LOCK-UP AGREEMENT
Exhibit
10.4
This LOCK-UP AGREEMENT (this “Agreement”) is made and entered into as of the 28th day
of February, 2007, by and between the undersigned, a resident of the State of (the
“Shareholder”), and CapitalSouth Bancorp, a Delaware corporation and a registered bank
holding company (“CapitalSouth”).
R E C I T A L S:
On even date herewith, CapitalSouth and Monticello Bancshares, Inc., a Florida corporation
(“Monticello”), have entered into an Agreement and Plan of Merger joined in by Xx. Xxxx
Xxxxx, a resident of Xxxxx County, Florida (the “Merger Agreement”). The Merger Agreement
provides for the merger of Monticello with and into CapitalSouth (the “Merger”) and the
conversion of the issued and outstanding shares of the $1.00 par value common stock of Monticello
(“Monticello Shares”) into shares of the $1.00 par value common stock of CapitalSouth
(“CapitalSouth Shares”). The Merger Agreement is subject to the affirmative vote of the
shareholders of Monticello, the receipt of certain regulatory approvals and the satisfaction of
other conditions.
The Shareholder is the owner of Monticello Shares (the “Shares”).
In order to induce CapitalSouth to enter into the Merger Agreement, the Shareholder is entering
into this Agreement with CapitalSouth to set forth certain terms and conditions governing the
actions to be taken by the Shareholder solely in his capacity as a shareholder of Monticello with
respect to the Monticello Shares until consummation of the Merger.
A G R E E M E N T:
NOW, THEREFORE, in consideration of the transactions provided for in the Merger Agreement and
the mutual promises and covenants contained herein, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto, intending to be legally bound, do hereby agree as follows:
1. Restrictions on Transfer. The Shareholder shall not transfer, sell, assign, convey
or encumber any of the Shares during the term of this Agreement except (i) transfers in which the
transferee shall agree in writing to be bound by the provisions of this Agreement as fully as the
Shareholder, or (ii) to CapitalSouth pursuant to the terms of the Merger Agreement. Without
limiting the generality of the foregoing, the Shareholder shall not grant to any person any option
or right to purchase the Shares or any interest therein or enter into any agreement to transfer
Shares.
2. Voting. The Shareholder intends to, and will, vote (or cause to be voted) all of
the Shares over which the Shareholder has voting authority in favor of the Merger Agreement and all
of the transactions provided for therein, including without limitation the Merger, at any meeting
of shareholders of Monticello called to vote on the Merger Agreement or the Merger or the
adjournment thereof or in any other circumstance upon which a vote, consent or other approval with
respect to the Merger Agreement or the Merger is sought. Further, the Shareholder
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intends to, and will, surrender the certificate or certificates representing the Shares over
which the Shareholder has dispositive authority to CapitalSouth upon consummation of the Merger as
described in the Merger Agreement and hereby waives any rights of appraisal, or rights to dissent
from the Merger, that the Shareholder may have.
3. No Authorization of Certain Transactions. Except as otherwise provided in this
Agreement, at any meeting of shareholders of Monticello or at any adjournment thereof or any other
circumstances upon which their vote, consent or other approval is sought, the Shareholder will vote
(or cause to be voted) all of the Shares over which the Shareholder has voting authority against
(i) any merger agreement, share exchange or merger (other than the Merger Agreement and the
Merger), consolidation, combination, sale of substantial assets, recapitalization, dissolution,
liquidation or winding-up of or by Monticello or (ii) any amendment of Monticello’s Articles of
Incorporation or Bylaws or other proposal or transaction involving Monticello or any of its
subsidiaries, which amendment or other proposal or transaction would in any manner delay, impede,
frustrate, prevent or nullify the Merger, the Merger Agreement or any of the other transactions
provided for therein.
4. Non-Competition
and Non-Solicitation; Support of CapitalSouth. (a) For purposes of
this Agreement, the phrase “Non-Competition Period” shall mean the period commencing on the
“Effective Time of the Merger”, as set forth in the Merger Agreement, and continuing to the second
(2nd) anniversary hereof, except as such period may be extended by Section 4(c) hereof.
