Exhibit 10.08

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CAPITAL BANK
SUPPLEMENTAL RETIREMENT PLAN FOR DIRECTORS

(Amended and Restated Effective December 18, 2008)

 

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PURPOSE

The purpose of this Capital Bank Supplemental Retirement Plan for Directors (the
“Plan”) is to provide valuable retirement and other benefits to Board members
who are selected to participate in the Plan and who satisfy the requirements
prescribed by the Plan and Adoption Agreement for the receipt of those benefits.

This Plan will only be for those Directors shown in Section 3 of the Adoption
Agreement and no additional Directors may be added to this Plan.

The Plan was originally adopted effective May 24, 2005. This amendment and
restatement of the Plan was adopted effective December 18, 2008 in order to
ensure the Plan’s compliance with additional rules and regulations under Code
Section 409A governing nonqualified deferred compensation arrangements.

ARTICLE I
DEFINITIONS

1.01           Accrued Benefit

Accrued Benefit is defined in the Adoption Agreement.

1.02           Adoption Agreement

Adoption Agreement means the agreement entered into by the Employer evidencing
adoption of the Plan and selection of key Plan terms and conditions and is
incorporated by reference herein.

1.03           Affiliate

Affiliate means any entity that is a member of a controlled group of Employers,
as defined in Code section 414(b) or a group of trades or businesses under
common control, as defined in Code section 414(c), of which the Employer is a
member according to Code section 414(b) or Code section 414(c), and which has,
with the approval of the Board, adopted the Plan by action of its board.

1.04           Board

Board means the Board of Directors of Capital Bank Corporation or any successor
corporation or bank. Service on an advisory board of any Employer or Affiliate
shall not constitute Board service for purpose of this Plan.

1.05           Cause

Unless otherwise defined in the Adoption Agreement, Cause means fraud or
dishonesty involving the assets of the Employer or an Affiliate or the
conviction of, or pleading guilty or nolo contendre to, a felony or embezzlement
from the Employer or an Affiliate.

1.06           Change in Control

For purposes of this Plan, the term “Change in Control” shall mean any of the
following:

(i)           Any “person” (as such term is used in Section 13(d)(3) or 14(d)(2)
of the Securities Exchange Act of 1934, as amended (the “Act”)) acquiring
“beneficial ownership” (as such term is used in Rule 13d-3 under the Act),
directly or indirectly, of securities of the Capital Bank Corporation (“the
Corporation”), the parent holding company of Capital Bank (the “Bank”),
representing more than fifty percent (50%) of the total fair market value or
total voting power of the Corporation’s then outstanding voting securities, but
excluding for this purpose an acquisition by the Corporation or by an employee
benefit plan (or related trust) of the Corporation.

 
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(ii)           The shareholders of the Corporation approve a reorganization,
share exchange, merger or consolidation related to the Corporation following
which the owners of the total voting power of the Corporation immediately prior
to the closing of such transaction do not beneficially own, directly or
indirectly, more than forty percent (40%) of the total voting power of the
Corporation.

(iii)           A majority of the Corporation’s Board is replaced during any
12-month period by Directors whose appointment or election is not endorsed by a
majority of the members of the Corporation’s Board prior to the date of such
appointment or election.

(iv)           The shareholders of the Corporation approve a complete
liquidation or dissolution of the Corporation, or a sale or other disposition of
all or greater than sixty percent (60%) of the assets of the Corporation.

In no event, however, will a “Change in Control” include a transaction, or
series of transactions, whereby the Corporation or the Bank becomes a subsidiary
of a holding company if the shareholders of the holding company are
substantially the same as the shareholders of the Corporation prior to such
transaction or series of transactions.

1.07           Code

Code means the Internal Revenue Code of 1986, as amended.

1.08           Control Change Date

Control Change Date means the date on which a Change in Control occurs. If a
Change in Control occurs as a result of a series of transactions, the Control
Change Date is the date of the last of such transactions.

