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.
(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.
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.
(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
