Exhibit 10.1

EMPLOYMENT AGREEMENT

This Employment Agreement (“Agreement”), dated as of August 2, 2006, is made and
entered into between Capital Bank (hereinafter the “Bank”) and Mark Redmond
(hereinafter the “Employee”).

          The Bank desires to employ Employee and Employee desires to accept
such employment on the terms set forth below.

          In consideration of the mutual promises set forth below and other good
and valuable consideration, the receipt and sufficiency of which the parties
acknowledge, the Bank and Employee agree as follows:

          1.          Employment. The Bank employs Employee and Employee accepts
employment on the terms and conditions set forth in this Agreement.

          2.          Nature Of Employment. Employee shall serve as Executive
Vice President and Chief Credit Officer and shall have such responsibilities and
authority consistent with such position as may be reasonably assigned to him by
the Bank. Employee shall also serve as Executive Vice President of Capital Bank
Corporation (“CBC” and, along with the Bank, sometimes collectively referred to
herein as the “Corporation”). Employee shall devote his full time and attention
and best efforts to perform successfully his duties and advance the Bank’s and
CBC’s interests. Employee shall abide by the Bank’s and CBC’s policies,
procedures, and practices as they may exist from time to time.

                       During this employment, Employee shall have no other
employment of any nature whatsoever without the prior consent of the Bank;
provided, however, this Agreement shall not prohibit Employee from personally
owning and dealing in stocks, bonds, securities, real estate, commodities or
other investment properties for his own benefit or those of his immediate
family.

          3.          Term. Subject to the earlier termination provisions set
forth in Section 5, the original term of this Agreement shall be one (1) year
commencing as of the date set forth above. Upon expiration of the original term
or any renewal term, the term shall be automatically renewed for an additional
one (1) year period unless, at least thirty (30) days prior to the renewal date,
either party gives notice of its intent not to continue the relationship. During
any renewal term, the terms, conditions and provisions set forth in this
Agreement shall remain in effect unless modified in accordance with Section 13.

          4.          Compensation and Benefits.

                       (a)     Base Salary. Employee’s initial annual base
salary for all services rendered shall be One Hundred Fifty Thousand and No/100
Dollars ($150,000.00) (less applicable withholdings), payable in accordance with
the Bank’s policies, procedures, and practices as they may exist from time to
time. Employee’s salary periodically may be reviewed and adjusted at the Bank’s
discretion in accordance with the Bank’s policies, procedures and practices as
they may exist from time to time.

                       (b)    Employee’s Obligation to Reimburse Bank. If
Employee should voluntarily terminate his employment for any reason other than
Good Reason (as defined in Section 5(c) below) prior to April 26, 2007, then he
shall reimburse the Bank fifty percent (50%) of the gross amount of the Fifteen
Thousand and No/100 Dollars ($15,000.00) signing bonus he received from the Bank
at the commencement of his employment and he shall reimburse the Bank fifty
percent (50%) of the gross amount of the relocation expenses either paid on his
behalf or reimbursed to him. Employee hereby authorizes the deduction of any
such reimbursement to the Bank from his final pay.

                       (c)     Incentive Plan. Employee shall be eligible to
participate in the Capital Bank Corporation Equity Incentive Plan in accordance
with the applicable terms, conditions, and eligibility requirements of that
Plan, some of which are in the plan administrator’s discretion, as they may
exist from time to time.

                       (d)     Benefits. Employee may participate in any medical
insurance or other employee benefit plans and programs which may be made
available from time to time to other Bank or CBC employees at Employee’s level;
provided, however, that Employee’s participation in such benefit plans and
programs is subject to the applicable terms, conditions, and eligibility
requirements of those plans and programs, some of which are within the plan
administrator’s discretion, as they may exist from time to time.

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                       (e)     Car Allowance. Employee shall receive a car
allowance of Six Hundred and No/100 Dollars ($600.00) per month.

                       (f)     Expenses. Employee shall be reimbursed by the
Bank for any reasonable and necessary business expenses incurred by Employee on
behalf of the Bank or in connection with Employee’s performance of his duties
hereunder. Such reimbursement shall be in accordance with the Bank’s practices
or policies as they may exist from time to time.

                       (g)     Vacation. Employee shall be entitled to four (4)
weeks of vacation during calendar year 2006 and thereafter vacation entitlement
shall be in accordance with the Bank’s policies. Such vacation shall be taken in
accordance with the Bank’s policies and practices as they may exist from time to
time.

