit under this
Agreement if the Executive has made any material misstatement of fact on an
employment application or resume provided to the Company, or on any application
for any benefits provided by the Company to the Executive.

5.3 Competition After Termination of Employment. The Company shall not pay any
benefit under this Agreement if the Executive, without the prior written consent
of the Company and within 2 years from the Executive’s Termination of
Employment, engages in, becomes interested in, directly or indirectly, as a sole
proprietor, as a partner in a partnership, or as a substantial

 

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shareholder in a corporation, or becomes associated with, in the capacity of
employee, director, officer, principal, agent, trustee or in any other capacity
whatsoever, any enterprise conducted in the trading area (a 50 mile radius) of
the business of the Company, which enterprise is, or may deemed to be,
competitive with any business carried on by the Company as of the date of
termination of the Executive’s employment or retirement. This section shall not
apply following a Change in Control.

5.4 Solicitation After Termination of Employment. The Company shall not pay any
benefit under this Agreement if the Executive, without the prior written consent
of the Company and within 2 years from the Executive’s Termination of
Employment, solicits any employee of the Company for the purpose of hiring such
employee away from the Company or solicits any customer of the Company that was
a customer of the Company at or prior to the Executive’s Termination of
Employment for the purpose of obtaining such customer’s business relationship in
any manner that could be deemed to be competitive to the Company. This section
shall not apply following a Change in Control.

Article 6

Claims and Review Procedures

6.1 Claims Procedure. The Executive or beneficiary (“claimant”) who has not
received benefits under the Plan that he or she believes should be paid shall
make a claim for such benefits as follows:

6.1.1 Initiation – Written Claim. The claimant initiates a claim by submitting
to the Company a written claim for the benefits.

6.1.2 Timing of Company Response. The Company shall respond to such claimant
within 90 days after receiving the claim. If the Company determines that special
circumstances require additional time for processing the claim, the Company can
extend the response period by an additional 90 days by notifying the claimant in
writing, prior to the end of the initial 90-day period, that an additional
period is required. The notice of extension must set forth the special
circumstances and the date by which the Company expects to render its decision.

6.1.3 Notice of Decision. If the Company denies part or all of the claim, the
Company shall notify the claimant in writing of such denial. The Company shall
write the notification in a manner calculated to be understood by the claimant.
The notification shall set forth:

(a) The specific reasons for the denial,

(b) A reference to the specific provisions of the Plan on which the denial is
based,

(c) A description of any additional information or material necessary for the
claimant to perfect the claim and an explanation of why it is needed,

(d) An explanation of the Plan’s review procedures and the time limits
applicable to such procedures, and

 

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(e) A statement of the claimant’s right to bring a civil action under ERISA
Section 502(a) following an adverse benefit determination on review.

6.2 Review Procedure. If the Company denies part or all of the claim, the
claimant shall have the opportunity for a full and fair review by the Company of
the denial, as follows:

6.2.1 Initiation – Written Request. To initiate the review, the claimant, within
60 days after receiving the Company’s notice of denial, must file with the
Company a written request for review.

6.2.2 Additional Submissions – Information Access. The claimant shall then have
the opportunity to submit written comments, documents, records and other
information relating to the claim. The Company shall also provide the claimant,
upon request and free of charge, reasonable access to, and copies of, all
documents, records and other information relevant (as defined in applicable
ERISA regulations) to the claimant’s claim for benefits.

6.2.3 Considerations on Review. In considering the review, the Company shall
take into account all materials and information the claimant submits relating to
the claim, without regard to whether such information was submitted or
considered in the initial benefit determination.

6.2.4 Timing of Company Response. The Company shall respond in writing to such
claimant within 60 days after receiving the request for review. If the Company
determines that special circumstances require additional time for processing the
claim, the Company can extend the response period by an additional 60 days by
notifying the claimant in writing, prior to the end of the initial 60-day
period, that an additional period is required. The notice of extension must set
forth the special circumstances and the date by which the Company expects to
render its decision.

6.2.5 Notice of Decision. The Company shall notify the claimant in writing of
its decision on review. The Company shall write the notification in a manner
calculated to be understood by the claimant. The notification shall set forth:

(a) The specific reasons for the denial,

(b) A reference to the specific provisions of the Plan on which the denial is
based,

(c) A statement that the claimant is entitled to receive, upon request and free
of charge, reasonable access to, and copies of, all documents, records and other
information relevant (as defined in applicable ERISA regulations) to the
claimant’s claim for benefits, and

(d) A statement of the claimant’s right to bring a civil action under ERISA
Section 502(a).

 

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Article 7

Amendments and Termination

This Agreement may be amended only by a written agreement signed by the Company
and the Executive.

Notwithstanding the previous paragraph in this Article 7, the Company may
terminate this Agreement at any time. However, in no event shall this Agreement
be terminated under this Article 7 without payment to the Executive of 100% of
the Accrual Balance set forth on Schedule A (recalculated as set forth in
Section 2.2.1) for the end of the Plan Year in which termination of the
Agreement occurs.

Article 8

Miscellaneous

8.1 Binding Effect. This Agreement shall bind the Executive and the Company, and
their beneficiaries, survivors, executors, successors, administrators and
transferees.

