Document:

Amendment No. 1

 Exhibit 10.1 

AMENDMENT NO. 1 

TO 

STOCK PURCHASE AGREEMENT 

AND 

REGISTRATION RIGHTS AGREEMENT 

BY AND AMONG 

PALMETTO BANCSHARES, INC., 

CAPGEN CAPITAL GROUP V LP 

AND EACH OF THE OTHER 

INVESTORS NAMED THEREIN 

EACH DATED AS OF 

MAY 25, 2010 

 AMENDMENT NO. 1 

TO THE 

STOCK PURCHASE AGREEMENT 

AND THE 

REGISTRATION RIGHTS AGREEMENT 

This Amendment No. 1 (the “Amendment”), dated as of June 8, 2010, is to the Stock Purchase Agreement, dated as
of May 25, 2010 (the “Stock Purchase Agreement”) by and among PALMETTO BANCSHARES, INC., a South Carolina corporation (the “Company”), and CAPGEN CAPITAL GROUP V LP, a Delaware limited partnership
(“CapGen”), and each of the respective other investors set forth on the signature pages to this Agreement (collectively, with CapGen, the “Investors”) is dated as of June 3, 2010. This Amendment also amends the
Registration Rights Agreement (the “Registration Rights Agreement”) between the Company and the Investors that is an exhibit to the Stock Purchase Agreement. 

This Amendment modifies and clarifies certain terms of the Stock Purchase Agreement and the Registration Rights Agreement as set forth
below to meet Investor requests. Capitalized terms used, but not defined herein, shall have the same respective meanings as provided in the Stock Purchase Agreement and Registration Rights Agreement, respectively. 

In consideration of the premises, and other good and valuable consideration, the receipt of which is acknowledged, the parties, intending
to be legally bound, agree as follows: 
 SECTION I. 

AMENDMENTS TO THE STOCK PURCHASE AGREEMENT 

Section 1.01 Section 1.05 of the Stock Purchase Agreement is amended to read in its entirety as follows: 

“Section 1.05 Transaction Fees and Expenses. The Company has agreed as of the date hereof, whether or
not the Private Placement is consummated, to (i) reimburse CapGen for legal fees and expenses in the amount of $250,000 and (ii) reimburse CapGen for all legal fees and expenses incurred with respect to negotiating this Agreement, the
Registration Rights Agreement and the other terms of the Private Placement (including the Transaction) with Investors other than CapGen and any amendments to such agreements or the Private Placement; provided that the total amount of
reimbursement to CapGen pursuant to this Section 1.05 shall not exceed $500,000.” 
 Section 1.02
The last sentence of Section 2.02 of the Stock Purchase Agreement is amended to read in its entirety as follows: 

“Each of the Company and the Bank has all requisite corporate power and authority and has taken all corporate action necessary,
subject to the receipt of the Shareholder Approvals described in this Agreement, in order to execute, deliver and perform its obligations under this Agreement and to consummate the Private Placement (including the Transaction).” 

 Section 1.03 Section 2.22 of the Stock Purchase Agreement is amended to
change the word “limit” in the fourth line from the bottom of this Section to “would permit” so that Section 2.22 shall read in its entirety as follows: 

“Section 2.22 Computer and Technology Security. The Company and the Subsidiaries have in place
reasonable safeguards of the information technology systems utilized in the operation of the business of the Company and the Subsidiaries consistent with the guidance of its Regulatory Authorities, including the implementation of procedures intended
to ensure that such information technology systems are free from any disabling codes or instructions, timer, copy protection device, clock, counter or other limiting design or routing and any “back door,” “time bomb,”
“Trojan horse,” “worm,” “drop dead device,” “virus,” or other software routines or hardware components that in each case would permit unauthorized access or the unauthorized disablement or unauthorized erasure
of data or other software by a third party, and to the Company’s knowledge there have been no successful unauthorized intrusions or breaches of the security of the information technology systems.” 

Section 1.04 The first sentence of Section 2.34 is amended to read as follows: 

“The Company has no other agreements with any Investor to purchase shares of Common Stock on terms that are not substantially similar
to the terms of this Agreement, except with respect to the allocation of payments and amounts due in the event of an Alternative Transaction under Section 9.18 below.” 

Section 1.05 Section 3.02(b) of the Stock Purchase Agreement is amended to read in its entirety as follows: 

“(b) No Investor, other than CapGen, is or will be, immediately following the Closing, a bank holding company under
the BHCA. No Investor has or is acting in concert with any other Person other than with such Investor’s affiliates. Except for CapGen, each Investor represents and warrants that it does not and will not as a result of its purchase or holding of
the Purchased Shares or any other securities of the Company have “control” of the Company or the Bank, and has no present intention of acquiring “control” of the Company or the Bank for purposes of the BHCA or, except as provided
in the immediately following sentence, the Change in Bank Control Act. If required, Patriot Financial Partners, L.P. (“Patriot”) will file a notice under the Change in Bank Control Act with respect to Patriot’s purchase of
Purchased Shares which would result in Patriot holding more than 9.9% and not more than 19.9% of the Company’s outstanding shares of Common Stock at all times following the Private Placement.” 

Section 1.06 Section 4.01 of the Stock Purchase Agreement is amended to read in its entirety as follows: 

“Section 4.01 Representations and Warranties to be True and Correct. The representations and warranties
contained in Article 2 are true and correct in 
  

 2 

 
all material respects as of the date of this Agreement and are true and correct in all material respects at and as of the Closing Date as though such representations and warranties had been made
on and as of the Closing Date (except (i) to the extent such representations and warranties are limited expressly to an earlier date, in which case the accuracy of such representations and warranties shall be determined on and as of such date,
and (ii) to the extent that such representations and warranties are qualified by the term “material” or “Material Adverse Effect,” such representations and warranties (as so written, including the term “material”
or “Material Adverse Effect”) shall be true and correct at and as of the applicable dates), and the chief executive officer of the Company shall have certified such compliance to the Investor in writing on behalf of the Company prior to
Closing.” 
 Section 1.07 Section 4.04 of the Stock Purchase Agreement is amended to read in its entirety
as follows: 
 “Section 4.04 Corporate Approvals; Shareholder Approvals. All corporate
approvals to be taken by the Company in connection with the Private Placement (including the Transaction) shall have been obtained and remain in full force and effect. The Company’s shareholders shall have approved the amendment to the
Company’s Amended and Restated Articles of Incorporation in the form attached as Schedule IV hereto, and such amendment to the Amended and Restated Articles of Incorporation shall have been filed with the South Carolina Secretary of
State and be in full force and effect. The Company’s shareholders shall have approved any other matters, if any, with respect to the Private Placement (including the Transaction) which require approval by the Company’s shareholders
pursuant to the Company’s articles of incorporation, bylaws, Applicable Law or otherwise.” 
 and a corresponding
Schedule IV, attached hereto, shall be added. 
 Section 1.08 Section 4.05(a) is amended to read in its
entirety as follows: 
 “(a) CapGen has received all regulatory approvals necessary to complete the
Transaction, including approval of its application to the Federal Reserve to acquire control of the Company and the Bank (the “Investor Regulatory Application”). Patriot has received a written determination of non-control of the Company
and the Bank from the Federal Reserve for purposes of the BHCA and has either received a notice of intent not to disapprove its acquisition of shares of Common Stock under the Change in Bank Control Act or has received a written determination from
the Federal Reserve, or delivered a certificate from an officer of Patriot certifying information from the Federal Reserve, that no such notice under the Change in Bank Control Act is required.” 

Section 1.09 Section 4.05(g) of the Stock Purchase Agreement is amended to add a sentence that reads as follows:

  

 3 

 “Prior to Closing, on the Closing Date, the Company will update
Section 2.07(a) and Section 2.25(b) of the Disclosure Schedule promptly upon the change of any information therein and deliver such updated information to CapGen and the Investors.” 

