EX-10.3 NON-COMPETITION AGREEMENT

Exhibit 10.3

NON-COMPETITION AGREEMENT

          THIS NON-COMPETITION AGREEMENT (this “ Agreement ”), made and entered into this 28th day of February, 2007, between CapitalSouth Bancorp, a Delaware corporation and a registered bank holding company (“ CapitalSouth ”), and Jake Bowen, a resident of Duval County, Florida (“Mr. Bowen”).

W I T N E S S E T H :

          WHEREAS, on even date hereof, CapitalSouth Bancorp, a Delaware corporation and a registered bank holding company (“ CapitalSouth ”), and Monticello Bancshares, Inc., a Florida corporation (“ Monticello ”), have executed an Agreement and Plan of Merger (the “ Merger Agreement ”), joined in by Mr. Bowen, pursuant to which Monticello will be merged with and into CapitalSouth (the “ Merger ”), and it is contemplated, but not required, that, in the sole discretion of CapitalSouth and in connection with the consummation of the Merger Agreement and pursuant to the terms of a certain Bank Merger Agreement (the “ Bank Merger Agreement ”), Monticello Bank, a federal savings bank (“ Monticello Bank ”), will be merged with and into CapitalSouth Bank, an Alabama banking corporation (“ CapitalSouth Bank ”); and

          WHEREAS, it is a condition precedent to the Merger that Mr. Bowen execute this Agreement.

          NOW, THEREFORE, in consideration of the promises, mutual covenants set forth in this Agreement, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound, do hereby agree as follows:

SECTION 1: NON-COMPETITION, NON-SOLICITATION AND CONFIDENTIALITY

     1.1 Non-Competition and Non-Solicitation . As an inducement for CapitalSouth to enter into the Merger Agreement and in consideration for CapitalSouth’s consummation of the transactions contemplated thereby, Mr. Bowen agrees that:

          (a) For purposes of this Agreement, the phrase “ Non-Competition Period ” shall mean the period commencing on the Closing Date and continuing to the second (2 ^nd ) anniversary of the Closing Date, except as such period may be extended by Section 1.1(c) hereof. During the Non-Competition Period, Mr. Bowen will not, without the prior written approval of the Board of Directors of CapitalSouth, directly or indirectly (i) whether through his own account or as a partner, member, manager, employee, advisor, consultant, owner, trustee, shareholder, officer, director or agent of or to any person, corporation, proprietorship, partnership, limited liability company, joint venture, trust or other entity or association (any of the foregoing being referred to as a “ Person ”), (A) within Duval County, Florida or any county contiguous thereto (the “ Non-Competition Territory ”), perform services, own, advise, participate in, support, have an interest in, give financial assistance to, permit Mr. Bowen’s name to be used in connection with or serve as a member of management, supervisor, consultant or employee of any financial service institution, including without limitation any “insured depository institution”

(as such term is defined in 12 U.S.C. § 1813(c)(2)) or any “regulated lending institution” (as such term is defined in 42 U.S.C. § 4003(a)(10)) or any other business, or any affiliate, parent, or subsidiary thereof, which would be competitive with the business of CapitalSouth or any affiliate or subsidiary thereof, or (B) within the States of Florida, Georgia, Alabama or South Carolina perform services for, own, advise, participate in, support, have an interest in, give financial assistance to, permit Mr. Bowen’s name to be used in connection with or serve as a member of management, supervisor, consultant or employee of any broker, originator, packager or seller of residential mortgage loans, including any mortgage banking operation; (ii) solicit or induce, or attempt to solicit or induce, any employee of CapitalSouth or any affiliate or subsidiary thereof to terminate such employment or to become employees of any other person or entity; (iii) solicit or induce, or attempt to solicit or induce, any Person who during the term of this Agreement was or is a customer, supplier, contractual party of CapitalSouth or any affiliate or subsidiary thereof or any other Person with whom any of them has or had business relations to refrain from or cease doing business with, seek advice and/or services and products from, or otherwise discontinue all or any portion of their relationship with CapitalSouth or any affiliate or subsidiary thereof; or (iv) disparage or cast in a poor light CapitalSouth or any affiliate or subsidiary thereof, or any of their respective shareholders, directors, officers, or employees. The preceding provisions of Section 1.1(a)(i) shall not preclude Mr. Bowen from holding any publicly-traded stock, provided that Mr. Bowen does not at any time hold any stock interest in any one company in excess of one percent (1%) of the outstanding voting stock of that company.

          (b) Mr. Bowen agrees that each of the covenants set forth above in Section 1.1(a) of this Agreement are reasonable with respect to its duration, geographical area and scope.

          (c) In the event of a breach by Mr. Bowen of any covenant set forth in Section 1.1(a) of this Agreement, the Non-Competition Period shall be extended by the period of the duration of such breach.

     1.2 Confidentiality .

          (a) Mr. Bowen hereby acknowledges that he has occupied a position of trust and confidence with Monticello and Monticello Bank prior to the date hereof, has contacts with and has developed and served the customers of Monticello and Monticello Bank, and that in all of his activities, including negotiation of the Merger Agreement and the transactions contemplated thereby, he has become familiar with and has had access to confidential information relating to the business, assets, operations, customers, suppliers, contractual parties and other persons with whom Monticello, Monticello Bank, CapitalSouth and its respective affiliates and subsidiaries do business. Mr. Bowen hereby acknowledges and confirms that such information constitutes the exclusive property of CapitalSouth or any affiliate or subsidiary thereof, as the case may be, and that such information is proprietary in nature. Such information does not include information already in the public realm or information received by Mr. Bowen from third parties.

          (b) Mr. Bowen agrees in perpetuity that he shall not at any time disclose to others (except as permitted and as directed by CapitalSouth or any affiliate or subsidiary thereof or only as to the extent required pursuant to a subpoena or order of a court of competent jurisdiction) any such information referred to in Section 1.2(a) of this Agreement.

     1.3 Remedies .

          (a) If Mr. Bowen breaches, or threatens to commit a breach, of any of the provisions of Section 1 hereof, CapitalSouth shall have the following rights and remedies, each of which rights and remedies shall be independent of the others and severally enforceable, and each of which is in addition to, and not in lieu of, any other rights and remedies available to CapitalSouth at law or in equity (including the right to recover damages):

               (i) the right and remedy to have Section 1 hereof specifically enforced by any court of competent jurisdiction, it being agreed that any breach or threatened breach of Section 1 would cause irreparable harm to CapitalSouth and that money damages would not provide an adequate remedy to CapitalSouth;

               (ii) the right and remedy to require Mr. Bowen to account for and pay over to CapitalSouth all compensation, profits or other benefits derived or received by Mr. Bowen as the result of any actions constituting a breach of Section 1 hereof; and