8.2 No Guarantee of Employment. This Agreement is not an employment policy or
contract. It does not give the Executive the right to remain an employee of the
Company, nor does it interfere with the Company’s right to discharge the
Executive. It also does not require the Executive to remain an employee nor
interfere with the Executive’s right to terminate employment at any time.

8.3 Non-Transferability. Benefits under this Agreement cannot be sold,
transferred, assigned, pledged, attached or encumbered in any manner.

8.4 Reorganization. The Company shall not merge or consolidate into or with
another company, or reorganize, or sell substantially all of its assets to
another company, firm, or person unless such succeeding or continuing company,
firm, or person agrees to assume and discharge the obligations of the Company
under this Agreement. Upon the occurrence of such event, the term “Company” as
used in this Agreement shall be deemed to refer to the successor or survivor
company.

8.5 Tax Withholding. The Company shall withhold any taxes that are required to
be withheld from the benefits provided under this Agreement.

8.6 Applicable Law. The Agreement and all rights hereunder shall be governed by
the laws of the State of South Carolina, except to the extent preempted by the
laws of the United States of America.

8.7 Unfunded Arrangement. The Executive and beneficiary are general unsecured
creditors of the Company for the payment of benefits under this Agreement. The
benefits represent the mere promise by the Company to pay such benefits. The
rights to benefits are not subject in any manner to anticipation, alienation,
sale, transfer, assignment, pledge, encumbrance, attachment, or garnishment by
creditors. Any insurance on the Executive’s life is a general asset of the
Company to which the Executive and beneficiary have no preferred or secured
claim.

 

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8.8 Entire Agreement. This Agreement constitutes the entire agreement between
the Company and the Executive as to the subject matter hereof. No rights are
granted to the Executive by virtue of this Agreement other than those
specifically set forth herein.

8.9 Administration. The Company shall have powers which are necessary to
administer this Agreement, including but not limited to:

(a) Establishing and revising the method of accounting for the Agreement;

(b) Maintaining a record of benefit payments;

(c) Establishing rules and prescribing any forms necessary or desirable to
administer the Agreement; and

(d) Interpreting the provisions of the Agreement.

8.10 Named Fiduciary. The Company shall be the named fiduciary and plan
administrator under this Agreement. It may delegate to others certain aspects of
the management and operational responsibilities including the employment of
advisors and the delegation of ministerial duties to qualified individuals.

IN WITNESS WHEREOF, the Executive and the Company have signed this Agreement.

 

EXECUTIVE:     COMPANY:     CAPITALBANK

/s/ Chase Christopher

    By  

/s/ William G. Stevens

CHASE CHRISTOPHER     Title   CEO

 

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CAPITALBANK

CHASE CHRISTOPHER

Salary Continuation Agreement

Schedule A

 

Plan Year Ending

   Benefit Level    Accrual Balance    Early Term.
Vesting Schedule     Vested
Accrual Balance    Early Termination
Annual Benefit
Payable at 65    Change of Control
Annual Benefit
Payable at 65    Disability Lump-sum
Benefit Payable
Immediately

Aug-04

   17,159    1,419    20 %   284    178    47,572    1,419

Aug-05

   17,845    7,314    30 %   2,194    1,299    47,572    7,314

Aug-06

   18,559    13,571    40 %   5,429    3,026    47,572    13,571

Aug-07

   19,301    20,215    50 %   10,108    5,308    47,572    20,215

Aug-08

   20,073    27,269    60 %   16,361    8,092    47,572    27,269

Aug-09

   20,876    34,757    70 %   24,330    11,335    47,572    34,757

Aug-10

   21,711    42,708    80 %   34,166    14,992    47,572    42,708

Aug-11

   22,580    51,149    90 %   46,034    19,026    47,572    51,149

Aug-12

   23,483    60,110    100 %   60,110    23,401    47,572    60,110

Aug-13

   24,422    69,624    100 %   69,624    25,530    47,572    69,624

Aug-14

   25,399    79,725    100 %   79,725    27,536    47,572    79,725

Aug-15

   26,415    90,449    100 %   90,449    29,425    47,572    90,449

Aug-16

   27,472    101,835    100 %   101,835    31,204    47,572    101,835

Aug-17

   28,571    113,922    100 %   113,922    32,880    47,572    113,922

Aug-18

   29,713    126,756    100 %   126,756    34,459    47,572    126,756

Aug-19

   30,902    140,380    100 %   140,380    35,946    47,572    140,380

Aug-20

   32,138    154,846    100 %   154,846    37,346    47,572    154,846

Aug-21

   33,424    170,203    100 %   170,203    38,665    47,572    170,203

Aug-22

   34,761    186,507    100 %   186,507    39,908    47,572    186,507

Aug-23

   36,151    203,817    100 %   203,817    41,078    47,572    203,817

Aug-24

   37,597    222,195    100 %   222,195    42,180    47,572    222,195

Aug-25

   39,101    241,706    100 %   241,706    43,219    47,572    241,706

Aug-26

   40,665    262,421    100 %   262,421    44,197    47,572    262,421

Aug-27

   42,292    284,413    100 %   284,413    45,118    47,572    284,413

Aug-28

   43,983    307,762    100 %   307,762    45,985    47,572    307,762

Aug-29

   45,743    332,551    100 %   332,551    46,803    47,572    332,551

Aug-30

   47,572    358,869    100 %   358,869    47,572    47,572    358,869

 

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