Document:

ex10_06.htm

    Exhibit 10.06

    
      
        

      

    

    
       

      CAPITAL
BANK

      DEFINED
BENEFIT SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

      (Amended
and Restated Effective December 18, 2008)

      

      This
Capital Bank Defined Benefit Supplemental Executive Retirement Plan (the “Plan”)
was adopted by Capital Bank Corporation (the “Corporation”) AND Capital Bank
(the “Bank”), effective as of May 24, 2005. This amendment and restatement of
the Plan was adopted effective December 18, 2008 to make certain amendments to
the Plan in order to ensure its compliance with Code Section 409A.

      

      The Plan
is established and is to be maintained for the benefit of a select group of the
Employer's management or highly compensated employees. The purposes of the Plan
are to offer benefits to supplement retirement benefits under the Employer's
tax-qualified retirement plan and to prevent Participants from entering into
competitive business ventures with the Employer, from appropriating confidential
information proprietary to the Employer to his personal benefit, or otherwise
from acting in a manner that is injurious to the Employer's
interests.

      

      The Plan
is intended to be a top-hat plan (i.e., an unfunded nonqualified deferred
compensation plan maintained for a select group of man­agement or highly
compensated employees) pursuant to Sections 201(2), 301(a)(3), and 401(a)(1) of
the Employee Retirement Income Security Act of 1974, as amended (“ERISA”). The
Plan is also a nonqualified deferred compensation plan subject to Code Section
409A and applicable regulations and other guidance thereunder.

      

      ARTICLE
I-DEFINITIONS

      

      The
following terms, as used herein, unless a different meaning clearly is implied
by the context, shall have the following meanings:

      

      1.1           BENEFICIARY
means any person or persons so designated in ac­cordance with the provisions
of Article V.

      

      1.2           BENEFIT
means the total supplemental retirement amount, after all offsets and vesting
provisions, accrued and to be paid for the benefit of the Participant as
deter­mined under the Plan.

      

      1.3           BENEFIT
COMMENCEMENT DATE means the date on which Benefits under the Plan are to
commence following the Participant's termination of employment with the Employer
as provided herein.

      

      1.4           BENEFIT
PERCENTAGE means a percentage of each Participant’s Compensation as established
by the Board to be used for purposes of calculating the Participant’s Target
Benefit under the Plan.

      

      1.5           BOARD
means the Board of Directors of the Employer or a committee designated by the
Board of Directors that will be responsible for the administration and oversight
of the Plan.

      

      1.6           CODE
means the Internal Revenue Code of 1986 and the regulations thereunder, as
amended from time to time.

      

      1.7           COMPENSATION
means the average annualized salary received by a Participant within the three
(3) years prior to the Participant’s termination of employment with the Employer
or current salary if employed less than three years with Employer. For purposes
of this Plan, the term Compensation excludes any compensation from bonuses,
profit sharing, deferred compensation, stock options, restricted stock or any
other similar forms of wages or compensation paid in addition to the
Participant’s annualized base salary for a given year.

      

      1.8           EFFECTIVE
DATE means the effective date of this Plan, which shall be May 24, 2005. The
Amended and Restated Plan set forth herein was adopted December 18,
2008.

      

      1.9           EMPLOYER
means Capital Bank Corporation and subsidiaries, or its successors and assigns,
unless otherwise herein provided, or any other corpo­ration or business
organization that, with the consent of Capital Bank Corporation or its
successors or assigns, assumes the Employer's obligations
hereunder.

      
        
           

        

        
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      1.10           ERISA
means the Employee Retirement Income Security Act of 1974 and the regulations
thereunder, as amended from time to time.

      

      1.11           NORMAL
RETIREMENT DATE means the date on which a Participant attains fifty-eight (58)
years of age.

      

      1.12           PARTICIPANT
means a member of a select group of the Employer's management or highly
compensated employees within the meaning of Sections 201 (2), 301 (a)(3), and
401 (a)(1) of ERISA. Participants will be approved by the Employer’s Board of
Directors or a committee of the Board of Directors designated such authority by
the Board of Directors. The Board (or appropriate committee) shall also
determine the effective date of a Participant’s eligibility for accruing Years
of Service under the Plan.