Section 1.10 Section 4.07 of the Stock Purchase Agreement is amended to read in its entirety as follows: 

“Section 4.07 Sales of Shares. At the Closing, the Company shall concurrently sell to all Investors,
including CapGen, Common Stock in the Private Placement in the aggregate amount of not less than $100 million, in each case, at a purchase price per share of $2.60, in accordance with the terms of this Agreement.” 

Section 1.11 A new sentence shall be added to Section 5.03, which will read in its entirety as follows: 

“Patriot has received a written determination of non-control of the Company and the Bank from the Federal Reserve for
purposes of the BHCA and has either received a notice of intent not to disapprove its acquisition of shares of Common Stock under the Change in Bank Control Act or has received a written determination from the Federal Reserve, or delivered a
certificate from an officer of Patriot certifying information from the Federal Reserve, that no such notice under the Change in Bank Control Act is required.” 

Section 1.12 A new Section 6.02(d) is added to the Stock Purchase Agreement, which will read in its entirety as follows:

 “(d) Notwithstanding anything to the contrary contained in this Section 6.02, none of CapGen or any
other Investor will be obligated to provide to the Company any documentation or information to the extent such documentation or information is confidential or proprietary to CapGen or such other Investor.” 

Section 1.13 Section 6.04(b) of the Stock Purchase Agreement is amended to read in its entirety as follows: 

“(b) As promptly as practicable following the date of this Agreement, the Company shall call a special meeting of its
shareholders (the “Shareholders’ Meeting”) for the purpose of obtaining the Requisite Shareholder Vote in connection with this Agreement and the Proposals and shall use its reasonable best efforts to cause such Shareholders’
Meeting to occur as promptly as reasonably practicable and in any event no later than sixty (60) days after the date Investors have executed this Agreement to purchase $100 million of Purchased Shares. The Proxy Statement shall include the
Company Board Recommendation, and the Board (and all applicable committees thereof) shall use its reasonable best efforts to obtain from the Company’s shareholders the Requisite Shareholder Vote in favor of the approval of the Proposals (the
“Shareholder Approvals”).” 
  

 4 

 Section 1.14 Section 6.07 of the Stock Purchase Agreement is amended to
read in its entirety as follows: 
 “Section 6.07 Board Matters 

(a) Prior to the Closing Date, the Company shall expand the Board by up to three directors, and cause the Nominating and Corporate
Governance Committee of the Board to nominate, and the Board shall have appointed, subject to the Closing, one designee of Patriot and up to two designees of CapGen each as a director of the Company to fill, effective as of the Closing, the
vacancies created by such expansion of the Board. For so long as CapGen or Patriot or any of their affiliates, as applicable, owns more than 9.9% of the Company’s outstanding Common Stock, and subject to satisfaction of all legal and governance
requirements applicable to all Board members regarding service as a director of the Company, the Company shall cause the nomination of one person designated by Patriot and up to two people designated by CapGen for election to the Board at each
annual meeting at which the term of each such director expires, or upon the death, resignation, removal or disqualification of each such director, if earlier. Patriot and CapGen shall each provide written notice of such designees to the Company,
together with any information pertaining to the nominated persons reasonably requested by the Company. Upon receipt of such notice and information, the Company shall do, or cause to be done, all things, and take, or cause to be taken, all actions
necessary, including filing and actively seeking approvals of, all applications for prior approval of all Governmental Authorities under Applicable Law necessary or expedient to having such designees be elected and qualified to serve as members of
the Company’s Board as soon thereafter as reasonably practicable. The Company shall also elect Patriot’s and CapGen’s designees to the Bank’s board of directors and to the board of directors of any other subsidiary requested by
Patriot or CapGen, as applicable. After the Closing but prior to the election and qualification of Patriot or CapGen’s designees, as applicable, Patriot shall have the right to designate one non-voting observer, and CapGen shall have the right
to designate two nonvoting observers to the boards of directors of each of the Company and the Bank. 
 (b) Each of
Patriot’s and CapGen’s designees as a Company director shall provide the Company with a directors’ and officers’ questionnaire and provide such other background information as ordinarily requested by the Company from time to time
of its other directors and officers. 
 (c) The Company shall waive any equity ownership requirements in connection with
Patriot’s and CapGen’s designees and serving as director of the Company and the Bank based upon such Investor’s holdings of shares of Company Common Stock; provided, however, that, in accordance with Section 34-3-40
of the SCC, the Company agrees to issue to each of Patriot’s and CapGen’s designees as a director of the Company and the Bank and each of Patriot and CapGen agree that it, on behalf of each of their designees, shall each purchase for $2.60
per share and hold (subject to any regulatory approval) shares of Common Stock of the Company having an aggregate value of at least $500, which shares may be transferred to Patriot and CapGen and/or any future Person designated by Patriot or CapGen,
as applicable, to serve as a director of the Company and the Bank. Each of Patriot and CapGen agree that its respective designees as Company directors will be an “Accredited Investor” within the meaning of the Securities Act. 

 

 5 

 (d) The Company shall waive, or exempt each of Patriot’s and CapGen’s designees
from, any South Carolina residence requirements in its bylaws or other applicable policies. 
 (e) If required under
Section 32 of the Federal Deposit Insurance Act (the “FDI Act”) or any other law, rule, regulation, order or requirement of any Governmental Authority, the Company shall promptly seek and use its reasonable best efforts to
promptly obtain, all approvals necessary to having each of Patriot’s and CapGen’s designees to the board of directors approved by all applicable Governmental Authorities. 

(f) Notwithstanding anything to the contrary in this Section 6.07, if, at any time, Patriot or CapGen, as applicable, owns
9.9% or less of the outstanding shares of Company Common Stock, then Patriot’s or CapGen’s right, as applicable, to nominate such members to the Company’s board of directors, the Bank’s board of directors, and the board of
directors of any other subsidiary requested by Patriot or CapGen, as applicable, granted by this Section 6.07 will terminate and such right will be lost permanently, irrespective of whether Patriot’s or CapGen’s, as applicable,
ownership of Company Common Stock increases again after the loss of such right. If, at any time, Patriot shall no longer have the right to designate a member of the Board pursuant to this Section 6.07(f), the number of designees that
CapGen may designate shall be reduced to one.” 
 Section 1.15 Sections 6.10, 6.11, 6.13 and 6.14 of the Stock
Purchase Agreement are amended such that references to “the prior written consent of CapGen” shall read “the prior written consent of 66 2/3% of the Investors and CapGen, based on the aggregate Purchase Price payable hereunder, at the
date of determination by CapGen and the Investors” and all references to CapGen having such approval rights over other Investors are deleted. 

Section 1.16 Section 6.12 of the Stock Purchase Agreement is amended to read in its entirety as follows: 

“Section 6.12 Investor Call. CapGen will issue the Investor Call to its investors five days after
receipt of the last approval of the Regulatory Authorities and the satisfaction (or waiver) of all other conditions under this Agreement needed for Closing of the Transaction.” 

Section 1.17 Section 6.15(a) of the Stock Purchase Agreement is amended to read in its entirety as follows: 

“(a) The Company and CapGen shall consult with each other before issuing any press release with respect to the
Transaction or this Agreement and shall not issue any such press release or make any such public statements without the prior consent of the other, which consent shall not be unreasonably withheld or delayed; provided, however, that
the Company may, without the prior consent of CapGen (but after such consultation, to the extent practicable in the circumstances), issue such press release or make such public statements or filings as may be required by Applicable Law or required
by Section 6.15 (b) or (c) below.” 
  

 6 

 Section 1.18 Section 6.17 is amended to read in its entirety as follows:

 “Section 6.17 Listing. The Company will not list or seek to list any of its securities on
any securities exchange or other market that would result in the Private Placement or the Transaction or any aspect thereof requiring shareholder approval for any reason. Following the Closing and the Shareholders’ Meeting, the Company shall
use its reasonable best efforts to list (the “Listing”) the shares of Common Stock on Nasdaq or another national securities exchange by nine months following the Closing Date.” 

