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As filed with the SEC on September 21, 1999
Registration No. 333-______
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM SB-2
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
FIRST NATIONAL BANCSHARES, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
South Carolina 6021 58-2466370
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<S> <C> <C>
(State or other Jurisdiction of (Primary Standard Industrial (I.R.S. Employer Identification No.)
Incorporation or Organization) Classification Code Number)
</TABLE>
248 N. Church Street
Spartanburg, South Carolina 29304
(864) 948-9001
(Address and Telephone Number of Intended Principal Place of Business)
Jerry L. Calvert
Chief Executive Officer
248 N. Church Street
Spartanburg, South Carolina 29304
(864) 948-9001
(Name, Address, and Telephone Number of Agent For Service)
Copies of all communications, including copies of all communications
sent to agent for service, should be sent to:
Neil E. Grayson, Esq.
C. Russell Pickering, Esq.
J. Brennan Ryan, Esq.
Nelson Mullins Riley & Scarborough, L.L.P.
999 Peachtree Street, N.E., Suite 1400
Atlanta, Georgia 30309
(404) 817-6000
(404) 817-6225 (Fax)
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As
soon as practicable after this Registration Statement becomes effective.
If this form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act of 1933, check the
following box and list the Securities Act of 1933 registration statement number
of the earlier effective registration statement for the same offering. [ ]
___________________
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act of 1933, check the following box and list the
Securities Act of 1933 registration statement number of the earlier effective
registration statement for the same offering. [ ] ___________________
If this Form is a post-effective amendment filed pursuant to Rule
462(d) under the Securities Act of 1933, check the following box and list the
Securities Act of 1933 registration statement number of the earlier effective
registration statement for the same offering. [ ] ___________________
If delivery of the prospectus is expected to be made pursuant to Rule
434, check the following box. [ ]
CALCULATION OF REGISTRATION FEE
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<CAPTION>
PROPOSED
MAXIMUM PROPOSED MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE OFFERING AGGREGATE REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED PER SHARE PRICE FEE
<S> <C> <C> <C> <C>
Common Stock, $.01 par value ..... 1,200,000 $ 10.00 $ 12,000,000 $ 3,343
</TABLE>
The registrant hereby amends this Registration Statement on such date
or dates as may be necessary to delay its effective date until the registrant
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to such Section 8(a),
may determine.
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The information in this prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed with the SEC
is effective. This prospectus is not an offer to buy these securities in any
state where the offer or sale is not permitted.
THIS IS A PRELIMINARY PROSPECTUS AND IS NOT YET COMPLETE. September 21, 1999
FIRST NATIONAL BANCSHARES, INC.
A proposed bank holding company for
[BANK LOGO HERE]
FIRST NATIONAL BANK OF SPARTANBURG
(PROPOSED)
1,200,000 Shares of Common Stock
$10.00 per share
We are offering shares of common stock of First National Bancshares,
Inc. to fund the start-up of a new community bank, First National Bank of
Spartanburg (proposed). First National Bancshares, Inc. will be the holding
company and sole owner of the bank. The bank will be headquartered in
Spartanburg, South Carolina, and we expect to open the bank in the first
or second quarter of 2000. This is our first offering of stock to
the public, and there is no public market for our shares. The minimum purchase
requirement for investors is 100 shares and maximum purchase amount is 5% of
the offering, although we may at our discretion accept subscriptions for more.
We will request that quotations for the common shares be reported on the Nasdaq
OTC Bulletin Board.
The shares will be sold primarily by our officers and directors and by
our exclusive sales agent, J.C. Bradford & Co. J.C. Bradford has agreed to use
its best efforts to sell at least 150,000 of the shares offered, and may sell
up to 240,000 shares. We will pay the sales agent $.57 for each share it sells.
The offering is scheduled to end on March 31, 2000, but we may extend
the offering until September 30, 2000, at the latest. All of the money which we
receive will be placed with an independent escrow agent which will hold the
money until we sell (1) 1,200,000 shares and (2) we receive preliminary
approval from our bank regulatory agencies for the new bank. If we do not
succeed before the end of the offering period, we will return all funds
received to the subscribers promptly, without interest.
This table summarizes the offering and the amounts we expect to
receive. The commissions shown are the maximum we expect to pay the sales
agent.
<TABLE>
<CAPTION>
PER SHARE TOTAL
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<S> <C> <C>
Public Offering Price ............. $ 10.00 $12,000,000
Sales Agency Commission ........... $ .57 $ 136,800
Proceeds to First National
Bancshares ........................ $ 9.43 $11,863,200
</TABLE>
THIS IS A NEW BUSINESS. AS WITH ALL NEW BUSINESSES, AN INVESTMENT WILL
INVOLVE RISKS. IT IS NOT A DEPOSIT OR AN ACCOUNT AND IS NOT INSURED BY THE FDIC
OR ANY OTHER GOVERNMENT AGENCY. YOU SHOULD NOT INVEST IN THIS OFFERING UNLESS
YOU CAN AFFORD TO LOSE SOME OR ALL OF YOUR INVESTMENT. SOME OF THE RISKS OF
THIS INVESTMENT ARE DESCRIBED UNDER THE HEADING "RISK FACTORS" BEGINNING ON
PAGE 6.
NEITHER THE SEC NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR
DISAPPROVED THESE SECURITIES OR DETERMINED WHETHER THIS PROSPECTUS IS TRUTHFUL
OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
___________ ____, 1999
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FIRST NATIONAL BANCSHARES, INC.
FIRST NATIONAL BANK OF SPARTANBURG
PROPOSED MARKET AREA
[INSERT MAP OF SOUTH CAROLINA AND SPARTANBURG COUNTY SHOWING MARKET AREA]
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\
SUMMARY
We encourage you to read the entire prospectus carefully before
investing.
FIRST NATIONAL BANCSHARES AND FIRST NATIONAL BANK OF SPARTANBURG
We incorporated First National Bancshares, Inc. in July 1999 to
organize and serve as the holding company for First National Bank of
Spartanburg, a new national bank proposed to be located in Spartanburg, South
Carolina. The bank will focus on the local community, emphasizing personal
service to individuals and businesses in Spartanburg County. We have filed for
regulatory approval to open the new bank with the Office of the Comptroller of
the Currency and for deposit insurance for the bank with the FDIC. We will file
for approval of the Federal Reserve Board to become a bank holding company and
acquire all of the stock of the new bank. We expect to receive all final
regulatory approvals and open for business in the first or second quarter of
2000.
WHY WE ARE ORGANIZING A NEW BANK IN SPARTANBURG COUNTY
Spartanburg County has a growing and dynamic economic environment that
we believe will support First National Bank of Spartanburg. It is South
Carolina's fourth most populous county with over 247,000 residents. The county
and surrounding area are home to several large manufacturing concerns, including
BMW, Springs Industries, Michelin Tire Company, Advantica, Milliken & Company,
and Spartanburg Regional Medical Center, which support a stable business
foundation and a skilled labor force. The presence of companies like these has
resulted in Spartanburg County having the highest per capita international
investment of any area in the United States in 1995. In November 1998, the
unemployment rate was approximately 3.1%. One factor in this economic growth is
Spartanburg County's strategic location on the I-85 corridor between Atlanta
and Charlotte, an area also known as the "Boom Belt."
We believe that there is an opportunity in Spartanburg County for a
new locally managed bank focused on the community and personalized service to
individuals and local businesses. The county's bank and thrift deposits grew
over the last four years at an average annual rate of 5%, and should continue
to grow with the community and its economy. The two community banks and the
local thrift located in Spartanburg County experienced average annual growth
rates of over 10% during this same period. We believe that this indicates many
residents in the area prefer the community bank experience to that provided by
the larger and more impersonal regional and super-regional banks. Despite this
perceived preference, large regional banks continue to consolidate the banking
market through mergers and acquisitions, as evidenced by Regions Bank's recent
acquisition of Spartanburg National Bank. This acquisition left only one
community bank in Spartanburg with less than $50 million in assets. We believe
that the combination of positive deposit growth rates, good economic conditions,
and the consolidation of existing community banks into larger banks creates a
favorable environment for a new community oriented bank.
Taking advantage of this opportunity, First National Bank of
Spartanburg will position itself as "the hometown bank" that cares about its
clients. We will provide professional and personalized service to our clients
by employing well trained, seasoned bankers who are familiar with our market
area and our clients' individual needs. We will emphasize our local ownership
and management and our strong ties to the Spartanburg County community. Our
target market will be primarily individuals and small-to medium-sized
businesses who desire a consistent and professional relationship with a local
banker.
OUR BOARD OF DIRECTORS AND MANAGEMENT
First National Bancshares was founded by thirteen local business
leaders, most of whom have lived in Spartanburg for many years. They are also
community leaders and serve on numerous charitable and service organizations
throughout Spartanburg County. We believe our directors' long-standing ties to
the community and their significant business experience will provide First
National Bank of Spartanburg with the ability to effectively assess and address
the needs of our proposed market area.
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Our Board of Directors consists of the following:
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<S> <C> <C> <C>
- C. Dan Adams - Benjamin R. Hines
- Mellnee G. Buchheit - William A. Hudson
- Jerry L. Calvert - Norman F. Pulliam
- Martha C. Chapman - Peter E. Weisman
- W. Russel Floyd, Jr. - Donald B. Wildman
- Dr. C. Tyrone Gilmore, Sr. - Coleman L. Young, Jr.
- Dr. Gaines W. Hammond, Jr.
</TABLE>
Jerry Calvert will serve as the president and chief executive officer
for the holding company and the bank. He has over 25 years of banking
experience in the Spartanburg area. Until he began preparations to open First
National Bank of Spartanburg, he served as regional manager of American Federal
Bank in Spartanburg.
We are in the process of assembling the rest of our management team.
We are looking for individuals who reside in the Spartanburg area and have
significant local banking experience and a history of service to the community.
PRODUCTS AND SERVICES
We plan to offer most of the products and services offered by larger
banks by utilizing modern delivery systems coupled with personalized service.
Our lending services will include consumer loans and lines of credit,
commercial and business loans and lines of credit, residential and commercial
real estate loans, and construction loans. We will competitively price our
deposit products, which will include checking accounts, savings accounts, money
market accounts, certificates of deposit, commercial checking accounts, and
IRAs. We will also provide cashier's checks, credit cards, home mortgage
brokerage services, tax deposits, safe deposit boxes, traveler's checks, direct
deposit, and special bank club packages. We intend to deliver our services
though a variety of methods, including ATMs, banking by mail, and drive-through
banking, and we are considering providing internet banking services to our
customers.
THE OFFERING AND OWNERSHIP BY MANAGEMENT
We are offering 1,200,000 shares of our common stock for $10.00 per
share. Our organizers and executive officers intend to purchase 425,000 shares,
which represents 35.4% of the shares outstanding after the offering. To
compensate them for their financial risk and efforts in organizing the bank,
our organizers will receive warrants to purchase two shares of common stock for
$10.00 per share for every three shares they purchase in this offering. We hope
to sell most of the remaining shares to individuals and businesses in
Spartanburg County who share our desire to support a new local community bank.
FUNDS RECEIVED WILL BE PLACED IN ESCROW
We cannot open the bank without regulatory approvals. Therefore, we
will place all of the proceeds from investors in this offering with an
independent escrow agent, The Bankers Bank. The escrow agent will hold these
funds until we raise $12,000,000 and obtain preliminary regulatory approvals to
open the bank. We expect to receive all preliminary regulatory approvals by the
first quarter of 2000. We currently intend to close the offering on March 31,
2000, but may extend the offering up to September 30, 2000. If we fail to meet
these conditions by the close of the offering, we will refund your subscription
in full, without interest, and will use the investments by our founding
shareholders to pay expenses and liquidate the company.
SHARES WILL BE SOLD BY OFFICERS, DIRECTORS, AND A SALES AGENT
Our officers and directors will handle the sale of most of the shares
in this offering. We will not pay them any fees or commissions for their
efforts. Additionally, we have engaged J.C. Bradford & Co. as our sales
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agent to use its best efforts to sell a minimum of 150,000 shares, and up to
240,000 shares. We will pay J.C. Bradford a commission of $0.57 for each share
it sells.