      

      1.13           PIA
means the Primary Insurance Amount under Social Security. When determined at an
age other than Social Security retirement age, PIA reflects future compensation
(from age at determination to Social Security retirement age) equal to
compensation in the last calendar year before the determination date. For the
year of determination, PIA reflects the greater of actual compensation or
compensation in the last calendar year before the determination
date.

      

      1.14           PLAN
means this Capital Bank Defined Benefit Supplemental Executive Retirement Plan,
as amended from time to time.

      

      1.15           PLAN
YEAR means the twelve (12) month period ending on December 31 of each year
during which the Plan is in effect.

      

      1.16           QUALIFIED
PLAN means the Capital Bank 401(k) Retirement Plan, as it may be amended from
time to time.

      

      1.17           YEARS
OF SERVICE means the number of years a Participant has performed at least 1,000
hours of service for the Employer in the calendar year in which the Board
approved the employee as a Participant in the Plan and each subsequent year the
employee remained a Participant in the Plan as well as any credit for service
for prior years under Section 3.7.

      

      ARTICLE
II-BENEFITS

      

      2.1           PARTICIPANT’S
TARGET BENEFIT. A Participant's “Target Benefit” to be paid under this Plan
shall be an amount equal to a Participant’s Benefit Percentage multiplied by the
Participant’s Compensation (as such term is defined in Section 1.7) reduced by
the following offset amounts: (i) the maximum allowed Employer matching
contributions to the Qualified Plan without regard to whether the Participant
actually participated at a level to receive the maximum matching contribution
unless the reason for participating at a lower level is due to the constraints
under any law or regulation in order that the Qualified Plan maintains its
qualified plan status under ERISA accumulated over the Participant’s employment
with Employer plus an annualized earnings credit to the matching contribution of
2% annually. The accumulated amount of matching contributions and earnings will
then be divided by the Benefit Period as defined in Section 4.2 to determine the
annual offset amount; (ii) benefits provided under any future retirement plan or
program which provides Employer-paid retirement benefits from a defined benefit
plan other than this Plan for the Participant; (iii) Employer-paid costs
provided under any future retirement plan or program which provides benefits
under a defined contribution benefit plan and (iv) 50% of the Participant’s
estimated annualized PIA benefit at the date of termination of employment with
Employer.

      

      All
calculations performed with respect to determining a Participant's Target
Benefit shall be performed using reasonable actuarial and other assumptions,
consistently ap­plied and consistent with one another. The Employer may, in
its discretion, attach as a schedule hereto prescribed actuarial and other
assumptions that will be used to determine the Participant's Benefit under the
Plan.

      

      2.2           BENEFICIARY'S
BENEFIT. The Beneficiary’s Benefit payable hereunder shall be paid in a lump sum
the amount of which shall be determined by the provisions of Sections 3.2 and
4.3 depending on whether the Participant’s death occurs while employed by the
Employer or after termination of employment with the Employer.

      
        
           

        

        
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      All lump
sum payments made as a result of a Participant’s death shall be calculated by
present valuing to the payment date using a discount rate equal to the yield of
a ten year constant maturity US Treasury security, a stream of payments assuming
the Participant’s Benefit would commence or continue on the date of the
Participant’s death and be payable for the number of periods described in
Section 4.3.

      

      ARTICLE
III-ENTITLEMENT TO BENEFITS

      

      3.1           RETIREMENT.
If the Participant terminates employment with the Employer for reasons other
than death or Disability, the Participant's Benefit shall be payable according
to the provisions of Article IV unless the Participant forfeits rights to his or
her Benefits under the Plan pursuant to Section 3.7.

      

      3.2           DEATH.
If a Participant dies prior to his or her termination of employ­ment with
the Employer, the Participant’s Benefit shall become fully vested and be payable
to the Participant's designated Beneficiary in accordance with the provisions of
Section 2.2 and Article IV.