Section 1.19 Section 7.01 is amended to read in its entirety as follows: 

“Section 7.01 Bank Holding Company Status. Following the Closing and as long as the Investor holds
shares of the Company, no Investor other than CapGen shall have or exercise “control” for purposes of the BHCA of the Company or the Bank.” 

Section 1.20 Section 7.02(a)(E) of the Stock Purchase Agreement is amended to read as follows: 

“(E) up to 384,615 shares of Common Stock to be issued and sold to officers of the Company in connection with and
upon the Closing at a cash purchase price of $2.60 per share (the “Executive Officer Investment”). 

Section 1.21 A new Section 7.07 is added, which shall read in its entirety as follows: 

“Section 7.07 If it is determined by the Federal Reserve or any other applicable Governmental Authority that
Patriot is a “bank holding company” and controls directly or indirectly the Bank and one or more other depository institutions for purposes of Section 5(e) of the Federal Deposit Insurance Act, it shall give immediate notice to the
Company and to any other company that then controls or is deemed to be in control of the Company or the Bank, and shall promptly take such actions so that it is no longer a bank holding company under the BHCA or in control, directly or indirectly,
of the Bank, and so that the Bank has no liability under Section 5(e) of the Federal Deposit Insurance Act with respect to any other depository institution controlled, directly or indirectly, by Patriot. In the event the Company makes a
non-prorata purchase of shares of its Common Stock, including purchases of fractional shares resulting from a stock split or similar transaction, (i) prior to the Listing, then the Company will simultaneously purchase any shares of Common Stock
held by Patriot that would cause Patriot to hold more than 19.9% of the Company’s outstanding Common Stock immediately after such purchase, and (ii) following the Listing, then the Company shall give Patriot at least 20 days’ prior
notice of such purchase and Patriot shall sell shares of Common Stock it holds so that at all times Patriot shall own not more than 19.9% of the Company’s outstanding shares of Common Stock.” 

Section 1.22 Section 7.02(d) of the Stock Purchase Agreement is amended to read in its entirety as follows: 

“(d) Anything to the contrary in this Section 7.02 notwithstanding, the preemptive right to purchase
Covered Securities granted by this Section 7.02 shall 
  

 7 

 
terminate as of and not be available any time after the date on which the Investor sells greater than 50% of the Purchased Shares purchased by such Investor; provided that in the case of
CapGen and Patriot, such preemptive right shall terminate in accordance with this Section 7.02(d) when and if CapGen or Patriot, as applicable, owns less than 4.9% of the outstanding Common Stock of the Company.” 

Section 1.23 Section 7.05(b) of the Stock Purchase Agreement is amended to read in its entirety as follows: 

“(b) The Company shall notify CapGen and each other Investor orally and in writing promptly (but in no event later
than one Business Day) after receipt by the Company or any of the Representatives thereof of any proposal or offer from any person other than CapGen and the other Investors pursuant to this Agreement to effect an Acquisition Transaction or any
request for non-public information relating to the Company or for access to the properties, books or records of the Company in connection with an Acquisition Transaction.” 

Section 1.24 Section 7.06(c) of the Stock Purchase Agreement is amended to change the De Minimis Claim from $125,000 to
$50,000 and to change the Threshold Amount from $750,000 to $250,000. 
 Section 1.25 Section 9.15 of the Stock
Purchase Agreement is amended to change the first sentence to read in its entirety as follows: 
 “This
Agreement, including the schedules hereto, the Registration Rights Agreement, each as amended hereby, and any other written agreement between any Investor and the Company entered into in connection herewith constitutes the final Agreement between
the Parties.” 
 Section 1.26 Section 9.18 of the Stock Purchase Agreement is amended such that
Section 9.18 shall read in its entirety as follows: 
 “(a) In the event that at
any time from the date hereof through the 365th day
following the date of termination of this Agreement (1) by the Company or (2) by CapGen as a result of a breach of Section 6.14 by the Company, upon or following any of the Company or any affiliate of the Company entering into
one or more Alternative Transaction Agreements with respect to any Alternative Transaction or an Alternative Transaction is proposed to be consummated outside of this Agreement and specific performance pursuant to Section 9.02 is
unavailable for any reason, then upon the determination of CapGen and Investors that are then parties to this Agreement (excluding any Investor that is or will be a party to the Alternative Transaction) which have subscribed to two-thirds (66 2/3%)
of the Purchased Securities to be purchased by CapGen and such other remaining Investors: 
 (i) CapGen and all
such Investors that are then parties to this Agreement (excluding any Investor that is or will be a party to the Alternative Transaction) shall receive the product of (x) the positive difference, if any,

  

 8 

 
between the Alternative Transaction Amount and $2.60 and (y) 38,461,540 (the “Alternative Transaction Payment”) with CapGen being entitled to 70% of the total Alternative
Transaction Payment and the other Investors that are then parties to this Agreement (excluding any Investor that is or will be a party to the Alternative Transaction) being entitled to 30% of the Alternative Transaction Payment; or 

(ii) The Company and the parties to the Alternative Transaction will deliver to CapGen and the other Investors that are
then parties to this Agreement (excluding any Investor that is or will be a party to the Alternative Transaction) the same number of (x) shares of Company Common Stock as the As-adjusted Purchased Shares or (y) the Alternative Transaction
Securities that would result from the As-adjusted Purchased Shares, in each case at a price per share equal to the lesser of (A) the price per share to be paid by counterparties to the Alternative Transaction or the shareholders of such
counterparties and (B) $2.60 per share. If, however, Alternative Transaction Consideration cannot be delivered for any reason as a result of pending Regulatory Approvals applicable to CapGen or any such other Investor and which approvals are
expected by CapGen or such other Investor to be received no more than 80 days from the date the Alternative Transaction Agreement was entered into, then each of CapGen and any such other Investor separately and individually may elect to defer
receipt of the Alternative Transaction Compensation for up to 80 days or demand, at any time, in lieu of the Alternative Transaction Compensation, the Alternative Transaction Payment; 

provided, that, if the Alternative Transaction Payment is selected, in no event except as set forth in Section 9.18(b) below,
shall CapGen and the Investors receive less than an aggregate of $5.0 million allocated 70% to CapGen and 30% to all the other Investors that are then parties to this Agreement (excluding any Investor that is or will be a party to the Alternative
Transaction). 
 (b) Notwithstanding the proviso at the end of Subsection 9.18(a) indicated above and without
duplicating the minimum amount set forth in the preceding clause, in the event of an Alternative Transaction where the consideration paid to the Company is the same or less per share or per equivalent share than that paid per share or per equivalent
share hereunder, then the Company shall pay CapGen and the other Investors a transaction fee of $5.0 million, with CapGen being entitled to 70% of the total Alternative Transaction Payment and the other Investors that are then parties to this
Agreement (excluding any Investor that is or will be a party to the Alternative Transaction) being entitled to 30%. In no event shall more than one such $5 million payment be made. If an Alternative Transaction consists of an aggregate investment of
less than $85 million, no Alternative Transaction Payment or Alternative Transaction fee shall be payable. 
 (c)
Any Alternative Transaction Payment and other cash payable otherwise under this Section 9.18 will be payable jointly and severally by the 

 

 9 

 
Company, the Bank and the Company’s counterparties to such Alternative Transaction. Except as CapGen may elect under this Subsection 9.18(b), any Alternative Transaction Compensation
or Alternative Transaction Payment shall be payable immediately upon the entry into the Alternative Transaction Agreement. 

