EX-10.18 BOWEN PLEDGE NOTE






Exhibit 10.18








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
	$1,500,000.00
	 	September 14, 2007






     For value received, CapitalSouth Bancorp, a Delaware corporation (the “Surviving
Corporation”), 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 ONE MILLION FIVE HUNDRED THOUSAND AND NO/100 Dollars ($1,500,000.00) 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
fifty (50) basis points above the LIBOR Rate (as defined herein). 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. On the 14th day of September, 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 Surviving Corporation (the
“Maturity Date”). This Note is the “Pledged Bowen Promissory Note” contemplated by the Agreement
and Plan of Merger by and between the Surviving Corporation and Monticello Bancshares, Inc. and
joined into by the Holder (the “Merger Agreement”) and the 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 Surviving Corporation (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.



 









 





     The
Surviving Corporation 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 January 1, 2008, and at final maturity of the principal sum.
The outstanding principal sum of this Note on which interest shall accrue and be payable may be
reduced by Surviving Corporation in accordance with the terms of the Indemnity Agreement



     The
Surviving Corporation promises to pay the principal sum of this Note in 1 quarterly
installment of principal in the amount of $300,000 and three quarterly installments of principal in
the amount of $400,000; provided, however, that the Surviving Corporation may, in its
sole discretion, reduce such quarterly installments of principal in accordance with the reduction,
if any, of the outstanding principal sum of this Note pursuant to the terms of the Indemnity
Agreement. The first such installment shall be due and payable on January 1, 2012, and another
such installment shall be due and payable on the 1st day of each of April and July
thereafter until September 14, 2012, at which time the final installment of principal and all other
sums due under this Note, if not sooner paid, shall be due and payable.



     The Surviving Corporation 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.



     It is hereby agreed that if default be 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 Surviving Corporation at its address as provided for in the
Agreement, or if the Surviving Corporation 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, 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 Surviving Corporation waives demand, presentment, protest, notice of protest, suit and all
other requirements necessary to hold it liable, and the Surviving Corporation 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 Surviving Corporation 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 Surviving Corporation,
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 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 SURVIVING CORPORATION HEREBY UNCONDITIONALLY WAIVES SURVIVING CORPORATION’S RIGHT TO A
JURY TRIAL ON ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT
OF THIS NOTE OR 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, Surviving Corporation 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.



	 	 	 	 	 	 	 
	 	 	CAPITALSOUTH BANCORP	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	/s/ W. Dan Puckett	 	 
	 

	 	 	 	 	 	 
	 

	 	By:
	 	W. Dan Puckett	 	 
	 

	 	Its:
	 	Chairman and Chief Executive Officer