      

      3.3           VESTING.
Provided there has not been a Change in Control as defined in Section 3.5 below
and that the Participant has not terminated employment due to death or
Disability, a Participant’s Benefit amount accrued under the Plan shall vest and
become payable in accordance with the following vesting schedule (the “Vesting
Schedule”):

      

      
        
          	 
      	
                  Years
      of Service

                	 
      	
                  Vested
      Benefit

                	 
      
	 
      	 
      	 
      	 
      	 
      
	 
      	
                  0–3
      Years of Service

                	 
      	
                  0%

                	 
      
	 
      	
                  4
      Years of Service

                	 
      	
                  20%

                	 
      
	 
      	
                  5
      Years of Service

                	 
      	
                  40%

                	 
      
	 
      	
                  6
      Years of Service

                	 
      	
                  60%

                	 
      
	 
      	
                  7
      Years of Service

                	 
      	
                  80%

                	 
      
	 
      	
                  8
      Years of Service

                	 
      	
                  100%

                	 
      

        

      

      

      Accordingly,
any Participant who terminates employment with the Employer, prior to a Change
in Control, for any reason other than death or Disability without eight (8) or
more Years of Service shall be entitled only to a percentage of the total
Benefit potentially payable to the Participant under the Plan as corresponds to
the Participant’s Vested Benefit percentage set forth in the above Vesting
Schedule.

      

      3.4           DISABILITY.
In the event a Participant terminates employment with the Employer due to
Disability, the Participant shall become 100% vested in any Participant’s Target
Benefit earned as of the date of Disability. In such cases, the Participant’s
annual Target Benefit amount as determined under the Plan shall be paid to the
disabled Participant for a period of years equal to the total Years of Service
the Participant earned under the Plan up to a maximum of seventeen (17) years.
For example, a Participant who terminates due to a Disability after five (5)
Years of Service would be entitled to 100% of the Participant’s Target Benefit
amount to be paid out for a period of five (5) years. In the event a Participant
becomes Disabled following termination of employment with the Employer, Benefits
shall be paid out in accordance with Article IV based on the Participant’s
Vested Benefit at the time of termination. For purposes of this Plan, the term
“Disability” shall mean any physical or mental impairment which, in the opinion
of the Board, results in a Participant being “disabled” or constitutes a
“disability” as such terms are defined in Code Section 409A(a)(2)(C) and the
regulations thereunder.

      

      3.5           CHANGE
IN CONTROL.

      

      (a)           Definition of 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 Corporation, the parent holding company of 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 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.

      

      (b)           Benefits upon a Change in
Control. In the event of a Change in Control while a Participant is
employed by Employer, a Participant’s annual Benefit to be paid under this Plan
shall be deemed fully vested for purposes of Section 3.3 and shall be payable
for a period of seventeen (17) years regardless of the Participant’s actual
Years of Service with the Employer.

      

      3.6           PRIOR
SERVICE. The Board (or appropriate Committee of the Board) may provide
Participants with credit for Years of Service for periods prior to the Effective
Date of the Plan.

      

      3.7           FORFEITURE.
Notwithstanding any other provisions of this Plan to the contrary, 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 two (2)
years following termination of employment with Employer a senior officer,
independent contractor, advisor, 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 at any time within the three years prior to the termination of
Participant’s employment with Employer; (ii) the Participant makes any
materially disparaging public disclosures about the Employer following the
termination of his or her employment relationship with the Employer; (iii) the
Board determines that the Participant’s separation from employment by Employer
is based on fraud, dishonesty, conviction of, or pleading guilty to, a felony,
or embezzlement from the Employer; 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 employment with the
Employer. The provisions of this Section shall not be applicable in the event of
a Change of Control.

      

      ARTICLE
IV-DISTRIBUTION OF BENEFITS

      

      4.1           AMOUNT.
The total annual Benefit payable to the Participant (or his or her Beneficiary
or Beneficiaries) shall be determined by taking the Participant’s Target Benefit
determined under Section 2.1 and multiplying that amount by the applicable
vesting percentage determined in accordance with the Vesting Schedule under
Section 3.3 of the Plan. A Participant’s annual Benefit amount shall be divided
into four (4) equal payments and paid to Participants on the last business day
of each calendar year quarter, unless the Plan otherwise provides.