(d) The Alternative Transaction Payment or the Alternative Transaction Compensation will not be payable upon termination
of this Agreement only if (i) the Company’s Board has unanimously approved this Agreement and the Transaction contemplated herein and recommended that the Company’s shareholders vote to approve the Transaction and has not modified or
rescinded such approval or modified or withdrawn such recommendation to the Company’s shareholders, (ii) the Company’s directors and officers have voted all their shares of Company Common Stock as provided in Section 2.27
pursuant to the Insider Shareholder Vote and (iii) CapGen has not received all necessary Regulatory Authority approvals needed for its investment in the Purchased Shares by not later than December 31, 2010 or CapGen has breached its
obligations under Section 3.06 hereof. 
 (e) The Company and the Bank acknowledge and agree, jointly and
severally, that this Section 9.18 is an integral part of the Transaction and is in recognition of the time, expense and efforts expended and to be expended by CapGen as the lead Investor, and that, without this Section 9.18, CapGen would
not enter into this Agreement. Accordingly, if the Alternative Transaction Payment or the Alternative Transaction Compensation is not promptly paid or issued and, in order to obtain such consideration, CapGen commences a lawsuit or action that
results in a judgment for any of such Alternative Transaction Payment or Alternative Transaction Compensation, the Company’s counterparties to such Alternative Transaction shall pay in cash to CapGen its costs and expenses (including reasonable
attorneys’ fees and expenses) in connection with enforcing CapGen’s rights under this Section 9.18 and Section 1.05, including with respect to such lawsuit or other action, and the Company and the Bank agree jointly
and severally to further guarantee such payment. Payment of the Alternative Transaction Payment or the Alternative Transaction Compensation described in this Section 9.18 shall be the exclusive remedy for termination of this Agreement as
specified in Section 9.18 and shall be in lieu of other damages incurred in the event of any termination of this Agreement, but shall not prevent CapGen from obtaining specific performance as provided in Section 9.02 in all
other cases. 
 (f) For purposes of this Section 9.18, the following terms shall have respective
meanings set forth below: 
 “Alternative Transaction” means any transaction by or with the
Company or any affiliate of the Company and any person other than CapGen (including any transaction with an Investor other than CapGen where CapGen is not the lead investor) which is in lieu of the Transaction in whole or in part. 

 

 10 

 “Alternative Transaction Agreement” means any agreement,
letter of intent, term sheet, arrangement or understanding, whether or not binding that provides for or contemplates an Alternative Transaction, provided, that, following the termination of this Agreement, this term shall only refer to any
executed agreement that is or purports to be binding upon the Company and/or the Bank. 

“Alternative Transaction Amount” means the total fair market value per share paid for Company Common
Stock in an Alternative Transaction where the Company is the surviving or continuing entity. If security convertible into, or exercisable or exchangeable for Common Stock, whether directly or indirectly, is to be sold or issued in the Alternative
Transaction, the Alternative Transaction Amount shall be the amount paid per share of Common Stock on an as-converted basis. 

“Alternative Transaction Consideration” means the total fair market value of the Alternative Transaction
Securities and all other consideration (including cash) receivable by the Company or holders of shares of Company Common Stock in an Alternative Transaction where the Company is not the surviving or continuing entity. If a security convertible into,
or exercisable or exchangeable for Common Stock, whether directly or indirectly, is to be sold or issued in the Alternative Transaction, the Alternative Transaction Consideration as the higher of the amount so paid or on as-converted basis.

 “Alternative Transaction Securities” means the shares of capital stock and other securities
of any acquirer of the Company that would be issuable to CapGen and the other Investors hereunder if CapGen and the other Investors held As-adjusted Purchased Shares immediately prior to the Alternative Transaction. 

“As-adjusted Purchased Shares” means the number of shares of Company Common Stock needed to be delivered
by the Company upon completion of an Alternative Transaction to insure that CapGen’s and the other Investors’ respective ownership of the Company immediately following the Alternative Transaction would be the same as if the Transaction had
been consummated.” 
 Section 1.27 Section 2.26 of the Disclosure Schedule regarding the Placement
Agent’s fees is amended as provided in attached Schedule 1.08. 
 Section 1.28 Certain cross references in the
Stock Purchase Agreement are corrected as follows: 
 (a) In Section 1.02, the preamble to Article IV and
Section 9.09, the references to Section 4.06 are changed to Section 4.05; 
 (b) In
Section 6.15, the reference to Section 6.13 is changed to Section 6.15; 
  

 11 

 (c) In Section 7.06 and Section 9.07, the references to
Section 7.07 are changed to Section 7.06; and 
 (d) In Section 8.01(g), the reference to
Section 8.01(h) is changed to Section 8.01(g). 
 SECTION II. 

AMENDMENTS TO THE REGISTRATION RIGHTS AGREEMENT 

Section 2.01 Section 2.1(a)(i) is amended to change the filing deadline to the
30th day following the Closing and to clarify the Shelf
Termination Date. Section 2.01(a)(i) of the Registration Rights Agreement shall read in its entirety as follows: 

“SECTION 2. REGISTRATION 

2.1 Demand Registration and Shelf Registration. 

(a) Mandatory Registration. 

(i) The Company shall use its reasonable best efforts to file by the 30th day following the Closing (such date, the
“Filing Deadline”), with the SEC, a registration statement on Form S-1 or such other SEC form which the Company is eligible to use with respect to the resale from time to time, whether underwritten or otherwise, of the Registrable
Securities by the Holders. The Company shall use Form S-3, if it is then eligible to use Form S-3. The Company shall use its reasonable best efforts to promptly respond to all SEC comments, if any, related to such registration statement but in any
event within two weeks of the receipt thereof, and shall use its reasonable best efforts to obtain all such qualifications and compliances as may be so requested and as would permit or facilitate the sale and distribution of all of the Holders’
Registrable Securities, including causing such registration statement to be declared effective by the SEC as soon as practicable after filing and no later than the Effectiveness Deadline. The Company shall use its reasonable best efforts to maintain
the effectiveness of the registration effected pursuant to this Section 2.1(a) at all times. The registration contemplated by this Section 2.1(a) is referred to herein as the “Mandatory Registration.” The
Mandatory Registration shall be filed with the SEC in accordance with and pursuant to Rule 415 promulgated under the Securities Act (or any successor rule then in effect) (a “Shelf Registration”). So long as any such Shelf
Registration is effective as required herein and in compliance with the Securities Act and is usable for resale of Registrable Securities, the Holders shall be entitled to demand any number of takedowns (including underwritten takedowns,
provided that (i) the Registrable Securities requested to be included in such underwritten takedown constitute at least 25% of the Registrable Securities then outstanding or (ii) the anticipated aggregate offering price based on the
then-current market prices, net of underwriting discounts and commissions, would exceed $10,000,000 from the Shelf Registration. In connection with any such takedown, the Company shall take all

  

 12 

 
customary and reasonable actions that the Company would take in connection with an underwritten registration pursuant to Section 2.3 (including, without limitation, all actions
referred to in Section 2.5 necessary to effectuate such sale in the manner determined by the Holders of at least a majority of the Registrable Securities to be included in such underwritten takedown). The Company shall use its reasonable
best efforts to cause the registration statement or statements filed hereunder to remain effective until such date (the “Shelf Termination Date”) that is the earlier of (i) the date on which all Registrable Securities included
in the registration statement shall have been sold to the public by a Holder either pursuant to a registration statement or Rule 144, or shall otherwise have ceased to be Registrable Securities and (ii) the date that all Registrable Securities
covered by such registration statement may be sold without volume or manner of sale restrictions under Rule 144 (after taking into account any Holder’s status as an Affiliate of the Company) for purposes of Rule 144 and without the requirement
for compliance by the Company with the current public information requirements under Rule 144(c)(1) or, if applicable, Rule 144(i)(2), as determined by counsel to the Company (the “Effectiveness Period”). In the event the
Mandatory Registration must be effected on Form S-1 or any similar long-form registration as the Company may elect or is required to use, such registration shall nonetheless be filed as a Shelf Registration and the Company shall use its reasonable
best efforts to keep such registration current and effective, including by filing periodic post-effective amendments to update the information therein, as determined by counsel to the Company, including the financial statements contained in such
registration statement in accordance with Regulation S-X promulgated under the Securities Act until the Shelf Termination Date. The Company shall not include in the Mandatory Registration any securities which are not Registrable Securities without
the prior written consent of the Holders of at least a majority of the Registrable Securities included in such registration. The Company shall request effectiveness of a Registration Statement as of 5:00 P.M. New York City time on a Business Day.
The Company shall promptly notify the Holders via facsimile or electronic mail in a “.pdf” format data file of the effectiveness of a Registration Statement within one (1) Business Day of the Effective Date. The Company shall, by 9:30
A.M. New York City time on the first Business Day after the Effective Date, file a final Prospectus with the Commission, as required by Rule 424(b). 

