Document:

<PAGE>
                                                                    Exhibit 10.1

                IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE

                          IN AND FOR NEW CASTLE COUNTY

                                   )
IN RE NEW VALLEY CORPORATION       )           Consolidated
DERIVATIVE LITIGATION              )           Civil Action No. 17649-NC
                                   )

                     STIPULATION AND AGREEMENT OF SETTLEMENT

         The parties to the above-captioned action, by and through their
respective attorneys, hereby enter into the following Stipulation and Agreement
of Settlement (the "Stipulation" or "Settlement," as appropriate), subject to
the approval of the Court of Chancery of the State of Delaware (the "Court"):

         WHEREAS,

         A. Two actions were commenced in the Court, styled Fuss v. New Valley
Corporation, C.A. No. 15613-NC and Goodwin v. New Valley Corporation, C.A. No.
16840-NC (the "Actions").

         B. The Actions were filed as derivative actions on behalf of the
nominal defendant, New Valley Corporation ("New Valley" and/or the "Company").
Also named as individual defendants in the Actions were various New Valley
directors, namely, Arnold I. Burns ("Burns"), Henry C. Beinstein ("Beinstein"),
Ronald J. Kramer, Richard J. Lampen, Bennett S. LeBow, Howard M. Lorber, Richard
S. Ressler, Barry W. Ridings ("Ridings"), and Victor M. Rivas (collectively, the
"Individual Defendants"), and Brooke Group Ltd. ("Brooke" and, together with the
Individual Defendants and New Valley, the "Defendants").

         C. Brooke, now known as Brooke Group Holding Inc., an indirect, wholly
owned subsidiary of Vector Group Ltd. ("Vector"), was New Valley's controlling

<PAGE>
stockholder at the time of the Transaction (defined in recital "D" below) and
was the beneficial owner of approximately 40% of New Valley's common stock,
approximately 60% of New Valley's Class A Preferred shares, and approximately
10% of New Valley's Class B Preferred shares. BrookeMil Ltd. ("BML") was a
subsidiary of Brooke and a Russian real estate development company at the time
of the Transaction.

         D. In each of the initial operative complaints in the Actions,
plaintiffs claimed that the Individual Defendants knowingly breached their
fiduciary duty of loyalty to New Valley and its shareholders by (1) acquiescing
in the acquisition by New Valley of BML from Brooke (the "Transaction"), (2)
accepting terms in the Transaction that were unfair to New Valley, (3)
overpaying Brooke for the purchase of BML at a price exceeding BML's fair market
value and book value, and (4) engaging in self-dealing and interested
transactions, which were not recommended by a properly functioning or
independent Special Committee of the New Valley Board of Directors and which
were not at arms length. The complaints also asserted that the Transaction
constituted corporate "waste."

         E. On February 13, 1997, plaintiff Richard Fuss ("Fuss") filed a
derivative complaint on behalf of nominal defendant New Valley against the
directors of New Valley and Brooke alleging breach of fiduciary duty.

         F. On November 17, 1998, in accordance with 8 Del. C. ss. 220, Richard
C. Goodwin ("Goodwin"), formerly a plaintiff herein and at that time a
beneficial owner of New Valley shares, and Cede & Co. ("Cede"), as nominee for
Goodwin, served a demand letter on New Valley, seeking to inspect New Valley's
books and records relating to the disputed Transaction.

                                       2
<PAGE>

         G. On December 11, 1998, Goodwin filed a verified complaint against New
Valley, seeking to enforce his inspection rights under 8 Del. C. ss. 220 to
determine whether to pursue a derivative action against New Valley's officers
and/or directors for waste and/or self-dealing with respect to the Transaction.
On January 4, 1999, defendant moved to dismiss the Goodwin verified complaint
for failure to comply with the requirements of 8 Del. C. ss. 220, including, but
not limited to, failure to state a proper purpose and a claim upon which relief
can be granted. Shortly before trial on the demand for inspection, the parties
settled the dispute over the inspection rights and New Valley gave certain of
the requested documents to Goodwin.

         H. On December 9, 1999, Goodwin filed a derivative complaint with
allegations similar to those contained in plaintiff Fuss' February 13, 1997
derivative complaint. The Goodwin complaint contained additional factual
allegations based, in part, on the documents New Valley produced pursuant to
Goodwin's action under 8 Del. C.ss.220.

