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| CAPB > SEC Filings for CAPB > Form 8-K on 3-Oct-2008 | All Recent SEC Filings |
3-Oct-2008
Entry into a Material Definitive Agreement
On September 30, 2008, CapitalSouth Bancorp ("CapitalSouth") and James C.
Bowen, a director of CapitalSouth ("Bowen"), entered into a restructuring
agreement (the "Restructuring Agreement") whereby CapitalSouth and Bowen agreed
to restructure the CapitalSouth debt held by Bowen evidenced by notes in the
original principal amounts of $1,500,000 (the "Pledged Note") and $5,530,319.40
(the "Non-Pledged Note"). Under the terms of the Restructuring Agreement, the
current outstanding indebtedness of CapitalSouth due to Bowen under the notes
will be restructured as follows:
• the Pledged Note will be converted into (i) a new promissory note in an
estimated amount of $500,000.00 to be made by CapitalSouth in favor of Bowen
with an interest rate of LIBOR plus two percent (2%), paid quarterly ("Bowen
Note II"), and (ii) the maximum number of shares of CapitalSouth common
stock which may be purchased for $1,000,000, or such lesser amount which is
necessary to cause the total stock holdings of Bowen, after such purchase,
to equal, but not exceed, 9.9% of CapitalSouth's outstanding common stock.
The conversion price will be the subscription price for the exercise of
non-transferable rights distributed to holders of CapitalSouth common stock
as of September 22, 2008 (the "Right's Offering") described in
CapitalSouth's Registration Statement on Form S-1 filed with the SEC on
June 11, 2008 as amended through the date hereof. The original principal
amount of Bowen Note II will be the difference between $1,500,000 (the
balance of the Pledged Note) and the actual price paid by Bowen for shares
of CapitalSouth common stock in the conversion. Bowen Note II will replace
the Pledged Note as security for Bowen's indemnity obligations incurred in
connection with the acquisition by CapitalSouth of Monticello Bancshares,
Inc.
• the Non-Pledged Note will be converted into (i) a new promissory note in the amount of $2,400,000.00 to be made by CapitalSouth in favor of Bowen with an interest rate of LIBOR plus two percent (2%), paid quarterly and (ii) an unsecured convertible subordinated debenture in the amount of $1,930,319.00 issued by CapitalSouth to Bowen with an interest rate of LIBOR plus two percent (2%), paid quarterly.
The Restructuring Agreement will not be effective until the closing date of the Rights Offering.
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