Document:

EX-10.4

Exhibit 10.4

AMENDMENT TO NON-RECOURSE 

INDEMNITY AND SECURITY AGREEMENT

THIS AMENDMENT TO NON-RECOURSE INDEMNITY AND SECURITY AGREEMENT (this “Amendment”), is made
and entered into as of February 24, 2009, by and between CAPITALSOUTH BANK, an Alabama banking
corporation (the “Bank”), and JAMES C. BOWEN, a resident of Duval County, Florida
(“Bowen”), and is joined in by CAPITALSOUTH BANCORP, a Delaware corporation and a
registered bank holding company (“CapitalSouth”).

R E C I T A L S:

     A. The Bank and Bowen entered into that certain Non-Recourse Indemnity and Security Agreement,
dated September 14, 2007, joined in by CapitalSouth for the purposes of certain provisions (the
“Indemnity Agreement”). Capitalized terms not defined in this Amendment shall have the
meanings ascribed to them in the Indemnity Agreement.

     B. Pursuant to Section 1 of the Indemnity Agreement, Bowen agreed to indemnify the Bank and
CapitalSouth for certain Claims relating to Covered Loans.

     C. Pursuant to Section 2 of the Indemnity Agreement, Bowen has no liability or obligation with
respect to amounts subject to indemnification under Section 1 of the Indemnity Agreement (the
“Indemnified Costs”), until the Indemnified Costs incurred or accrued reach Two Million
Five Hundred Thousand Dollars ($2,500,000) (the “Threshold Amount”).

     D. Pursuant to Section 3 of the Indemnity Agreement, Bowen is responsible for 50% of all
Indemnified Costs above the Threshold Amount up to a maximum amount of $1,500,000 (the “Maximum
Amount”).

     E. Pursuant to Section G of the recitals to the Indemnity Agreement, Bowen agreed that
a Promissory Note in the original principal amount of One Million Five Hundred Thousand Dollars
($1,500,000) would be made by CapitalSouth in favor of Bowen (the “Pledged Note”), and the
Pledged Note would be used as security for Bowen’s indemnification obligations under the Indemnity
Agreement.

     F. Pursuant to that certain Restructuring Agreement dated September 30, 2008, by and among
CapitalSouth and Bowen, CapitalSouth and Bowen agreed to reduce the Maximum Amount to $500,000 and
replace the Pledged Note with a new promissory note in the original principal amount of $500,000
made by CapitalSouth in favor of Bowen (“Bowen Note II”)

     G. CapitalSouth, the Bank and Bowen now desire to amend the Indemnity Agreement to (i) reflect
the change in the Maximum Amount to $500,000 and (ii) replace the Pledged Note with Bowen Note II,
all on the terms provided herein.

 

 

A G R E E M E N T:

     NOW, THEREFORE, in consideration of the Ten Dollars ($10.00) and other good valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as
follows:

     1. Recitals Confirmed. The recitals herein are true and correct.

     2. Amendment to the Indemnity Agreement. The Indemnity Agreement is hereby amended as
follows:

          (i) In Section G of the recitals to the Indemnity Agreement, the term “(the “Pledged
Note”)” shall be deleted in its entirety, and term “Pledged Note” shall be defined to mean Bowen
Note II everywhere that term appears in the Indemnity Agreement.

          (ii) In Section 5 of the Indemnity Agreement, the term “One Million Five Hundred
Thousand Dollars ($1,500,000)” shall be deleted in its entirety and in its place shall be inserted
“Five Hundred Thousand Dollars ($500,000).”

     3. Continuing Effect of Indemnity Agreement. Except as expressly amended hereby, the
Indemnity Agreement remains in full force and effect in accordance with its terms.

     4. Governing Law. This Amendment shall be governed by, and shall be construed in
accordance with, the laws of the State of Alabama, without regard to principles governing conflicts
of law, and all applicable laws of the United States of America.

     5. Modification. No modification, amendment or waiver of any provision of this
Amendment shall be effective unless the same shall be in writing and signed by all parties, and
then such waiver or consent shall be effective only in the specific instance and for the purpose
for which given.

     6. Counterparts. This Amendment may be executed in two or more counterparts, each of
which shall constitute an original, but when taken together all such counterparts shall constitute
but one agreement, and any party may execute this Amendment by executing any one or more of such
counterparts.

     7. Successors and Assigns, etc. This Amendment shall be binding upon and inure to the
benefit of the parties hereto and their respective representatives, successors and assigns.

