exhibit10-3.htm


    Exhibit
10.3

    


    December
____, 2008

    


    BY HAND
DELIVERY

    


    [Insert
Name of SEO]

    Capital
Bank Corporation

    333
Fayetteville Street, Suite 700

    Raleigh,
North Carolina 27601

    


    Dear
[Insert SEO’s Name],

    


    Capital
Bank Corporation anticipates entering into a Securities Purchase Agreement (the
“Participation
Agreement”), with the United States Department of Treasury (“Treasury”) that provides for
Capital Bank Corporation’s participation in the Treasury’s TARP Capital Purchase
Program (the “CPP”).  Capital
Bank Corporation has been informed by Treasury that the investment contemplated
by the Participation Agreement is scheduled to close on December 12,
2008.

    


    If
Capital Bank Corporation does not participate in the CPP, this letter shall be
of no further force and effect.  Furthermore, if Capital Bank
Corporation ceases to participate in the CPP, this letter shall be of no further
force and effect as of the earliest possible time permitted following the “CPP
Covered Period.”  A “CPP Covered Period” for such
purposes shall be any period during which (A) you are a senior executive officer
of Capital Bank Corporation and (B) Treasury holds an equity or debt position
acquired from Capital Bank Corporation in the CPP.

    


    For
Capital Bank Corporation to participate in the CPP and as a condition to the
closing of the investment contemplated by the Participation Agreement, Capital
Bank and its wholly owned subsidiary, Capital Bank (collectively with Capital
Bank Corporation referred to herein as “Capital Bank”), are required to
establish specified standards for incentive compensation for Capital Bank’s
senior executive officers and to make changes to Capital Bank’s compensation
arrangements. To comply with these requirements, and in consideration of the
benefits that you will receive as a result of Capital Bank’s participation in
the CPP and other good and valuable consideration, you agree as
follows:

    


    
      	 
      	
              1.

            	
              No Golden Parachute
      Payments.  Capital Bank is prohibiting any golden
      parachute payment to you during any CPP Covered Period.

            
	 
      	 
      	 
      
	 
      	
              2.

            	
              Recovery of Bonus and
      Incentive Compensation. Any bonus and incentive compensation paid
      to you during a CPP Covered Period is subject to recovery or “clawback” by
      Capital Bank if the payments were based on materially inaccurate financial
      statements or any other materially inaccurate performance metric
      criteria.

            
	 
      	 
      	 
      
	 
      	
              3.

            	
              Compensation Program
      Amendments. Each of Capital Bank’s compensation, bonus, incentive
      and other benefit plans, arrangements and agreements (including golden
      parachute, severance and employment agreements) (collectively, “Benefit Plans”) with
      respect to you is hereby amended to the extent necessary to give effect to
      provisions (1) and (2).  In addition, Capital Bank is required
      to review its Benefit Plans to ensure that they do not encourage senior
      executive officers to take unnecessary and excessive risks that threaten
      the value of Capital Bank.  To the extent any such review
      requires revisions to any Benefit Plan with respect to you, you and
      Capital Bank agree to negotiate such changes promptly and in good faith
      and execute such additional documents as Capital Bank deems necessary to
      effect such revisions.

            
	 
      	 
      	 
      
	 
      	
              4.

            	
              Definitions and
      Interpretation. This letter shall be interpreted as
      follows:

            
	 
      	 
      	 
      
	 
      	 
      	
              •

            	
              “Senior
      executive officer” means Capital Bank’s “senior executive officers” as
      defined in subsection 111(b)(3) of EESA.

            
	 
      	 
      	 
      	 
      
	 
      	 
      	
              •

            	
              “Golden
      parachute payment” shall have the same meaning as in EESA Section
      111(b)(2)(C).

            
	 
      	 
      	 
      	 
      
	 
      	 
      	
              •

            	
               “EESA”
      means the Emergency Economic Stabilization Act of 2008 as implemented by
      guidance or regulation issued by the Department of the Treasury and as
      published in the Federal Register on October 20, 2008.

            
	 
      	 
      	 
      	 
      
	 
      	 
      	
              •

            	
              The
      term “Capital Bank” includes any entities treated as a single employer
      with Capital Bank Corporation under 31 C.F.R. § 30.1(b) (as in effect on
      the Closing Date).  You are also delivering a waiver pursuant to
      the Participation Agreement, and, as between Capital Bank and you, the
      term “employer” in that waiver will be deemed to mean Capital Bank as used
      in this letter.

            
	 
      	 
      	 
      	 
      
	 
      	 
      	
              •

            	
              The
      term “CPP Covered Period” shall be limited by, and interpreted in a manner
      consistent with, 31 C.F.R. § 30.11 (as in effect on the Closing
      Date).

            
	 
      	 
      	 
      	 
      
	 
      	 
      	
              •

            	
              Provisions
      (1) and (2) of this letter are intended to, and will be interpreted,
      administered and construed to, comply with EESA Section 111 (and, to the
      maximum extent consistent with the preceding, to permit operation of the
      Benefit Plan in accordance with their terms before giving effect to this
      letter).

            
	 
      	 
      	 
      	 
      
	 
      	
              5.

            	
              Miscellaneous.  To
      the extent not subject to federal law, this letter will be governed by and
      construed in accordance with the laws of the State of North
      Carolina.  This letter may be executed in two or more
      counterparts, each of which will be deemed to be an original.  A
      signature transmitted by facsimile will be deemed an original
      signature.

            


    

     

    The Board
appreciates the concessions you are making and looks forward to your continued
leadership during these financially turbulent times.

    


    Yours
sincerely,

    


    
      	
              CAPITAL
      BANK CORPORATION

            	 	
              CAPITAL
      BANK

            	 
	 
      	 
      	 	 
      	 
      	 
	
              By:

            	 
      	 	
              By:

            	 
      	 
	
              Name:

            	 
      	 	
              Name:

            	 
      	 
	
              Title:

            	 
      	 	
              Title:

            	 
      	 


    

    


    EXECUTIVE

    


    Intending
to be legally bound, I agree with and accept the foregoing
terms on the date set forth below.

     

    
      
        	 
      	 
      	
                (SEAL)

              	 
      	 
      
	 
      	
                [Insert
      Name]

              	 
      	 
      	 
      
	
                Date: