Exhibit 10.2

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.
PROMISSORY NOTE

     
 
  Birmingham, Alabama
$500,000.00
  February 24, 2009

     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 (1st) 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 this Note,
including but not limited to, any outstanding principal and accrued but unpaid
interest shall be immediately due and payable by the Company (the “Maturity
Date”).
     The Company promises to pay accrued interest on the outstanding principal
sum of this Note on the 1st day of each calendar quarter (or if not a business
day, the next business day) hereafter commencing April 1, 2009, and at final
maturity of the principal sum.
     The Company may pay in advance the principal sum of this loan, in whole or
in part, with accrued interest to the date of prepayment, without penalty or
fee.

 

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     It is hereby agreed that if default is made in the payment of this Note or
any part hereof or any interest hereon and such remains uncured for a period of
ten (10) days or more after written notice from the Holder to the Company at its
address as provided for in the Merger Agreement, or if the Company shall become
bankrupt or insolvent, then, at the option of the Holder, the entire unpaid
principal balance of this Note, with accrued interest thereon, shall become due
and payable in full at the option of the Holder, time being of the essence of
this instrument and thereafter the unpaid principal balance hereof shall bear
interest at a fixed rate of 8% per annum.
     The Company waives demand, presentment, protest, notice of protest, suit
and all other requirements necessary to hold it liable, and the Company agrees
that time of payment may be extended or renewal notes taken or other indulgences
granted without notice of, or consent to, such action, and without release of
liability. The Company agrees to pay after default all costs of collecting or
securing or attempting to collect or secure this Note, including reasonable
attorneys’ fees.
     The provisions hereof are binding on the successors and assigns of the
Company, and shall inure to the benefit of the Holder, his heirs, executors,
administrators and assigns.
     THIS NOTE IS SUBJECT TO THE TERMS OF THAT CERTAIN AMENDED NON-RECOURSE
INDEMNITY AND SECURITY AGREEMENT, TO WHICH THE HOLDER, OR HIS OR ITS PREDECESSOR
IN INTEREST, IS A PARTY, WHICH AGREEMENT PROVIDES FOR CERTAIN RESTRICTIONS ON
TRANSFER. SUCH AGREEMENT IS ON FILE AT THE PRINCIPAL OFFICE OF THE SURVIVING
CORPORATION AND AFFECTS THE TRANSFERABILITY OF THE NOTE.
     All rights and remedies of the Holder hereunder and under any statute or
rule of law shall be cumulative and may be exercised successively or
concurrently. This Note shall be governed by and construed in accordance with
the laws of the State of Alabama.
     THE CORPORATION HEREBY UNCONDITIONALLY WAIVES CORPORATION’S RIGHT TO A JURY
TRIAL ON ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS NOTE OF
ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT (INCLUDING WITHOUT
LIMITATION, CONTRACT CLAIMS, TORT CLAIMS AND ALL OTHER COMMON LAW AND STATUTORY
CLAIMS). THIS WAIVER IS IRREVOCABLE AND THE WAIVER SHALL APPLY TO ANY SUBSEQUENT
AMENDMENTS, RENEWALS, SUPPLEMENTS, OR MODIFICATIONS TO THIS NOTE. IN THE EVENT
OF LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY
THE COURT.
     All actions with respect to this Note may be instituted in the Circuit
Courts of the State of Alabama sitting in Jefferson County, Alabama, or the
United States District Court for the Northern District of Alabama sitting in
Birmingham, Alabama, as the Holder might elect from time to time, and by
execution and delivery of this Note, Company irrevocably and unconditionally
submits to the jurisdiction (both subject matter and personal) of each such
court and irrevocably and unconditionally waives: (1) any objection the
undersigned might now or hereafter have to the venue in any such court; and
(2) any claim that any action or proceeding brought in any such court has been
brought in an inconvenient forum.
     This Note is given in substitution of, and not in payment or novation of,
that certain Promissory Note, dated September 14, 2007, in the amount of
$1,500,000 (the “Original

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Note”). A portion of the Original Note has been converted into common stock of
the Company and certain promissory notes, including this Note, have been issued
with respect to the remaining balance thereof.

         
 
      CAPITALSOUTH BANCORP
 
       
 
  By:   /s/ W. Dan Puckett
 
       
 
  Name:   W. Dan Puckett
 
  Its:   Chairman and
Chief Executive Officer

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