USE OF PROCEEDS
We will use the first $11,000,000 we raise in this offering to
capitalize First National Bank of Spartanburg. This is the amount of capital we
believe our banking regulators will require for us to open the bank. We will
use the remaining net proceeds of the offering to pay expenses of this offering
and of organizing the holding company and the bank, and to provide general
working capital for the holding company. The bank will use the funds it
receives from First National Bancshares to pay expenses, lease and furnish its
offices, and provide working capital to operate the bank. For more detailed
information see "Use of Proceeds" on page 12.
WE DO NOT INITIALLY PLAN TO PAY DIVIDENDS
Because we are a new business, we will not pay dividends in the
foreseeable future. We intend to use all available earnings to fund the
continued operation and growth of the bank.
LOCATION OF OFFICES
Our temporary executive offices are located at 248 N. Church Street,
Spartanburg, South Carolina 29306. Our telephone number is (864) 948-9001. Our
main office will be located at 215 N. Pine Street, Spartanburg, South Carolina
29302, one block north of the intersection of Main Street and Pine Street in
downtown Spartanburg. The site is approximately 2.0 acres in size, and the
building will be approximately 10,000 square feet. We expect to complete
construction of this facility in January 2001. In the interim period, we will
operate out of a temporary modular facility located on the same site. We also
plan to open a 3,000 square foot branch office on the west side of Spartanburg
on a one acre outparcel of the Oak Grove Shopping Center at 2660 Reidville
Road, Spartanburg, South Carolina 29301. We expect to open this branch office
upon completion of construction, which we believe will be in the first or
second quarter of 2000.
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RISK FACTORS
The following is a summary of some of the risks which we will
encounter in starting and operating the new bank. We may face other risks as
well, which we have not anticipated. An investment in our common stock involves
a significant degree of risk and you should not invest in the offering unless
you can afford to lose some or all of your investment. Please read the entire
prospectus for a more thorough discussion of the risks of an investment in our
common stock.
WE ARE A NEW BUSINESS AND THERE IS A RISK WE MAY NOT BE SUCCESSFUL.
Neither First National Bancshares nor First National Bank of
Spartanburg has any operating history. The operations of new businesses are
always risky. Because First National Bank of Spartanburg has not yet opened, we
do not have historical financial data and similar information which would be
available for a financial institution that has been operating for several
years.
WE EXPECT TO INCUR LOSSES FOR MORE THAN ONE YEAR AND THERE IS A RISK WE MAY
NEVER BECOME PROFITABLE.
In order for us to become profitable, we will need to attract a large
number of customers to deposit and borrow money. This will take time. We expect
to incur large initial expenses and may not be profitable for more than one
year, if at all. Our future profitability is dependent on numerous factors
including the continued success of the economy of the community and favorable
government regulation. While the economy in this area has been strong in recent
years, an economic downturn in the area would hurt our business. We are also a
highly regulated institution. Our ability to grow and achieve profitability may
be adversely affected by state and federal regulations that limit a bank's
right to make loans, purchase securities, and pay dividends. Although we expect
to become profitable in our second year, there is a risk that a deterioration
of the local economy or adverse government regulation could affect our plans.
If this happens, we may never become profitable and you will lose part or all
of your investment.
WE CANNOT OPEN THE BANK FOR BUSINESS UNTIL WE RECEIVE REGULATORY APPROVALS,
WHICH ARE AT THE DISCRETION OF OUR REGULATORY AGENCIES.
We cannot begin operations until we receive all required regulatory
approvals. We will not receive these approvals until we satisfy all requirements
for new banks imposed by state and federal regulatory agencies. We have already
filed applications with the FDIC and the Office of the Comptroller of the
Currency, and we will file an application with the Federal Reserve prior to
opening the bank. We expect to receive our preliminary regulatory approvals by
the first quarter of 2000. We expect to receive final approvals by the first or
second quarter of 2000, but it may take longer. If we ultimately do not open, we
anticipate that we will dissolve the company, and return to our investors all
funds remaining after paying the expenses incurred through this time.
ANY DELAY IN OPENING FIRST NATIONAL BANK OF SPARTANBURG WILL RESULT IN
ADDITIONAL LOSSES.
We intend to open the bank in the first or second quarter of 2000. If
we do not receive all necessary regulatory approvals as planned, the bank's
opening will be delayed or may not occur at all. If the bank's opening is
delayed, our organizational and pre-opening expenses will increase. Because the
bank would not be open and generating revenue, these additional expenses would
cause our accumulated losses to increase.
WE WILL DEPEND HEAVILY ON JERRY CALVERT, AND OUR BUSINESS WOULD SUFFER IF
SOMETHING WERE TO HAPPEN TO HIM OR IF HE WERE TO LEAVE.
Jerry Calvert will be our president and chief executive officer. He
will provide valuable services to us, and he would be difficult to replace. We
have an employment agreement with Mr. Calvert and carry $500,000 of insurance
on his life payable to the bank. Nevertheless, if he were to leave, our
business would suffer.
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WE DETERMINED THE OFFERING PRICE OF $10.00 ARBITRARILY AND IT WILL FLUCTUATE
ONCE THE SHARES BECOME FREELY TRADABLE AFTER THE OFFERING.
Because we do not have any history of operations, we determined the
price arbitrarily. The offering price is essentially the book value of the
shares prior to deduction for expenses of the offering and the organization of
the bank. The offering price may not be indicative of the present or future
value of the common stock. As a result, the market price of the stock after the
offering may be more susceptible to fluctuations than it otherwise might be.
The market price will be affected by our operating results, which could
fluctuate greatly. These fluctuations could result from expenses of operating
and expanding the bank, trends in the banking industry, economic conditions in
our market area, and other factors which are beyond our control. If our
operating results are below expectations, the market price of the common stock
would probably fall.
WE WILL NOT HAVE A LARGE NUMBER OF SHAREHOLDERS OR A LARGE NUMBER OF SHARES
OUTSTANDING AFTER THE OFFERING, WHICH MAY LIMIT YOUR ABILITY TO SELL OR TRADE
THE SHARES AFTER THE OFFERING.
Initially, there will be no established market for our common stock.
After the offering, we will encourage broker-dealers to match buy and sell
orders for our common stock on the OTC Bulletin Board. However, the trading
markets on the OTC Bulletin Board lack the depth, liquidity, and orderliness
necessary to maintain a liquid market. We do not expect a liquid market for our
common stock to develop for several years, if at all. A public market having
depth and liquidity depends on having enough buyers and sellers at any given
time. Because this a relatively small offering, we do not expect to have enough
shareholders or outstanding shares to support an active trading market.
Accordingly, investors should consider the potential illiquid and long-term
nature of an investment in our common stock.
WE WILL FACE STRONG COMPETITION FOR CUSTOMERS FROM LARGER AND MORE ESTABLISHED
BANKS WHICH COULD PREVENT US FROM OBTAINING CUSTOMERS AND MAY CAUSE US TO HAVE
TO PAY HIGHER INTEREST RATES TO ATTRACT CUSTOMERS.
We will encounter strong competition from existing banks and other
types of financial institutions operating in the Spartanburg County area and
elsewhere. Some of these competitors have been in business for a long time and
have already established their customer base and name recognition. Most are
larger than we will be and have greater financial and personnel resources than
we will have. Some are large super-regional and regional banks, like BB&T, Bank
of America, Regions, and Wachovia. These institutions offer services, including
extensive and established branch networks and trust services, that we either do
not expect to provide or will not provide for some time. Due to this
competition, we may have to pay higher rates of interest to attract deposits.
In addition, competitors that are not depository institutions are generally not
subject to the extensive regulations that will apply to our bank. See "Proposed
Business - Marketing Opportunities- Competition" on page 18 and "Supervision
and Regulation" starting on page 25.
WE MAY NOT BE ABLE TO COMPETE WITH OUR LARGER COMPETITORS FOR LARGER CUSTOMERS
BECAUSE OUR LENDING LIMITS WILL BE LOWER THAN THEIRS.
We will be limited in the amount we can loan a single borrower by the
amount of the bank's capital. The legal lending limit is 15% of the bank's
capital and surplus. We expect that our initial legal lending limit will be
approximately $1,590,000 immediately following the offering, but we intend to
impose an internal limit on the bank of 80% of this amount, or approximately
$1,270,000. Until the bank is profitable, our capital will continue to decline
and therefore our lending limit. Our lending limit will be significantly less
than the limit for most of our competitors and may affect our ability to seek
relationships with larger businesses in our market area. We intend to
accommodate larger loans by selling participations in those loans to other
financial institutions.
WE ARE AUTHORIZED TO ISSUE PREFERRED STOCK WHICH, IF ISSUED, MAY ADVERSELY
AFFECT YOUR VOTING RIGHTS AND REDUCE THE MARKET PRICE OF OUR COMMON STOCK.
We are authorized by our articles of incorporation to issue shares of
preferred stock without the consent
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of our shareholders. Preferred stock, when issued, may rank senior to common
stock with respect to voting rights, payment of dividends, and amounts received
by shareholders upon liquidation, dissolution, or winding up. The existence of
rights which are senior to common stock may reduce the price of our shares. We
do not have any plans to issue any shares of preferred stock at this time.
THE EXERCISE OF WARRANTS AND STOCK OPTIONS WILL CAUSE STOCK DILUTION AND MAY
ADVERSELY AFFECT THE VALUE OF OUR COMMON STOCK.
The organizers and officers may exercise warrants and options to
purchase common stock, which would result in the dilution of your proportionate
interests in First National Bancshares. Upon completion of the offering, we
will issue to the organizers warrants to purchase two shares of common stock at
$10.00 per share for every three shares they purchase in the offering. If the
organizers purchase 425,000 shares in the offering, we will issue warrants to
purchase an additional 283,333 shares of common stock to them. In addition,
after the offering, we expect to adopt a stock option plan which will permit us
to grant options to our officers, directors, and employees. We anticipate that
we will initially authorize the issuance of a number of shares under the stock
option plan equal to 15% of the shares outstanding after the offering. We do
not intend to issue stock options with an exercise price less than the fair
market value of the common stock on the date of grant.
IT IS POSSIBLE THAT OUR COMPUTER SYSTEMS OR THOSE OF OUR PROCESSING VENDORS OR
LOAN CUSTOMERS COULD FAIL TO OPERATE ON JANUARY 1, 2000.
Like many financial institutions, we will rely upon computers for
conducting our business and for information systems processing. There is
concern among industry experts that on January 1, 2000, computers will be
unable to read or interpret the new year and there may be widespread computer
malfunctions. We will generally rely on software and hardware developed by
independent third parties to provide our information systems. We will request
warranties about Year 2000 compliance from the primary third party hardware and
software system providers we use. We believe that our other internal systems
and software, including our network connections, will be programmed to comply
with Year 2000 requirements, although there is a risk they may not comply.
Based on information currently available, we believe that we will not incur
significant expenses in connection with the Year 2000 issue.
The Year 2000 issue may also negatively affect the business of our
customers. We intend to include Year 2000 readiness in our lending criteria to
minimize this risk. However, we cannot be certain that this will eliminate the
issue, and any financial difficulties our customers experience as a result of
Year 2000 issues could impair their ability to repay loans to the bank.
We do not plan to open the bank until after January 1, 2000, at which
time we believe that most of the uncertainty surrounding the Year 2000 issue
should be resolved. In this event, our risks associated with computer
malfunctions should be greatly reduced, but we will still seek to ensure that
our computer systems and our major vendors' and clients' computer systems are
in compliance and functioning properly. For more information on Year 2000
issues, please refer to page 16.
FORWARD-LOOKING STATEMENTS
This prospectus contains certain "forward-looking statements"
concerning First National Bancshares and First National Bank of Spartanburg and
their operations, performance, financial conditions, and likelihood of success.
These statements are based on many assumptions and estimates. Our actual
results will depend on many factors about which we are unsure, including those
discussed above. Many of these risks and factors are beyond our control. The
words "may," "would," "could," "will," "expect," "anticipate," "believe,"
"intend," "plan," and "estimate," and similar expressions identify
forward-looking statements. The most significant of these risks, uncertainties,
and other factors are discussed under the heading "Risk Factors" beginning on
page 6 of this prospectus. We urge you to carefully consider these factors
prior to making an investment.
