Document:

EX-10.3 AMENDMENT NO. 1 TO 2001 INCENTIVE STOCK

EXHIBIT 10.3

AMENDMENT NO. 1 TO

SOUTHERN COMMUNITY BANCSHARES, INC.

2001 INCENTIVE STOCK OPTION PLAN FOR KEY EMPLOYEES

     This Amendment No. 1 to the Southern Community Bancshares, Inc. 2001 Incentive Stock Option
Plan for Key Employees is made effective as of the 14th day of August, 2008.

W I T N E S S E T H:

     WHEREAS, Southern Community Bancshares, Inc. (the “Company”) has adopted a 2001 Incentive
Stock Option Plan for Key Employees (the “Plan”) which, adjusted for stock splits, authorizes
46,519 shares of the Company’s common stock to be issued upon the exercise of options granted under
the Plan;

     WHEREAS, the Board of Directors of the Company has authorized this Amendment No. 1 to the Plan
to increase the number of shares authorized and reserved for issuance under the Plan by 133,333 to
179,852 and directed that the amendment be presented to the Company’s shareholders for ratification
at the next annual shareholders’ meeting;

     NOW, THEREFORE, for and in consideration of the mutual covenants and agreements set forth
herein and other good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:

	 	(1)	 	Section 3 of the Plan is hereby deleted and replaced with a new Section 3 which
reads as follows:

“3.   SHARES SUBJECT TO THE PLAN

	 	 	 	Subject to adjustments pursuant to the provisions of Section 14, there shall be
authorized and reserved for issuance upon the exercise of Options to be granted
under the Plan, One Hundred Seventy Nine Thousand Eight Hundred and Fifty Two
(179,852) shares of Common Stock.”

          As herein amended, the Plan continues in full force and effect.

1EX-10.1

Exhibit 10.1

Central Co-operative Bank

Senior Management Incentive Compensation Plan

Fiscal 2009

 

 

CENTRAL CO-OPERATIVE BANK

Somerville, Massachusetts

Since fiscal 2005, Thomas Warren and Associates was been retained by the Bank to update its Senior
Management Incentive Compensation Plan. The plan was adopted by the Board and the appropriate
incentive levels were also approved by the Board. As a result of not reaching goals under the
plan, no awards have been paid under this plan for several years. However, we do believe that the
plan has merit and that the plan should be re-approved by the Board with appropriate goals for
fiscal 2009. The incentive goals are based on the budget approved by the Board.

The highlights of the incentive plan follow:

	 	1.	 	The plan is competitive compared with similar sized banks and the banking
industry in general.
	 
	 	2.	 	The Board of Directors controls all aspects of the Plan
	 
	 	3.	 	The Plan is directed at the Bank’s senior executives
	 
	 	4.	 	The financial criterion necessary for plan operation consists of achievement
of specified levels of ROAA
	 
	 	5.	 	Incentive distributions range from 0% of base salary (did not meet goal) to
24% of base salary (maximum performance of plan).
	 
	 	6.	 	Award distribution would be made during the fiscal 2010 for fiscal 2009
performance.
	 
	 	7.	 	The categories of incentive plan participants and the related bonus range are
as follows:

	 	 	 
	Position:	 	Range of Bonus Awards:
	CEO

	 	0% - 24%
	Executive & Senior Vice Presidents

	 	0% - 18%

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Appendix A

CENTRAL CO-OPERATIVE BANK

Somerville, Massachusetts

Fiscal 2009 Performance Goals

The Board of Directors has established the following performance goals for the 2009 plan year:

	 	1.)	 	Meet or exceed a ROAA (Return on Average Assets) of .40%
	 
	 	2.)	 	In calculating ROAA, net income for the year excludes the following items:
any gains or losses on the sale or write-down of investment securities and bonus
expense calculated under this plan and any other bonus plan for the benefit of
“exempt” employees, all as computed on an after-tax basis.