1.09           Designated Beneficiary

Designated Beneficiary means the person, persons, entity, entities or the estate
of a Participant which is designated by the Participant or beneficiary to
receive any benefits that may become payable under the Plan as a result of a
Participant’s death. If there is no Designated Beneficiary for any reason then
the Participant’s Designated Beneficiary shall be the Participant’s surviving
spouse, (i.e., the person to whom the Participant was legally married on the
date of the Participant’s death) and if there is no surviving spouse then the
Designated Beneficiary shall be the Participant’s children, per stirpes, and, if
none, the Designated Beneficiary shall be the Participant’s estate.

1.10           Eligible Board Member

Eligible Board Member means an individual who is a member of the Board as of the
date of the adoption of the Plan and not an active employee of the Employer,
except for William Gilliam who has been expressly designated as an Eligible
Board Member despite being an active employee. Only individuals listed in Item 3
of the Adoption Agreement are eligible to participate in the Plan.

1.11           Employer

Employer means Capital Bank, Capital Bank Corporation and any successor employer
that sponsors this Plan.

1.12           Participant

Participant means an Eligible Board Member who is designated to participate in
the Plan in accordance with Article II or a former Eligible Board Member who has
accrued a vested benefit under the Plan. Names of all Participants shall be
listed in item 3 of the Adoption Agreement and no additional Participants will
be eligible to participate in this Plan.

1.13           Plan

Plan means this Supplemental Retirement Plan for Directors, together with the
Adoption Agreement as completed by the Employer.

 
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1.14           Year of Service

Year of Service is defined in the Adoption Agreement.

ARTICLE II
PARTICIPATION

An Eligible Board Member shall become a Participant in the Plan effective as of
the date he is designated a Participant by the Board. Whether a benefit is
payable under the Plan to or on behalf of a Participant whose board service with
the Employer and its Affiliates has terminated shall be determined under the
remaining provisions of the Plan. An individual who is entitled to receive a
benefit under the Plan following termination of Board service shall continue to
be a Participant until that benefit has been paid in full, either to the
Participant or the Designated Beneficiary. An individual who is not entitled to
receive a benefit under the Plan following termination of Board service shall
cease to be a Participant on the date that Board service with the Employer and
its Affiliates terminates or is terminated.

ARTICLE III
BENEFITS

Subject to the limitations set forth in Articles IV and V, the benefits of a
Participant and his Designated Beneficiary shall be as follows:

3.01           Retirement Benefit

A Participant shall be entitled to the benefit described in this Section 3.01 if
the Participant’s Board service with the Employer and its Affiliates terminates
for a reason other than the Participant’s death or Disability. A Participant
described in the preceding sentence shall be entitled to receive his or her
Accrued Benefit as defined in the Adoption Agreement and any applicable
provisions of this Plan. The payment of the annual benefit described in this
Section 3.01 shall commence on the first day of the year after both the
Participant’s termination of Board service with the Employer (and its
Affiliates) and after attaining age 72 unless there has been a Change in
Control. Each annual retirement benefit payment provided for in this Section
3.01 shall be made in a lump sum payment within the first thirty-one (31) days
of each calendar year for which the Participant is entitled to a retirement
benefit hereunder.

In the event of a Change in Control, all benefits will be payable in a lump sum
and present valued to the payment date. Such payment date shall be as soon as
administratively practicable following the Control Change Date but in no event
later than ninety (90) days following the Control Change Date. The present value
for such purposes shall be calculated assuming a stream of ten (10) annual
payments equal to the Participant’s Accrued Benefit commencing on the Control
Change Date and utilizing a discount rate equal to a ten year constant maturity
treasury security.

3.02           Death Benefits

In the event a Participant’s Board service terminates due to a Participant’s
death or in the event a Participant dies before all of the Retirement Benefits
to be provided to the Participant under this Plan are paid out, the
Participant’s Accrued Benefit shall be paid out to the Participant’s Designated
Beneficiary as Death Benefits in accordance with this Section 3.02 as follows:

(a)           If a Participant dies while a Director of the Employer or an
Affiliate, the Designated Beneficiary of a Participant shall be entitled to
receive the Participant’s Accrued Benefit. The annual benefit payable under this
Section 3.02(a) shall commence on the first day of the calendar year immediately
following the Participant’s death. Such annual payments shall be made in a lump
sum within the first thirty-one (31) days of each calendar year for which the
Participant is entitled to an Accrued Benefit under the Plan. The Designated
Beneficiary shall have the right to designate in writing a beneficiary to
receive any benefits remaining to be paid under this Section 3.02(a) upon the
death of the Designated Beneficiary. If no such designation has been made (or
any such successor designated beneficiary fails to survive the Designated
Beneficiary or is not in existence on the date of the death of the Designated
Beneficiary), any remaining benefits payable under this Section 3.02(a) shall be
paid to the Designated Beneficiary’s estate.