     8. Captions. The headings in this Agreement are for purposes of reference only and
shall not limit or otherwise affect the meaning of this Agreement.

[Signature Page Follows]

 

 

     IN WITNESS WHEREOF, the parties hereto have executed or caused this Amendment to be executed
and delivered as of the date first above written.

	 	 	 	 	 	 	 
	 

	 	CAPITALSOUTH BANCORP	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ W. Dan Puckett	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:
	 	W. Dan Puckett	 	 
	 

	 	Its:
	 	Chairman and Chief Executive Officer	 	 
	 
	 	 	 	 	 	 
	 

	 	CAPITALSOUTH BANK	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ W. Dan Puckett	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:
	 	W. Dan Puckett	 	 
	 

	 	Its:
	 	Chairman and Chief Executive Officer	 	 
	 
	 	 	 	 	 	 
	 

	 	/s/ James C. Bowen
	 	[L.S.]
	 

	 	 	 	 
	 

	 	James C. Bowen	 	 

 

 

	 	 	 	 	 	 
	STATE OF ALABAMA

	 	 	)	 
	 

	 	 	:	 
	JEFFERSON COUNTY

	 	 	)	 

     I, the undersigned, a notary public in and for said county in said state, hereby certify that
W. Dan Puckett whose name as Chairman and CEO of CAPITALSOUTH BANCORP, a Delaware corporation and a
registered bank holding company, is signed to the foregoing instrument, and who is known to me,
acknowledged before me on this day that, being informed of the contents of said instrument, he, as
such officer and with full authority, executed the same voluntarily for and as the act of said
corporation.

     Given under my hand and official seal this 24th day of February, 2009.

	 	 	 
	 

	 	/s/ Karen Ball
	 
	 	 
	 
	 	Notary Public
	 	 	 
	[NOTARIAL SEAL]
	 	My commission expires: 10/16/12

 

 

	 	 	 	 	 	 
	STATE OF ALABAMA

	 	 	)	 
	 

	 	 	:	 
	JEFFERSON COUNTY

	 	 	)	 

     I, the undersigned, a notary public in and for said county in said state, hereby certify that
W. Dan Puckett whose name as Chairman and CEO of CAPITALSOUTH BANK, an Alabama banking corporation,
is signed to the foregoing instrument, and who is known to me, acknowledged before me on this day
that, being informed of the contents of said instrument, he, as such officer and with full
authority, executed the same voluntarily for and as the act of said corporation.

     Given under my hand and official seal this 24th day of February, 2009.

	 	 	 
	 

	 	/s/ Karen Ball
	 
	 	 
	 
	 	Notary Public
	 	 	 
	[NOTARIAL SEAL]
	 	My commission expires: 10/16/12

 

 

	 	 	 	 	 	 
	STATE OF GEORGIA

	 	 	)	 
	 

	 	 	:	 
	WORTH COUNTY

	 	 	)	 

     I, the undersigned, a notary public in and for said county in said state, hereby certify that
James C. Bowen, whose name is signed to the foregoing instrument, and who is known to me,
acknowledged before me on this day that, being informed of the contents of said instrument, he
executed the same voluntarily on the day the same bears date.

     Given under my hand and official seal this 24th day of February, 2009.

	 	 	 
	 

	 	/s/ Judy S. Martin
	 
	 	 
	 
	 	Notary Public
	 	 	 
	[NOTARIAL SEAL]
	 	My commission expires: 7/24/12EX-10.33

EXHIBIT 10.33

FORM OF LETTER AGREEMENT REGARDING STANDARDS FOR INCENTIVE COMPENSATION

TO EXECUTIVE OFFICERS UNDER THE TARP CAPITAL PURCHASE PROGRAM

[DATE]

[ADDRESS]

__________________

__________________

__________________

__________________

Dear ________:

     Popular, Inc. (the “Company”) intends to enter into a Securities Purchase Agreement, (the
“Participation Agreement”), with the United States Department of Treasury (“Treasury”) that
provides for the Company’s participation in the Treasury’s TARP Capital Purchase Program (the
“CPP”).

     For the Company to participate in the CPP and as a condition to the closing of the investment
contemplated by the Participation Agreement, the Company is required to establish specified
standards for incentive compensation to its senior executive officers and to make changes to its
compensation arrangements. To comply with these requirements, and in consideration of the benefits
that you will receive as a result of the Company’s participation in the CPP, you agree as follows:

	 	(1)	 	No Golden Parachute Payments. The Company is prohibiting any golden parachute
payment to you during any “CPP Covered Period”. A “CPP Covered Period” is any period
during which (A) you are a senior executive officer and (B) Treasury holds an equity or
debt position acquired from the Company in the CPP.