         I. By order dated February 7, 2000, the Court consolidated the Fuss and
Goodwin actions and directed that Goodwin's complaint serve as the operative
complaint in the consolidated action. The Court appointed the law firms of Grant
& Eisenhofer and Abbey Gardy as plaintiffs' committee of the whole.

         J. On February 28, 2000, plaintiffs filed an amended derivative
complaint ("Amended Complaint"), which corrected certain factual errors
regarding the composition of New Valley's board of directors at the time
plaintiff Goodwin filed his original complaint. In the Amended Complaint,
plaintiffs again claimed, INTER ALIA, that

                                       3
<PAGE>
the Individual Directors violated their fiduciary duty of loyalty by approving
the Transaction and asserted that the Transaction constituted corporate "waste."

         K. On March 13, 2000, Defendants filed a motion to dismiss the
plaintiffs' Amended Complaint, which the Court denied by memorandum opinion and
order dated January 11, 2001.

         L. Thereafter, plaintiffs conducted extensive document discovery from
Defendants and third parties and deposed Individual Defendants Burns, Beinstein
and Ridings.

         M. On October 3, 2003, Defendants moved for summary judgment against
plaintiff Goodwin. On June 28, 2004, the Court granted Defendants' motion for
summary judgment against plaintiff Goodwin on the grounds that Goodwin lacked
standing, inter alia, because he failed to satisfy the contemporaneous ownership
requirement for derivative actions by virtue of a lapse of ownership of New
Valley stock during the months of October 2000 through March 2001.

         N. Counsel for plaintiff have examined the relevant facts and law
relating to the matters set forth in the Amended Complaint and have conferred
with experts regarding damages caused by the Defendants' alleged breaches of
fiduciary duty and plaintiff and his counsel have concluded that the terms and
conditions of the Settlement (as defined below) are fair, reasonable, adequate,
and in the best interests of the Company and its stockholders. Plaintiff has
entered into this Stipulation after taking into account, among other things, (1)
the value of the Settlement to the Company and its public shareholders, (2) the
risks of continued litigation, and (3) the conclusion of plaintiff's

                                       4
<PAGE>

counsel that the terms and conditions of the Settlement are fair, reasonable,
adequate, and in the best interests of the Company and its stockholders.

         NOW, THEREFORE, IT IS STIPULATED AND AGREED, in consideration of the
benefits afforded as described herein, subject to the approval of the Court and
pursuant to Court of Chancery Rule 23.1, as follows:

         1. All claims, rights, demands, causes of action, suits, matters and
issues known or unknown by plaintiff, any other past or present stockholder of
the Company, or the Company, or by their or its predecessors, successors or
assigns (or any person claiming by, through, in the right of, or on behalf of
them or the Company by subrogation, assignment or otherwise), whether asserted
directly, derivatively or otherwise, against Defendants (including the Company,
as nominal defendant) or any of their families, parent entities, affiliates,
subsidiaries, predecessors, successors or assigns, and each and all of their
respective past, present or future officers, directors, associates,
stockholders, controlling persons, representatives, employees, attorneys,
financial or investment advisors, consultants, accountants, investment bankers,
commercial bankers, engineers, advisors or agents, heirs, executors, trustees,
general or limited partners or partnerships, personal representatives, estates
or administrators (collectively, the "Released Persons"), whether under state,
federal, common or administrative law, which have been, or could have been,
asserted relating to the Transaction, the related disclosure materials,
disclosures, facts and allegations that are or could (insofar as such
transactions, disclosures, facts and allegations relate to, result from, or
occurred in connection with, the subject matter of the Actions) be the subject
of the Actions (collectively, the "Settled Claims"), shall be compromised,
settled, released and dismissed with prejudice, upon and

                                       5
<PAGE>

subject to the following terms and conditions; provided, however, that the
Settled Claims shall not include the right to enforce the terms of this
Stipulation.

         2. In full and final settlement of the Actions, the parties agree that:

                  (a) Vector will pay seven million dollars ($7,000,000) in cash
to New Valley (i) if no appeal is taken from the entry of the Final Order
(defined in paragraph 4, below), within five (5) business days following the
last date on which such an appeal could have been timely filed; and (ii) if an
appeal is taken from the entry of the Final Order, within five (5) business days
of the first to occur of (x) affirmance of the Final Order on appeal following
the exhaustion of all possible appeals and (y) the expiration of the time to
file a further appeal from an affirmance on appeal of the Final Order with no
such further appeal having been filed.