 
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(b)           In the event a Participant dies (i) after termination of Board
service with the Employer and its Affiliates, and (ii) after the commencement of
payment of Accrued Benefits to the Participant in accordance with Section 3.01
but (iii) before the payment of all Accrued Benefits due the Participant under
the Plan, such payments shall continue to be paid to the Designated Beneficiary
on the same schedule and in the same form and amount as paid to the Participant
until such benefits are fully paid. The Designated Beneficiary shall have the
right to designate in writing a successor beneficiary to receive any benefits
remaining to be paid under this Section 3.02(b) upon the death of the Designated
Beneficiary. If no such designation has been made (or any such designated
beneficiary fails to survive the Designated Beneficiary or is not in existence
on the date of the death of the Designated Beneficiary), any remaining Accrued
Benefits payable under this Section 3.02(b) shall be paid to the Designated
Beneficiary’s estate.

(c)           This Section 3.02(c) applies if a Participant dies (i) after
termination of Board service with the Employer and its Affiliates, and (ii)
before the payment of benefits due the Participant has commenced. The Designated
Beneficiary of a Participant described in the preceding sentence shall be
entitled to receive the Participant’s Accrued Benefit. The annual benefit
payable under this Section 3.02(c) shall commence on the first day of the
calendar year immediately following the Participant’s death. Such annual
payments shall be made in a lump sum within the first thirty-one (31) days of
each calendar year for which the Participant is entitled to an Accrued Benefit
under the Plan. The Designated Beneficiary shall have the right to designate in
writing a successor beneficiary to receive any benefits remaining to be paid
under this Section 3.02(c) upon the death of the Designated Beneficiary. If no
such designation has been made (or any such designated beneficiary fails to
survive the Designated Beneficiary or is not in existence on the date of the
death of the Designated Beneficiary), any remaining benefits payable under this
Section 3.02(c) shall be paid to the Designated Beneficiary’s estate.

3.03           Forms of Distribution

A Participant who is entitled to Accrued Benefits under Sections 3.01 and 3.04
and a Designated Beneficiary who is entitled to Accrued Benefits under Section
3.02 shall receive an annual cash payment within the first thirty-one (31) days
of each calendar year for which the Participant or Designated Beneficiary is
entitled to a Benefit, unless otherwise specified in the Plan.

3.04           Disability

A Participant that suffers a Disability while serving as a Director of the
Employer and its Affiliates or after leaving service as a Director but prior to
commencement of distribution of Accrued Benefits under the Plan pursuant to
Section 3.01 shall be entitled to all vested Accrued Benefits under the Plan as
of the time of Disability. Distribution of such Accrued Benefits shall commence
with the first calendar year immediately following the date the Director is
determined to be Disabled and shall be paid in equal annual installments for the
number of years equal to the Years of Service accrued by the Participant under
the Plan prior to becoming Disabled. Such annual payments shall be paid to the
Participant within the first thirty-one (31) days of each calendar year in which
the Participant is entitled to an Accrued Benefit. Any Participant who suffers a
Disability after commencement of payments of Accrued Benefits under the Plan
shall continue to receive such payments on the same schedule and at the same
rates as before the Disability. For purposes of this Plan, the term “Disability”
shall mean any physical or mental impairment which, in the opinion of the Board,
constitutes a “disability” as such term is defined in Section 409A(a)(2)(C) of
the Code and the regulations thereunder.

ARTICLE IV
VESTING

4.01           Vesting

A Participant’s right to a Year of Service credit for benefit purposes under the
Plan shall fully vest upon completion of each Year of Service, except subject to
the Forfeiture provisions below.