          5.          Termination of Employment and Post-Termination
Compensation.

                       (a)     With Notice. Either the Bank or Employee may
terminate this Agreement and the employment relationship created hereunder
without cause at any time by giving thirty (30) days’ written notice to the
other party.

                       (b)     Cause, Disability, or Death. The Bank may
terminate Employee’s employment immediately for “Disability,” “Cause,” or in the
event of Employee’s death. For purposes of this Agreement, Disability shall mean
Employee’s mental or physical inability to perform the essential functions of
his duties satisfactorily for a period of one hundred eighty (180) consecutive
days or one hundred eighty (180) days within a 365-day period as determined by
the Bank in its reasonable discretion and in accordance with applicable law. For
purposes of this Agreement, “Cause” shall mean: (i) any act of Employee
involving dishonesty; (ii) any material violation by Employee of any Bank or CBC
rule, regulation, or policy; (iii) gross negligence committed by Employee;
(iv) material failure of Employee to perform his duties hereunder; or
(v) Employee’s breach of any of the express obligations of this Agreement.

                       (c)     Post-Termination Compensation.

 

         (i)     In the event of termination for Cause, the Bank’s obligation to
compensate Employee ceases on the date of termination except as to the amounts
of salary due at that time.

 

 

 

          (ii)   In the event of a termination for death or Disability, the
Bank’s obligation to compensate Employee ceases on the date of termination,
except as to any salary and prorated bonuses to which he may be entitled as of
the date of termination. The Bank shall pay any such amounts to Employee or
Employee’s estate.

 

 

 

         (iii)   If there has been no Change in Control and the Bank terminates
Employee’s employment without Cause or Employee terminates his employment for
Good Reason (as defined below), then Employee, upon his execution of a general
release in a form prepared by the Bank, shall be entitled to (A) receive a gross
amount equal to his then current annual base salary plus the amount of bonus
paid to Employee, if any, in the prior bonus year, payable in substantially
equal amounts over a twelve (12) month period beginning with the first month
after the release is executed and returned and the revocation period, if any,
specified in the release expires; and (B) for the period of time Employee
receives payments pursuant to Section 5(c)(iii)(A), participate in all life
insurance, retirement, health, accidental death and dismemberment, and
disability plans and other benefit programs and other services paid by the Bank
for Employee in which Employee participates immediately prior to the
termination, provided that Employee’s continued participation is possible under
the applicable terms, conditions and eligibility requirements of such plans and
programs. Employee’s continued participation in such plans and programs shall be
at no greater cost to Employee than the cost he bore for such participation
immediately prior to termination. If Employee’s participation in any such plan
or program is barred, the Bank shall arrange upon comparable terms, and at no
greater cost to Employee than the cost he bore for such plans and programs prior
to termination, to provide Employee with benefits substantially similar to, or
greater than, those which he is entitled to receive under any such plan or
program.

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         For purposes of this Agreement, Good Reason shall mean the occurrence
of any of the following events or conditions without Employee’s prior written
consent and prior to a Change in Control:

 

       (A)   a change in Employee’s status, title, position, or responsibilities
(including reporting responsibilities) which represents a material adverse
change from his status, title, position, or responsibilities in effect
immediately prior thereto; the assignment to Employee of any duties or
responsibilities which are materially inconsistent with his status, title,
position or responsibilities; or any removal of Employee from or failure to
reappoint or re-elect him to any of such positions, status, or title (including
positions, titles, and responsibilities with any affiliate), except in
connection with the termination of his employment for Disability, Cause, or
death, or by Employee other than for Good Reason;

 

 

 

       (B)   the Bank’s requiring Employee to be based at any place outside a
thirty (30) mile radius from its headquarters at 333 Fayetteville Street,
Raleigh, North Carolina, except for reasonably required travel on the Bank’s
business;

 

 

 

       (C)   any material breach by the Bank of any express provision of this
Agreement.

          6.          Non-Solicitation/Non-Compete. Employee acknowledges that
by virtue of Employee’s employment with the Bank, Employee shall have access to
and control of confidential and proprietary information concerning the
Corporation’s and/or its affiliates’ business and that the Corporation’s
business depends to a considerable extent on the individual skills, efforts, and
leadership of Employee. Additionally, Employee acknowledges that the covenants
contained in this Section 6: are reasonably necessary to protect the legitimate
business interests of the Corporation; are described with sufficient accuracy
and definiteness to enable him to understand the scope of the restrictions
imposed on him; and were disclosed to him prior to the commencement of his
employment, such employment being conditioned on his execution of an agreement
containing such terms. Accordingly and in consideration of the Corporation’s
commitments to Employee under this Agreement, Employee expressly covenants and
agrees that Employee shall not, without the prior consent of the Bank, during
his employment and, subject to Section 6(c) below, for one (1) year following
the cessation of his employment regardless of the reason for the cessation,