Section 2.02 Section 2.1(a)(ii) is changed to add the following three sentences at the end of such Section: 

“Notwithstanding anything contained in this Agreement to the contrary, no Holder shall be named as an underwriter in any registration
statement (whether or not pursuant to SEC Guidance) without the prior written consent of such Holder. If such consent is not granted by the Holder, the Company shall no longer have any obligations to register such Holder’s Shares only with
respect to such registration statement but shall continue to have such obligation with respect to any subsequent registration statement filed with respect to Registrable Securities or a piggyback registration pursuant to Section 2.2, in
each case, provided such Holder consents to be named an underwriter therein if and as required for such 
  

 13 

 
subsequent registration statement, on the same bases as provided in this Section 2.1(a)(ii). If the Company requests the consent of any Holder to be named as an underwriter in a
registration statement, the Company shall simultaneously furnish to such Holder the form of registration statement proposed to be filed along with any additional materials that such Holder may reasonably request.” 

Section 2.03 Section 2.4(h) is amended by adding the following sentence at the end of such Section: 

“If any Holder is named as an underwriter in any registration statement (after consent of such Holder), then all
references to underwriters in this Section 2.4(h) shall include all Holders named as underwriters in such registration statement; provided the Investor shall cooperate with the Company and supply such information or responses required to
permit the Company’s independent registered public accountants to provide a “comfort” letter to such Investor, and provided further that the Company shall direct its counsel and independent registered public accountants to
deliver legal opinions and “comfort” letters respectively, to any such persons deemed underwriters. 

Section 2.04 Certain cross references are corrected in Section 2.8 as follows: 

(a) The reference to Section 2.9 in Section 2.8(a) is changed to Section 2.8(a), and the reference in the first line of
Section 2.8(c) is changed from Section 2.9 to Section 2.8. 
 Section 2.05 Section 3.10 is
changed to read in its entirety as follows: 
 “3.10 Entire Agreement. This Agreement, the Stock Purchase
Agreement and any other agreement entered into between any Investor and the Company in connection herewith constitutes the full and entire understanding and agreement among the parties with regard to the subject matter hereof.” 

Section 2.06 Miscellaneous. 

This Amendment shall be governed by the laws of the State of New York without giving effect to its conflicts of law principles and may be
executed in multiple counterparts, each of which shall constitute an original, all of which, collectively, shall constitute one and the same Amendment No. 1. By executing this Amendment, the undersigned acknowledge and agree that they are
parties to a Stock Purchase Agreement and a Registration Rights Agreement, respectively. Except as expressly modified herein, all terms of the Stock Purchase Agreement and the Registration Rights Agreement are hereby ratified and affirmed by each of
the parties hereto and such Agreement shall remain in full force and effect unmodified hereby. 
  

 14 

 Each of the undersigned have executed or caused this Amendment No. 1 to be executed as
of the date first above written by their respective duly authorized officials. 
  

			
	PALMETTO BANCSHARES, INC.
		
	 By:
	 	  

		 	 Name: Samuel L. Erwin

Title: Chief Executive Officer

Joined in by the Bank as to Section 2.02 (as to the Bank only) and Section 9.18 only in consideration of the capital to be provided to the Bank
from proceeds of the Private Placement and other good and valuable consideration, the receipt of which is acknowledged. 
  

			
	THE PALMETTO BANK
		
	 By:
	 	  

		 	 Name:

		 	 Title:

  

 15 

			
	 CAPGEN CAPITAL GROUP V LP

CAPGEN CAPITAL GROUP V LLC,
 THE GENERAL PARTNER
OF CAPGEN
 CAPITAL GROUP V LP

		
	 By:
	 	  

		 	 Name: John P. Sullivan

		 	 Title: Managing Director

  

 16 

			
	INVESTOR
	
	  

	Name Of Investor
		
	By:	 	  

		 	Name:
		 	Title:
	
	Address for Notices:

  

 17 

 SCHEDULE 1.08 

No change from the fees set forth in the Stock Purchase Agreement. 

 SCHEDULE IV 

The Corporation shall have the authority, exercisable by its Board of Directors, to issue up to 75,000,000 shares of common stock, par
value $.01 per share, and to issue up to 2,500,000 shares of preferred stock, par value $.01 per share. The Board of Directors shall have the authority to specify the preferences, limitations and relative rights (within the limits set forth in
Section 33-6-101 of the South Carolina Business Corporation Act of 1988, or any successor provision or redesignation thereof, as applicable) of the preferred stock or one or more series within the class of preferred stock. Without limiting the
foregoing, and notwithstanding anything to the contrary in these Article of Incorporation with respect to directors generally, whenever the holders of preferred stock, or one or more series of preferred stock, issued by the Corporation shall have
the right, voting separately or together by class or series, to elect one or more directors at an annual or special meeting of shareholders, the election, term of office, terms of removal, filling of vacancies and other features of such
directorship(s) shall be governed by the rights of such preferred stock as set forth in the articles of amendment adopted by the Board of Directors that determines the preferences, limitations and relative rights of such class or series. Except as
otherwise required by law, holders of preferred stock, including any series of preferred stock, shall be entitled only to such voting rights, if any, as shall be expressly granted thereto by these Articles of Incorporation. References to “these
Articles of Incorporation” refer to the Corporation’s Articles of Incorporation, as the same shall be amended from time to time, including, without limitation, amendments adopted by the Board of Directors that determine the preferences,
limitations and relative rights of the preferred stock or one or more series within the class of preferred stock.Consent Order

 Exhibit 10.2 

FEDERAL DEPOSIT INSURANCE CORPORATION 

WASHINGTON, D.C. 
  

					
	 In the Matter of

 
 THE PALMETTO BANK

LAURENS, SOUTH CAROLINA
  

(Insured State Nonmember Bank)
	  	 )
 )

)
 )

)
 )

)
 )

)
 )
	  	 CONSENT ORDER
  

FDIC-10-077b

The Federal Deposit Insurance Corporation (“FDIC”) is the appropriate Federal banking agency for The Palmetto Bank, Laurens,
South Carolina (“Bank”), under 12 U.S.C. § 1813(q). 
 The Bank, by and through its duly elected and acting Board
of Directors (“Board”), has executed a “Stipulation to the Issuance of a Consent Order” (“STIPULATION”), dated June 8, 2010, that is accepted by the FDIC and the Commissioner of Banking (“Commissioner”)
on behalf of the State Board of Financial Institutions for the State of South Carolina (“State Board”). With the STIPULATION, the Bank has consented, without admitting or denying any charges of unsafe or unsound banking practices and
violations of law and/or regulation relating to asset quality, capital adequacy, earnings, management effectiveness, liquidity, and sensitivity to market risk, to the issuance of this Consent Order (“ORDER”) by the FDIC and the State
Board. 
 Having determined that the requirements for issuance of an order under 12 U.S.C. § 1818(b) and S.C. Code Ann.
§ 34-1-60 have been satisfied, the FDIC and the State Board hereby order that: 
  

 1 

 BOARD OF DIRECTORS 

1. (a) Effective immediately, the Board shall increase its participation in the affairs of the Bank, assuming full responsibility for the approval of
sound policies and objectives and for the supervision of all of the Bank’s activities, consistent with the role and expertise commonly expected for directors of banks of comparable size. The Board shall prepare in advance and follow a detailed
written agenda for each meeting, including consideration of the actions of any committees. Nothing in the foregoing sentences shall preclude the Board from considering matters other than those contained in the agenda. This participation shall
include meetings to be held no less frequently than monthly at which, at a minimum, the following areas shall be reviewed and approved: reports of income and expenses; new, overdue, renewal, insider, charged-off, and recovered loans; investment
activity; operating policies; and individual committee actions. Board minutes shall document these reviews and approvals, including the names of any dissenting directors. 