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Appendix B

CENTRAL
CO-OPERATIVE BANK

Somerville, Massachusetts

Distribution of Awards

CEO AWARD

0-24 %

	 	 	 	 	 
	ROAA	 	Bonus %
	 
	 	 	 	 
	0.40%
	 	 	4.00	%
	0.45
	 	 	9.00	 
	0.50
	 	 	14.00	 
	0.55
	 	 	19.00	 
	0.60
	 	 	24.00	 

EXECUTIVE AND SENIOR VICE PRESIDENT AWARD

0-18%

	 	 	 	 	 
	ROAA	 	Bonus %
	 
	 	 	 	 
	0.40%
	 	 	4.00	%
	0.45
	 	 	7.50	 
	0.50
	 	 	11.00	 
	0.55
	 	 	14.50	 
	0.60
	 	 	18.00	 

Note: Achievement of an actual ROAA level between .40% and .60% that is not equal to one of the
specified levels presented herein will be pro-rated in computing the actual bonus award.

3Ex-10.1

Exhibit 10.1

UNITED STATES OF AMERICA

BEFORE THE

BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM

WASHINGTON, D.C.

STATE OF ALABAMA

STATE BANKING DEPARTMENT

	 	 	 	 	 	 	 
	In the Matter of
	 	 	 	 	 	 
	 

	 	 	 	Docket No. 08-034-B-HC

                    08-034-B-SM
	 	
	CAPITALSOUTH BANCORP

	 	 	 	 	 	
	Birmingham, Alabama
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	and

CAPITALSOUTH BANK 

Birmingham, Alabama	 	 	 	Cease and Desist Order Issued

Upon Consent Pursuant to the

Federal Deposit Insurance Act,

as Amended	 	 

     WHEREAS, in recognition of their common goal to maintain the financial soundness of
CapitalSouth Bancorp, Birmingham, Alabama, a registered bank holding company (“Bancorp”), and its
subsidiary bank, CapitalSouth Bank (the “Bank”), a state chartered bank that is a member of the
Federal Reserve System, Bancorp and the Bank have consented to the issuance of a Cease and Desist
Order (the “Order”) by the Board of Governors of the Federal Reserve System (the “Board of
Governors”) and the Alabama State Banking Department (the “Superintendent”);

     WHEREAS, on October 29, 2008, the boards of directors of Bancorp and the Bank, at duly
constituted meetings, adopted resolutions authorizing and directing W. Dan Puckett, and W. Dan
Puckett, to enter into this Order on behalf of Bancorp and the Bank, respectively, and consenting
to compliance with each and every provision of this Order by Bancorp, the Bank, and their 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)) and waiving any and all rights that Bancorp and the
Bank may have pursuant to Section 8 of the FDI Act (12 U.S.C. § 1818) to: (i) a hearing for the
purpose of taking evidence on any matters set forth in this Order; (ii) judicial review of this
Order; (iii) contest the issuance of this Order by the Board of Governors pursuant to Section 8 of
the FDI Act and the Superintendent pursuant to Section 5-2A-12 (1975) of the Alabama Banking Code;
and (iv) challenge or contest, in any manner, the basis, issuance, validity, terms, effectiveness
or enforceability of this Order or any provisions hereof.

     NOW, THEREFORE, IT IS HEREBY ORDERED, pursuant to sections 8(b)(1) and 8(b)(3) of the FDI Act,
and Section 5-2A-12 of the Code of Alabama, that Bancorp, the Bank, and their
institution-affiliated parties shall cease and desist and take affirmative actions as follows:

Board Oversight

     1. Within 60 days of this Order, the board of directors of the Bank shall submit to the
Reserve Bank and the Superintendent a written plan to strengthen board oversight of the management
and operations of the Bank and its wholly owned subsidiary, Mortgage Lion, Inc. (“Mortgage Lion”)
The plan shall, at a minimum, address, consider, and include:

          (a) The actions that the board of directors will take to improve the Bank’s condition and
maintain effective control over, and supervision of, the Bank’s senior management and major
operations and activities, including but not limited to credit
risk management, loan underwriting, and credit administration;

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          (b) a description of the detailed information to be included in the periodic reports that will
be reviewed by the board of directors in its oversight of the operations and management of the
Bank, including information sufficient to assess management’s adherence to applicable written
plans, policies, procedures, and programs and compliance with applicable laws and regulations; and

          (c) the deficiencies related to the board of directors’ oversight of management noted in the
report of the examination of the Bank conducted by the Superintendent and the Reserve Bank that
commenced on May 5, 2008 (the “Report of Examination”).