      

      4.2           BENEFIT
PERIOD. A Participant’s annual Benefits to be paid in accordance with Section
4.1 shall be paid to the Participant in quarterly payments for a number of years
equal to the number of Years of Service the Participant has earned with the
Employer not to exceed a maximum of seventeen (17) Years of Service.
Notwithstanding any other provisions of this Plan to the contrary, in the event
of a Change in Control while the Participant is employed by the Employer, the
Participant shall receive credit for seventeen (17) Years of Service with the
Employer and Benefits due under this Plan shall be calculated and paid out
accordingly.

      

        
          
             

          

          
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4.3           COMMENCEMENT
AND TIMING OF BENEFIT PAYMENTS.

      

      (a)           Normal Retirement. The
anticipated Normal Retirement Age for commencement of Benefit payments is the
date on which a Participant attains fifty-eight (58) years of age. Except as
otherwise provided herein, Benefits under the Plan shall commence being paid to
a Participant as soon as practicable but in no event later than ninety (90) days
following the later of the date the Participant (i) terminates employment with
the Employer, or (ii) attains age 58. Commencement of Benefits under this Plan
to be paid to a “Specified Employee” (as such term is defined in Code Section
409A(a)(2)(B)(i) and the regulations thereunder) following termination of
employment shall be delayed for the six-month period following termination to
the extent required to comply with Section 409A of the Code. Any Benefits to a
Specified Employee delayed to comply with Code Section 409A shall be paid to
such Participant in a lump sum amount on the first business day of the seventh
month following termination. In the event of a Participant’s death following
commencement of Benefit payments due to Normal Retirement, all remaining Benefit
payments shall continue to be paid to the Participant’s designated Beneficiary
at the same rate and on the same schedule as in existence at the time of the
Participant’s death.

      

      (b)           Early Retirement.
Notwithstanding the foregoing normal retirement benefits, a Participant may,
prior to commencing participation in the Plan, instead elect to have Benefits
commence as soon as practicable following a Participant’s termination of
employment prior to attaining age fifty-eight (58) provided the Participant’s
annual Benefit is reduced to reflect such early retirement election. For such
purposes, the reduction factor to be applied to the Participant’s normal
retirement Benefits shall be calculated by multiplying two percent (2%) times
the number of whole years away from age 58 the Participant is at the time of
termination. This reduction factor shall then be multiplied by the vested annual
Benefit amount determined in accordance with Section 4.1 above to determine the
Participant’s early retirement benefit under the Plan. Such early retirement
Benefits shall be paid in accordance with Section 4.1 and shall commence being
paid to a Participant as soon as practicable but in no event later than ninety
(90) days following the date the Participant terminates employment with the
Employer; provided, however, that any Benefits to be paid to a “Specified
Employee” following termination shall be automatically delayed for the six month
(or other minimum) period required in order to comply with Section 409A of the
Code. A Participant’s election to commence benefits prior to age 58 must be made
at the time an individual first becomes a Participant in the Plan and is
irrevocable unless Section 409A would permit a Participant to amend or make a
subsequent deferral election.

      

      (c)           Benefits for Participants
Dying While Employed by
the Employer; Benefits upon a Change of Control. In the event of a
Participant’s death while employed by Employer or in the event of a consummation
of a Change of Control as defined in Section 3.5(a), the payment of Benefits due
under the Plan shall be paid in a lump sum to Participant (or Participant’s
Beneficiary, as applicable) as soon as practical but in no event later than
ninety (90) days following such event. In such cases, a Participant’s lump sum
Benefit shall be calculated as if payable for seventeen (17) years regardless of
the Participant’s actual Years of Service with the Employer. The lump sum amount
shall be present valued to the payment date using a discount rate equal to the
yield of a ten year constant maturity treasury security and assuming Benefits
would have been paid over the seventeen years after an event covered by this
section occurred.

      

      (d)           Death after Termination of
Employment. In the event of the death of a Participant following
termination of employment with the Employer but prior to commencement of any
Retirement Benefits hereunder, any Benefits due under this Plan shall be paid to
the designated Beneficiary in a lump sum as soon as practicable but in no event
later than ninety (90) days following the Participant’s death. The lump sum
Benefit shall be calculated based on the Participant’s actual Years of Service
with the Employer reduced for Benefits already paid the Participant, if any,
present valued to the payment date using a discount rate equal to the yield of a
ten year constant maturity treasury security.