                  (b) As soon as practicable after the execution of this
Stipulation, the parties jointly shall apply to the Court for an Order in the
form attached hereto as Exhibit A (the "Scheduling Order"), which shall provide,
inter alia: (a) that a notice substantially in the form attached hereto as
Exhibit B (the "Notice") is approved, and that distribution of the Notice in the
manner and the form set forth in the Scheduling Order is the best notice
practicable under the circumstances and meets the requirements of due process
and applicable law and shall constitute due and sufficient notice of the
proposed Settlement to all persons entitled to receive notice; and (b) that a
hearing (the "Settlement Hearing") shall be held at a date set by the Court to
determine whether the Settlement is fair, reasonable and adequate and should be
approved by the Court.

         3. The Company shall be responsible for the reproduction and
distribution of the Notice in accordance with the Scheduling Order and all costs
related to such Notice

                                       6
<PAGE>

shall be paid by the Company whether or not the Settlement is approved. Prior to
or at the Settlement Hearing, counsel for the Company shall file with the Court
an appropriate affidavit with respect to preparation and distribution of the
Notice.

         4. If the Settlement is approved by the Court, the parties promptly
shall request that the Court enter a final order and judgment dismissing the
Actions with prejudice (the "Final Order"), substantially in the form attached
hereto as Exhibit C.

         5. At or before the Settlement Hearing, plaintiff's counsel may apply
for an award of fees not to exceed two million one hundred thousand dollars
($2,100,000) and documented expenses not exceeding fifty thousand dollars
($50,000), to be paid by New Valley as plaintiff's counsel shall direct.
Defendants agree not to oppose an application up to those amounts. The fairness,
reasonableness and adequacy of the Settlement may be considered and ruled upon
by the Court independently of any award of attorneys' fees and expenses.
Defendants retain the rights to oppose any other application for fees or
disbursements by plaintiff, plaintiff's counsel or any other person. Subject to
the terms and conditions of this Stipulation, such fees and expenses shall
become payable within two (2) business days from the later of the date on which
(i) the order approving the Settlement is entered or (ii) any separate Order of
the Court awarding plaintiff's counsel fees and expenses is entered. As a
condition precedent to receiving payment of attorneys fees and expenses in
conformity with this paragraph, plaintiff's counsel agree, jointly and
severally, to repay to New Valley the fees and expenses so received, or the
appropriate portion thereof, within 60 days in the event that either the
Settlement is overturned on appeal or the amount of plaintiff's counsel's
approved fees and expenses is lowered on appeal.

                                       7
<PAGE>

         6. Each of the parties shall have the option to withdraw from and
terminate the Settlement in the event that (a) either the Scheduling Order or
the Final Order are not entered substantially in the forms specified herein,
including such modifications thereto as may be ordered by the Court with the
consent of the parties; or (b) the Settlement is not approved by the Court or is
disapproved or substantially modified upon appeal. For purposes of this section,
a disallowance or modification by the Court or on appeal of the fees and
expenses provided for in paragraph 5 hereof shall not be deemed a modification
or disapproval of the Settlement or the Final Order. In the event that a party
withdraws from and terminates this Settlement, that party must provide, within
five (5) business days of the event giving rise to such action, written notice
of such withdrawal or termination and the grounds therefore to all signatories
to this Stipulation.

         7. In the event the Settlement proposed herein is not approved by the
Court, or the Court approves the Settlement but such approval is reversed or
vacated on appeal, reconsideration or otherwise and such order reversing or
vacating the Settlement becomes final by lapse of time or otherwise, or if any
of the conditions to such Settlement are not fulfilled, then the Settlement
proposed herein shall be of no further force and effect, and this Stipulation
and all negotiations, proceedings and statements relating thereto and any
amendment thereof shall be null and void and without prejudice to any party
hereto, and each party shall be restored to his, her or its respective position
as it existed prior to the execution of this Stipulation, including the
repayment of attorneys' fees and expenses as set forth above.

         8. If the Settlement is terminated for any reason whatsoever, all
negotiations, proceedings, agreements, documents, and statements made in
connection herewith shall

                                       8
<PAGE>

not be deemed or construed to be evidence or an admission by any party of any
act, matter or proposition and shall not be used in any manner or for any
purpose in any subsequent proceeding in the Actions, or in any other action or
proceeding.