Management Review

     2. Within 30 days of this Order, the board of directors of the Bank shall engage an
independent consultant acceptable to the Reserve Bank and the Superintendent to assess the Bank’s
management and staffing needs and the qualifications and performance of all senior executive
officers (the “Management Review”), and prepare a written report of findings and recommendations
(the “Report”). The Management Review’s purpose shall be to aid in the development of a suitable
management structure that is adequately staffed by qualified and trained personnel, particularly in
the areas of loan underwriting, credit administration, loan workout, owned real estate (“ORE”)
disposition, and asset/liability management. Within 10 days of the engagement of the Bank’s
independent consultant, but prior to the commencement of the Management Review, the Bank shall
submit an engagement letter to the Reserve Bank and the Superintendent for approval. The engagement
letter shall require the independent
consultant to submit its Report within 30 days of the approval of the engagement letter

3

 

and to provide a copy of its Report to the Reserve Bank and the Superintendent at the same time
that it is provided to the Bank. The Management Review shall, at a minimum, address, consider, and
include:

          (a) The identification of the type and number of officers needed to manage and supervise properly
the affairs of the Bank;

          (b) an evaluation of each officer to determine whether the individual possesses the ability,
experience, and other qualifications required to perform competently present and anticipated
duties, including the ability to comply with applicable laws and regulations, adhere to the Bank’s
established policies and procedures, restore and maintain the Bank to a safe and sound condition,
and comply with the requirements of this Order; and

          (c) the establishment of a formal organizational structure that provides for clear lines of
authority and responsibility for monitoring adherence to established policies and procedures.

     3. Within 30 days of the Bank’s receipt of the Report, the board of directors of the Bank
shall submit a written management plan (the “Management Plan”) to the Reserve Bank and the
Superintendent that fully addresses the findings and recommendations in the Report and describes
the specific actions that the board of directors proposes to take in order to strengthen the Bank’s
management, including but not limited to plans to hire or appoint additional or replacement
personnel, and an organization chart.

4

 

Credit Risk Management

     4. Within 60 days of this Order, the Bank shall submit an acceptable written plan to the
Reserve Bank and the Superintendent that describes the specific actions that the Bank’s board of
directors proposes to take to strengthen the Bank’s credit risk management practices and to address
the deficiencies relating to credit risk management noted in the Report of Examination. The plan
shall, at a minimum, address, consider, and include:

          (a) Enhanced risk monitoring policies, procedures, and practices to identify, measure,
monitor, and control risks arising from concentrations of credit by industries, types of loans, and
geographic locations, consistent with Interagency Guidance on Concentrations in Commercial Real
Estate Lending, Sound Risk Management Practices, dated December 12, 2006 (SR 07-1); and

          (b) enhanced management information systems to provide accurate and timely information to the
Bank’s management and board of directors, including but not limited to, updated problem loan or
watch reports and ORE reports.

Lending and Credit Administration

     5. Within 60 days of this Order, the Bank shall submit to the Reserve Bank and
the Superintendent acceptable revised written lending and credit administration
policies and procedures that shall, at a minimum, address, consider and include:

          (a) Underwriting standards that are appropriate for each type of loan product offered by
the Bank, including, at a minimum:

               (i) Documented analysis of the borrower’s repayment source, creditworthiness, and debt
service ability;

5

 

               (ii) procedures for reviewing, extending, or modifying existing loans, including procedures
for documenting the bases for each renewal, extension, or modification; and

               (iii) procedures to ensure that the Bank obtains independent appraisals consistent with the
Interagency Statement on Independent Appraisal and Evaluation Functions dated October 27, 2003 (SR
03-18), and the Interagency Appraisal and Evaluation Guidelines, dated October 27, 1994 (SR
94-55), as well as the requirements of Subpart G of Regulation Y of the Board of Governors (12
C.F.R. Part 225, Subpart G) made applicable to state member banks by section 208.50 of Regulation
H of the Board of Governors (12 C.F.R. § 208.50);

          (b) controls to ensure uniform adherence to all loan policies and
procedures;

          (c) procedures to ensure that the Bank receives timely and accurate information on all loans
serviced by third parties; and

          (d) measures to address the deficiencies in lending and credit administration noted in the
Report of Examination.

Loan Review

     6. Within 60 days of this Order, the Bank shall submit to the Reserve Bank and the
Superintendent an acceptable written program for the on-going review and grading of the loan
portfolios of the Bank and Mortgage Lion by a qualified independent party or by qualified staff
that is independent of the Bank’s and Mortgage Lion’s lending functions. The program shall, at a
minimum, address, consider, and include:

          (a) The scope and frequency of the loan review;

6

 

          (b) standards and criteria for assessing the credit quality of the loans;

          (c) application of loan grading standards and criteria to the loan portfolio; and

          (d) periodic written reports to the board of directors that
identify the status of those loans that are adversely graded and the prospects
for full collection or strengthening of the quality of any such loans.

Asset Improvement

     7. (a) The Bank shall not, directly or indirectly, extend or renew any credit to or for the
benefit of any borrower, including any related interest of the borrower, who is obligated to the
Bank in any manner on any extension of credit or portion thereof that has been charged off by the
Bank or classified, in whole or in part, “loss” or “doubtful” in the Report of Examination or in
any subsequent report of examination, as long as such credit remains uncollected.

          (b) The Bank shall not, directly or indirectly, extend or renew any credit to or for the
benefit of any borrower, including any related interest of the borrower, whose extension of credit
has been classified “substandard” in the Report of Examination or in any subsequent report of
examination, without the prior approval of the board of directors. The board of directors shall
document in writing the reasons for the extension of credit or renewal, specifically certifying
that: (i) the extension of credit is necessary to protect the Bank’s interest in the ultimate
collection of the credit already granted or (ii) the extension of credit is in full compliance with
the Bank’s written loan policy, is adequately secured, and a thorough credit analysis has been
performed indicating that the extension or renewal is reasonable and justified, all necessary loan
documentation has

7

 

been properly and accurately prepared and filed, the extension of credit will not impair the
Bank’s interest in obtaining repayment of the already outstanding credit, and the board of
directors reasonably believes that the extension of credit or renewal will be repaid according to
its terms. The written certification shall be made a part of the minutes of the board of
directors meetings, and a copy of the signed certification, together with the credit analysis and
related information that was used in the determination, shall be retained by the Bank in the
borrower’s credit file for subsequent supervisory review. For purposes of this Order, the term
“related interest” is defined as set forth in Section 215.2(n) of Regulation O of the Board of
Governors (12 C.F.R. § 215.2(n)).

     8. (a) Within 60 days of this Order, the Bank shall submit to the Reserve
Bank and the Superintendent an acceptable written plan designed to improve the Bank’s position
through repayment, amortization, liquidation, additional collateral, or other means on each loan or
other asset in excess of $500,000, including ORE and pools of loans, that (i) is past due as to
principal or interest more than 90 days as of the date of this Order; (ii) is on the Bank’s problem
loan list; or (iii) was adversely classified in the Report of Examination.

          (b) Within 30 days of the date that any additional loan or other asset in excess of $500,000,
including ORE and pools of loans, becomes past due as to principal or interest for more than 90
days, is on the Bank’s problem loan list, or is adversely classified in any subsequent report of
examination of the Bank, the Bank shall submit to the Reserve Bank and the Superintendent an
acceptable written plan to improve the
Bank’s position on such loan or asset.

8

 

          (c) Within 30 days after the end of each calendar quarter thereafter, the Bank shall submit a
written progress report to the Reserve Bank and the Superintendent to update each asset
improvement plan, which shall include, at a minimum, the carrying value of the loan or other asset
and changes in the nature and value of supporting collateral, along with a copy of the Bank’s
current problem loan list, extension report, and past due/non-accrual report.

Allowance for Loan and Lease Losses

     9. (a) Within 10 days of this Order, the Bank shall eliminate from its books, by charge-off or
collection, all assets or portions of assets classified “loss” in the Report of Examination that
have not been previously collected in full or charged off. Thereafter the Bank shall, within 30
days from the receipt of any federal or state report of examination, charge off all assets
classified “loss” unless otherwise approved in writing by the Reserve Bank and the Superintendent.