      

      (e)           Disability. In the event a
Participant becomes permanently Disabled, Benefits due under this Plan shall be
determined in accordance with Section 3.4 and paid to the Participant on a
quarterly basis commencing as soon as practicable but in no event later than
ninety (90) days following the Employer’s certification of the Participant’s
Disability.

      

        
          
             

          

          
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4.4           METHOD
OF PAYMENT.

      

      (a)            Form of Benefits. All
distributions under the Plan shall be made in cash.

      

      (b)           Timing and Manner of Distribution.
Normal retirement payments shall commence upon the later of a
Participant’s termination of employment or the attainment of age fifty-eight
(58) and shall be paid in quarterly amounts as provided above unless the Plan
expressly provides for an alternative time and manner of distribution. Quarterly
payments due under the Plan shall equal the amount determined in accordance with
Section 4.1 above which shall be paid to Participants on the last business day
of each calendar quarter.

      

      4.5           TAXES.
The withholding of taxes will be in accordance with Section 409A of the Code;
however, unless otherwise specified by Section 409A of the Code or the
applicable regulations thereunder, no federal or state withholding taxes will be
withheld from any Benefits payable under this Plan unless instructed by the
Participant and the Employer agrees to process distributions in a manner
consistent with its recurring payment process which facilitates the withholding
of taxes.

      

      ARTICLE
V-BENEFICIARIES; PARTICIPANT DATA

      

      5.1           DESIGNATION
OF BENEFICIARIES. The Participant from time to time may designate any person or
persons (who may be named contingently or successively) to receive such Benefits
as may be payable under the Plan upon or after the Participant's death, and such
designation may be changed from time to time by the Participant by filing a new
designation. Each designation by the Participant will revoke all prior
designations by the Participant, shall be in the form prescribed by the
Employer, and will be effective only when filed in writing with the Employer
during the Participant's lifetime. In the absence of a valid Beneficiary
designation, or if, at the time any Benefit payment is due to a Beneficiary,
there is no living Beneficiary validly named by the Participant, the Employer
shall pay any such Benefit payment to the Participant's spouse, if any, or the
Participant’s estate, if the Participant has no spouse.

      

      5.2           INFORMATION
TO BE FURNISHED BY PARTICIPANT AND BENEFI­CIARIES; INABILITY TO LOCATE
PARTICIPANT OR BENEFICIARIES. Any communication, statement, or notice addressed
to the Participant or to a Beneficiary at his or her last post office address as
shown on the Employer's records shall be binding on the Participant or
Benefi­ciary for all purposes of the Plan. The Employer shall not be obliged
to search for the Participant or any Beneficiary beyond the sending of a
registered letter to such last known address. If the Employer notifies the
Participant or any Beneficiary that he or she is entitled to an amount under the
Plan and the Participant or Beneficiary fails to claim such amount or make his
or her location known to the Employer within three (3) years thereafter, then,
except as otherwise required by law, if the location of one or more of the next
of kin of the Participant is known to the Employer, the Employer may direct
distribution of such amounts to any one or more or all of such next of kin in
such proportions as the Employer determines. If the location of none of the
foregoing persons can be determined, the Employer shall have the right to direct
that the amount payable shall be deemed to be a forfeiture and paid to the
Employer, except that the dollar amount of the forfeiture, unad­justed for
imputed interest in the interim, shall be paid by the Employer if a claim for
the benefit subsequently is made by the Participant or Beneficiary to whom it
was payable. If a benefit payable to the Participant or Beneficiary is subject
to escheat pursuant to applicable state law, the Employer shall not be liable to
any person for any payment made in accordance with such law.