(b) Within 30 days from the effective date of this ORDER, the Board shall have in place a program that will provide for monitoring of the
Bank’s compliance with this ORDER. Following the adoption of the program, the Board shall review the Bank’s compliance with this ORDER and record its review in the minutes of each regularly scheduled Board meeting. Establishment of this
program does not in any way diminish the responsibility of the entire Board to ensure compliance with the provisions of this ORDER. 
  

 2 

 MANAGEMENT 

2. (a) During the life of this ORDER, the Bank shall have and retain qualified management with the qualifications and experience commensurate with
assigned duties and responsibilities at the Bank. Each member of management shall be provided appropriate written authority from the Bank’s Board to implement the provisions of this ORDER. 

(b) Within 60 days from the effective date of this ORDER, the Bank shall develop and approve a written analysis and assessment of the
Bank’s management and staffing needs (“Management Plan”) for the purpose of providing qualified management for the Bank. The Management Plan shall be forwarded to the Regional Director of the FDIC’s Atlanta Regional Office
(“Regional Director”) and to the Commissioner on behalf of the State Board (collectively “Supervisory Authorities”) for review and comment and shall address, at a minimum, the following: 

(i) A review of each officer’s performance, abilities and assignments to positions within the Bank; 

(ii) identification of both the type and number of officer positions needed to properly manage and supervise the affairs of the Bank;

 (iii) identification and establishment of such Bank committees as are needed to provide guidance and oversight to active
management; 
 (iv) annual written evaluations of all Bank officers, and staff members to determine whether these individuals
possess the ability, experience and other qualifications required to perform present and anticipated duties, including, but not limited to, adherence to the Bank’s established policies 

 

 3 

 
and practices, and restoration and maintenance of the Bank in a safe and sound condition; 

(v) a plan to recruit and hire any additional or replacement personnel with the requisite ability, experience and other qualifications to
fill those officer or staff member positions consistent with the needs identified in the Management Plan; and 
 (vi) an
organizational chart. 
 (c) During the life of this ORDER, the Bank shall notify the Supervisory Authorities, in writing, of
the resignation or termination of any of the Bank’s directors or senior executive officers. Prior to the addition of any individual to the Board or the employment of any individual as a senior executive officer, the Bank shall comply with the
requirements of section 32 of the Act, 12 U.S.C. § 1831i, and Subpart F of Part 303 of the FDIC Rules and Regulations, 12 C.F.R. §§ 303.100-303.104 and any State requirement for prior notification and approval. 

(d) While this ORDER is in effect, the Bank shall comply with the requirements of Part 359 of the FDIC’s Rules and Regulations, 12
C.F.R. Part 359. 
 CAPITAL 

3. (a) Within 120 days from the effective date of this ORDER, the Bank shall achieve and maintain the following minimum capital levels as defined in Part
325 of the FDIC Rules and Regulations, 12 C.F.R. Part 325, after establishing an adequate allowance for loan and lease losses (“ALLL”): 
  

 4 

 (i) Tier 1 Capital at least equal to eight percent (8.0%) of total assets; and

 (ii) Total Risk-Based Capital at least equal to ten percent (10.0%) of total risk-weighted assets. 

(b) Within 30 days of the last day of each calendar quarter, the Bank shall determine, from its Reports of Condition and Income, its
capital ratios for that calendar quarter. If any capital measure falls below the established minimum, within 30 days of such required determination of capital ratios, the Bank shall submit a written plan to the Supervisory Authorities, describing
the means and timing by which the Bank shall increase such ratios up to or in excess of the established minimums. 
 (c) Any
increase in Tier 1 Capital necessary to meet the requirements of paragraph 3(a) of this ORDER may be accomplished by the following: 

(i) sale of common stock; or 

(ii) sale of noncumulative perpetual preferred stock; or 

(iii) direct contribution of cash by the Board, shareholders, and/or parent holding company; or 

(iv) any other means acceptable to the Supervisory Authorities; or 

(v) any combination of the above means. 

Any increase in Tier 1 Capital necessary to meet the requirements of paragraph 3(a) of this ORDER may not be accomplished through a deduction from the
Bank’s ALLL. 
 (d) If all or part of any necessary increase in Tier 1 Capital required by paragraph 3(a) of this ORDER is
accomplished by the sale of new securities, the Board shall forthwith take all necessary steps to adopt and implement a plan for the sale of such 

 

 5 

 
additional securities, including the voting of any shares owned or proxies held or controlled by them in favor of the plan. Should the implementation of the plan involve a public distribution of
the Bank’s securities (including a distribution limited only to the Bank’s existing shareholders), the Bank shall prepare offering materials fully describing the securities being offered, including an accurate description of the financial
condition of the Bank and the circumstances giving rise to the offering, and any other material disclosures necessary to comply with the Federal securities laws. Prior to the implementation of the plan and, in any event, not less than fifteen
(15) days prior to the dissemination of such materials, the plan and any materials used in the sale of the securities shall be submitted to the FDIC, Division of Supervision and Consumer Protection, Accounting and Securities Disclosure Section,
550 17th Street, N.W., Room F-6066, Washington, D.C. 20429
and the Commissioner of Banking, 1205 Pendleton Street, Suite 305, Columbia, S.C. 29201, for review. Any changes requested to be made in the plan or materials by the Supervisory Authorities shall be made prior to their dissemination. If the increase
in Tier 1 Capital is provided by the sale of noncumulative perpetual preferred stock, then all terms and conditions of the issue, including but not limited to those terms and conditions relative to interest rate and convertibility factor, shall be
presented to the Supervisory Authorities for prior approval. 
 (e) In complying with the provisions of paragraph 3(a) of this
ORDER, the Bank shall provide to any subscriber and/or purchaser of the Bank’s securities, a written notice of any planned or existing development or other changes which are materially different from the information reflected in any offering
materials used in connection with the sale of Bank securities. The written notice required by this paragraph shall be 

 

 6 

 
furnished within ten (10) days from the date such material development or change was planned or occurred, whichever is earlier, and shall be furnished to every subscriber and/or purchaser of
the Bank’s securities who received or was tendered the information contained in the Bank’s original offering materials. 

(f) For the purposes of this ORDER, the terms “Tier 1 Capital” and “total assets” shall have the meanings ascribed to
them in Sections 325.2(t) and 325.2(v) of the FDIC Rules and Regulations, 12 C.F.R. §§ 325.2(t) and 325.2(v). 

CHARGE-OFF 
 4.
(a) Within 10 days from the effective date of this ORDER, the Bank shall eliminate from its books, by charge-off or collection, all assets or portions of assets classified “Loss” and 50 percent of those assets classified
“Doubtful” in the Joint Report of Examination dated October 26, 2009 (“Report”) that have not been previously collected or charged-off. (If an asset classified “Doubtful” is a loan or lease, the Bank may, in the
alternative, increase its ALLL by an amount equal to 50 percent of the loan or lease classified “Doubtful”). Elimination of any of these assets through proceeds of other loans made by the Bank is not considered collection for purposes of
this paragraph. 
 (b) Additionally, while this ORDER remains in effect, the Bank shall, within 30 days from the receipt of any
official Report of Examination of the Bank from the FDIC or the State Board, eliminate from its books, by collection, charge-off, or other proper entries, the remaining balance of any asset classified “Loss” and 50 percent of the those
classified “Doubtful” unless otherwise approved in writing by the Supervisory Authorities. 
  

