AMENDMENT TO
NON-RECOURSE
INDEMNITY AND SECURITY AGREEMENT
THIS AMENDMENT
TO NON-RECOURSE INDEMNITY AND SECURITY AGREEMENT (this “
Amendment ”), is made and entered into as of
February 24, 2009, by and between CAPITALSOUTH BANK, an
Alabama banking corporation (the “ Bank ”), and
JAMES C. BOWEN, a resident of Duval County, Florida (“
Bowen ”), and is joined in by CAPITALSOUTH BANCORP, a
Delaware corporation and a registered bank holding company (“
CapitalSouth ”).
A. The Bank
and Bowen entered into that certain Non-Recourse Indemnity and
Security Agreement, dated September 14, 2007, joined in by
CapitalSouth for the purposes of certain provisions (the “
Indemnity Agreement ”). Capitalized terms not defined
in this Amendment shall have the meanings ascribed to them in the
Indemnity Agreement.
B. Pursuant
to Section 1 of the Indemnity Agreement, Bowen agreed to
indemnify the Bank and CapitalSouth for certain Claims relating to
Covered Loans.
C. Pursuant
to Section 2 of the Indemnity Agreement, Bowen has no
liability or obligation with respect to amounts subject to
indemnification under Section 1 of the Indemnity Agreement
(the “ Indemnified Costs ”), until the
Indemnified Costs incurred or accrued reach Two Million Five
Hundred Thousand Dollars ($2,500,000) (the “ Threshold
Amount ”).
D. Pursuant
to Section 3 of the Indemnity Agreement, Bowen is responsible
for 50% of all Indemnified Costs above the Threshold Amount up to a
maximum amount of $1,500,000 (the “ Maximum Amount
”).
E. Pursuant
to Section G of the recitals to the Indemnity
Agreement, Bowen agreed that a Promissory Note in the original
principal amount of One Million Five Hundred Thousand Dollars
($1,500,000) would be made by CapitalSouth in favor of Bowen (the
“ Pledged Note ”), and the Pledged Note would be
used as security for Bowen’s indemnification obligations
under the Indemnity Agreement.
F. Pursuant
to that certain Restructuring Agreement dated September 30,
2008, by and among CapitalSouth and Bowen, CapitalSouth and Bowen
agreed to reduce the Maximum Amount to $500,000 and replace the
Pledged Note with a new promissory note in the original principal
amount of $500,000 made by CapitalSouth in favor of Bowen (“
Bowen Note II ”)
G. CapitalSouth,
the Bank and Bowen now desire to amend the Indemnity Agreement to
(i) reflect the change in the Maximum Amount to $500,000 and
(ii) replace the Pledged Note with Bowen Note II, all on the
terms provided herein.
NOW, THEREFORE
, in consideration of the Ten Dollars ($10.00) and other
good valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties agree as follows:
1.
Recitals Confirmed . The recitals herein are true and
correct.
2.
Amendment to the Indemnity Agreement . The Indemnity
Agreement is hereby amended as follows:
(i) In
Section G of the recitals to the Indemnity Agreement,
the term “(the “Pledged Note”)” shall be
deleted in its enti
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