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THE OFFERING
GENERAL
We are offering 1,200,000 shares of our common stock at a price of
$10.00 per share to raise $12,000,000. The minimum purchase for any investor is
100 shares and the maximum purchase is 5% of the offering, although we may
accept subscriptions for more or less.
The organizers intend to purchase 425,000 shares in this offering, for
a total investment of $4,250,000. As a result, they will own approximately
35.4% of the common stock outstanding upon completion of the offering.
Additionally, each of the organizers will receive a warrant to purchase two
shares of common stock at $10.00 per share for every three shares purchased in
the offering, exercisable for ten years after the completion of the offering.
If each organizer exercises his warrant in full, the organizers' ownership of
First National Bancshares will increase to 47.8%. Although they have not
promised to do so, the organizers may purchase additional shares in the
offering, including up to 100% of the offering. All shares purchased by the
organizers will be for investment and not intended for resale. Because
purchases by the organizers may be substantial, you should not assume that the
sale of a specified minimum offering amount indicates the merits of this
offering.
We must receive your subscription for shares before midnight, Eastern
Standard Time, on March 31, 2000, unless all of the shares are sold earlier or
the offering is terminated or extended. We reserve the right to terminate the
offering at any time or to extend the expiration date up to September 30, 2000.
Extension of the expiration date might cause an increase in our expenses. We do
not have to give you any prior written notice of an extension. If we extend the
offering, subscriptions we have already accepted will still be binding. We do,
however, intend to communicate quarterly with all subscribers and inform you of
any extensions of the offering.
Accepted subscriptions will be binding and may not be revoked except
with our consent. We reserve the right to cancel or reject any or all of any
subscription before or after acceptance until the proceeds of this offering are
released from escrow. We may also allocate shares among subscribers if the
offering is oversubscribed. In deciding which subscriptions to accept, we may
take into account any factors, including:
- the order in which subscriptions are received;
- a subscriber's potential to do business with or to direct
customers to the bank; and
- our desire to have a broad distribution of stock ownership.
If we reject any subscription, or accept a subscription but subsequently elect
to cancel all or part of that subscription, we will refund the amount remitted
for shares for which a subscription is rejected or canceled. We will issue
certificates for shares which have been subscribed and paid for promptly after
we receive the funds out of escrow.
CONDITIONS TO THE OFFERING AND RELEASE OF FUNDS
We will place all subscription proceeds with The Bankers Bank which
will serve as an independent escrow agent. The escrow agent will hold these
funds, and no shares will be issued, until:
- We have accepted subscriptions and payment in full for
1,200,000 shares at $10.00 per share;
- We have received preliminary approval from the Office of the
Comptroller of the Currency to grant us a national bank
charter;
- We have received preliminary approval of the bank's
application for deposit insurance from the FDIC; and
- We have obtained preliminary approval from the Federal
Reserve to acquire the stock of the bank.
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<PAGE> 11
If First National Bancshares terminates the offering or if the offering period
expires before these conditions are satisfied, then:
- We will cancel accepted subscription agreements and
subscribers in the offering will not become shareholders;
- The funds held in the escrow account will not be subject to
the claims of any of our creditors or available to defray the
expenses of this offering; and
- We will return the full amount of all subscription funds
promptly to subscribers, without interest earned.
The escrow agent has not investigated the desirability, advisability,
or merits of a purchase of the shares. The escrow agent will invest escrowed
funds in interest-bearing savings accounts, short-term United States Treasury
securities, FDIC-insured bank deposits, or other similar investments as we
agree on with the escrow agent. We do not intend to invest the subscription
proceeds held in escrow in instruments that would mature after the expiration
date of the offering.
If the conditions for releasing subscription funds from escrow are met
and the funds are released but we do not receive final regulatory approval to
operate the bank, or if the bank does not open for any other reason, our board
of directors intends to propose that the shareholders approve a plan to
liquidate First National Bancshares. First National Bancshares would be
dissolved and First National Bancshares's net assets, consisting primarily of
the funds received in this offering, less the costs and expenses we have
incurred, would be distributed to the shareholders other than the organizers,
who will not receive any distribution until all other shareholders have
received their initial investments.
PLAN OF DISTRIBUTION
Offers and sales of the common stock will be made primarily by our
officers and directors, who will be reimbursed for their reasonable expenses
but will not receive commissions or other remuneration. First National
Bancshares believes these officers and directors will not be deemed to be
brokers or dealers under the Securities Exchange Act of 1934 due to Rule 3a4-1.
We have also entered into an agreement with J.C. Bradford & Co. to
sell up to 240,000 of the shares offered. First National Bancshares must
reserve a minimum of 150,000 shares for sale by the sales agent, which is
required to use its best efforts through the expiration date to sell the
shares. The sales agent will receive a commission of $0.57 on each share it
sells. The sales agent will not receive any commission on the shares purchased
by the organizers in the offering and will not receive commissions on sales
made by the officers or directors of First National Bancshares.
The sales agency agreement provides for reciprocal indemnification
between First National Bancshares and the sales agent against certain
liabilities in connection with this offering, including liabilities under the
Securities Act of 1933. The SEC has advised us that it believes this type of
indemnification is against public policy as expressed by the Securities Act of
1933 and is, therefore, unenforceable.
Prior to this offering there has been no public market for the shares.
We established the initial offering price of the shares based upon our
assessment of the capital needs of First National Bancshares and the commercial
potential of the services to be offered by First National Bank of Spartanburg.
We have discussed the establishment and maintenance of a market for the shares
after the offering with the sales agent. Based upon these discussions, we
expect that a secondary market may eventually develop for the shares, although
we can not be sure. In general, if a secondary market develops, the shares
other than those held by affiliates will be freely transferable in the market.
See "Description of the Capital Stock of First National Bancshares, Inc.-Shares
Eligible for Future Sale" on page 40.
10
<PAGE> 12
HOW TO SUBSCRIBE
If you desire to purchase shares of the common stock of First National
Bancshares, Inc., you should:
1. Complete, date, and execute the subscription agreement which
you received with this prospectus;
2. Make a check, bank draft, or money order payable to "The
Bankers Bank, Escrow Account for First National Bancshares,
Inc.," in the amount of $10.00 times the number of shares you
wish to purchase; and
3. Deliver the completed subscription agreement and check to
First National Bancshares or the sales agent at the following
address:
<TABLE>
<S> <C> <C>
Mr. Jerry Calvert Mr. Ed Medlin
First National Bancshares, Inc. or J. C. Bradford & Co.
P.O. Box 3508 233 S. Pine Street
Spartanburg, South Carolina 29304 Post Office Box 2869
Spartanburg, South Carolina
29304
</TABLE>
If you have any questions about the offering or how to subscribe,
please call Mr. Calvert at (864) 948-9001 (or any of the other organizers) or
Mr. Ed Medlin with J.C. Bradford at (864) 573-9141. If you subscribe, you
should retain a copy of the completed subscription agreement for your records.
You must pay the subscription price at the time you deliver the subscription
agreement.
11
<PAGE> 13
USE OF PROCEEDS
We estimate that we will receive net proceeds of $11,743,200 from the
sale of 1,200,000 shares of common stock in the offering, after deducting sales
agency commissions and estimated organizational and offering expenses. We have
established a line of credit in the amount of $500,000 with The Banker's Bank
at the prime rate minus 0.5% to pay pre-opening expenses of the holding company
and the bank prior to the completion of the offering. We intend to pay off this
line of credit with proceeds that we receive from this offering. The following
two paragraphs describe our proposed use of proceeds based on our present plans
and business conditions.
USE OF PROCEEDS BY FIRST NATIONAL BANCSHARES
The following table shows the anticipated use of the proceeds by First
National Bancshares. We describe the bank's anticipated use of proceeds in the
following section. As shown, we will use $11,000,000 to capitalize the bank. We
will initially invest the remaining proceeds in United States government
securities or deposit them with First National Bank of Spartanburg. In the
long-term, we will use these funds for operational expenses and other general
corporate purposes, including the provision of additional capital to the bank,
if necessary. We may also use the proceeds to expand, for example by opening
additional facilities or acquiring other financial institutions. In addition to
our main office and initial branch office, we currently plan to open two
additional branch offices in the Spartanburg area in the next five years. We do
not have any other definitive plans for expansion.
<TABLE>
<CAPTION>
Total
-----
<S> <C>
Gross proceeds from offering ......................... $ 12,000,000
Less:
Sales agency expense ................................. $ (136,800)
Expense of organizing First National Bancshares ...... $ (120,000)
Investment in capital stock of the bank .............. $ (11,000,000)
-------------
Remaining proceeds ................................... $ 743,200
=============
</TABLE>
12
<PAGE> 14
USE OF PROCEEDS BY FIRST NATIONAL BANK OF SPARTANBURG
The following table shows the anticipated use of the proceeds by First
National Bank of Spartanburg. All proceeds received by the bank will be in the
form of an investment in the bank's capital stock by First National Bancshares
as described above. We anticipate purchasing a site and constructing a
permanent main office. We expect our main office to be completed by January
2001. During the period between the opening of the bank and the completion of
our permanent main facility, we will conduct operations from a modular facility
located on the site where we will construct our main office. This temporary
facility will require an estimated initial payment of $12,000 and an estimated,
a monthly lease payment of $5,500. We also plan to open a branch office. We
will lease the land for this office and construct a permanent facility on the
site that we anticipate completing in the first or second quarter of 2000. The
table shows the cost of the temporary and permanent facilities for a period of
twelve months from the completion of the offering. Furniture, fixtures, and
equipment will be capitalized and amortized over the life of the lease or over
the estimated useful life of the asset. The bank will use the remaining
proceeds to make loans, purchase securities, and otherwise conduct the business
of the bank.
<TABLE>
<CAPTION>
Total
-----
<S> <C>
Investment by First National Bancshares in the
bank's capital stock ................................. $ 11,000,000
Less:
Organizational and pre-opening expenses of the bank ..... $ 407,000
Furniture, fixtures and equipment ....................... $ 792,000
Cost of main office and site ............................ $ 1,750,000
Construction cost of branch office ...................... $ 500,000
Initial payment and lease of temporary facility (10
months) ................................................. $ 67,000
Lease of branch facility land (12 months) ............... $ 48,000
-------------
Remaining proceeds ...................................... $ 7,436,000
=============
</TABLE>
13
<PAGE> 15
CAPITALIZATION
The following table shows First National Bancshares' capitalization as
of July 31, 1999, and the pro forma consolidated capitalization of First
National Bancshares' and the bank as adjusted to give effect to the sale of
1,200,000 shares in this offering, after deducting the expenses of the
offering. First National Bancshares' capitalization as of July 31, 1999
reflects the purchase of ten shares by Jerry Calvert for $10.00 per share.
These shares will be redeemed after the offering. After the offering, we will
have 1,200,000 shares outstanding. The "As Adjusted" column reflects the
estimated cost of organizing First National Bancshares and organizing and
preparing to open First National Bank of Spartanburg through the expected
opening date, which should be in the first or second quarter of 2000. See "Use
of Proceeds" above.
<TABLE>
<CAPTION>
As Adjusted
For
July 31, 1999 The Offering
------------- ------------
<S> <C> <C>
SHAREHOLDERS' EQUITY:
Common Stock, par value $.01 per share; 10,000,000
shares authorized; 10 shares issued and outstanding;
1,200,000 shares issued and outstanding as adjusted ........ $ 0 $ 12,000
Preferred Stock, par value $.01 per share; 10,000,000
shares authorized; no shares issued and outstanding ........ 0 0
Additional paid-in capital ................................. $ 100 $ 11,731,200
Deficit accumulated during the pre-opening stage ........... $(108,282) $ (407,000)
--------- ------------
Total shareholders' equity (deficit) ....................... $(108,182) $ 11,324,200
========= ============
Book value per share ....................................... $ N/A $ 9.44
========= ============
</TABLE>
DIVIDEND POLICY
We expect initially to retain all earnings to operate and expand the
business. It is unlikely that we will pay any cash dividends in the near
future. Our ability to pay any cash dividends will depend primarily on First
National Bank of Spartanburg's ability to pay dividends to First National
Bancshares, which depends on the profitability of the bank. In order to pay
dividends, the bank must comply with the requirements of all applicable laws
and regulations. See "Supervision and Regulation - The Bank Dividends" on page
28 and "Supervision and Regulation - The Bank - Capital Regulations" on page
29. In addition to the availability of funds from the bank, our dividend policy
is subject to the discretion of our board of directors and will depend upon a
number of factors, including future earnings, financial condition, cash needs,
and general business conditions.