 7 

 ALLOWANCE FOR LOAN AND LEASE LOSSES 

5. Within 60 days from the effective date of this ORDER, the Board shall review and update its policy to ensure the adequacy of the ALLL. For the purpose
of this determination, the adequacy of the ALLL shall be determined after the charge-off of all loans or other items classified “Loss.” The policy shall provide for a review of the ALLL at least once each calendar quarter. Said review
shall be completed in time to properly report the ALLL in the quarterly Reports of Condition and Income. The review shall focus on the results of the Bank’s internal loan review, loan and lease loss experience, trends of delinquent and
non-accrual loans, an estimate of potential loss exposure of significant credits, concentrations of credit, and present and prospective economic conditions. A deficiency in the ALLL shall be remedied in the calendar quarter it is discovered, prior
to submitting the Reports of Condition and Income, by a charge to current operating earnings. The minutes of the Board meeting at which such review is undertaken shall indicate the results of the review. The Bank’s policy for determining the
adequacy of the ALLL and its implementation shall be satisfactory to the Supervisory Authorities. 
 REDUCTION OF
CRITICIZED ASSETS 
 6. (a) Within 60 days from the effective date of this ORDER, the Bank shall submit to the Supervisory Authorities,
for review and comment, a written plan to reduce the Bank’s risk exposure in relationships with assets in excess of $1,000,000 criticized as “Substandard”, “Doubtful”, or “Special Mention” in the Report. For
purposes of this paragraph, “reduce” means to collect, charge-off, or improve the quality of an asset so as to warrant its removal from adverse criticism by the Supervisory Authorities. Within 10

  

 8 

 
days from the receipt of any comment from the Supervisory Authorities, and after due consideration of any recommended changes, the Bank shall approve the plan, which approval shall be recorded in
the minutes of a Board meeting. Thereafter, the Bank shall implement and follow this plan. 
 (b) The written plan mandated by
this provision shall further require a reduction in the aggregate balance of assets classified “Substandard” and “Doubtful” in the Report in accordance with the following schedule. For purposes of this paragraph,
“number of days” means number of days from the effective date of this ORDER. 
 (i) Within 180 days, a reduction of
twenty-five percent (25%) in the balance of assets classified “Substandard” or “Doubtful.” 
 (ii)
Within 360 days, a reduction of forty-five percent (45%) in the balance of assets classified “Substandard” or “Doubtful.” 

(iii) Within 540 days, a reduction of sixty-five percent (65%) in the balance of assets classified “Substandard” or
“Doubtful.” 
 (iv) Within 720 days, a reduction of seventy-five percent (75%) in the balance of assets classified
“Substandard” or “Doubtful.” 
 (c) The requirements of this paragraph are not to be construed as standards
for future operations of the Bank. Following compliance with the above reduction schedule, the Bank shall continue to reduce the total volume of adversely classified assets. 

REDUCTION OF OTHER REAL ESTATE ASSETS 

7. (a) Within 60 days from the effective date of this ORDER, the Board shall revise its policies and procedures for managing the Bank’s Adversely
Classified Other Real Estate Owned (“ORE”). At a minimum, the policy shall address: 
  

 9 

 (i) requirements for conducting periodic reviews, at least quarterly, of the ORE portfolio
by a committee appointed by the Board (“ORE Committee”); 
 (ii) requirements for establishing realistic and
comprehensive budgets for each parcel, including projections of the Bank’s carrying costs (e.g., maintenance, taxes, repairs, and insurance costs) and projections of the marketing costs; 

(iii) requirements for ordering independent appraisals of each parcel at the time of foreclosure and periodically thereafter (but no more
than 12 months from the date of the prior appraisal report); 
 (iv) requirements for determination by the ORE Committee that
each parcel of ORE is listed with a real estate broker or otherwise made widely available for sale within an appropriate timeframe and at a realistic selling price; 

(v) requirements for periodic progress reports from each real estate broker marketing the Bank’s ORE, including projected sales
timeframes, to the Bank; 
 (vi) requirements for detailed reports from the ORE Committee to the Board at least quarterly, which
include written documentation of the action taken to facilitate the timely sale of ORE; and 
 (vii) requirements for accounting,
documentation, resale terms, and action plans for the orderly liquidation of ORE from the Bank’s books. 
  

 10 

 (b) The Bank shall submit the policy to the Supervisory Authorities for review and comment.
Within 30 days from receipt of any comment from the Supervisory Authorities, and after due consideration of any recommended changes, the Board shall approve the policy, which approval shall be recorded in the Board minutes. Thereafter, the Bank
shall implement and fully comply with the policy. 
 NO ADDITIONAL CREDIT 

8. (a) As of the effective date of this ORDER, the Bank shall not extend, directly or indirectly, any additional credit to, or for the benefit of, any
borrower who has a loan or other extension of credit from the Bank that has been charged off or classified, in whole or in part, “Loss” or “Doubtful” and is uncollected. The requirements of this paragraph shall not prohibit the
Bank from renewing (after collection in cash of interest due from the borrower) any credit already extended to any borrower. 

(b) Additionally, as of the effective date of this ORDER, the Bank shall not extend, directly or indirectly, any additional credit to, or
for the benefit of, any borrower who has a loan or other extension of credit from the Bank that has been criticized, in whole or part, “Substandard” or “Special Mention” and is uncollected. 

(c) Paragraph 8(b) shall not apply if the Bank’s failure to extend further credit to a particular borrower would be detrimental to
the best interests of the Bank. Prior to the extending of any additional credit pursuant to this paragraph, either in the form of a renewal, extension, or further advance of funds, such additional credit shall be approved by a majority of the Board
or a designated committee thereof, who shall certify in writing as follows: 
  

 11 

 (i) why the failure of the Bank to extend such credit would be detrimental to the best
interests of the Bank; 
 (ii) that the Bank’s position would be improved thereby including an explanatory statement of how
the Bank’s position would be improved; and 
 (iii) that an appropriate workout plan has been developed and will be
implemented in conjunction with the additional credit to be extended. 
 (d) The signed certification shall be made a part of
the minutes of the Board or its designated committee and a copy of the signed certification shall be retained in the borrower’s credit file. 

REDUCE CONCENTRATIONS OF CREDIT 

9. Within 90 days from the effective date of this ORDER, the Bank shall perform a risk segmentation analysis with respect to the Concentrations of Credit
discussed in the Report. Concentrations should be identified by product type, geographic distribution, underlying collateral or other asset groups, which are considered economically related and in the aggregate represent a large portion of the
Bank’s Tier 1 Capital. The Bank shall develop a written plan approved by its Board and acceptable to the Supervisory Authorities to systematically reduce any segment of the portfolio which the Supervisory Authorities deems to be an undue
concentration of credit in relation to the Bank’s Tier 1 Capital. At a minimum the plan must provide for written procedures for the ongoing measurement and monitoring of the concentrations of credit, and a limit on concentrations commensurate
with the Bank’s capital position, safe and sound banking practices, and the overall risk profile of the Bank. 
  

 12 

 LENDING AND COLLECTION POLICIES 

10. Within 60 days from the effective date of this ORDER, and annually thereafter, the Board shall review the Bank’s loan policies and procedures
for adequacy and, based upon this review, shall make all appropriate revisions to the policies and procedures necessary to enhance the Bank’s lending functions and ensure their implementation. As required by this paragraph, the Bank’s loan
policies and procedures shall be revised to include, at a minimum, provisions that address and fully correct those criticisms found in the Report. 