          (b) Within 60 days of this Order, the Bank shall review and revise its ALLL methodology
consistent with relevant supervisory guidance, including the Interagency Policy Statements on the
Allowance for Loan and Lease Losses, dated July 2, 2001 (SR 01-17 (Sup)) and December 13, 2006 (SR
06-17), and the findings and recommendations regarding the ALLL set forth in the Report of
Examination, and submit a description of the revised methodology to the Reserve Bank and the
Superintendent. The revised ALLL methodology shall be designed to maintain an adequate ALLL and
shall address, consider, and include, at a minimum, the reliability of the Bank’s loan grading
system, the volume of criticized loans, concentrations of credit, the current level of past due and
nonperforming loans, past loan loss experience,

9

 

evaluation of probable losses in the Bank’s loan portfolio, including adversely classified loans,
and the impact of market conditions on loan and collateral valuations and collectibility.

          (c) Within 60 days of this Order, the Bank shall submit to the Reserve Bank and the
Superintendent an acceptable written program for the maintenance of an adequate ALLL. The program
shall include policies and procedures to ensure adherence to the revised ALLL methodology and
provide for periodic reviews and updates to the ALLL methodology, as appropriate. The program shall
also provide for a review of the ALLL by the board of directors on at least a quarterly calendar
basis. Any deficiency found in the ALLL shall be remedied in the quarter it is discovered, prior to
the filing of the Consolidated Reports of Condition and Income, by additional provisions. The board
of directors shall maintain written documentation of its review, including the factors considered
and conclusions reached by the Bank in determining the adequacy of the ALLL. During the term of
this Order, the Bank shall submit to the Reserve Bank and the Superintendent, within 30 days after
the end of each calendar quarter, a written report regarding the board of directors’ quarterly
review of the ALLL and a description of any changes to the methodology used in determining the
amount of ALLL for that quarter.

Capital Plan

     10. Within 60 days of this Order, Bancorp and the Bank shall submit to the Reserve Bank and
the Superintendent an acceptable joint written plan to maintain sufficient capital at Bancorp, on
a consolidated basis, and at the Bank, as a separate legal entity on a stand-alone basis. The plan
shall, at a minimum, address, consider, and
include:

10

 

          (a) The consolidated organization’s current and future capital requirements, 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);

          (b) The Bank’s current and future capital requirements, including compliance with the Capital
Adequacy Guidelines for State Member Banks: Risk-Based Measure and Tier 1 Leverage Measure,
Appendices A and B of Regulation H of the Board of Governors (12 C.F.R. Part 208, App. A and B);

          (c) the volume of the Bank’s adversely classified assets;

          (d) the nature and level of the Bank’s asset concentrations;

          (e) the adequacy of the Bank’s ALLL;

          (f) any planned asset growth;

          (g) the anticipated level of retained earnings;

          (h) anticipated and contingent liquidity needs;

          (i) the source and timing of additional funds to fulfill the future capital needs of Bancorp
and the Bank and the ALLL needs of the Bank; and

          (j) the requirements of Section 225.4(a) of Regulation Y of the Board of Governors that
Bancorp shall serve as a source of strength to the Bank (12 C.F.R. § 225.4(a)).

     11. The board of directors of the Bank shall monitor and review the
sufficiency of the capital of the Bank on a monthly basis. The board of directors of
Bancorp shall monitor and review the sufficiency of the capital of Bancorp on a quarterly

11

 

basis. Each board shall reflect such reviews in the minutes of the board of directors’
meetings.

Liquidity/Funds Management

     12. Within 60 days of this Order, the Bank shall submit to the Reserve Bank and the
Superintendent an acceptable revised written plan designed to improve management of the Bank’s
liquidity position and funds management practices. The plan shall, at a minimum, address,
consider, and include:

          (a) Steps to diversify sources of funding and reduce reliance on short-term wholesale funding;

          (b) measures to enhance the monitoring and reporting of the Bank’s liquidity position; and

          (c) the maintenance of sufficient liquidity to meet contractual obligations and unanticipated
demands.

     13. Within 60 days of this Order, Bancorp and the Bank shall submit to the Reserve Bank and
the Superintendent an updated joint contingency funding plan that, at a minimum, identifies
available sources of liquidity and includes adverse scenario planning.

Earnings Plan and Budget

     14. (a) Within 60 days of this Order, the Bank shall submit to the Reserve Bank and the
Superintendent a written business plan for 2009 to improve the Bank’s earnings and overall
condition. The plan, at a minimum, shall provide for or describe:

               (i) a realistic and comprehensive budget for calendar year
2009, including income statement and balance sheet projections; and

               (ii) a description of the operating assumptions that form the

12

 

basis for, and adequately support, major projected income, expense, and balance sheet
components.