14
<PAGE> 16
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND PLAN OF OPERATION
GENERAL
First National Bancshares was formed to organize and own all of the
capital stock of First National Bank of Spartanburg. In July 1999, the
organizers filed applications with the Office of the Comptroller of the
Currency to charter the bank as a national bank and with the FDIC to receive
federal deposit insurance. Whether the charter is issued and deposit insurance
is granted will depend upon, among other things, compliance with legal
requirements imposed by the Office of the Comptroller of the Currency and the
FDIC, including capitalization of the bank with at least a specified minimum
amount of capital which we believe will be $11,000,000. Upon preliminary
approval from the Office of the Comptroller of the Currency and the FDIC, we
will file an application with the Federal Reserve to become a bank holding
company, which must be approved before we can acquire the capital stock of the
bank. We expect to receive all final regulatory approvals by the second quarter
of 2000.
FINANCIAL RESULTS
As of July 31, 1999, First National Bancshares had total assets of
$20,818, consisting primarily of cash, deferred organization costs, furniture
and equipment, prepaid expenses, and escrow deposits. First National Bancshares
incurred a net loss of $108,282 for the period from its inception on April 1,
1999 through July 31, 1999.
EXPENSES
On completion of the offering and opening of the bank, we expect we
will have incurred the following expenses:
- $136,800 in commissions to the sales agent, which will be
deducted from the proceeds of the offering.
- $120,000 in other expenses of the offering, which will be
subtracted from the proceeds of the offering.
- $407,000 in expenses to organize and prepare to open First
National Bank of Spartanburg, consisting principally of
salaries, overhead and other operating costs, which will be
charged against the income of First National Bank of
Spartanburg.
Prior to our completion of this offering, these expenses will be
funded by a $500,000 line of credit at the prime rate minus 0.5%. We will use
the proceeds of this offering to repay amounts due under our line of credit. We
anticipate that the proceeds of the offering will be sufficient to satisfy the
corporation's financial needs for at least the next twelve months.
OFFICES AND FACILITIES
Our temporary executive offices are located at 248 N. Church Street,
Spartanburg, South Carolina 29306. Our main office will be located at 215 N.
Pine Street, Spartanburg, South Carolina 29302, one block north of the
intersection of Main Street and Pine Street in downtown Spartanburg. The site
is approximately 2.0 acres in size and the building will be approximately
10,000 square feet. We will purchase this site for $500,000 and construction of
the building is expected to cost an additional $1,250,000. We also plan to open
a 3,000 square foot branch office on the west side of Spartanburg on a one acre
outparcel of the Oak Grove Shopping Center at 2660 Reidville Road, Spartanburg,
South Carolina 29301. We intend to lease the land for approximately $4,000 per
month, and we will construct the branch office on the property for
approximately $500,000. We expect to open the bank in a temporary modular
facility on the site of the main office and complete construction of our branch
office in the first or second quarter of 2000 and our main office in the first
quarter of
15
<PAGE> 17
2001. In the interim period, we will operate the bank out of a temporary
modular facility located on the site of the future main office.
We plan to open for business in the first or second quarter of 2000.
Within the first five years of operation, we also plan to open two additional
branches located strategically in our service area. We believe that these
branches will expand our market presence and provide additional convenience to
our customers. We will need to obtain regulatory approval before we can open
these branches. We believe that these facilities will adequately serve the
bank's needs for its first five years of operation.
LIQUIDITY AND INTEREST RATE SENSITIVITY
First National Bank of Spartanburg, like most banks, will depend on
its net interest income for its primary source of earnings. Net interest income
is roughly the difference between the interest we charge on our loans and
receive from our investments, our assets, and the interest we pay on deposits,
our liabilities. Movements in interest rates will cause our earnings to
fluctuate. To lessen the impact of these margin swings, we intend to structure
our balance sheets so that we can reprice the rates applicable to our assets
and liabilities in roughly equal amounts at approximately the same time. We
will manage the bank's asset mix by regularly evaluating the yield, credit
quality, funding sources, and liquidity of its assets. We will manage the
bank's liability mix by expanding our deposit base and converting assets to
cash as necessary. If there is an imbalance in our ability to reprice assets
and liabilities at any point in time, our earnings may increase or decrease
with changes in the interest rate, creating interest rate sensitivity. Interest
rates have historically varied widely, and we cannot control or predict them.
Despite the measures we plan to take to lessen the impact of interest rate
fluctuations, large moves in interest rates may decrease or eliminate our
profitability.
Liquidity refers to our ability to provide steady sources of funds for
loan commitments and investment activities, as well as to maintain sufficient
funds to cover deposit withdrawals and payment of debt and operating
obligations. We will manage our liquidity by actively monitoring the bank's
sources and uses of funds to meet cash flow requirements and maximize profits.
If the bank is open before January 1, 2000, we expect to increase our
cash on hand because consumer uncertainty about the Year 2000 may cause a
higher than normal rate of deposit withdrawal.
CAPITAL ADEQUACY
Capital adequacy for banks and bank holding companies is regulated by
the Office of the Comptroller of the Currency, the Federal Reserve Board of
Governors, and the FDIC. The primary measures of capital adequacy are (i)
risk-based capital guidelines and (ii) the leverage ratio. Changes in these
guidelines or in our levels of capital can affect our ability to expand and pay
dividends. Please see "Capital Regulations" on page 29 for a more detailed
discussion.
YEAR 2000 ISSUES
Like most financial institutions, we will rely upon computers for the
daily conduct of our business and for information systems processing. There is
concern among industry experts that on January 1, 2000 some computers will be
unable to "read" the new year resulting in computer malfunctions.
We do not intend to open the bank until after January 1, 2000, at
which time we believe that most of the uncertainty surrounding the Year 2000
issue should be clarified. In this event, our risks associated with computer
malfunctions should be greatly reduced, but we will still seek to ensure that
our computer systems and our major vendors' and clients' computer systems are
in compliance and functioning properly.
We will be generally relying on independent third parties for our
information processing needs. We have not entered into an agreement with a
software servicing company to process our daily account and transactional data;
to provide our teller, accounting, and internet computer systems; and to
provide our ATM switching and processing services, but we plan to prior to
opening the bank. We plan to request and review Year 2000 testing
16
<PAGE> 18
protocols and results from our software servicing company and each of our
primary vendors. We will receive Year 2000 warranties from each vendor
confirming their Year 2000 compliance, although the remedies available under
such agreements generally include standard disclaimers of and limitations of
liability and specifically exclude special, incidental, indirect, and
consequential damages. We intend to retain a software servicing company which
is an established provider of bank processing and software services to existing
financial institutions. These existing financial institutions are in the
process of investigating their Year 2000 compliance in accordance with
regulatory mandates. Because of this scrutiny, we do not believe that the
software servicing company that we select will have any material Year 2000
issues related to the products or services we will receive from them.
Our customers may also have Year 2000 issues. We may incur losses if
these issues affect our loan customer's ability to repay their loans or if they
suffer material harm to their businesses as a result. We intend to request
certification from each commercial borrower that their systems are Year 2000
compliant and that they have not been adversely affected by the year change.
Although these certifications will be helpful, it would be very difficult for
us to accurately assess the Year 2000 readiness of any borrower.
17
<PAGE> 19
PROPOSED BUSINESS
GENERAL
We initiated activity to form First National Bank of Spartanburg in
April 1999 and incorporated First National Bancshares as a South Carolina
corporation in July 1999, to function as a holding company to own and control
all of the capital stock of First National Bank of Spartanburg. We initially
will engage in no business other than owning and managing the bank.
We have chosen this holding company structure because we believe it
will provide flexibility that would not otherwise be available. Subject to
Federal Reserve Board debt guidelines, the holding company structure can assist
the bank in maintaining its required capital ratios by borrowing money and
contributing the proceeds to the bank as primary capital. Additionally, a
holding company may engage in certain non-banking activities that the Federal
Reserve Board has deemed to be closely related to banking. Although we do not
presently intend to engage in other activities, we will be able to do so with a
proper notice or filing to the Federal Reserve if we believe that there is a
need for these services in our market area and that the activities could be
profitable.
We filed an application with the Office of the Comptroller of the
Currency on July 26, 1999, to organize the bank as a national bank under the
laws of the United States. We have also filed an application with the FDIC for
deposit insurance. Upon preliminary approval from the Office of the Comptroller
of the Currency and the FDIC, we will file an application with the Board of
Governors of the Federal Reserve System for approval to become a bank holding
company. Subject to receiving regulatory approval from these agencies, we plan
to open the bank in the first or second quarter of 2000, and will engage in a
general commercial and consumer banking business as described below. Final
approvals will depend on compliance with regulatory requirements, including our
capitalization of the bank with at least $11,000,000 from the proceeds of this
offering.
MARKETING OPPORTUNITIES
Service Area. Our primary service area will consist of Spartanburg
County, South Carolina, with a focus on the ten mile radius of our main office
and our initial branch office. Our main office will be located in downtown
Spartanburg and will provide excellent visibility for the bank. We will
simultaneously open a branch on the west side of Spartanburg, the fastest
growing area of the county. Our anticipated expansion plans include opening two
additional branches strategically located within our service area in the third
and fifth years of operation. These branches will extend the market reach of
our bank, and they will increase our personal service delivery capabilities to
all of our customers. We plan to take advantage of existing contacts and
relationships with individuals and companies in this area to more effectively
market the services of the bank.
Economic and Demographic Factors. Spartanburg County is located in the
northwest portion of South Carolina along the I-85 corridor between Atlanta,
Georgia and Charlotte, North Carolina, also known as the "Boom Belt." The
county is a business and high technology manufacturing center. Major employers
in the metropolitan area include; BMW, Springs Industries - Michelin Tire
Company, Advantica, Milliken & Company, and Spartanburg Regional Medical
Center. Spartanburg's strategic location and skilled labor force have helped it
attract major international manufacturing companies. BMW recently located its
North American manufacturing facility to the county employing almost 2,000
workers. Successes like this have resulted in Spartanburg County having the
highest per capita international investment of any area in the United States in
1995. Spartanburg County had over $884 million in business and industrial
capital investment in 1998. In November 1998, the unemployment rate in the area
was 3.1%. This growth in the manufacturing base is complemented by Spartanburg
County's population growth which is expected to increase from 247,000 in 1998
to 282,000 in 2010. Ultimately, the success of the bank will depend on the
economy of the community and an economic downturn would hurt our business. We
believe that the demographic factors in Spartanburg make it a desirable market
in which to form our bank.
Competition. The banking business is highly competitive. The bank will
compete as a financial intermediary with other commercial banks, savings and
loan associations, credit unions, finance companies, and
18
<PAGE> 20
money market mutual funds operating in the Spartanburg County area and
elsewhere. In 1998, there were 75 banking offices, representing 18 financial
institutions, operating in Spartanburg County and holding over $2.1 billion in
deposits. Many of these competitors are well established in the Spartanburg
County area. Most of them have substantially greater resources and lending
limits than our bank will have, and many of these competitors offer services,
including extensive and established branch networks and trust services, that we
either do not expect to provide or will not provide initially. Our competitors
include large financial institutions like Regions Bank, Bank of America, BB&T,
American Federal Bank, and Wachovia, super-community banks like Palmetto Bank,
community banks like First South Bank, Carolina Southern Bank, and thrifts like
First Federal Bank. We believe that the opportunity created by recent mergers,
our management team, and the economic and demographic dynamics of our service
area combined with our business strategy will allow us to gain a meaningful
share of the area's deposits.