         9. The provisions contained in this Stipulation are not and shall not
be argued by any person to be or to be deemed to be a presumption, concession or
admission by any defendant of any fault, liability or wrongdoing as to any facts
or claims alleged or asserted in this or any other action or proceeding, or to
be or to be deemed to be a presumption, concession or admission by plaintiff of
any lack of merit in the claims alleged or asserted, and shall not be
interpreted, construed, deemed, invoked, offered or received in evidence or
otherwise used by any person in this or any other action or proceeding, civil,
criminal or administrative, except in a proceeding to enforce the terms or
conditions of the Stipulation.

         10. Defendants have denied and continue to deny that they have engaged
in any misconduct or breaches of duty alleged in the Actions, and they have
denied and continue to deny the material allegations of the Amended Complaint
and all prior complaints in the Actions, and assert that the claims alleged are
without merit, and that their conduct at all times has been lawful and proper.
Nevertheless, Vector believes that the continued litigation of the Actions could
have a substantial adverse effect upon its reputation, and it has agreed to fund
the settlement payment set forth in paragraph 2 hereof to ensure that it does
not suffer such reputational injury.

         11. If any claims which are or would be subject to the release and
dismissal contemplated by the Settlement are asserted against any Released
Person in any court

                                       9
<PAGE>

prior to the Settlement becoming Final, plaintiff shall join
in any motion to dismiss or stay such proceedings.

         12. Each of the attorneys executing this Stipulation on behalf of one
or more parties hereto warrants and represents that he or she duly has been
authorized and empowered to execute the Stipulation on behalf of his or her
respective clients.

         13. This Stipulation constitutes the entire agreement among the
parties, and supersedes any prior agreements among the parties (including,
without limitation, the proposed settlement in principle) with respect to the
subject matter hereof. This Stipulation may not be amended nor may any of its
provisions be waived except by a writing executed by all of the parties hereto.

         14. This Stipulation, upon becoming operative, shall be binding upon
and inure to the benefit of the parties hereto (and in the case of the benefits,
all Released Persons) and their respective executors, administrators, legal
representatives, heirs, transferees, successors in interest and assigns and upon
any corporation, partnership or other entity into or with which any party may
merge or consolidate.

         15. All of the exhibits hereto are incorporated herein by reference as
if set forth herein verbatim, and the terms of all exhibits are expressly made
part of this Stipulation.

         16. This Stipulation shall be governed by and interpreted according to
Delaware law, without reference to rules of conflicts of laws.

         17. The waiver by any party of any breach of this Stipulation shall not
be deemed or construed as a waiver of any other breach, whether prior,
subsequent, or contemporaneous, of this Stipulation.

                                       10
<PAGE>

         18. This Stipulation may be executed in any number of actual or
telecopied counterparts and by each of the different parties thereto on several
counterparts, each of which when so executed and delivered shall be an original.
The executed signature page(s) from each actual or telecopied counterpart may be
joined together and attached to one such original and shall constitute one and
the same instrument.

         19. The parties hereto and their attorneys agree to cooperate fully
with one another and to use their best efforts in seeking and securing Court
approval of this Stipulation and the Settlement.

Dated: March 11, 2005

/s/ Jay W. Eisenhofer
--------------------------------------------
Jay W. Eisenhofer
Grant & Eisenhofer, P.A.
1220 North Market Street, Suite 500
Wilmington, Delaware 19801
(302) 622-7000

/s/ Norman M. Monhait
------------------------------------
Norman M. Monhait
ROSENTHAL, MONHAIT, GROSS & GODDESS
Mellon Bank Center, Suite 1401
P.O. Box 1070
Wilmington, Delaware 19899
(302) 656-4433

/s/ Arthur N. Abbey
--------------------------------------------
Arthur N. Abbey
ABBEY GARDY, LLP
212 East 39th Street
New York, New York 10016
(212) 889-3700

Attorneys for Plaintiff

                                       11
<PAGE>

/s/ Michael D. Goldman
------------------------------------
Michael D. Goldman
POTTER, ANDERSON & CORROON, LLP
1313 North Market Street
P.O. Box 951
Wilmington, Delaware 19899

/s/ Michael L. Hirschfeld
------------------------------------
Michael L. Hirschfeld
MILBANK, TWEED, HADLEY & McCLOY, LLP
1 Chase Manhattan Plaza
New York, New York 10005

Attorneys for Defendants

                                       12<PAGE>

                                                                    Exhibit 10.1

                            UNITED STATES OF AMERICA
                                     BEFORE
              THE BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM
                                WASHINGTON, D.C.

