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THE SECURITIES
REPRESENTED BY THIS NOTE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (“ACT”), OR THE
SECURITIES LAWS OF ANY OTHER JURISDICTION INCLUDING, WITHOUT
LIMITATION, ALABAMA, AND MAY NOT BE SOLD, TRANSFERRED, PLEDGED,
HYPOTHECATED OR OTHERWISE DISPOSED OF IN ANY MANNER UNLESS THEY ARE
REGISTERED UNDER SUCH ACT AND THE SECURITIES LAWS OF ANY APPLICABLE
JURISDICTIONS OR UNLESS PURSUANT TO AN EXEMPTION
THEREFROM.
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Birmingham, Alabama
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February 24, 2009
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For value
received, CapitalSouth Bancorp, a Delaware corporation (the
“Company”), promises to pay to Jake Bowen, an
individual resident of the State of Florida (the
“Holder”), at such place as the Holder may designate
from time to time in writing, the principal sum of Five Hundred
Thousand and 00/100 Dollars ($500,000.00) with interest on the
unpaid balance thereof from the date hereof until paid in full.
Interest shall accrue on the outstanding principal balance from the
date hereof until paid at a variable per annum rate equal to the
LIBOR Rate (as defined herein) plus 2.0%. The interest rate
accruing on the principal balance of this Note shall be set as of
the date hereof and adjusted on the first (1
st ) day of each calendar month thereafter during
the term of this Note (each such day being hereinafter referred to
as a “Change Date”). The “LIBOR Rate” shall
mean the London Interbank Offered Rate, as published in The Wall
Street Journal for deposits of United States Dollars. The LIBOR
Rate shall be determined by the Holder and shall be based upon the
then applicable one-month LIBOR Rate on each respective Change
Date. In the event that any Change Date falls on a day on which
The Wall Street Journal is not published or the LIBOR Rate
is not available, the LIBOR Rate shall be determined from the
immediately preceding edition of The Wall Street Journal in
which the LIBOR Rate is available. If the LIBOR Rate is no longer
published in The Wall Street Journal or is no longer
available, the Holder will select a new index that is reasonably
determined by the Holder to be comparable to the LIBOR
Rate.
This Note is the
“Pledged Note” contemplated by the Agreement and Plan
of Merger by and between the Company and Monticello Bancshares,
Inc. and joined into by the Holder (the “Merger
Agreement”) and the Amended Non-Recourse Indemnity and
Security Agreement entered into by and between CapitalSouth Bank,
an Alabama banking corporation and the Holder, and joined in by the
Company (the “Indemnity Agreement”). Capitalized terms
used in this Note and not otherwise defined shall have the meanings
ascribed to them in the Merger Agreement or the Indemnity Agreement
unless the context clearly requires otherwise.
On the 1st day of
January, 2012, any and all amounts due under th
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