BUSINESS STRATEGY
Management Philosophy. First National Bank of Spartanburg will
position itself as a locally-owned and operated bank organized to serve
consumers and small- to mid-size businesses and professional concerns. Because
there are few locally owned banks left in Spartanburg, we believe we can offer
a unique banking alternative for the market by offering a higher level of
customer service and a management team more focused on the needs of the
community than most of our competitors. We believe that this approach will be
enthusiastically supported by the community.
Operating Strategy. In order to achieve the level of prompt,
responsive service that we believe will be necessary to attract customers and
to develop First National Bank of Spartanburg's image as a local bank with an
individual focus, we will employ the following operating strategies:
- Experienced Senior Management. We have retained Jerry Calvert
to lead the management team as the president and chief
executive officer for both First National Bancshares and
First National Bank of Spartanburg. He is a native of
Spartanburg and has over 25 years of banking experience. Mr.
Calvert previously served as the regional manager of American
Federal Bank having responsibility for all banking activities
in a three county area, including Spartanburg County, as well
as two branches in Greenville County. He left American
Federal Bank in March 1999 to organize First National Bank of
Spartanburg.
- Other Executives. We are in the process of assembling a
management team with significant banking experience. We
expect these officers to be individuals who reside in the
Spartanburg area and have local banking experience and a
history of service to the community. Because of the recent
merger and acquisition activity in the market and excitement
surrounding the organization of our bank, we believe there is
an abundance of local experienced banking executives who
would be interested in joining our community banking effort.
- Community-Oriented Board of Directors. Our management team
will operate under the direction of our board of directors.
As described in the Management Section beginning on page 32,
most of our directors are long time residents and businessmen
in the Spartanburg area, with significant community
involvement. These directors are dedicated to the success of
the bank, and will play a key part in marketing the new bank
in the community.
- Convenient Branch Locations. Within the first five years of
operation, we plan to open three branch offices located
strategically in our primary service area. We believe these
"branches" will expand our market presence and provide
convenience to our customers.
19
<PAGE> 21
- Local Services and Decision Making. Clients will enjoy a
professional and consistent banking environment with local
decision-making and personal access to a banker that strives
to understand their financial needs. We will seek to be
identified as "the hometown bank" that "cares about its
customers." In order to accomplish this, we will attempt to
hire local bankers who are recognized for their community
involvement and successful banking background.
- Capitalize on Need for Community Banks. The current trend of
consolidation in the banking industry has led to the recent
acquisition of Spartanburg National Bank by Regions Bank,
which left only one community bank in Spartanburg under $50
million in assets. According to the FDIC, in 1998, over 53%
of the total deposits were controlled by large financial
institutions headquartered outside of the area. Despite the
market-share presence of these banks, from 1995 through 1998
total annual deposit growth for five of the largest regional
institutions, Bank of America, BB&T, American Federal Bank,
First Union, and Wachovia was 2.1%, while total annual
deposit growth in Spartanburg County during the same period
was 5%. The two community banks and a local thrift in the
area, Carolina Southern Bank, First South Bank, and First
Federal Bank have experienced average annual growth rates of
over 10% during this same period. We believe that these
statistics reflect the desire of the residents of this area
for a community bank relationship, and that they will support
our new local bank as a result.
- Focus on Small-to Mid-Sized Commercial Market Sector.
Although size gives larger banks certain advantages in
competing for business from large corporations, including
higher lending limits and the ability to offer services in
other areas of South Carolina, we believe that there is a
void in the community banking market in the Spartanburg
County area, and that we can successfully fill this void. We
will not compete with large institutions for the primary
banking relationships of large corporations, but will compete
for niches in this business and for the consumer business of
their employees. We will also focus on small-to medium-sized
businesses and their employees. This includes retail,
service, wholesale distribution, manufacturing, and
international businesses with annual revenues of less than
$15 million. We believe that these organizations desire a
consistent banking relationship. We intend to attract these
types of businesses based on relationships and contacts which
the bank's directors and management have outside our core
service area.
LENDING ACTIVITIES
General. We intend to emphasize a range of lending services, including
real estate, commercial, and equity-line and consumer loans to individuals,
small-to medium-sized businesses with annual revenue of less than $15 million,
and professional concerns that are located in or conduct a substantial portion
of their business in the bank's primary market area. We will compete for these
loans with competitors who are well established in the Spartanburg County area
and have greater resources and lending limits. As a result, we may have to
charge lower interest rates to attract borrowers.
The well established banks in the Spartanburg County area will make
proportionately more loans to medium-to large-sized businesses than we will.
Many of the bank's anticipated commercial loans will likely be made to small-
to medium-sized businesses which may be less able to withstand competitive,
economic, and financial conditions than larger borrowers.
Loan Approval and Review. The bank's loan approval policies will
provide for various levels of officer lending authority. When the amount of
aggregate loans to a single borrower exceeds that individual officer's lending
authority, the loan request will be considered and approved by an officer with
a higher lending limit or the board of directors' loan committee. The bank will
not make any loans to any director, officer, or employee of the bank unless the
loan is approved by the board of directors of the bank and is made on terms not
more favorable to the person than would be available to a person not affiliated
with the bank. The bank currently intends to adhere to Federal National
Mortgage Association and Federal Home Loan Mortgage Corporation guidelines in
its mortgage loan review process, but may choose to alter this policy in the
future. The bank expects to sell residential mortgage loans that it originates
on the secondary market.
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<PAGE> 22
Loan Distribution. We estimate that our initial percentage
distribution of our loans for the first year will be as follows:
<TABLE>
<S> <C>
Real Estate 50%
Commercial Loans 24%
Equity Line and Consumer Loans 20%
Residential Mortgage Loans 6%
----
Total 100%
====
</TABLE>
These are estimates only. Our actual deposit and loan distribution will depend
on our customers and vary initially and over time.
Allowance for Loan Losses. We will maintain an allowance for loan
losses, which we will establish through a provision for loan losses charged
against income. We will charge loans against this allowance when we believe
that the collectibility of the principle is unlikely. The allowance will be an
estimated amount that we believe will be adequate to absorb losses inherent in
the loan portfolio based on evaluations of its collectibility. We anticipate
that initially our allowance for loan losses will equal approximately 1% of the
average outstanding balance of our loans. Over time, we will base the loan loss
reserves on our evaluation of factors including; changes in the nature and
volume of the loan portfolio, overall portfolio quality, specific problem loans
and commitments, and current anticipated economic conditions that may affect
the borrower's ability to pay.
Lending Limits. The bank's lending activities will be subject to a
variety of lending limits imposed by federal law. In general, the bank will be
subject to a legal limit on loans to a single borrower equal to 15% of the
bank's capital and unimpaired surplus. Different limits may apply in certain
circumstances based on the type of loan or the nature of the borrower,
including the borrower's relationship to the bank. These limits will increase
or decrease as the bank's capital increases or decreases. The bank will
initially have a self-imposed loan limit of $1,270,000, which represents
approximately 80% of our legal lending limit of $1,590,000. Unless the bank is
able to sell participations in its loans to other financial institutions, the
bank will not be able to meet all of the lending needs of loan customers
requiring aggregate extensions of credit above these limits.
Credit Risk. The principal credit risk associated with each category
of loans is the creditworthiness of the borrower. Borrower creditworthiness is
affected by general economic conditions and the strength of the manufacturing,
services, and retail market segments. General economic factors affecting a
borrower's ability to repay include interest, inflation, and employment rates
and the strength of local and national economy, as well as other factors
affecting a borrower's customers, suppliers, and employees.
Real Estate Loans. We expect that loans secured by first or second
mortgages on real estate will make up 50% of the bank's loan portfolio. These
loans will generally fall into one of two categories: commercial real estate
loans or construction and development loans. We also expect to make residential
real estate loans secured by first or second mortgages on real estate that will
make up 6% of the bank's loan portfolio. Each of these categories is discussed
in more detail below, including their specific risks. Interest rates for all
categories may be fixed or adjustable, and will more likely be fixed for
shorter-term loans. The bank will generally charge an origination fee for each
loan.
Real estate loans are subject to the same general risks as other
loans. They are particularly sensitive to fluctuations in the value of real
estate, which is generally the underlying security for real estate loans. On
first and second mortgage loans we would typically not advance more than 80% of
the lesser of the cost or appraised value of the property. We will require a
valid mortgage lien on all real property loans along with a title lien policy
which insures the validity and priority of the lien. We will also require
borrowers to obtain hazard insurance policies and flood insurance if
applicable.
We will have the ability to originate some real estate loans for sale
into the secondary market. We can limit our interest rate and credit risk on
these loans by locking the interest rate for each loan with the secondary
investor and receiving the investor's underwriting approval prior to
originating the loan.
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- Commercial Real Estate Loans. Commercial real estate loans
will generally have terms of five years or less, although
payments may be structured on a longer amortization basis. We
will evaluate each borrower on an individual basis and
attempt to determine its business risks and credit profile.
We will attempt to reduce credit risk in the commercial real
estate portfolio by emphasizing loans on owner-occupied
office and retail buildings where the loan-to-value ratio,
established by independent appraisals, does not exceed 80%.
We will also generally require that debtor cash flow exceed
115% of monthly debt service obligations. We will typically
review all of the personal financial statements of the
principal owners and require their personal guarantees. These
reviews generally reveal secondary sources of payment and
liquidity to support a loan request.
- Construction and Development Real Estate Loans. We will offer
adjustable and fixed rate residential and commercial
construction loans to builders and developers and to
consumers who wish to build their own home. The term of
construction and development loans will generally be limited
to eighteen months, although payments may be structured on a
longer amortization basis. Most loans will mature and require
payment in full upon the sale of the property. Construction
and development loans generally carry a higher degree of risk
than long term financing of existing properties. Repayment
depends on the ultimate completion of the project and usually
on the sale of the property. Specific risks include:
- cost overruns;
- mismanaged construction;
- inferior or improper construction
techniques;
- economic changes or downturns
during construction;
- a downturn in the real estate market;
- rising interest rates which may prevent
sale of the property; and
- failure to sell completed projects in a
timely manner.
We will attempt to reduce risk by obtaining personal
guarantees where possible, and by keeping the loan-to-value
ratio of the completed project below specified percentages.
We may also reduce risk by selling participations in larger
loans to other institutions when possible.
- Residential Real Estate Loans. These loans will generally
have longer terms up to 30 years. We will offer fixed and
adjustable rate mortgages, and we intend to sell some or all
of the residential real estate loans that we generate in the
secondary market. By selling these loans in the secondary
market, we can significantly reduce our exposure to credit
risk because the loans will be underwritten through a third
party agent without any recourse against the bank.
Commercial Loans. The bank will make loans for commercial purposes in
various lines of businesses. Equipment loans will typically be made for a term
of five years or less at fixed or variable rates, with the loan fully amortized
over the term and secured by the financed equipment and with a loan-to-value
ratio of 80% or less. We will focus our efforts on commercial loans of less
than $500,000. Working capital loans will typically have terms not exceeding
one year and will usually be secured by accounts receivable, inventory, or
personal guarantees of the principals of the business. For loans secured by
accounts receivable or inventory, principal will typically be repaid as the
assets securing the loan are converted into cash, and in other cases principal
will typically be due at maturity. Trade letters of credit, standby letters of
credit, and foreign exchange will be handled through a correspondent bank as
agent for the bank.
We expect to also offer small business loans utilizing government
enhancements such as the Small Business Administration's 7(a) program and SBA's
504 programs, and Appalachian Development Council. These loans will typically
be partially guaranteed by the government which may help to reduce the bank's
risk. Government guarantees of SBA loans will not exceed 80% of the loan value,
and will generally be less.
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Consumer Loans. The bank will make a variety of loans to individuals
for personal and household purposes, including secured and unsecured
installment loans and revolving lines of credit such as credit cards.
Installment loans typically will carry balances of less than $50,000 and be
amortized over periods up to 60 months. Consumer loans may be offered on a
single maturity basis where a specific source of repayment is available.
Revolving loan products will typically require monthly payments of interest and
a portion of the principal. Consumer loans are generally considered to have
greater risk than first or second mortgages on real estate.
