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.

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.

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”):

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.

(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. Notwithstand