------------------------------------)
                                    )
Written Agreement by and between    )
                                    )
CIVITAS BANKGROUP, INC.             )
Franklin, Tennessee                 )        Docket No. 05-011-WA/RB-HC
                                    )
and                                 )
                                    )
FEDERAL RESERVE BANK                )
  OF ATLANTA                        )
Atlanta, Georgia                    )
------------------------------------)

     WHEREAS, in recognition of their common goal to restore and maintain the
financial soundness of Civitas BankGroup, Inc., Franklin, Tennessee ("Civitas"),
a registered bank holding company that has or formerly had ownership interests
in, and provides operational oversight and services to, subsidiary banks (each
individually, a "Subsidiary Bank," and collectively, the "Subsidiary Banks"),
Civitas and the Federal Reserve Bank of Atlanta (the "Reserve Bank") have
mutually agreed to enter into this Written Agreement (the "Agreement");

     WHEREAS, Civitas oversees the activities and operations of the Subsidiary
Banks and services provided by Civitas to the Subsidiary Banks include but are
not limited to, risk management, credit administration, loan review, audit, and
deposit operations;

     WHEREAS, as a result of the identification of deficiencies in various areas
by the Reserve Bank, Civitas is taking steps to enhance and improve the
centralized functions and services it provides to the Subsidiary Banks; and

     WHEREAS, on April 21, 2005, the board of directors of Civitas, at a duly
constituted meeting, adopted a resolution authorizing and directing Richard
Herrington to enter into this

<PAGE>

Agreement on behalf of Civitas and consenting to compliance by Civitas and its
institution-affiliated parties, as defined in sections 3(u) and 8(b)(3) of the
Federal Deposit Insurance Act, as amended (the "FDI Act") (12 U.S.C. 1813(u) and
1818(b)(3)), with each and every applicable provision of this Agreement.

     NOW, THEREFORE, Civitas and the Reserve Bank agree as follows:

MANAGEMENT

     1.  (a) Within 30 days of this Agreement, the board of directors of Civitas
shall retain an independent consultant acceptable to the Reserve Bank to conduct
a review of the management, directorate, and organizational structure of Civitas
(the "Management Review") and to prepare a written report of findings and
recommendations (the "Consultant's Report"). The primary purpose of the
Management Review shall be to aid in the development of a directorate and
management structure, consisting of qualified and trained personnel, that is
suitable to Civitas's enterprise-wide needs. The Management Review shall, at a
minimum, address, consider, and include:

               (i) The identification of the type and number of officer
positions needed to manage and properly supervise the affairs of Civitas's
consolidated organization;

               (ii) the identification and establishment of committees of
Civitas's board of directors that are needed to provide guidance and oversight
for the consolidated organization;

               (iii) an evaluation of each Civitas officer and director to
determine whether the individual possesses the ability, experience, and other
qualifications required to competently perform present and anticipated duties,
including the ability to adhere to established policies and procedures of
Civitas; to restore Civitas to, and to thereafter maintain, a safe and

                                       2
<PAGE>

sound condition; and to comply with the requirements of this Agreement and all
applicable laws and regulations; and

               (iv) an evaluation of the information being provided to the board
of directors to enable it to carry out its responsibility to oversee the
operations and management of the consolidated organization.

         (b) Within 10 days of the engagement of the independent consultant, but
prior to the commencement of the Management Review, Civitas shall submit to the
Reserve Bank for approval an engagement letter that sets forth the scope of the
Management Review and the date of submission of the Consultant's Report, not to
exceed 90 days after the date of the Reserve Bank's approval of the engagement
letter.

         (c) Upon receipt of the Consultant's Report, Civitas shall forward a
copy to the Reserve Bank.

     2. Within 30 days of Civitas's receipt of the Consultant's Report, Civitas
shall submit to the Reserve Bank a written management plan that fully addresses
the findings and recommendations in the Consultant's Report and describes the
specific actions that the board of directors proposes to take in order to
strengthen Civitas's management and improve the board of directors' supervision
of Civitas. The plan shall, at a minimum, address, consider, and include actions
to improve and strengthen:

         (a) The consolidated organization's risk management program;

         (b) Civitas's oversight of the lending policies and procedures of the
Subsidiary Banks; and

         (c) Civitas's planning process and strategic direction.