                       (a)   on Employee’s own or another’s behalf, whether as
an officer, director, stockholder, partner, associate, owner, employee,
consultant or otherwise:

 

       (i)     within any city, metropolitan area or county in which the
Corporation does business or is located, engage in any business activity (or
assist others to engage in any business activity) that directly competes with
the Corporation;

 

 

 

       (ii)    solicit or do business that is the same, similar to, or otherwise
in competition with the business engaged in by the Corporation from or with
persons or entities who are customers of the Corporation, who were customers of
the Corporation at any time during the last year of Employee’s employment with
the Bank, or to whom the Corporation made proposals for business at any time
during the last year of Employee’s employment with the Bank; or

 

 

 

       (iii)   employ, offer employment to, or otherwise solicit for employment,
any employee or other person who is then currently an employee of the
Corporation or who was employed by the Corporation during the last year of
Employee’s employment with the Bank.

                       (b)   within any city, metropolitan area or county in
which the Corporation does business or is located, be employed or otherwise
engaged by any entity that engages in the same, similar or otherwise competitive
business as the Corporation, to provide the same or similar services that
Employee provided to the Corporation.

                       (c)   If (A) the Bank terminates Employee’s employment
without Cause or Employee terminates his employment for Good Reason and
(B) Employee waives in writing his right to receive payments pursuant to Section
5(c)(iii) hereof, the non-competition and non-solicitation restrictions
contained in this Section 6 shall terminate on the later of (A) the cessation of
Employee’s employment with the Bank or (B) the Bank’s receipt of Employee’s
waiver described in this Section 6(c)(i). (ii) In the event that Employee’s
employment terminates under any of the circumstances described in Section 8(b),
the non-competition and non-solicitation restrictions contained in this Section
6 shall terminate six (6) months following cessation of Employee’s employment
with the Bank.

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          7.          Proprietary Information And Property. Employee shall not,
at any time during or following employment with the Bank, disclose or use,
except in the course of his employment with the Bank or as may be required by
law, any confidential or proprietary information of the Bank or CBC received by
Employee while employed hereunder, whether such information is in Employee’s
memory or embodied in writing or other physical form.

                       Confidential or proprietary information is information
which is not generally available to the general public, or Bank’s or CBC’s
competitors, or ascertainable through common sense or general business
knowledge; including, but not limited to data, compilations, methods, financial
data, financial plans, business plans, product plans, lists of actual or
potential customers, and marketing information regarding executives and
employees.

                       All records, files or other objects maintained by or
under the control, custody or possession of the Bank, CBC, or their agents in
their capacity as agents shall be and remain the Bank’s or CBC’s property
respectively. Upon termination of his employment, Employee shall return to the
Bank all property (including, but not limited to, credit cards, keys, company
car, cell phones, computer hardware and software, records, files, manuals and
other documents in whatever form they exist, whether electronic, hard copy or
otherwise and all copies, notes or summaries thereof) which he received in
connection with his employment. At the Bank’s request, Employee shall bring
current all such records, files or documents before returning them.

                       Upon notice of cessation of his employment with the Bank,
Employee shall fully cooperate with the Bank in winding up his pending work and
transferring his work to those individuals designated by the Bank.

          8.          Change in Control.

 

(a)   Definition. For purposes of this Agreement, “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 CBC, the parent holding company
of the Bank, representing fifty percent (50%) or more of the combined voting
power of CBC’s then outstanding voting securities (the “Voting Power”), but
excluding for this purpose an acquisition by CBC or an “affiliate” (as defined
in Rule 12b-2 under the Act) or by an employee benefit plan of CBC or of an
affiliate.

 

 

 

       (ii)    The individuals who constitute the Board of Directors of CBC
(“Board”) on the effective date hereof or their successors duly appointed in the
ordinary course (collectively, the “Incumbent Directors”) cease to constitute at
least a majority of the Board in any twelve (12) month period. Any director
whose nomination is approved by a majority of the Incumbent Directors shall be
considered an Incumbent Director; provided, however, that no Director whose
initial assumption of office is in connection with an actual or threatened
election contest relating to the election of the directors of CBC shall be
considered an Incumbent Director.