      

      ARTICLE
VI-ADMINISTRATION AND RECORDKEEPING

      

      6.1           ADMINISTRATIVE
AND RECORDKEEPING AUTHORITY. Except as otherwise specifically provided herein,
the Board of the Employer shall have the sole responsibility for, and sole
control of, the operation, administration, and recordkeeping of the Plan and
shall have the power and authority to take all action and to make all decisions
and interpretations that may be necessary or appropriate in order to administer
and operate the Plan, including, without limiting the generality of the
foregoing, the power, duty, and responsibility to:

      

      (a)           Exercise
discretion in interpreting or construing the Plan and resolve all questions or
disputes that may arise hereunder, including the power to determine the status
and rights of a Participant (or a Participant’s Beneficiaries and their
respective benefits), and to remedy any ambiguities, inconsistencies, or
omissions in the Plan;

      
        
           

        

        
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      (b)           Adopt
such rules of procedure and regulations as, in its opinion, may be necessary for
the proper and efficient administration of the Plan and as are consistent with
the Plan;

      

      (c)           Implement
the Plan in accordance with its terms and the rules and regulations adopted as
above; and

      

      (d)           Make
determinations concerning the crediting and distribution of each Participant's
Benefits.

      

      6.2           UNIFORMITY
OF DISCRETIONARY ACTS. Whenever, in the adminis­tration or operation of the
Plan, discretionary actions by the Employer are required or permitted, such
action shall be consistently and uni­formly applied to all persons similarly
situated, and no such action shall be taken that shall discriminate in favor of
any particular person or group of persons. Review of all discretionary acts,
determinations, or decisions by the Board (or committee appointed by the Board
for such purposes) shall be limited to review under an arbitrary and capricious
standard.

      

      6.3           LITIGATION.
In any action or judicial proceeding affecting the Plan, it shall be necessary
to join as a party only the Employer. Except as may be otherwise required by
law, neither the Participant nor any Beneficiary shall be entitled to any notice
or service of process, and any final judgment entered in such action shall be
binding on all persons interested in, or claiming under, the Plan.

      

      6.4           CLAIMS
PROCEDURE. Any person claiming a benefit under the Plan (a “Claimant”) shall
present the claim, in writing, to the Board of the Employer, and said Board
shall respond in writing. If the claim is denied, the written notice of denial
shall state, in a manner calculated to be understood by the
Claimant:

      

      (a)           The
specific reason or reasons for denial, with specific refer­ences to the Plan
provisions on which the denial is based;

      

      (b)           A
description of any additional material or information necessary for the Claimant
to perfect his or her claim and an explanation of why such material or
information is necessary; and

      

      (c)           An
explanation of the Plan's claims review procedure.

      

      The
written notice denying or granting the Claimant's claim shall be provided to the
Claimant within ninety (90) days after the Employer's receipt of the claim,
unless special circumstances require an extension of time for processing the
claim. If such an extension is required, written notice of the extension shall
be furnished by the Board of the Employer to the Claimant within the initial
ninety (90) day period, and in no event shall such an extension exceed a period
of ninety (90) days from the end of the initial ninety (90) day period. Any
extension notice shall indicate the special circumstances requiring the
extension and the date on which the Board of the Employer expects to render a
decision on the claim. Any claim not granted or denied within the period noted
above shall be deemed to have been denied. Any Claimant (or such Claimant's
authorized representative) whose claim is denied or deemed to be denied under
the preceding sentence may, within sixty (60) days after the Claimant's receipt
of notice of the denial or after the date of the deemed denial, request a review
of the denial by notice given, in writing, to the Employer. Upon such a request
for review, the claim shall be reviewed by the Employer (or its designated
representa­tive), which may, but shall not be required to, grant the
Claimant a hearing. In connection with the review, the Claimant may have
representation, may examine pertinent documents, and may submit issues and
com­ments in writing.

      

      The
decision on review normally shall be made within sixty (60) days of the receipt
by the Board of the Employer of the request for review. If an extension of time
is required due to special circumstances, the Claimant shall be notified, in
writing, by the Board (or appropriate committee of the Board) of the Employer,
and the time limit for the decision on review shall be extended to one hundred
twenty (120) days. The decision on review shall be in writing and shall state,
in a manner calculated to be understood by the Claimant, the specific reasons
for the decision and shall include references to the relevant Plan provisions on
which the decision is based. The written decision on review shall be given to
the Claimant within the sixty (60) day (or, if applicable, the one hundred
twenty (120) day) time limit discussed above. If the decision on review is not
communicated to the Claimant within the sixty (60) day (or, if applicable, the
one hundred twenty (120) day) period discussed above, the claim shall be deemed
to have been denied upon review. All decisions on review shall be final and
binding with respect to all concerned parties.