          (b) A business plan and budget for each calendar year subsequent
to 2009 shall be submitted to the Reserve Bank and the Superintendent at least
30 days prior to the beginning of that calendar year.

Dividends and Distributions

     15. (a) Bancorp and the Bank shall not declare or pay any dividends without the prior
written approval of the Reserve Bank, the Director of the Division of Banking Supervision and
Regulation of the Board of Governors (“Director”), and the Superintendent.

          (b) Bancorp shall not, directly or indirectly, take any other form of payment
representing a reduction in capital from the Bank without the prior written approval of the
Reserve Bank and the Superintendent.

          (c) Bancorp and its nonbank subsidiaries shall not make any distributions of interest,
principal, or other sums on subordinated debentures or trust preferred securities without the
prior written approval of the Reserve Bank, the Director, and the Superintendent.

          (d) All requests for prior approval shall be received at least 30 days prior to the proposed
dividend declaration date, proposed distribution on subordinated debentures, and required notice of
deferral on trust preferred securities. All requests shall contain, at a minimum, current and
projected information, as appropriate, on Bancorp’s capital, earnings, and cash flow; the Bank’s
capital, asset quality, earnings, and ALLL;
and identification of the sources of funds for the proposed payment or distribution. For

13

 

requests to declare or pay dividends, Bancorp and the Bank, as appropriate, must also demonstrate
that the requested declaration or payment of dividends is consistent with the Board of Governors’
Policy Statement on the Payment of Cash Dividends by State Member Banks and Bank Holding
Companies, dated November 14, 1985 (Federal Reserve Regulatory Service, 4-877 at page 4-323), and
Alabama State policies on dividends.

Debt and Stock Redemption

     16. (a) Bancorp and its nonbank subsidiaries shall not, directly or indirectly, incur,
increase, or guarantee any debt without the prior written approval of the Reserve Bank and the
Superintendent. All requests for prior written approval shall contain, but not be limited to, a
statement regarding the purpose of the debt, the terms of the debt, and the planned source(s) for
debt repayment, and an analysis of the cash flow resources available to meet such debt repayment.

          (b) Bancorp shall not, directly or indirectly, purchase or
redeem any shares of its stock without the prior written approval of the
Reserve Bank and the Superintendent.

Compliance with Laws and Regulations

     17. Bancorp and the Bank shall immediately take all necessary steps to correct all violations
of laws and regulations set forth in the Report of Examination. In addition, the boards of
directors of Bancorp and the Bank shall take necessary steps to ensure Bancorp and the Bank’s
future compliance with all applicable laws and regulations.

     18. In appointing any new director or senior executive officer, or changing the
responsibilities of any senior executive officer so that the officer would assume a

14

 

different senior executive officer position, Bancorp and the Bank shall comply with the notice
provisions of Section 32 of the FDI Act (12 U.S.C. § 1831i) and Subpart H of Regulation Y of the
Board of Governors (12 C.F.R. §§ 225.71 et seq.) and also provide written notice to the
Superintendent.

     19. Bancorp and the Bank shall comply with the restrictions on indemnification and
severance payments of Section 18(k) of the FDI Act (12 U.S.C. § 1828(k)) and Part 359 of
the Federal Deposit Insurance Corporation’s regulations (12 C.F.R. Part 359).

Compliance with the Order

     20. (a) Within 10 days of this Order, the boards of directors of Bancorp and the Bank shall
appoint a joint compliance committee (the “Compliance Committee”) to monitor and coordinate
compliance with the provisions of this Order. The Compliance Committee shall include at least three
outside directors who are not executive officers or principal shareholders of Bancorp and the Bank,
as defined in sections 215.2(e)(1) and 215.2(m)(1) of Regulation O of the Board of Governors (12
C.F.R. §§ 215.2(e)(1) and 215.2(m)(1)). At a minimum, the Compliance Committee shall meet at least
monthly, keep detailed minutes of each meeting, and report its findings to the board of directors.

          (b) Within 30 days after the end of each calendar quarter following the date of this Order,
Bancorp and the Bank shall submit to the Reserve Bank and the Superintendent written progress
reports detailing the form and manner of all actions taken to secure compliance with this Order and
the results thereof.