 

 

 

       (iii)    The shareholders of CBC approve a reorganization, share
exchange, merger or consolidation related to CBC or the Bank following which the
owners of the Voting Power of CBC immediately prior to the closing of such
transaction do not beneficially own, directly or indirectly, more than fifty
percent (50%) of the Voting Power of CBC.

 

 

 

       (iv)    The shareholders of CBC approve a complete liquidation or
dissolution of CBC, or a sale or other disposition of all or substantially all
of the capital stock or assets of CBC, but excluding for this purpose any sale
or disposition of all or substantially all of the capital stock or assets of CBC
to an “affiliate” (as defined in Rule 12b-2 under the Act) of CBC.

 

             Change in Control shall not include a transaction, or series of
transactions, whereby CBC 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 CBC prior to such transaction or series of series of
transactions.

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                       (b)   Change in Control Termination. After the occurrence
of a Change in Control, Employee shall be entitled to receive payments and
benefits pursuant to this Agreement in the following circumstances:

 

       (i)     if within the period beginning ninety (90) days prior to and
ending three (3) years after the occurrence of a Change in Control, the Bank
terminates Employee’s employment for any reason other than Cause, Disability, or
death; or

 

 

 

       (ii)    if within three (3) years after the occurrence of a Change in
Control, Employee terminates his employment with the Bank for “Good Reason.” For
purposes of this Section 8(b), “Good Reason” shall include the failure of CBC to
obtain an agreement, satisfactory to Employee, from any successor or assign of
CBC to assume and agree to perform this Agreement.

                       (c)   Change in Control Benefits. In the event that
Employee’s employment with the Bank terminates under any of the circumstances
described above in this Section 8 at any time, Employee shall be entitled to
receive all accrued compensation and any pro rata bonuses to which he may be
entitled and which Employee may have earned up to the date of termination and,
upon Employee’s execution of an enforceable general release in a form prepared
by the Bank, severance payments and benefits according to the following schedule
and terms:

 

       (i)    a severance payment equal to: 2.99 times the amount of Employee’s
then current annual base salary plus the amount of bonus paid to Employee, if
any, in the prior bonus year, in the event the termination occurs no later than
twelve (12) months after the occurrence of a Change in Control; 2.0 times the
amount of Employee’s then current annual base salary plus the amount of bonus
paid to Employee, if any, in the prior bonus year, in the event the termination
occurs more than twelve (12) months but within (up to and including) twenty-four
(24) months after the occurrence of a Change in Control; or 1.0 times the amount
of Employee’s then current annual base salary plus the amount of bonus paid to
Employee, if any, in the prior bonus year, in the event the termination occurs
more than twenty-four (24) months but within (up to and including) thirty-six
(36) months after the occurrence of a Change in Control. The severance payment
shall be paid in substantially equal monthly installments without interest, over
a period of thirty-six (36), twenty-four (24), or twelve (12) months,
respectively, beginning with the first month after the release is executed and
returned and the revocation period, if any, specified in the release expires;
and

 

 

 

       (ii)   a continuation of benefits for the period of time Employee
receives the severance benefits described in Section 8(c)(i) above as follows:
During such time, the Bank shall maintain and Employee shall be entitled to
participate in all life insurance, retirement, health, accidental death and
dismemberment, and disability plans and other benefit programs and other
services paid by the Bank for Employee in which Employee participated
immediately prior to the termination, provided that Employee’s continued
participation is possible under the applicable terms, conditions and eligibility
requirements of such plans and programs. Employee’s continued participation in
such plans and programs shall be at no greater cost to Employee than the cost he
bore for such participation immediately prior to termination. If Employee’s
participation in any such plan or program is barred, the Bank shall arrange upon
comparable terms, and at no greater cost to Employee than the cost he bore for
such plans and programs prior to termination, to provide Employee with benefits
substantially similar to, or greater than, those which he is entitled to receive
under any such plan or program.

                       (d)     Limitation on Payments. To the extent that any of
the payments and benefits provided for under this Agreement or otherwise payable
to Employee constitute “parachute payments” within the meaning of Section 280G
of the Internal Revenue Code of 1986, as amended (the “Code”), and but for this
Section 8 would be subject to the excise tax imposed by Section 4999 of the
Code, the Bank shall reduce the aggregate amount of such payments and benefits
such that the present value of such payment of benefits and any other “parachute
payments” amounts (as determined under the Code and the applicable regulations)
is equal to 2.99 times Employee’s “base amount” as defined in Section 280G(b)(3)
of the Code.