                                       3
<PAGE>

INTERNAL AUDIT

     3. Within 60 days of this Agreement, Civitas shall submit to the Reserve
Bank an acceptable written plan to enhance the enterprise-wide internal audit
function. The plan shall address internal audit staffing in terms of the types,
number, and qualifications of staff needed to provide an effective audit program
for the organization in light of its size and complexity. The plan shall also at
a minimum, address, consider, and include:

         (a) Compliance with regulatory guidance regarding the internal audit
function, including but not limited to, the requirements of the Interagency
Policy Statement on the Internal Audit Function and its Outsourcing, issued
March 17, 2003;

         (b) establishment of an audit schedule that ensures that all areas,
including but not limited to, the Subsidiary Banks' wire transfer, teller
operations, lending, investment securities, and the organization's consolidated
balance sheet, and income and expenses, are audited at least yearly;

         (c) procedures for management to review audit reports quarterly,
formally respond in writing to criticisms in audit reports, and promptly
implement corrective actions that are responsive to audit findings;

         (d) procedures for tracking audit issues and the internal audit
function's review of management's corrective action; and

         (e) submission of quarterly audit reports and management responses to
the Audit Committee of the board of directors.

     4.  (a) Within 60 days of this Agreement, Civitas shall complete a review
of its enterprise-wide deposit operations. The purposes of the review shall be
to assess current internal controls over deposit operations and to make
findings, conclusions, and recommendations for

                                       4
<PAGE>

improvements to the internal controls, policies, and procedures in the area of
deposit operations. The review shall address, consider, and include, at a
minimum, the processes for issuing and controlling official checks, reactivating
dormant accounts, and controls over items held for customer pickup. Civitas
shall provide a copy of the findings, conclusions, and recommendations of the
review to the Reserve Bank upon completion.

         (b) Within 30 days of the completion of its review of Civitas's
enterprise-wide deposit operations, Civitas shall submit to the Reserve Bank an
acceptable written plan to strengthen deposit operations. The plan shall, at a
minimum, take into consideration the findings, conclusions, and recommendations
of the review completed pursuant to paragraph 4(a).

CREDIT ADMINISTRATION

     5. Within 60 days of this Agreement, Civitas shall submit to the Reserve
Bank an acceptable written plan to strengthen Civitas's enterprise-wide credit
administration policies, procedures, and practices. At a minimum, Civitas shall
ensure that its credit administration program includes:

         (a) Uniform underwriting standards for all new and renewed loans that
emphasize the importance of cash flow analysis of the borrower rather than
collateral-based lending and ensure that comprehensive financial statements, tax
returns, and other financial data indicating the borrower's capacity to repay
the loan are current at the time that the loan is extended are regularly updated
during the period that the loan remains outstanding;

         (b) procedures for exceptions to the loan policies, including required
documentation by the account officer and approval by each of the Subsidiary
Bank's board of

                                       5
<PAGE>

directors or committee, as appropriate, that each exception to the policies is
in the best interest of the Subsidiary Bank;

         (c) internal controls that are designed to ensure uniform adherence to
loan policies and procedures;

         (d) procedures for controlling and monitoring concentrations of credit,
including (i) establishing concentration of credit limits for acceptable
industries and types of loans; and (ii) managing the risk associated with asset
concentrations;

         (e) monthly reviews by Civitas's board of directors and senior
management of the level and trend of criticized assets (classified and special
mention loans) at each of the Subsidiary Banks, and the establishment of
benchmarks and timeframes for reducing the level of classified assets to
acceptable levels as determined by the board of directors and senior management;

         (f) collection policies and procedures that are designed to ensure that
the organization's consolidated past due and nonaccrual loan ratio remains at an
acceptable, manageable level as determined by Civitas's board of directors and
senior management; and

         (g) monthly reviews by Civitas's board of directors of the aggregate
dollar level and volume of all internally graded loans (grades 1 - 8), and all
past due and nonaccrual loans, as a percentage of total loans of each
wholly-owned Subsidiary Bank.