 
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4.02           Forfeiture

Notwithstanding the above, the Participant and his or her Beneficiary shall
forfeit all then unpaid Benefits under the Plan upon the occurrence of any of
the following events: (i) without the Employer’s prior written consent, the
Participant becomes within one (1) year following termination of service as a
director with Employer or its Affiliates, a senior officer, director, or ten
percent (10%) or more shareholder, directly or indirectly, of a for-profit
enterprise engaged in the business of banking within thirty (30) miles of the
Participant’s principal business office or primary residence any time within the
three years prior to the termination of Participant’s service as a director with
Employer; (ii) the Participant makes any materially disparaging public
disclosures about the Employer following the termination of his or her service
with the Employer; (iii) if the Board determines that the Participant’s
separation from service as a director by Employer and its Affiliates is based on
Cause; or (iv) without the Employer’s prior written consent, the Participant
uses any of the Employer’s propri­etary information for business gain following
his or her termination of service as a Director with the Employer. The
provisions of this Section shall not be applicable in the event of a Change in
Control.

ARTICLE V
TERMINATION, AMENDMENT OR MODIFICATION OF PLAN

5.01           Right to Terminate or Amend

Except as otherwise specifically provided, the Employer reserves prior to a
Change in Control the right to terminate, amend or modify this Plan, wholly or
partially, at any time and from time to time to the extent allowed under Code
Section 409A. Without the written consent of a Participant or, following the
Participant’s death, his Designated Beneficiary, any such termination, amendment
or change may not adversely affect the benefits paid or obligations to any
Participant who died or otherwise terminated Board service before the
termination, amendment, or change. Such right to terminate, amend or modify the
Plan shall be exercised by the Board.

In the event of termination of the Plan all vested service credit and Accrued
Benefits under the Plan shall remain payable to the Participants in accordance
with Article III. Participants will not be entitled to any future accrual of
additional Benefits or Years of Service credit after the date the Plan is
terminated or entitled to accelerate distributions as a result of the Plan
termination unless distributions in accordance with the plan termination rules
under Code Section 409A.

5.02           Notice

Section 5.01 notwithstanding, no action to terminate the Plan shall be taken
except upon thirty (30) days’ written notice to each Participant affected
thereby.

5.03           Manner of Giving Notice

Notices and elections under this Plan must be in writing. A notice or election
is deemed delivered if it is delivered personally or if it is mailed by
registered or certified mail to the person or business at his or its last known
address.

5.04           Discharge of Obligation

Except as provided in Section 5.01 above, upon the termination of this Plan by
the Board, the Plan shall no longer be of any further force or effect and
neither the Employer nor any Participant shall have any further obligation or
right under this Plan.

 
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ARTICLE VI
OTHER BENEFITS AND AGREEMENTS

The benefits provided for a Participant and his Beneficiary under the Plan are
in addition to any other benefits available to such Participant under any other
plan or program of the Employer or a participating Affiliate for its employees,
and, except as may otherwise be expressly provided for, the Plan shall
supplement and shall not supersede, modify or amend any other plan or program of
the Employer or a participating Affiliate in which a Participant is
participating.

ARTICLE VII
EFFECT OF IRC SECTION 4999

If an amount payable under this Plan, alone or together with any other
compensation or benefit a Participant has received or may receive, would result
in the Participant’s being subject to an excise tax under Section 4999 of the
Code, the amount payable hereunder may be reduced if so provided in the Adoption
Agreement. Such reduction, if any, shall be made only on those terms (and in
those circumstances) set forth in the Adoption Agreement.

ARTICLE VIII
RESTRICTIONS ON TRANSFER OF BENEFITS

No right or benefit under the Plan shall be subject to anticipation, alienation,
sale, assignment, pledge, encumbrance or charge, and any attempt to do so shall
be void. No right or benefit hereunder shall in any manner be liable for or
subject to the debts, contracts, liabilities, or torts of the person entitled to
such benefit. If any Participant or Designated Beneficiary under the Plan should
become bankrupt or attempt to anticipate, alienate, sell, assign, pledge,
encumber or charge any right to a benefit hereunder, then such right or benefit,
in the discretion of the Board, shall cease and terminate, and, in such event,
the Board may hold or apply the same or any part thereof for the benefit of such
Participant or Designated Beneficiary, his or her spouse, children, or other
dependents, or any of them, in such manner and in such portion as the Board may
deem proper.