      
        
           

        

        
          - 7
-

          
            

          

        

        
           

        

      

      ARTICLE
VII-AMENDMENT

      

      7.1           RIGHT
TO AMEND. The Board, by written instrument, shall have the right to amend the
Plan at any time with respect to any provisions hereof, and all parties hereto
or claiming any interest hereunder shall be bound by such amendment; provided,
however, that no such amendment shall deprive the Participant or any Beneficiary
of a right accrued hereunder whether vested or unvested prior to the date of the
amendment, including the right to receive the payment of his or her Benefit upon
a benefit entitlement event, or earlier as pro­vided herein.

      

      7.2           AMENDMENT
REQUIRED BY LAW. Notwithstanding the provisions of Section 7.1, the Plan may be
amended at any time, retroactively if required, if found necessary, in the
opinion of the Board, in order to ensure that the Plan is characterized as a
non-qualified plan of deferred compensation maintained for a select group of
management or highly compensated employees as described under Code Section 451
and ERISA Sections 201 (2), 301 (a)(3), and 401 (a)(1) and to conform the Plan
to the provisions and requirements of any applicable law (including ERISA and
the Code).

      

      ARTICLE
VIII-TERMINATION

      

      8.1           EMPLOYER'S
RIGHT TO TERMINATE PLAN. The Board of Directors of the Employer reserves the
right, at any time, to terminate the Plan; provided, however, that no such
termination shall deprive the Participant or any Beneficiary of a right accrued
here­under prior to the date of termination and provided that, upon
termination, the Participant shall become fully and immediately vested in his or
her Benefit notwithstanding the Vesting Schedule set forth in Section 3.3 above.
Benefits shall be distributable to the Participant pursuant to the terms of
Article IV and payable for the applicable benefit period unless otherwise
expressly permitted as part of the termination in accordance with Code Section
409A.

      

      8.2           AUTOMATIC
TERMINATION OF PLAN. Except in the case of an adoption by a successor to the
Employer as provided in Section 8.3, the Plan shall terminate automatically with
respect to accrual of future Benefits upon the dissolution of the Employer or
upon the Employer's merger into or consolidation with any other corporation or
business organization that does not specifically adopt and agree to continue the
Plan; provided, however, that no such termination shall deprive the Participant
or any Beneficiary of a right accrued here­under prior to the date of
termination and provided that, upon termination, the Participant shall become
fully and immediately vested in his or her Benefit. In no event, however, shall
such automatic termination of the Plan provided in this Section entitle any
Participant to accelerated distribution or receipt of Benefits under this Plan
to the extent such distributions are prohibited by Code Section 409A. Upon an
automatic termination, a Participant’s Benefits shall remain distributable to
Participants pursuant to Article IV unless Code Section 409A would otherwise
permit.

      

      8.3           SUCCESSOR
TO EMPLOYER. Any corporation or other business organization that is a successor
to the Employer by reason of a consoli­dation, merger, or purchase of
substantially all of the assets of the Employer shall have the right to become a
party to the Plan by adopting the same by resolution of the entity's board of
directors or other appro­priate governing body. If within thirty (30) days
from the effective date of such consolidation, merger, or sale of assets, such
new entity does not become a party hereto, as above provided, the Plan shall be
terminated automatically and the provisions of Section 8.2 shall become
operative.

      

      ARTICLE
IX-MISCELLANEOUS

      

      9.1           LIMITATIONS
ON LIABILITY OF EMPLOYER. Neither the establish­ment of the Plan or any
modification thereof, nor the creation of any account under the Plan, nor the
payment of any benefits under the Plan shall be construed as giving to the
Participant or any other person any legal or equitable right against the
Employer or any officer or employee thereof, except as provided by law or by any
Plan provision.