	 	(1)	 	Recovery of Bonus and Incentive Compensation. Any bonus and incentive compensation
paid to you during a CPP Covered Period is subject to recovery or “clawback” by the
Company if the payments were based on materially inaccurate financial statements or any
other materially inaccurate performance metric criteria.

	 	(2)	 	Compensation Program Amendments. Each of the Company’s compensation, bonus,
incentive and other benefit plans, arrangements and agreements (including golden
parachute, severance and employment agreements) (collectively, “Benefit Plans”) with
respect to you is hereby amended to the extent necessary to give effect to provisions (1)
and (2).

	 	 	 	In addition, the Company is required to review its Benefit Plans to ensure that they do not
encourage senior executive officers to take unnecessary and excessive risks that threaten the
value of the Company. To the extent any such

 

 

	 	 	 	review requires revisions to any Benefit Plan with respect to you, you and the Company agree to
execute such additional documents as the Company deems necessary to effect such revisions.

	 	(3)	 	Definitions and Interpretation. This letter shall be interpreted as follows:

	 	•	 	“Senior executive officer” means the Company’s “senior executive officers” as
defined in subsection 111(b)(3) of EESA.
	 
	 	•	 	“Golden parachute payment” is used with the same meaning as in subsection
111(b)(2)(C) of EESA.
	 
	 	•	 	“EESA” means the Emergency Economic Stabilization Act of 2008 as implemented by
guidance or regulation that has been issued and is in effect as of the “Closing Date”
as defined in the Participation Agreement.
	 
	 	•	 	The term “Company” includes any entities treated as a single employer with the
Company under 31 C.F.R. § 30.1(b) (as in effect on the Closing Date). You are also
delivering a waiver pursuant to the Participation Agreement, and, as between the
Company and you, the term “employer” in that waiver will be deemed to mean the
Company as used in this letter.
	 
	 	•	 	The term “CPP Covered Period” shall be limited by, and interpreted in a manner
consistent with, 31 C.F.R. § 30.11 (as in effect on the Closing Date).
	 
	 	•	 	Provisions (1) and (2) of this letter are intended to, and will be interpreted,
administered and construed to, comply with Section 111 of EESA (and, to the maximum
extent consistent with the preceding, to permit operation of the Benefit Plans in
accordance with their terms before giving effect to this letter).
	 
	 	•	 	This letter will be governed by and construed in accordance with the federal law
of the United States if and to the extent such law is applicable, and otherwise in
accordance with the laws of the State of New York applicable to contracts made and to
be performed entirely within such State. Each of the parties hereto agrees to submit
to the exclusive jurisdiction and venue of the United States District Court for the
District of Columbia and the United States Court of Federal Claims for any and all
actions, suits or proceedings arising out of or relating to this letter.

*      
       *             *

     The Board appreciates the concessions you are making and looks forward to your continued
leadership during these financially turbulent times.

	 	 	 	 	 
	 	Very truly yours,

Popular, Inc.

 
	 
	 	By:  	 	 
	 	 	 	 
	 	 	 	 
	 

Intending to be legally bound, I agree

with and accept the foregoing terms.

________________________________

By:

	 	 	 	 	 

 

 

	 	 	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 

WAIVER

In consideration for the benefits I will receive as a result of my employer’s participation in the
United States Department of the Treasury’s TARP Capital Purchase Program, I hereby voluntarily
waive any claim against the United States or my employer for any changes to my compensation or
benefits that are required to comply with the regulation issued by the Department of the Treasury
as published in the Federal Register on October 20, 2008.

I acknowledge that this regulation may require modification of the compensation, bonus, incentive
and other benefit plans, arrangements, policies and agreements (including so-called “golden
parachute” agreements) that I have with my employer or in which I participate as they relate to the
period the United States holds any equity or debt securities of my employer acquired through the
TARP Capital Purchase Program.

This waiver includes all claims I may have under the laws of the United States or any state related
to the requirements imposed by the aforementioned regulation, including without limitation a claim
for any compensation or other payments I would otherwise receive, any challenge to the process by
which this regulation was adopted and any tort or constitutional claim about the effect of these
regulations on my employment relationship.

__________________________________

By: _______________________________

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