ARTICLE IX
ADMINISTRATION OF THE PLAN

9.01           Plan Administration

(a)           The Plan shall be administered by the Board or the Compensation
Committee of the Board (“Committee”) if the Board so designates. In the event
the Board does not designate the Committee to administer the Plan, all remaining
references in this Article IX pertaining to Committee will refer instead to the
Board. Subject to the provisions of the Plan, the Committee may adopt such rules
and regulations as may be necessary to carry out the purposes hereof. The
Committee’s interpretation and construction of any provision of the Plan shall
be final and conclusive.

(b)           In addition to the powers hereinabove specified, the Committee
shall have the power to compute and certify the amount and kind of benefits from
time to time payable to Participants and Beneficiaries under the Plan, and to
authorize all disbursements for such purposes.

(c)           Except as otherwise expressly provided in the Plan, the Board (or
the Committee, as appropriate) shall have complete control of the administration
of the Plan, with all powers necessary to enable it to carry out its duties in
that respect. Not in limitation, but in amplification of the foregoing, the
Board or Committee, as appropriate, shall have the power in its sole discretion,
to interpret or construe the Plan and to determine all questions that may arise
hereunder as to the status and rights of Participants and others hereunder.
Further, any review of discretionary actions and determinations of such Board or
Committee shall be limited to an arbitrary and capricious standard of review.

 
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9.02           Reports and Records

To enable the Committee to perform its functions, the Employer and any
participating Affiliate shall supply full and timely information to the
Committee on all matters relating to the compensation of all Participants, their
retirement, death or other cause for termination of Board service, and such
other pertinent facts as the Committee may require.

9.03           Claims

The benefit claims review procedure set forth in the Capital Bank Corporation
401(k) Plan, as amended from time to time, is incorporated herein by reference
and made applicable to the Plan.

9.04           Indemnification

The Employer shall indemnify and save harmless each member of the Board against
any and all expenses and liabilities arising out of membership on the Board and
relating to administration of the Plan, excepting only expenses and liabilities
arising out of a member’s own willful misconduct. Expenses against which a
member of the Board shall be indemnified hereunder shall include, without
limitation, the amount of any settlement or judgment, costs, counsel fees, and
related charges reasonably incurred in connection with a claim asserted, or a
proceeding brought or settlement thereof. The foregoing right of indemnification
shall be in addition to any other rights to which any such member may be
entitled.

ARTICLE X
GENERAL

10.01           Funding

(a)           All Plan Participants and Designated Beneficiaries are general
unsecured creditors of the Employer with respect to the benefits due hereunder
and the Plan constitutes a mere promise by the Employer to make benefit payments
in the future. It is the intention of the Employer that the Plan be considered
unfunded for tax purposes and for purposes of Title I of the Employee Retirement
Income Security Act of 1974, as amended.

(b)           The Employer may purchase life insurance in amounts sufficient to
secure the benefits provided under this Plan. Participants agree to use their
best efforts to qualify for life insurance coverage if the Employer so elects to
obtain life insurance coverage on a Participant as a means of funding Accrued
Benefits.

(c)           The Employer may, but is not required to, establish a grantor
trust which may be used to hold assets of the Employer which are maintained as
reserves against the Employer’s unfunded, unsecured obligations hereunder. Such
reserves shall at all times be subject to the claims of the Employer’s creditors
and the creditors of any Affiliate that is an employer of a Participant. To the
extent such trust or other vehicle is established, the Employer’s obligations
hereunder shall be reduced to the extent such assets are utilized to meet its
obligations hereunder. Any such trust and the assets held thereunder are
intended to conform in substance to the terms of the model trust described in
Revenue Procedure 92-64, 1992-33 IRB 11 (8-17-92). Any trust that satisfies the
foregoing requirements must be in effect as of a Control Change Date and the
Employer, no later than thirty (30) days after a Control Change Date, shall
transfer to the trust assets (either money, insurance policies or other
property) in an amount that is not less than the actuarially equivalent value of
all obligations that are owed or projected to be owed to all Participants and
Designated Beneficiaries on and after the Control Change Date. For purposes of
the preceding sentence, the value on any given date of insurance policies held
in or transferred to the trust shall be equal to the unencumbered cash surrender
value of the policies.