INTERNAL LOAN REVIEW 

11. Within 60 days from the effective date of this ORDER, the Bank shall adopt an effective internal loan review and grading system to provide for the
periodic review of the Bank’s loan portfolio in order to identify and categorize the Bank’s loans, and other extensions of credit which are carried on the Bank’s books as loans, on the basis of credit quality. Such system and its
implementation shall be satisfactory to the Supervisory Authorities as determined at their initial review and at subsequent examinations and/or visitations. At a minimum, the grading system shall provide for the following: 

(a) specification of standards and criteria for assessing the credit quality of the Bank’s loans; 

(b) application of loan grading standards and criteria to the Bank’s loan portfolio; 

(c) categorization of the Bank’s loans into groupings based on the varying degrees of credit and other risks that may be presented
under the applicable grading standards and criteria, but in no case, will a loan be assigned a rating higher than that 

 

 13 

 
assigned by examiners at the last examination of the Bank without prior written notification to the Supervisory Authorities; 

(d) assessment of the likelihood that each loan exhibiting credit and other risks will not be repaid according to its terms and
conditions; 
 (e) identification of any loan that is not in conformance with the Bank’s loan policy; 

(f) identification of any loan which presents any unsafe or unsound banking practice or condition or is otherwise in violation of any
applicable State or Federal law, regulation, or statement of policy; 
 (g) requirement of a written report to be made to the
Board and Audit Committee, not less than quarterly after the effective date of this ORDER. The report shall identify the status of those loans that exhibit credit and other risks under the applicable grading standards/criteria and the prospects for
full collection and/or strengthening of the quality of any such loans; and 
 (h) specific policies governing Bank charge-offs
of loans and underlying collateral taken to repay loans. 
 PLAN FOR EXPENSES/PROFITABILITY 

12. (a) Within 60 days from the effective date of this ORDER, the Bank shall review and update its written profit plan to ensure it has a realistic,
comprehensive budget for all categories of income and expense. This plan shall be forwarded to the Supervisory Authorities for review and comment and shall address, at a minimum, the following: 

(i) goals and strategies for improving and sustaining the earnings of the Bank; 

 

 14 

 (ii) the major areas in, and means by which the Bank will seek to improve the Bank’s
operating performance; 
 (iii) realistic and comprehensive budgets; 

(iv) a budget review process to monitor the income and expenses of the Bank to compare actual figures with budgetary projections;

 (v) the operating assumptions that form the basis for, and adequately support, major projected income and expense components;
and 
 (vi) coordination of the Bank’s loan, investment, and operating policies and budget and profit planning with the
funds management policy. 
 (b) Following the end of each calendar quarter, the Board shall evaluate the Bank’s actual
performance in relation to the plan required by this paragraph and shall record the results of the evaluation, and any actions taken by the Bank in the minutes of the Board meeting at which such evaluation is undertaken. 

FUNDS MANAGEMENT PLAN 

13. Within 60 days from the effective date of this ORDER, the Bank shall review and update its written plan addressing liquidity, contingent funding, and
asset liability management. A copy of the plan shall be submitted to the Supervisory Authorities upon its completion for review and comment. Within 30 days from the receipt of any comments from the Supervisory Authorities, the Bank shall incorporate
those recommended changes. Thereafter, the Bank shall implement and follow the plan. Annually during the life of this ORDER, the Bank shall review this plan for adequacy and, based upon such review, shall make appropriate revisions to the plan that
are 
  

 15 

 
necessary to strengthen funds management procedures and maintain adequate provisions to meet the Bank’s liquidity needs. 

VIOLATIONS OF LAW, REGULATION AND POLICY 

14. (a) Within 30 days from the effective date of this ORDER, the Bank shall eliminate and/or correct all violations of law and regulation, which are
more fully set out in the Report. In addition, the Bank shall take all necessary steps to ensure future compliance with all applicable laws and regulations. 

(b) Within 30 days from the effective date of this ORDER, the Bank shall eliminate and/or correct all contraventions of policy, which are
more fully set out in the Report. In addition, the Bank shall take all necessary steps to ensure future compliance with all applicable statements of policy. 

BROKERED DEPOSITS 

15. (a) Throughout the life of this ORDER, the Bank shall not accept any brokered deposit, as defined by 12 C.F.R. § 337.6(a)(2), unless it is in
compliance with the requirements of 12 C.F.R. § 337.6(b), governing solicitation and acceptance of brokered deposits by insured depository institutions. 

(b) The Bank shall comply with the restrictions on the effective yields on deposits described in 12 C.F.R. § 337.6. 

ASSET GROWTH LIMITATIONS 

16. During the life of this ORDER, the Bank shall limit asset growth to ten percent (10.0%) per annum and in no event shall asset growth result in
noncompliance with the capital maintenance provisions of this ORDER without receiving prior written approval of the Supervisory Authorities. 
  

 16 

 RESTRICTIONS ON CERTAIN PAYMENTS 

17. (a) While this ORDER is in effect, the Bank shall not declare or pay dividends or bonuses without the prior written approval of the Supervisory
Authorities. All requests for prior approval shall be received at least 30 days prior to the proposed dividend declaration date or bonus payment date (at least 5 days with respect to any request filed within the first 30 days after the date of this
ORDER) and shall contain, but not be limited to, an analysis of the impact such dividend or bonus payment would have on the Bank’s capital, income, and/or liquidity positions. 

(b) During the term of this ORDER, the Bank shall not make any distributions of interest, principal or other sums on subordinated
debentures, if any, without the prior written approval of the Supervisory Authorities. 
 DISCLOSURE 

18. Following the effective date of this ORDER, the Bank shall send to its shareholders or otherwise furnish a description of this ORDER in conjunction
with the Bank’s next shareholder communication and also in conjunction with its notice or proxy statement preceding the Bank’s next shareholder meeting. The description shall fully describe the ORDER in all material respects. The
description and any accompanying communication, statement or notice shall be sent to the FDIC, Division of Supervision and Consumer Protection, Accounting and Securities Disclosure Section, 550 17th Street, N.W., Room F-6066, Washington, D.C. 20429,
and to the Commissioner of Banking, 1205 Pendleton Street, Suite 305, Columbia, SC 29201, at least fifteen (15) days prior to dissemination to shareholders. Any changes requested to be made by the Supervisory Authorities shall be made prior to
dissemination of the description, communication, notice, or statement. 
  

 17 

 PROGRESS REPORTS 

19. Within 30 days from the end of the first quarter following the effective date of this ORDER, and within 30 days of the end of each quarter
thereafter, the Bank shall furnish written progress reports to the Supervisory Authorities detailing the form and manner of any actions taken to secure compliance with this ORDER and the results thereof. Such reports shall include a copy of the
Bank’s Reports of Condition and Income. Such reports may be discontinued when the corrections required by this ORDER have been accomplished and the Supervisory Authorities have released the Bank in writing from making further reports. All
progress reports and other written responses to this ORDER shall be reviewed by the Board and made a part of the minutes of the appropriate Board meeting. 

The provisions of this ORDER shall not bar, estop, or otherwise prevent the FDIC, the State Board, or any other federal or state agency
or department from taking any other action against the Bank or any of the Bank’s current or former institution-affiliated parties. 

This ORDER shall be effective on the date of issuance. 

The provisions of this ORDER shall be binding upon the Bank, its institution-affiliated parties, and any successors and assigns thereof.

  

 18 

 The provisions of this ORDER shall remain effective and enforceable except to the extent
that and until such time as any provision has been modified, terminated, suspended, or set aside in writing. 
 Issued Pursuant
to Delegated Authority 
  

					
		 	Dated this 10 day of June, 2010.	 	
			
		 	  
	 	
		 	Thomas J. Dujenski	 	
		 	Regional Director	 	
		 	 Division of Supervision and Consumer Protection

Atlanta Region

		 	Federal Deposit Insurance Corporation	 	

 The Commissioner, having duly approved the foregoing ORDER on behalf of the State Board, and the
Bank, through its Board, agree that the issuance of said ORDER by the FDIC shall be binding as between the Bank and the State Board to the same degree and to the same legal effect that such ORDER would be binding if the State Board had issued a
separate ORDER that included and incorporated all of the provisions of the foregoing ORDER, pursuant to S.C. Code Ann. § 34-1-60 (1976). 
  

					
		 	Dated this 10 day of June, 2010.	 	
			
		 	  
	 	
		 	Louie A. Jacobs	 	
		 	Commissioner of Banking	 	
		 	South Carolina	 	
		 	State Board of Financial Institutions	 	

  

 19

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00174-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00174-of-00352.parquet"}]]