15

 

Approval and Implementation of Plans, Policies, Procedures, and Programs

     21. (a) Bancorp and the Bank, as applicable, shall submit written plans, policies,
procedures, an engagement letter, and programs that are acceptable to the Reserve Bank and the
Superintendent within the applicable time periods set forth in paragraphs 2, 4, 5, 6, 8, 9(c),
10 and 12 of this Order.

          (b) Within 10 days of approval by the Reserve Bank and the Superintendent, Bancorp and the
Bank, as applicable, shall adopt the approved plans, policies, procedures, an engagement letter,
and programs. Upon adoption, Bancorp and the Bank, as applicable, shall promptly implement the
approved plans, policies, procedures, and programs and thereafter fully comply with them.

          (c) During the term of this Order, the approved plans, policies, procedures, and programs
shall not be amended or rescinded without the prior written approval of the Reserve Bank and the
Superintendent, as appropriate.

Communications

     22. All communications regarding this Order shall be sent to:

	 	(a)	 	Mr. Steve Wise

Assistant Vice President

Federal Reserve Bank of Atlanta

1000 Peachtree Street, N.E.

Atlanta, Georgia 30309-4470

	 
	 	(b)	 	Mr. John D. Harrison

Superintendent of Banks

State of Alabama

State Banking Department

401 Adams Avenue, Ste. 680

Montgomery, Alabama 36130-1201

16

 

	 	(c)	 	Mr. W. Dan Puckett

Chairman of the Board of Directors

CapitalSouth Bank

2340 Woodcrest Place

Birmingham, Alabama 35209

Miscellaneous

     23. Notwithstanding any provision of this Order to the contrary, the Reserve Bank and the
Superintendent may, in their sole discretion, grant written extensions of time to Bancorp and the
Bank to comply with any provision of this Order.

     24. The provisions of this Order shall be binding upon Bancorp, the Bank and their
institution-affiliated parties, in their capacities as such, and their successors and assigns.

     25. Each provision of this Order shall remain effective and enforceable until stayed,
modified, terminated or suspended in writing by the Reserve Bank and the Superintendent.

     26. The provisions of this Order shall not bar, estop or otherwise prevent the Board of
Governors, the Reserve Bank, the Superintendent, or any other federal or state agency from taking
any other action affecting Bancorp, the Bank, or any of their current or former
institution-affiliated parties and their successors and assigns.

17

 

     27. The Alabama Superintendent of Banks, having duly approved this Order, and the Bank,
through its board of directors, agree that the issuance of this Order by the Board of Governors
shall be binding as between the Bank and the Alabama Superintendent of Banks to the same degree and
legal effect that such Order would be binding on the Bank if the Alabama Superintendent of Banks
had issued a separate Order and included and incorporated all of the provisions of this Order
pursuant to the provisions of section 5-2A-12 of the Code of Alabama.

     By Order of the Board of Governors of the Federal Reserve System and the Superintendent
effective this 4th day of November, 2008.

	 	 	 	 	 	 	 	 	 	 	 
	CAPITALSOUTH BANCORP	 	 	 	BOARD OF GOVERNORS OF THE
 FEDERAL
RESERVE SYSTEM	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By:

	 	s/s W. Dan Puckett
	 	 	 	By:
	 	s/s Jennifer J. Johnson
	 	 
	 

	 	 
	 	 	 	 	 	 	 	 
	 

	 	W. Dan Puckett
	 	 	 	 	 	Jennifer J. Johnson	 	 
	 

	 	Chairman of the Board of Directors
	 	 	 	 	 	Secretary of the Board	 	 
	 

	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	CAPITALSOUTH BANK	 	 	 	ALABAMA STATE SUPERINTENDENT
 OF BANKS	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By:

	 	s/s W. Dan Puckett	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 
	 

	 	W. Dan Puckett
	 	 	 	By:
	 	s/s John D. Harrison	 	 
	 

	 	 	 	 	 	 	 	 	 	 
	 

	 	Chairman of the
Board of Directors
	 	 	 	 	 	John D. Harrison

Superintendent of Banks	 	 
	 

	 	 	 	 	 	 	 	State of Alabama	 	 

18

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00149-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00149-of-00352.parquet"}], [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00149-of-00352.parquet"}]]