          9.     Survival. The terms and conditions of Sections 6 and 7 shall
survive termination of this Agreement and/or Employee’s employment and shall not
be affected by any change or modification of this Agreement unless specific
reference is made to such sections.

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          10.    Remedies. Employee agrees that his breach or threatened
violation of Sections 6 and 7 will result in immediate and irreparable harm to
the Bank or CBC for which legal remedies would be inadequate. Therefore, in
addition to any legal or other relief to which the Bank or CBC may be entitled,
(a) the Bank or CBC may seek legal and equitable relief, including but not
limited to, preliminary and permanent injunctive relief, (b) the Bank will be
released of its obligations under this Agreement to make any payments to
Employee, including but not limited to, those payable pursuant to Sections 5
and/or 8, and (c) Employee will indemnify the Bank or CBC for all expenses,
including attorneys’ fees, in seeking to enforce these paragraphs.

          11.    Delayed Distribution to Key Employees. If the Bank determines
in accordance with Sections 409A and 416(i) of the Code and the regulations
promulgated thereunder, in the Bank’s sole discretion, that Employee is a Key
Employee of the Bank on the date his employment with the Bank terminates and
that a delay in benefits provided under this Agreement is necessary to comply
with Code Section 409A(a)(2)(B), then any severance payments and any
continuation of benefits or reimbursement of benefit costs provided by this
Agreement shall be delayed for a period of six (6) months following Employee’s
termination date (the “409A Delay Period”). In such event, any severance
payments and the cost of any continuation of benefits provided under this
Agreement that would otherwise be due and payable to Employee during the 409A
Delay Period shall be paid to Employee in a lump sum cash amount in the month
following the end of the 409A Delay Period.

          For purposes of this Section 11, “Key Employee” shall mean an employee
who, on an Identification Date (“Identification Date” shall mean each December
31) is a key employee as defined in Section 416(i) of the Code without regard to
paragraph (5) thereof.

          If Employee is identified as a Key Employee on an Identification Date,
then Employee shall be considered a Key Employee for purposes of this Agreement
during the period beginning on the first April 1 following the Identification
Date and ending on the following March 31.

          12.    Waiver Of Breach. The Bank’s or Employee’s waiver of any breach
of a provision of this Agreement shall not waive any subsequent breach by the
other party.

          13.     Entire Agreement. This Agreement: (i) supersedes all other
understandings and agreements, oral or written, between the parties with respect
to the subject matter of this Agreement; and (ii) constitutes the sole agreement
between the parties with respect to this subject matter. Each party acknowledges
that: (i) no representations, inducements, promises or agreements, oral or
written, have been made by any party or by anyone acting on behalf of any party,
which are not embodied in this Agreement; and (ii) no agreement, statement or
promise not contained in this Agreement shall be valid. No change or
modification of this Agreement shall be valid or binding upon the parties unless
such change or modification is in writing and is signed by the parties.

          14.     Severability. If a court of competent jurisdiction holds that
any provision or sub-part thereof contained in this Agreement is invalid,
illegal or unenforceable, that invalidity, illegality or unenforceability shall
not affect any other provision in this Agreement. Additionally, if any of the
provisions, clauses or phrases set forth in Section 6 or 7 of this Agreement are
held unenforceable by a court of competent jurisdiction, then the parties desire
that such provision, clause or phrase be “blue-penciled” or rewritten by the
court to the extent necessary to render it enforceable.

          15.     Parties Bound. The terms, provisions, covenants and agreements
contained in this Agreement shall apply to, be binding upon and inure to the
benefit of the Bank’s successors and assigns. Employee may not assign this
Agreement without the Bank’s prior written consent.

          16.     Governing Law. This Agreement and the employment relationship
created by it shall be governed by North Carolina law. The parties hereby
consent to exclusive jurisdiction in North Carolina for the purpose of any
litigation relating to this Agreement and agree that any litigation by or
involving them relating to this Agreement shall be conducted in the court of
Wake County or the federal court of the United States for the Eastern District
of North Carolina.

[Signature Page Follows]

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          IN WITNESS WHEREOF, the parties have entered into this Agreement on
the day and year written below.

 

EMPLOYEE

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

/s/  Mark Redmond

 

August 2, 2006

 

 

 

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Mark Redmond

 

Date

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CAPITAL BANK

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

By:

/s/  B. Grant Yarber

 

August 2, 2006

 

 

 

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Date

 

 

 

 

 

 

 

 

CAPITAL BANK CORPORATION

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

By:

/s/ B. Grant Yarber

 

August 2, 2006

 

 

 

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Date

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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