Except as set forth on Exhibit A hereto, the Shareholder, for the Non-Competition Period,
will not, without the prior written approval of the Board of Directors of CapitalSouth, directly or
indirectly (i) whether through his own account or as a partner, member, manager, employee, advisor,
consultant, owner, trustee, shareholder, officer, director or agent of or to any person,
corporation, proprietorship, partnership, limited liability company, joint venture, trust or other
entity or association (any of the foregoing being referred to as a “Person”), within Xxxxx
County, Florida or any county contiguous thereto, perform services, own, advise, participate in,
support, have an interest in, give financial assistance to, permit Shareholder’s name to be used in
connection with or serve as a member of management, supervisor, consultant or employee of any
financial service institution, including without limitation any “insured depository institution”
(as such term is defined in 12 U.S.C. § 1813(c)(2)) or any “regulated lending institution” (as such
term is defined in 42 U.S.C. § 4003(a)(10)) or any other business, or any affiliate, parent, or
subsidiary thereof, which would be competitive with the business of CapitalSouth or any affiliate
or subsidiary thereof; (ii) solicit or induce, or attempt to solicit or induce, any employee of
CapitalSouth or any affiliate or subsidiary thereof to terminate such employment or to become
employees of any other person or entity; (iii) solicit or induce, or attempt to solicit or induce,
any Person who is a customer of CapitalSouth or any affiliate or subsidiary thereof to refrain from
or cease doing business with, seek advice and/or services and products from, or otherwise
discontinue all or any portion of their relationship with CapitalSouth or any affiliate or
subsidiary thereof; or (iv) disparage or cast in a poor light CapitalSouth or any affiliate or
subsidiary thereof or any of their respective shareholders, directors, officers, or employees. The
preceding provisions of Section 4(a)(i) shall not preclude the Shareholder from holding any
publicly-traded stock, provided that the Shareholder does not at any time hold any stock interest
in any one company in excess of one percent (1%) of the outstanding voting stock of that company.
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(b) The Shareholder agrees that each of the covenants set forth above in Section 4(a) of
this Agreement are reasonable with respect to its duration, geographical area and scope.
(c) In the event of a breach by the Shareholder of any covenant set forth in Section
4(a) of this Agreement, the Non-Competition Period shall be extended by the period of the duration
of such breach.
5. Remedies. The Shareholder acknowledges and agrees that CapitalSouth could not be
made whole by monetary damages in the event of any default by the Shareholder of the terms and
conditions set forth in this Agreement. It is accordingly agreed and understood that CapitalSouth,
in addition to any other remedy which it may have at law or in equity, shall be entitled to an
injunction or injunctions to prevent breaches of this Agreement and specifically to enforce the
terms and provisions hereof in any action instituted in any court of the United States or in any
state having appropriate jurisdiction. In the event that it is necessary for a party to seek
enforcement of this Agreement, the prevailing party in any such action, whether judicial or
arbitral, shall be entitled to recover its reasonable expenses incurred in connection therewith,
including attorneys fees and expenses, court costs, arbitrators fees and witness fees.
6. Termination. The covenants and obligations set forth in this Agreement shall
expire and be of no further force and effect on the date on which the Merger Agreement is
terminated in accordance with the terms and conditions of Article 10 thereof.
7. Binding Effect. Except for the provisions of Section 4 of this Agreement, this
Agreement shall be binding upon the Shareholder and his or her heirs, devisees, administrators,
executors, personal representatives, successors and assigns and shall inure to the benefit of
CapitalSouth and its subsidiaries and their respective successors and assigns.
8. Arbitration. Other than as set forth in Section 5 hereof, the parties hereto, by
executing this Agreement, WAIVE THEIR RIGHT TO TRIAL BY JURY of disputes, claims or controversies
between themselves or any of their respective officers, directors, partners, employees,
shareholders, affiliates or agents (such non-signatories being the intended third party
beneficiaries of this Agreement with respect solely to this Section) and instead agree that ANY AND
ALL CONTROVERSIES AND CLAIMS ARISING OUT OF OR RELATING TO THIS AGREEMENT, OR THE BREACH THEREOF,
SHALL BE SETTLED BY FINAL AND BINDING ARBITRATION IN ACCORDANCE WITH THE COMMERCIAL ARBITRATION
RULES OF THE AMERICAN ARBITRATION ASSOCIATION THEN IN EFFECT. Any such arbitration proceedings
shall be and remain confidential. The panel of arbitrators for any such arbitration shall consist
of three members of the American Arbitration Association, one of whom shall be selected by
CapitalSouth, one of whom shall be selected by Shareholder, and the third who will be selected by
the other two. Judgment upon the decision rendered by the arbitrators may be entered in any court
having jurisdiction thereof. The parties specifically acknowledge that this Agreement evidences a
transaction involving, affecting, affected by, and a part of, interstate commerce and that this
Agreement to arbitrate is governed by and enforceable under 9 U.S.C. §§ 1 et seq. The
place of arbitration shall be Birmingham, Alabama.