10.02           Plan Binding

The Plan shall be binding upon the Employer, any participating Affiliate and
successors and assigns, and, subject to the powers set forth in Article V, upon
a Participant’s or a Designated Beneficiary’s assigns, heirs, executors and
administrators.

 
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10.03           Interpretation of Plan

To the extent not preempted by federal law, the Plan shall be governed and
construed under the laws of State indicated in the Adoption Agreement (other
than its choice of law rules) as in effect from time to time.

10.04           Construction

Masculine pronouns wherever used shall include feminine pronouns and the use of
the singular shall include the plural.

10.05           Actuarial Equivalence

For purposes of the Plan, the terms “actuarial equivalence,” “actuarially
equivalent” and variations thereof mean that on the date of calculation two
forms of payment have equal values as determined by an independent actuarial
consulting firm selected by the Employer. Such actuarial consulting firm shall
determine actuarial equivalence using the interest rate for an immediate annuity
published by the Pension Benefit Guaranty Corporation and in effect on the date
of calculation.

10.06           Compliance with Code Section 409A

This Plan is intended to comply with Code Section 409A so that no payments to a
Participant hereunder will be subject to the additional tax imposed by Code
Section 409A. Any ambiguities with respect to any provisions in this Plan shall
be construed and interpreted and the Plan and all benefits provided hereunder
shall be administered to ensure compliance with Code Section 409A. If any
provision of the Agreement would otherwise frustrate or conflict with such
intent, such provision shall be interpreted and deemed amended so as to avoid
such conflict to the maximum extent permissible by Code Section 409A. In
accordance with Section 1.409A-3(d) of the Treasury Regulations issued under
Code Section 409A, a distribution under this Plan shall be treated as made on
the designated payment date if the payment is made (i) at such date or a later
date within the same calendar year, or if later, by the 15th day of the third
month following the date designated in the Plan (provided a Participant may not,
directly or indirectly, designate the year of payment), or (ii) at a date no
earlier than 30 days before the designated payment date (provided a Participant
may not directly or indirectly designate the taxable year of the payment). Any
reference in this Plan to a Participant’s termination of service, separation
from service, or similar term shall mean the Participant’s “Separation from
Service” with the Employer as such term is defined under Code Section 409A. For
purposes of Code Section 409A, each installment payment under the Plan shall be
regarded as a separate payment. Notwithstanding anything in this Agreement to
the contrary, if a Participant should ever be considered a “Specified Employee”
of a public company as such term is defined in Code Section 409A(a)(2)(B) and if
payment of any amount under this Agreement is required to be delayed for a
period of six months after Separation from Service in accordance with Code
Section 409A, then payment of such amount shall be delayed as required by Code
Section 409A and instead paid on the first business day of the seventh month
following the Director’s Separation from Service.

 
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SUPPLEMENTAL RETIREMENT PLAN
FOR DIRECTORS
ADOPTION AGREEMENT1

1.           Employer Information

 
Name:
Capital Bank
                     
Address:
333 Fayetteville Street, Suite 700, Raleigh, NC 27601
                 
Telephone:
(919) 645-4000
                     
Employer Tax Identification Number:
56-2032984
                     
Type of Business Entity:
 þ  C Corporation
 
 o  Sole Proprietorship
       
 o  S-Corporation
 
 o  Partnership
       
 o  LLC
 
 o  Other (Specify)
                 
The employer is a member of:
                     
(i)  a controlled group?
 þ  yes
 
 o  no
               
(ii)  an affiliated service group?
 o  yes
 
 þ  no
 

2.           Plan Information

Original Effective Date of Plan: May 24, 2005. This Amendment and Restatement is
effective as of December 18, 2008.

State Law to be Used For Plan Article X in Interpreting the Plan:  North
Carolina

3.           Definition: Accrued Benefit

Accrued Benefit means: an Annual Benefit listed below that will result in annual
income for a term equal to Years of Service on the Board (maximum term = 10
years) as defined in Section 4 of this Adoption Agreement.