We will also offer home equity loans. Our underwriting criteria for
and the risks associated with home equity loans and lines of credit will
generally be the same as those for first mortgage loans. Home equity lines of
credit will typically have terms of 15 years or less, will typically carry
balances less than $125,000, and may extend up to 100% of the available equity
of each property.
DEPOSIT SERVICES
We intend to offer a full range of deposit services that are typically
available in most banks and savings and loan associations, including checking
accounts, NOW accounts, commercial accounts, savings accounts, and other time
deposits of various types, ranging from daily money market accounts to
longer-term certificates of deposit. The transaction accounts and time
certificates will be tailored to our principal market area at rates competitive
to those offered in the Spartanburg County area. In addition, we intend to
offer certain retirement account services, including IRAs. We intend to solicit
these accounts from individuals, businesses, and other organizations.
Deposit Distribution. We estimate that our initial percentage
distribution of our deposits for the first year will be as follows:
<TABLE>
<S> <C>
Demand Deposit 15%
Savings & Money Market 28%
Time and Savings Deposits 7%
CD's under $100,000 36%
CD's over $100,000 14%
---
Total 100%
===
</TABLE>
OTHER BANKING SERVICES
We anticipate that the bank will offer other bank services including
cash management services such as sweep accounts for commercial businesses. In
addition, lines of credit, 24-hour telephone banking and PC/ internet delivery
are being considered for development. We will offer safe deposit boxes, direct
deposit of payroll and social security checks, U.S. Savings Bonds, travelers
checks, and automatic drafts for various accounts. We plan for the bank to
become associated with the Honor and Cirrus ATM networks that may be used by
the bank's customers throughout the country. We believe that by being
associated with a shared network of ATMs, we will be better able to serve our
clients and will be able to attract clients who are accustomed to the
convenience of using ATMs, although we do not believe that maintaining this
association will be critical to our success. We intend to begin offering these
services shortly after opening the bank. We also plan to offer a debit card and
VISA credit card services through a correspondent bank as an agent for the
bank. We do not expect the bank to exercise trust powers during its initial
years of operation.
MARKET SHARE
In 1998, deposits in Spartanburg County exceeded $2.1 billion. The
average annual growth rate in deposits in Spartanburg County over the last five
years was 5.0%. Based on a growth rate of 4%, the deposits in Spartanburg
County will grow to approximately $2.85 billion by 2004. Our plan over the next
five years is to reach a 5.3% market share with deposits in excess of $150
million. Of course, there can be no assurances that we will accomplish these
objectives.
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EMPLOYEES
We anticipate that, upon commencement of operations, the bank will
have approximately 22 full time employees and 1 part time employee operating
out of the bank's permanent facilities. First National Bancshares, as the
holding company for the bank, will not have any employees other than its
officers.
LEGAL PROCEEDINGS
Neither First National Bancshares, First National Bank of Spartanburg,
nor any of their properties are subject to any material legal proceedings.
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SUPERVISION AND REGULATION
Both First National Bancshares and First National Bank of Spartanburg
are subject to extensive state and federal banking laws and regulations which
impose specific requirements or restrictions on and provide for general
regulatory oversight of virtually all aspects of operations. These laws and
regulations are generally intended to protect depositors, not shareholders. The
following summary is qualified by reference to the statutory and regulatory
provisions discussed. Changes in applicable laws or regulations may have a
material effect on our business and prospects. Beginning with the enactment of
the Financial Institution Report Recovery and Enforcement Act in 1989 and
following with the FDIC Improvement Act in 1991, numerous additional regulatory
requirements have been placed on the banking industry in the past several
years, and additional changes have been proposed. Our operations may be
affected by legislative changes and the policies of various regulatory
authorities. We cannot predict the effect that fiscal or monetary policies,
economic control, or new federal or state legislation may have in the future on
our business and earnings.
FIRST NATIONAL BANCSHARES
Because it will own the outstanding capital stock of the bank, First
National Bancshares will be a bank holding company under the federal Bank
Holding Company Act of 1956 and the South Carolina Banking and Branching
Efficiency Act. Our activities will also be governed by the Glass-Steagall Act
of 1933.
The Bank Holding Company Act. Under the Bank Holding Company Act,
First National Bancshares will be subject to periodic examination by the
Federal Reserve and required to file periodic reports of its operations and any
additional information that the Federal Reserve may require. Our activities at
the bank and holding company level will be limited to:
- Banking and managing or controlling banks;
- furnishing services to or performing services for its
subsidiaries; and
- engaging in other activities that the Federal Reserve
determines to be so closely related to banking and managing
or controlling banks as to be a proper incident thereto.
Investments, Control, and Activities. With certain limited exceptions,
the Bank Holding Company Act requires every bank holding company to obtain the
prior approval of the Federal Reserve before:
- acquiring substantially all the assets of any bank;
- acquiring direct or indirect ownership or control of any
voting shares of any bank if after the acquisition it would
own or control more than 5% of the voting shares of such bank
(unless it already owns or controls the majority of such
shares); or
- merging or consolidating with another bank holding company.
In addition, and subject to certain exceptions, the Bank Holding
Company Act and the Change in Bank Control Act, together with regulations
thereunder, require Federal Reserve approval prior to any person or company
acquiring "control" of a bank holding company. Control is conclusively presumed
to exist if an individual or company acquires 25% or more of any class of
voting securities of the bank holding company. Control is rebuttably presumed
to exist if a person acquires 10% or more, but less than 25%, of any class of
voting securities and either First National Bancshares has registered
securities under Section 12 of the Securities Exchange Act of 1934 or no other
person owns a greater percentage of that class of voting securities immediately
after the transaction. We will register our common stock under the Securities
Exchange Act of 1934. The regulations provide a procedure for challenge of the
rebuttable control presumption.
Under the Bank Holding Company Act, a bank holding company is
generally prohibited from engaging in, or acquiring direct or indirect control
of more than 5% of the voting shares of any company engaged in nonbanking
activities unless the Federal Reserve Board, by order or regulation, has found
those activities to be so closely related to banking or managing or controlling
banks as to be a proper incident thereto. Some of the
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activities that the Federal Reserve Board has determined by regulation to be
proper incidents to the business of a bank holding company include:
- making or servicing loans and certain types of leases;
- engaging in certain insurance and discount brokerage
activities;
- performing certain data processing services;
- acting in certain circumstances as a fiduciary or investment
or financial adviser;
- owning savings associations; and
- making investments in certain corporations or projects
designed primarily to promote community welfare.
The Federal Reserve Board imposes certain capital requirements on
First National Bancshares under the Bank Holding Company Act, including a
minimum leverage ratio and a minimum ratio of "qualifying" capital to
risk-weighted assets. These requirements are described below under "Capital
Regulations." Subject to its capital requirements and certain other
restrictions, First National Bancshares is able to borrow money to make a
capital contribution to the bank, and these loans may be repaid from dividends
paid from the bank to First National Bancshares. Our ability to pay dividends
will be subject to regulatory restrictions as described below in "The Bank -
Dividends." First National Bancshares is also able to raise capital for
contribution to the bank by issuing securities without having to receive
regulatory approval, subject to compliance with federal and state securities
laws.
Source of Strength; Cross-Guarantee. In accordance with Federal
Reserve Board policy, First National Bancshares will be expected to act as a
source of financial strength to the bank and to commit resources to support the
bank in circumstances in which First National Bancshares might not otherwise do
so. Under the Bank Holding Company Act, the Federal Reserve Board may require a
bank holding company to terminate any activity or relinquish control of a
nonbank subsidiary, other than a nonbank subsidiary of a bank, upon the Federal
Reserve Board's determination that such activity or control constitutes a
serious risk to the financial soundness or stability of any subsidiary
depository institution of the bank holding company. Further, federal bank
regulatory authorities have additional discretion to require a bank holding
company to divest itself of any bank or nonbank subsidiary if the agency
determines that divestiture may aid the depository institution's financial
condition.
Glass-Steagall Act. We will also be restricted by the provisions of
the Glass-Steagall Act, which prohibits First National Bancshares from owning
subsidiaries that are engaged principally in the issue, flotation,
underwriting, public sale, or distribution of securities. The interpretation,
scope, and application of the provisions of the Glass-Steagall Act currently
are being considered and reviewed by regulators and legislators, and the
interpretation and application of those provisions have been challenged in the
federal courts.
South Carolina State Regulation. As a bank holding company registered
under the South Carolina Banking and Branching Efficiency Act, we are subject
to limitations on sale or merger and to regulation by the South Carolina Board
of Financial Institutions. Prior to acquiring the capital stock of a national
bank, we are not required to obtain the approval of the Board, but we must
notify them at least 15 days prior to doing so. We must receive the Board's
approval prior to engaging in the acquisition of banking or nonbanking
institutions or assets, and we must file periodic reports with respect to our
financial condition and operations, management, and intercompany relationships
between First National Bancshares and its subsidiaries.
THE BANK
The bank will operate as a national banking association incorporated
under the laws of the United States and subject to examination by the Office of
the Comptroller of the Currency. Deposits in the bank will be insured by the
FDIC up to a maximum amount, which is generally $100,000 per depositor subject
to aggregation rules.
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The Office of the Comptroller of the Currency and the FDIC will
regulate or monitor virtually all areas of the bank's operations, including:
- security devices and procedures;
- adequacy of capitalization and loss reserves;
- loans;
- investments;
- borrowings;
- deposits;
- mergers;
- issuances of securities;
- payment of dividends;
- interest rates payable on deposits;
- interest rates or fees chargeable on loans;
- establishment of branches;
- corporate reorganizations;
- maintenance of books and records; and
- adequacy of staff training to carry on safe lending and
deposit gathering practices.
The Office of the Comptroller of the Currency requires the bank to
maintain specified capital ratios and imposes limitations on the bank's
aggregate investment in real estate, bank premises, and furniture and fixtures.
The Office of the Comptroller of the Currency will also require the bank to
prepare quarterly reports on the bank's financial condition and to conduct an
annual audit of its financial affairs in compliance with its minimum standards
and procedures.
Under the FDIC Improvement Act, all insured institutions must undergo
regular on site examinations by their appropriate banking agency. The cost of
examinations of insured depository institutions and any affiliates may be
assessed by the appropriate agency against each institution or affiliate as it
deems necessary or appropriate. Insured institutions are required to submit
annual reports to the FDIC, their federal regulatory agency, and state
supervisor when applicable. The FDIC Improvement Act directs the FDIC to
develop a method for insured depository institutions to provide supplemental
disclosure of the estimated fair market value of assets and liabilities, to the
extent feasible and practicable, in any balance sheet, financial statement,
report of condition or any other report of any insured depository institution.
The FDIC Improvement Act also requires the federal banking regulatory agencies
to prescribe, by regulation, standards for all insured depository institutions
and depository institution holding companies relating, among other things, to
the following:
- internal controls;
- information systems and audit systems;
- loan documentation;
- credit underwriting;
- interest rate risk exposure; and
- asset quality.
National banks and their holding companies which have been chartered
or registered or have undergone a change in control within the past two years
or which have been deemed by the Office of the Comptroller of the Currency or
the Federal Reserve Board to be troubled institutions must give the Office of
the Comptroller of the Currency or the Federal Reserve Board 30 days prior
notice of the appointment of any senior executive officer or director. Within
the 30 day period, the Office of the Comptroller of the Currency or the Federal
Reserve Board, as the case may be, may approve or disapprove any such
appointment.
Deposit Insurance. The FDIC establishes rates for the payment of
premiums by federally insured banks and thrifts for deposit insurance. A
separate Bank Insurance Fund and Savings Association Insurance Fund are
maintained for commercial banks and savings associations with insurance
premiums from the industry used to
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offset losses from insurance payouts when banks and thrifts fail. In 1993, the
FDIC adopted a rule which establishes a risk-based deposit insurance premium
system for all insured depository institutions. Under this system, until
mid-1995 depository institutions paid to Bank Insurance Fund or Savings
Association Insurance Fund from $0.23 to $0.31 per $100 of insured deposits
depending on its capital levels and risk profile, as determined by its primary
federal regulator on a semiannual basis. Once the Bank Insurance Fund reached
its legally mandated reserve ratio in mid-1995, the FDIC lowered premiums for
well-capitalized banks, eventually eliminating premiums for well-capitalized
banks, with a minimum semiannual assessment of $1,000. However, in 1996
Congress enacted the Deposit Insurance Funds Act of 1996, which eliminated even
this minimum assessment. It also separated the Financial Corporation assessment
to service the interest on its bond obligations. The amount assessed on
individual institutions, including the bank, by Financial Corporation
assessment is in addition to the amount paid for deposit insurance according to
the risk-related assessment rate schedule. Increases in deposit insurance
premiums or changes in risk classification will increase the bank's cost of
funds, and we may not be able to pass these costs on to our customers.