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9. Defined Terms. Unless defined herein, capitalized terms used herein shall have the
meanings ascribed to them in the Merger Agreement unless the context clearly requires otherwise.
10. Severability. This Agreement shall be deemed severable and any part hereof which
may be held invalid by a court or other entity of competent jurisdiction shall be deemed
automatically excluded from this Agreement and the remaining parts shall remain in full force and
effect.
11. Entire Understanding. This Agreement contains the entire understanding
of the parties hereto and constitutes the only agreement between CapitalSouth and the Shareholder
regarding the subject matter hereof. This Agreement supersedes all prior agreements, either
express or implied, between the parties hereto regarding the shares of stock held by the
Shareholder in Monticello. There are no oral agreements or understandings of any nature between the
Shareholder and CapitalSouth.
12. Amendment. None of the terms and conditions of this Agreement shall be amended or
modified unless expressly consented to in writing and signed by each of the parties hereto.
13. Notices. All notices or other communications to be given by the parties
among themselves pursuant to this Agreement shall be in writing and shall be deemed to have been
duly made to the party to whom it is directed at the address given below Shareholder’s signature if
to the Shareholder, and at 0000 Xxxxxxxxx Xxxxx, Xxxxx 000, Xxxxxxxxxx, Xxxxxxx 00000, Attention:
Chairman, if to CapitalSouth, (a) upon the earlier of five (5) days after mailing or the date of
actual delivery, if mailed by first class or certified mail with postage prepaid; or (b) upon
delivery, if either by hand delivery or by reputable overnight courier. Any of the parties hereto
may change their respective addresses upon written notice to the other given in the manner provided
in this section.
14. Waiver. No waiver by any of the parties to this Agreement of any condition, term
or provision of this Agreement shall be deemed to be a waiver of any preceding or subsequent breach
of the same or any other condition, term or provision hereof.
15. Governing Law. This Agreement shall be governed by and construed under the laws
of the State of Alabama without regard to provisions thereof governing conflicts of law except
superseded by federal law.
16. Construction. Whenever used in this Agreement, the singular number shall include
the plural and the plural the singular. Pronouns of one gender shall include all genders.
Accounting terms used and not otherwise defined in this Agreement have the meanings determined by,
and all calculations with respect to accounting or financial matters unless otherwise provided for
herein, shall be computed in accordance with generally accepted accounting principles, consistently
applied. References herein to articles, sections, paragraphs, subparagraphs or the like shall
refer to the corresponding articles, sections, paragraphs, subparagraphs or the like of this
Agreement. The words “hereof”, “herein”, and terms of similar import shall refer to this entire
Agreement. Unless the context clearly requires otherwise, the use
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of the terms “including”, “included”, “such as”, or terms of similar meaning, shall not be
construed to imply the exclusion of any other particular elements.
17. Captions. The captions as to contents of particular articles, sections or
paragraphs contained in this Agreement and the table of contents hereto are inserted only for
convenience and are in no way to be construed as part of this Agreement or as a limitation on the
scope of the particular articles, sections or paragraphs to which they refer.
18. Counterparts. This Agreement may be executed in any number of counterparts, each
of which shall be deemed an original, but all of which together shall constitute one and the same
document with the same force and effect as though all parties had executed the same document. This
Agreement may be executed and delivered by facsimile transmission.
19. Persons Bound. There are no third party beneficiaries of this Agreement except as
provided in Sections 7 and 8 hereof.
[Signature Page Follows]
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IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by the Shareholder as
of the day and year first above written.
| WITNESS: | SHAREHOLDER: | |||||||||
| [L.S.] | ||||||||||
Name:
|
Name: | |||||||||
| (Please print or type name) | (Please print or type name) | |||||||||
SHAREHOLDER’S ADDRESS FOR PURPOSE
OF PROVIDING NOTICE UNDER SECTION 13
HEREOF:
OF PROVIDING NOTICE UNDER SECTION 13
HEREOF:
Attention:
WITH A COPY TO:
Attention:
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| Accepted and Agreed: | ||||||
| CAPITALSOUTH BANCORP | ||||||
| By: | ||||||
| Its: | ||||||
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