LOAN REVIEW

     6. Within 60 days of this Agreement, Civitas shall submit to the Reserve
Bank an acceptable enhanced independent loan review program. The program shall,
at a minimum, address, consider, and include the following:

         (a) The qualifications of the person or firm engaged to perform loan
reviews;

                                       6
<PAGE>

         (b) the periodic review of each loan in excess of $500,000 for
compliance with the original repayment schedule, verification of collateral
values and the Subsidiary Bank's interest in the collateral, the current
financial condition of the borrower and guarantor, and compliance with the
Subsidiary Bank's loan policy;

         (c) procedures to confirm the accuracy of all risk grades assigned by
loan officers;

         (d) monitoring and reporting of past due loans;

         (e) periodic reporting to the Subsidiary Bank's board of directors of
the status of the loan reviews and the action(s) taken by management to improve
the Subsidiary Bank's position on each adversely graded loan; and

         (f) documentation of any deviations from the recommendations made by
loan review in the minutes of the Subsidiary Bank's board of directors and
maintained for subsequent regulatory review.

CAPITAL PLAN

     7. (a) Within 90 days of this Agreement, Civitas shall submit to the
Reserve Bank an acceptable written plan to maintain a sufficient capital
position for the consolidated organization. The plan shall, at a minimum,
address, consider, and include:

               (i) The current and future capital requirements of each
wholly-owned Subsidiary Bank and the consolidated organization, including
compliance with the Capital Adequacy Guidelines for Bank Holding Companies:
Risk-Based Measure and Tier 1 Leverage Measure, Appendices A and D of Regulation
Y of the Board of Governors (12 C.F.R. Part 225, App. A and D);

                                       7
<PAGE>

               (ii) the asset quality, condition, and risk profile of each
wholly-owned Subsidiary Bank;

               (iii) the anticipated level of retained earnings and dividends of
each wholly-owned Subsidiary Bank and Civitas;

               (iv) actions to be taken and the source and timing of additional
funds to fulfill the consolidated organization's future capital requirements and
to maintain the adequacy of the consolidated organization's ALLL and each
wholly-owned Subsidiary Bank's ALLL; and

               (v) projected or anticipated growth of the consolidated
organization.

         (b) The board of directors shall monitor and review the sufficiency of
the consolidated organization's capital position on a quarterly basis and shall
reflect such reviews in the minutes of the meetings of the board of directors.

EARNINGS AND CASH FLOW

     8. Within 90 days of this Agreement, Civitas shall submit to the Reserve
Bank a written strategic plan that includes the goals and strategies for
improving consolidated earnings for a minimum of three years after the date of
this Agreement. The written plan shall, at a minimum, address, consider, and
include:

         (a) Identification of the major areas and means by which Civitas's
board of directors will seek to improve the operating performance of each
wholly-owned Subsidiary Bank;

         (b) financial performance objectives, including plans for asset growth,
earnings, liquidity, and capital supported by quarterly and annual pro forma
financial statements and assumptions; and

         (c) a budget review process that ensures, at a minimum:

                                       8
<PAGE>

               (i) Timely reporting of discrepancies between budget and
                   performance;

               (ii) documentation of variances from budget; and

               (iii) timely and appropriate revisions to budget.

     9. (a) Within 90 days of this Agreement, Civitas shall submit to the
Reserve Bank a comprehensive parent-only cash flow analysis detailing Civitas's
planned sources and uses of cash for debt retirement, operating expenses, and
other purposes for 2005.

         (b) For each year after 2005, Civitas shall by January 30 of such year
submit to the Reserve Bank a parent-only cash flow analysis for such year.

DIVIDENDS

     10. (a) Civitas shall not declare or pay any dividends, with the exception
of stock dividends, without the prior written approval of the Reserve Bank and
the Director of the Division of Banking Supervision and Regulation of the Board
of Governors.

         (b) Civitas shall not take dividends or any other form of payment
representing a reduction in capital from any wholly-owned Subsidiary Bank
without the prior written approval of the Reserve Bank.

         (c) All requests for prior approval shall be received by the Reserve
Bank at least 30 days prior to the proposed dividend declaration date and shall
contain, but not be limited to, current and projected information on
consolidated earnings, and cash flow, capital, asset quality, and loan loss
reserve needs of each wholly-owned Subsidiary Bank.