Transactions With Affiliates and Insiders. The bank will be subject to
the provisions of Section 23A of the Federal Reserve Act, which places limits
on the amount of loans or extensions of credit to, or investments in, or
certain other transactions with, affiliates and on the amount of advances to
third parties collateralized by the securities or obligations of affiliates.
The aggregate of all covered transactions is limited in amount, as to any one
affiliate, to 10% of the bank's capital and surplus and, as to all affiliates
combined, to 20% of the bank's capital and surplus. Furthermore, within the
foregoing limitations as to amount, each covered transaction must meet
specified collateral requirements. Compliance is also required with certain
provisions designed to avoid the taking of low quality assets.
The bank will also be subject to the provisions of Section 23B of the
Federal Reserve Act which, among other things, prohibits an institution from
engaging in certain transactions with certain affiliates unless the
transactions are on terms substantially the same, or at least as favorable to
such institution or its subsidiaries, as those prevailing at the time for
comparable transactions with nonaffiliated companies. The bank will be subject
to certain restrictions on extensions of credit to executive officers,
directors, certain principal shareholders, and their related interests. Such
extensions of credit (i) must be made on substantially the same terms,
including interest rates and collateral, as those prevailing at the time for
comparable transactions with third parties and (ii) must not involve more than
the normal risk of repayment or present other unfavorable features.
Dividends. A national bank may not pay dividends from its capital. All
dividends must be paid out of undivided profits then on hand, after deducting
expenses, including reserves for losses and bad debts. In addition, a national
bank is prohibited from declaring a dividend on its shares of common stock
until its surplus equals its stated capital, unless there has been transferred
to surplus no less than one-tenth of the bank's net profits of the preceding
two consecutive half-year periods (in the case of an annual dividend). The
approval of the Office of the Comptroller of the Currency is required if the
total of all dividends declared by a national bank in any calendar year exceeds
the total of its net profits for that year combined with its retained net
profits for the preceding two years, less any required transfers to surplus.
Branching. National banks are required by the National Bank Act to
adhere to branch office banking laws applicable to state banks in the states in
which they are located. Under current South Carolina law, the bank may open
branch offices throughout South Carolina with the prior approval of the Office
of the Comptroller of the Currency. In addition, with prior regulatory
approval, the bank will be able to acquire existing banking operations in South
Carolina. Furthermore, federal legislation has recently been passed which
permits interstate branching. The new law permits out-of-state acquisitions by
bank holding companies, interstate branching by banks if allowed by state law,
and interstate merging by banks.
Community Reinvestment Act. The Community Reinvestment Act requires
that, in connection with examinations of financial institutions within their
respective jurisdictions, the Federal Reserve, the FDIC, or the Office of the
Comptroller of the Currency, shall evaluate the record of each financial
institution in meeting the credit needs of its local community, including low
and moderate income neighborhoods. These factors are also considered in
evaluating mergers, acquisitions, and applications to open a branch or
facility. Failure to adequately meet these criteria could impose additional
requirements and limitations on the bank.
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Other Regulations. Interest and other charges collected or contracted
for by the bank are subject to state usury laws and federal laws concerning
interest rates. The bank's loan operations are also subject to federal laws
applicable to credit transactions, such as:
- the federal Truth-In-Lending Act, governing disclosures of
credit terms to consumer borrowers;
- the Home Mortgage Disclosure Act of 1975, requiring financial
institutions to provide information to enable the public and
public officials to determine whether a financial institution
is fulfilling its obligation to help meet the housing needs
of the community it serves;
- the Equal Credit Opportunity Act, prohibiting discrimination
on the basis of race, creed or other prohibited factors in
extending credit;
- the Fair Credit Reporting Act of 1978, governing the use and
provision of information to credit reporting agencies;
- the Fair Debt Collection Act, governing the manner in which
consumer debts may be collected by collection agencies; and
- the rules and regulations of the various federal agencies
charged with the responsibility of implementing such federal
laws.
The deposit operations of the bank also are subject to:
- the Right to Financial Privacy Act, which imposes a duty to
maintain confidentiality of consumer financial records and
prescribes procedures for complying with administrative
subpoenas of financial records; and
- the Electronic Funds Transfer Act and Regulation E issued by
the Federal Reserve Board to implement that act, which
governs automatic deposits to and withdrawals from deposit
accounts and customers' rights and liabilities arising from
the use of automated teller machines and other electronic
banking services.
Capital Regulations. The federal bank regulatory authorities have
adopted risk-based capital guidelines for banks and bank holding companies that
are designed to make regulatory capital requirements more sensitive to
differences in risk profiles among banks and bank holding companies and account
for off-balance sheet items. The guidelines are minimums, and the federal
regulators have noted that banks and bank holding companies contemplating
significant expansion programs should not allow expansion to diminish their
capital ratios and should maintain ratios in excess of the minimums. We have
not received any notice indicating that either First National Bancshares or
First National Bank of Spartanburg is subject to higher capital requirements.
The current guidelines require all bank holding companies and
federally-regulated banks to maintain a minimum risk-based total capital ratio
equal to 8%, of which at least 4% must be Tier 1 capital. Tier 1 capital
includes common shareholders' equity, qualifying perpetual preferred stock, and
minority interests in equity accounts of consolidated subsidiaries, but
excludes goodwill and most other intangibles and excludes the allowance for
loan and lease losses. Tier 2 capital includes the excess of any preferred
stock not included in Tier 1 capital, mandatory convertible securities, hybrid
capital instruments, subordinated debt and intermediate term-preferred stock,
and general reserves for loan and lease losses up to 1% of risk-weighted
assets.
Under these guidelines, banks' and bank holding companies' assets are
given risk-weights of 0%, 20%, 50%, or 100%. In addition, certain off-balance
sheet items are given credit conversion factors to convert them to asset
equivalent amounts to which an appropriate risk-weight applies. These
computations result in the total risk-weighted assets. Most loans are assigned
to the 100% risk category, except for first mortgage loans fully secured by
residential property and, under certain circumstances, residential construction
loans, both of which carry a 50% rating. Most investment securities are
assigned to the 20% category, except for municipal or state revenue bonds,
which have a 50% rating, and direct obligations of or obligations guaranteed by
the United States Treasury or United States Government agencies, which have a
0% rating.
The federal bank regulatory authorities have also implemented a
leverage ratio, which is equal to Tier 1 capital as a percentage of average
total assets less intangibles, to be used as a supplement to the risk-based
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guidelines. The principal objective of the leverage ratio is to place a
constraint on the maximum degree to which a bank holding company may leverage
its equity capital base. The minimum required leverage ratio for top-rated
institutions is 3%, but most institutions are required to maintain an
additional cushion of at least 100 to 200 basis points.
The FDIC Improvement Act established a new capital-based regulatory
scheme designed to promote early intervention for troubled banks which requires
the FDIC to choose the least expensive resolution of bank failures. The new
capital-based regulatory framework contains five categories of compliance with
regulatory capital requirements, including "well capitalized," "adequately
capitalized," "undercapitalized," "significantly undercapitalized," and
"critically undercapitalized." To qualify as a "well capitalized" institution,
a bank must have a leverage ratio of no less than 5%, a Tier 1 risk-based ratio
of no less than 6%, and a total risk-based capital ratio of no less than 10%,
and the bank must not be under any order or directive from the appropriate
regulatory agency to meet and maintain a specific capital level. Initially, we
will qualify as "well capitalized."
Under the FDIC Improvement Act regulations, the applicable agency can
treat an institution as if it were in the next lower category if the agency
determines (after notice and an opportunity for hearing) that the institution
is in an unsafe or unsound condition or is engaging in an unsafe or unsound
practice. The degree of regulatory scrutiny of a financial institution
increases, and the permissible activities of the institution decreases, as it
moves downward through the capital categories. Institutions that fall into one
of the three undercapitalized categories may be required to do some or all of
the following:
- submit a capital restoration plan;
- raise additional capital;
- restrict their growth, deposit interest rates, and other
activities;
- improve their management;
- eliminate management fees; or
- divest themselves of all or a part of their operations.
Bank holding companies controlling financial institutions can be called upon to
boost the institutions' capital and to partially guarantee the institutions'
performance under their capital restoration plans.
These capital guidelines can affect us in several ways. If we grow at
a rapid pace, our capital may be depleted too quickly, and a capital infusion
from the holding company may be necessary, which could impact our ability to
pay dividends. Our capital levels will initially be more than adequate;
however, rapid growth, poor loan portfolio performance, poor earnings
performance, or a combination of these factors could change our capital
position in a relatively short period of time.
The FDIC Improvement Act requires the federal banking regulators to
revise the risk-based capital standards to provide for explicit consideration
of interest-rate risk, concentration of credit risk, and the risks of
untraditional activities. We are uncertain what effect these regulations would
have.
Failure to meet these capital requirements would mean that a bank
would be required to develop and file a plan with its primary federal banking
regulator describing the means and a schedule for achieving the minimum capital
requirements. In addition, such a bank would generally not receive regulatory
approval of any application that requires the consideration of capital
adequacy, such as a branch or merger application, unless the bank could
demonstrate a reasonable plan to meet the capital requirement within a
reasonable period of time.
Enforcement Powers. The Financial Institution Reform Recovery and
Enforcement Act expanded and increased civil and criminal penalties available
for use by the federal regulatory agencies against depository institutions and
certain "institution-affiliated parties." Institution-affiliated parties
primarily include management, employees, and agents of a financial institution,
as well as independent contractors and consultants such as attorneys and
accountants and others who participate in the conduct of the financial
institution's affairs. These practices can include the failure of an
institution to timely file required reports or the filing of false or
misleading information or the submission of inaccurate reports. Civil penalties
may be as high as $1,000,000 a day for such
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<PAGE> 32
violations. Criminal penalties for some financial institution crimes have
been increased to twenty years. In addition, regulators are provided with
greater flexibility to commence enforcement actions against institutions and
institution-affiliated parties. Possible enforcement actions include the
termination of deposit insurance. Furthermore, banking agencies' power to issue
cease-and-desist orders were expanded. Such orders may, among other things,
require affirmative action to correct any harm resulting from a violation or
practice, including restitution, reimbursement, indemnifications or guarantees
against loss. A financial institution may also be ordered to restrict its
growth, dispose of certain assets, rescind agreements or contracts, or take
other actions as determined by the ordering agency to be appropriate.
Recent Legislative Developments. From time to time, various bills are
introduced in the United States Congress with respect to the regulation of
financial institutions. Some of these proposals, if adopted, could
significantly change the regulation of banks and the financial services
industry. We cannot predict whether any of these proposals will be adopted or,
if adopted, what effect these would have.
Effect of Governmental Monetary Policies. Our earnings are affected by
domestic economic conditions and the monetary and fiscal policies of the United
States government and its agencies. The Federal Reserve Bank's monetary
policies have had, and are likely to continue to have, an important impact on
the operating results of commercial banks through its power to implement
national monetary policy in order, among other things, to curb inflation or
combat a recession. The monetary policies of the Federal Reserve Board have
major effects upon the levels of bank loans, investments and deposits through
its open market operations in United States government securities and through
its regulation of the discount rate on borrowings of member banks and the
reserve requirements against member bank deposits. It is not possible to
predict the nature or impact of future changes in monetary and fiscal policies.