 
Participant
Annual Benefit
           
Charles Atkins
$15,000
   
Bill Burkhardt
$28,000
   
Leopold Cohen
$30,625
   
William Gilliam
$15,875
   
John Grimes
$14,625
   
Robert Jones
$24,750
   
Buddy Keller
$100,000
   
Oscar Keller
$32,156
   
James Moser
$33,469
   
George Perkins
$14,625
   
Don Perry
$24,938
   
Carl Ricker
$29,969
   
Rex Thomas
$23,625
   
Sam Wornom
$27,563
 

1 All capitalized terms not defined herein, but defined in the Capital Bank
Corporation Supplemental Retirement Plan for Directors plan document, have the
meaning given those terms in the plan document.

 
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Upon a Change in Control, prior to a Participant’s termination of service on the
Board, Participants shall be entitled to receive a benefit for a term equal to
10 years without regard to the actual Years of Service.
 
4.           Definition: Year of Service

For purposes of vesting and benefit accrual:

A “Year of Service” means any calendar year in which a Participant has at least
three months of Board service with the Employer in a calendar year in which the
Plan is adopted or any subsequent calendar year after the Effective Date of the
Plan. Directors will be given credit for four and one-half (4.5) months of Board
service with the Employer for the 2005 calendar year for service during 2005
prior to the original Effective Date of the Plan which was May 24, 2005.

A Participant’s Years of Service will be credited with the following additional
Years of Service in recognition of Board service prior to the original Effective
Date of the Plan which was May 24, 2005.

 
Charles Atkins
8 (eight)
   
Bill Burkhardt
8 (eight)
   
Leopold Cohen
8 (eight)
   
William Gilliam
3 (three)
   
John Grimes
6 (six)
   
Robert Jones
8 (eight)
   
Buddy Keller
8 (eight)
   
Oscar Keller
8 (eight)
   
James Moser
3 (three)
   
George Perkins
8 (eight)
   
Don Perry
8 (eight)
   
Carl Ricker
7 (seven)
   
Rex Thomas
8 (eight)
   
Sam Wornom
8 (eight)
 

In no event, however, shall a Director accrue or be credited with more than a
total of ten (10) Years of Service for any purpose under this Plan.

5.           Vesting Requirements Where Participant Terminates Service Prior to
His Death or Disability

A Participant will be fully vested in all Accrued Benefits unless the
Participant has performed acts consistent with the Forfeiture provisions of
Article IV of the Plan.

 
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6.           Golden Parachute Strategy

Employer should choose A, B, or C unless the small business corporation
exception to Code Sections 280G and 4999 applies, or the Employer is not
considered a corporation for this purpose, in which case D should be selected.
Employer should consult with its tax advisor in making a selection as to golden
parachute strategy and in determining whether it is a non-corporate entity for
this purpose or whether the small business corporation exception applies.
Employer should also revisit this strategy prior to any event that could change
its status for golden parachute purposes.

If an amount payable under the Plan, alone or together with other compensation,
causes a Participant to be subject to an excise tax under Section 4999 of the
Code, such amount will be:

    o
A.  Reduced or deferred to the smallest extent necessary to prevent the
Participant from incurring the excise tax.
          þ
B.  Reduced to the smallest extent necessary to prevent the Participant from
incurring the excise tax, but only if a Participant retains a greater portion of
the amount payable under the Plan, on an after-tax basis, as a result of the
reduction or deferral.
          o
C.  Supplemented with a payment sufficient to reimburse the Participant for the
excise tax plus income, employment and excise taxes thereon, so that the
Participant retains the full amount payable under the Plan, as if no excise tax
had been imposed.
          o
D.  Not applicable.

 
7.
Signatures

IN WITNESS WHEREOF, Employer has executed this Amended and Restated Adoption
Agreement effective this 18th day of December, 2008.

 
CAPITAL BANK AND CAPITAL BANK CORPORATION
             
By:  /s/ B. Grant Yarber
   
B. Grant Yarber
   
President and Chief Executive Officer
 

 
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