      

        
          
             

          

          
            - 8
-

            
              

            

          

          
             

          

        
9.2           CONSTRUCTION.
If any provision of the Plan is held to be illegal or void, such illegality or
invalidity shall not affect the remaining provisions of the Plan, but shall be
fully severable, and the Plan shall be construed and enforced as if said illegal
or invalid provisions had never been inserted herein. For all purposes of the
Plan, where the context permits, the singular shall include the plural, and the
plural shall include the singular. Headings of Articles and Sections herein are
inserted only for convenience of reference and are not to be considered in the
construction of the Plan. The laws of the state of North Carolina shall govern,
control, and determine all questions of law arising with respect to the Plan and
the interpretation and validity of its respective provisions, except where those
laws are preempted by the laws of the United States. Participation under the
Plan will not give a Participant the right to be retained in the service of the
Employer or any right or claim to any benefit under the Plan unless such right
or claim has specifically accrued hereunder.

      

      The Plan
is intended to be and at all times shall be interpreted and administered so as
to qualify as an unfunded plan of deferred compen­sation, and no provision
of this Plan shall be interpreted so as to give any individual any right in any
assets of the Employer which right is greater than the rights of any general
unsecured creditor of the Employer.

      

      9.3           SPENDTHRIFT
PROVISION. No amount payable to a Participant or any Beneficiary under the Plan
will, except as otherwise specifically provided by Code Section 409A or other
applicable law, be subject in any manner to anticipation, alienation,
attachment, garnishment, sale, transfer, assignment (either at law or in
equity), levy, execution, pledge, encumbrance, charge, or any other legal or
equitable process, and any attempt to do so will be void. Nor will any benefit
hereunder be in any manner liable for, or subject to, the debts, contracts,
liabilities, engagements, or torts of the person entitled thereto. Further, the
withholding of taxes from Plan benefit payments; the recovery under the Plan of
overpayment of benefits previously made to the Participant or any Beneficiary,
if applicable; the transfer of benefit rights from the Plan to another plan; or
the direct deposit of Plan benefit payments to an account in a banking
institution (if not actually part of an arrangement constituting an assignment
or alienation) shall not be con­strued as an assignment or
alienation.

      

      In the
event that the Participant's or any Beneficiary's benefits hereunder are
garnished or attached by order of any court, the Employer may bring an action
for a declaratory judgment in a court of competent jurisdiction to determine the
proper recipient of the benefits to be paid under the Plan. During the pendency
of said action, any benefits that become payable shall be held as credits to the
Participant's or Beneficiary's account or, if the Employer prefers, paid into
the court as they become payable, to be distributed by the court to the
recipient as it deems proper at the close of said action.

      

      9.4           COMPLIANCE
WITH CODE SECTION 409A. This Plan is intended to comply with Code
Section 409A so that no payments to 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 Plan Benefits 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 the 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 the Participant may not directly or indirectly
designate the taxable year of the payment). Any reference to a Participant’s
termination of employment, 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
the Participant is 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 Participant’s Separation from
Service.

      

        
          
             

          

          
            - 9
-ex10_08.htm

    Exhibit 10.08

    
      
        

      

    

    
CAPITAL
BANK

    
      SUPPLEMENTAL
RETIREMENT PLAN FOR DIRECTORS

      

      (Amended
and Restated Effective December 18, 2008)

      

      

      

        
          
             

          

          
            
            

            
              

            

          

          
             

          

        
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.

      

        
          
             

          

          
            - 2
-

            
              

            

          

          
             

          

        

      

      (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.

      
        
           

        

        
          - 3
-

          
            

          

        

        
           

        

      

      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.

      
        
           

        

        
          - 4
-

          
            

          

        

        
           

        

      

      (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.

      

        
          
             

          

          
            - 5
-

            
              

            

          

          
             

          

        
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.

      

        
          
             

          

          
            - 6
-

            
              

            

          

          
             

          

        
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.

      

        
          
             

          

          
            - 7
-

            
              

            

          

          
             

          

        

      

      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.

      
        
           

        

        
          - 8
-

          
            

          

        

        
           

        

      

      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.

      

        
          
             

          

          
            - 9
-

            
              

            

          

          
             

          

        
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.

      
        
           

        

        
          - 10
-

          
            

          

        

        
           

        

      

      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.

      

        
          
             

          

          
            - 11
-

            
              

            

          

          
             

          

        
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

                  	 
      

          

        

      

      

        
          
             

          

          
            - 12
-

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