DEBT AND STOCK REDEMPTION

     11. (a) Civitas shall not, directly or indirectly, incur any debt without
the prior written approval of the Reserve Bank. All requests for prior written
approval shall be received by the Reserve Bank at least 30 days before the
company wishes to incur the indebtedness and

                                       9
<PAGE>

shall contain, at a minimum, a statement regarding the purpose of the debt, the
terms of the debt, the planned source(s) for debt repayment, and an analysis of
the cash flow resources available to meet such debt repayment. The foregoing
restrictions equally apply to any refinancing of existing indebtedness that
affect a change in materials terms of the debt instrument (e.g., interest rate,
maturity date, and amortization schedule).

         (b) Civitas shall not redeem any stock without the prior written
approval of the Reserve Bank.

COMPLIANCE WITH AGREEMENT

     12. (a) Within 30 days of this Agreement, the board of directors of Civitas
shall appoint a committee (the "Compliance Committee") to monitor and coordinate
the company's compliance with the provisions of this Agreement. The Compliance
Committee shall be comprised of three or more outside directors who are not
executive officers or principal shareholders, as defined in sections 215.2(e)(1)
and (m) of Regulation O of the Board of Governors (12 C.F.R. 215.2(e)(1) and
(m)), of Civitas or any of its subsidiaries or affiliates. At a minimum, the
Compliance Committee shall meet monthly, keep detailed minutes of each meeting,
and report to the boards of director on a monthly basis on the actions taken to
comply with this Agreement and the results of those actions.

         (b) Within 30 days after the end of each calendar quarter (June 30,
September 30, December 31, and March 31) following the date of this Agreement,
the board of directors of Civitas shall submit to the Reserve Bank written
progress reports detailing the form and manner of all actions taken to secure
compliance with this Agreement and the results thereof. Such reports may be
discontinued when the corrections required by this Agreement have been

                                       10
<PAGE>

accomplished and the Reserve Bank has, in writing, released Civitas from making
further reports.

APPROVAL OF PLANS, POLICIES, PROCEDURES, AND PROGRAMS

     13. The engagement letter, plans, and program required by paragraphs 1(b),
3, 4(b), 5, 6, and 7 of this Agreement shall be submitted to the Reserve Bank
for review and approval. An acceptable engagement letter, acceptable program,
and acceptable plans shall be submitted within the time periods set forth in
this Agreement. Civitas shall adopt the approved engagement letter, program, and
plans within 10 days of approval by the Reserve Bank and then shall fully comply
with them. During the term of this Agreement, the approved program and plans
shall not be amended or rescinded without the prior written approval of the
Reserve Bank.

COMMUNICATIONS

     14. All communications regarding this Agreement shall be sent to:

          (a)   Mr. Ron Zimmerman
                Vice President
                Federal Reserve Bank of Atlanta
                1000 Peachtree Street, N.E.
                Atlanta, Georgia 30309-4470

          (b)   Mr. Richard Herrington
                President and Chief Executive Officer
                Civitas BankGroup, Inc.
                810 Crescent Centre Drive, Suite 320
                Franklin, Tennessee 37067

MISCELLANEOUS

     15. Notwithstanding any provision of this Agreement to the contrary, the
Reserve Bank may, in its sole discretion, grant written extensions of time to
Civitas to comply with any provision of this Agreement.

                                       11
<PAGE>

     16. The provisions of this Agreement shall be binding upon Civitas and its
institution-affiliated parties, in their capacities as such, and their
successors and assigns.

     17. Each provision of this Agreement shall remain effective and enforceable
until formally stayed, modified, terminated or suspended in writing by the
Reserve Bank.

     18. The provisions of this Agreement shall not bar, estop, or otherwise
prevent the Board of Governors of the Federal Reserve System (the "Board of
Governors"), the Reserve Bank, or any other federal or state agency from taking
any other action affecting Civitas, the Subsidiary Banks, or any of their
current or former institution-affiliated parties and their successors and
assigns.

     19. This Agreement is a "written agreement" for the purposes of, and is
enforceable by the Board of Governors as an order issued under, section 8 of the
FDI Act (12 U.S.C. 1818).

     IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
as of this 22nd day of April, 2005.

Civitas BankGroup, Inc.                     Federal Reserve Bank of Atlanta

By: /s/Richard Herrington                   By: /s/Ron Zimmerman
    ---------------------                       ----------------
    Richard Herrington                          Ron Zimmerman
    President                                   Vice President

                                       12

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00084-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00084-of-00352.parquet"}]]