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<PAGE> 33
MANAGEMENT
GENERAL
The following table sets forth the number and percentage of
outstanding shares of common stock we expect to be beneficially owned by the
organizers and executive officers after the completion of this offering. All of
our organizers will serve as directors. The addresses of our organizers are the
same as the address of the bank. Prior to the offering, Jerry Calvert purchased
ten shares of common stock for $10.00 per share. We will redeem this stock
after the offering. This table includes shares based on the "beneficial
ownership" concepts as defined by the SEC. Beneficial ownership includes
spouses, minor children, and other relatives residing in the same household,
and trusts, partnerships, corporations or deferred compensation plans which are
affiliated with the principal. This table does not reflect warrants that will
be granted to each organizer to purchase two shares of common stock for every
three shares of common stock purchased by the organizers during the offering
because these warrants will not be exercisable within 60 days of the date of
this prospectus.
<TABLE>
<CAPTION>
SHARES ANTICIPATED TO BE OWNED
FOLLOWING THE OFFERING
--------------------------
NAME OF BENEFICIAL OWNER NUMBER PERCENT
------------------------ ------ -------
<S> <C> <C>
DIRECTORS AND EXECUTIVE OFFICERS
C. Dan Adams 30,000 2.50%
Mellnee G. Buchheit 30,000 2.50%
Jerry L. Calvert 30,000 2.50%
Martha C. Chapman 20,000 1.67%
W. Russel Floyd, Jr. 30,000 2.50%
Dr. C. Tyrone Gilmore, Sr. 10,000 0.83%
Dr. Gaines W. Hammond, Jr. 60,000 5.00%
Benjamin R. Hines 25,000 2.08%
William A. Hudson 60,000 5.00%
Norman F. Pulliam 60,000 5.00%
Peter E. Weisman 25,000 2.08%
Donald B. Wildman 20,000 1.67%
Coleman L. Young, Jr. 25,000 2.08%
All directors and executive officers as a 425,000 35.41%
group (13 persons)
</TABLE>
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<PAGE> 34
EXECUTIVE OFFICERS AND DIRECTORS OF THE COMPANY
The following sets forth certain information regarding First National
Bancshares, Inc.'s executive officers and directors as of the date of this
Prospectus. The Company's Articles of Incorporation provide for a classified
Board of Directors, so that, as nearly as possible, one-third of the directors
are elected each year to serve three-year terms. The terms of office of the
classes of directors expire as follows: Class I at the 2000 annual meeting of
shareholders, Class II at the 2001 annual meeting of shareholders, and Class
III at the 2002 annual meeting of shareholders. Executive officers of the
Company serve at the discretion of the Company's Board of Directors.
<TABLE>
<CAPTION>
Name Age Position
- ---- --- --------
<S> <C> <C>
C. Dan Adams 39 Director
Mellnee G. Buchheit 51 Director
Jerry L. Calvert 51 Director, President, and
Chief Executive Officer
Martha Cloud Chapman 76 Director
W. Russel Floyd, Jr. 49 Director
C. Tyrone Gilmore, Sr. 56 Director
Gaines W. Hammond, Jr., M.D. 50 Director
Benjamin R. Hines 43 Director
William A. Hudson 64 Director
Norman F. Pulliam 56 Director, Chairman of the Board
Peter E. Weisman 62 Director
Donald B. Wildman 50 Director
Coleman L. Young, Jr. 42 Director
</TABLE>
C. Dan Adams, Class III director, has been the president and principal
owner of The Capital Corporation of America, Inc., a mortgage banking company
located in Spartanburg, since 1991. He is also president and owner of The
Capital Finance Group, Inc., a merger and acquisitions company located in
Spartanburg. From 1981 until 1991, he was an employee and vice president of C&S
National Bank. Mr. Adams maintains an active role in the business community
with ownership interests in several hotel, assisted living, and restaurant
businesses. Mr. Adams holds SEC Series 7 and SEC Series 63 licenses from the
NASD and is a certified business intermediary. He graduated from the University
of South Carolina-Spartanburg in 1983 with a degree in business administration.
He is a graduate of The Banking School of the South (Louisiana State
University, 1989) and is a Certified Commercial Investment member. He is an
active member of the First Baptist Church of Spartanburg.
Mellnee G. Buchheit, Class I director, has been the president of
Buchheit News Management, Inc., a firm specializing in media investments, since
1993. From 1980 until 1993, Ms. Buchheit worked in the public relations
department for Mid-South Management Company, Inc., a media investment company.
She also serves as a director for Wayne Printing Co., Inc. and Hometown News,
Inc. Ms. Buchheit graduated from Winthrop University with a degree in education
in 1969. Ms Buchheit currently serves on the board of trustees for Spartanburg
Day School, Spartanburg Regional Medical Foundation, and Spartanburg Methodist
College. Ms. Buchheit is presently a member of Westminster Presbyterian Church,
the Lady Slipper Garden Club, and the Junior League of Spartanburg (sustainer).
Jerry L. Calvert, Class I director, is the proposed chief executive
officer and president of First National Bancshares, Inc. and the First National
Bank of Spartanburg (proposed). He has over 25 years of experience in the
financial services industry. Mr. Calvert was the senior vice president and
regional manager for American Federal Bank from 1984 until March 1999, when he
resigned to help organize the First National Bank of Spartanburg. From 1977
until 1984, he was vice president and city executive for the Southern Bank &
Trust, located in Gaffney, South Carolina. From 1974 until 1977, Mr. Calvert
was a loan officer with First National
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Bank of South Carolina. Mr. Calvert graduated from Wofford College in 1974 with
a bachelor of arts degree in economics. He is also a graduate of The Bankers
School of the South at Louisiana State University and the National Commercial
Lending School at the University of Oklahoma. Mr. Calvert currently serves on
the board of directors of the Spartanburg Area Chamber of Commerce, the Cities
and Schools of Spartanburg, the Spartanburg Rotary Club, and the Spartanburg
Urban League. He was a former chairman of the board of the Cities and Schools
and a former director and chairman of the board of the Big Brothers/Sisters of
Spartanburg. He is a retired Lt. Colonel in the U.S. Marine Reserves and a
Vietnam veteran. Mr. Calvert was Rotarian of the Year in 1998-1999, and he has
been elected chairman of the board of the Spartanburg Area Chamber of Commerce
for the year 2000.
Martha Cloud Chapman, Class III director, graduated from the
University of North Carolina - Greensboro in 1942 with a degree in art. Ms.
Chapman previously was the first female board member of the Spartanburg County
Foundation, the South Carolina Development Board, and the South Carolina Mining
Council and the chairman of Governor Jim Edward's Inaugural Ball. She was also
a past board member of the Spartanburg Music Foundation, the South Carolina
Election Commission, South Carolina Health Coordinating Commission, Palmetto
Conservation Foundation, and Spartanburg Methodist College and a past member of
Clemson University's board of visitors. Ms. Chapman currently serves on the
board of directors for Queens College in Charlotte, North Carolina, the SC
School Deaf & Blind Foundation, the Charles Lea Foundation, AWARE (adult
literacy), Mobile Meals, Ballet Spartanburg, and Converse College Alumnae
Associates. Ms. Chapman is currently an elder of the First Presbyterian Church,
moderator elect of the Presbyterian Women, a sustainer of the Junior League of
Spartanburg, and a trustee of the YMCA foundation.
W. Russel Floyd, Jr., Class I director, has been the president of
W.R. Floyd Services, Inc., a funeral home and cemetery operation located in
Spartanburg, since 1978, the president of Westwood Memorial Gardens, Inc., a
cemetery located in Spartanburg, and the vice president of Piedmont Crematory
since 1980. He also serves as the president of Business Communications, Inc., a
local provider of telephone services and equipment since 1984. Mr. Floyd
graduated form the University of North Carolina - Chapel Hill in 1972 with a
bachelor of science degree in business administration, and he received a
bachelor of arts degree in psychology from the University of North Carolina -
Charlotte in 1977. He served on the advisory board for Wachovia of Spartanburg
from 1994 until April 1999 and was past president of the Spartanburg Boy's Home
for two terms while serving on the board from 1986 until 1999. Mr. Floyd
currently serves on the board of deacons at First Presbyterian Church of
Spartanburg and the board of trustees for the Spartanburg YMCA. Mr. Floyd is
also a member of the Spartanburg Rotary Club.
Dr. C. Tyrone Gilmore, Sr., Class III director, is the superintendent
of Spartanburg County School District 7, where he has served in numerous
capacities since 1965 including, principal, assistant principal, teacher, and
athletics coach. He graduated from Livingstone College in 1965 with a bachelor
of arts degree. Dr. Gilmore earned his Master's degree in 1971 from Converse
College and received his Ed. S. in post graduate studies in 1976 from the
University of South Carolina - Spartanburg. Dr. Gilmore has been an active
member of many organizations, serving in various capacities, including advisory
board member of BB&T Bank, chairman of the local United Way Board, member of
the Lander University Board of Trustees, chairman of the South Carolina State
Election Commission, Grand Basileus of the Omega Psi Phi Fraternity, and member
of the Mary Black Foundation Board of Trustees.
Dr. Gaines W. Hammond, Jr., Class II director, is a physician
practicing with Mary Black Health Systems, LLC. Prior to joining Mary Black,
Dr. Hammond owned his own practice, Hammond and Bass, P.A., from 1980 until
June 1996. He has an ownership interest in several lithotripsy partnerships, as
well as a publishing company and healthcare organization. Dr. Hammond graduated
from Washington and Lee University in 1971 with a bachelor of science degree,
and from the Medical University of South Carolina in 1974. He has served on the
SCMA legislative committee, the AMI medical advisory board, and several
committees for Doctors Memorial Hospital and Spartanburg Regional Medical
Center. He currently serves as chairman of Mary Black Physicians Group of Mary
Black Hospital and is a member of First Presbyterian Church of Spartanburg.
Benjamin R. Hines, Class II director, has been president of
Spencer/Hines Properties, a commercial real estate firm located in Spartanburg
since 1986. He has been involved in numerous real estate brokerage and
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<PAGE> 36
development projects including, retail, office, and industrial facilities. Mr.
Hines was also President of Palmetto Golf, Inc., a golf course management
company, and currently serves as a partner in Advance Business Funding, LLC., a
local company specializing in Factoring. He also holds South Carolina and North
Carolina real estate licenses, and he has been licensed as a Certified
Financial Planner since 1989. Mr. Hines graduated from Wofford College in 1978
with a Bachelor's Degree in Economics. He has served on the Eastern Regional
Advisory Board of American Federal Bank from 1994 until April 1999. In
addition, he has acted as a Board Member for the Pine Street YMCA and the Mary
Black Hospital Advisory Committee and was Chairman of the Board for Child
Evangelism Fellowship, a non-profit Christian Ministry.
William A. Hudson, Class I director, is vice chairman of Diversco,
Inc., an outsourcing and contract services business located in Spartanburg.
Since 1969, Mr. Hudson has held various positions with Diversco, including
chairman and chief executive officer. He graduated from Clemson University in
1957 with a bachelor of science degree in education. Mr. Hudson played
professional football for the San Diego Chargers, Boston Patriots, and Montreal
Alouettes from 1957 until 1963. Mr. Hudson remains an active member of the
business community maintaining an ownership interest in several real estate
entities. He served on the Wachovia Bank advisory board from 1995 until May
1999. Mr. Hudson is a member St. Paul United Methodist Church, S.C. Athletic
Hall of Fame, and the Clemson University Athletic Hall of Fame. He currently
serves on the board of directors for the Spartanburg Regional Medical Center
Heart Center.
Norman F. Pulliam, Class I director and chairman of the board, has
been the owner and president of Pulliam Investment Company, Inc., a real estate
development and property management company, since 1971. Mr. Pulliam holds a
real estate broker's license in South Carolina and North Carolina. He has
extensive real estate experience and has developed, owned, and managed several
office buildings, apartments, condominiums, retirement communities, assisted
living facilities, and commercial land developments. He graduated from Clemson
University in 1964 with a bachelor of science degree in industrial management,
and received his Masters of Business Administration from Harvard University in
1967. Mr. Pulliam has served as chairman of the South Carolina Manufactured
Housing Board, co-chairman of the Spartanburg Development Council, chairman of
the Piedmont Chapter of the American Red Cross, chairman of the Spartanburg
Convention and Visitors Bureau, president of the Spartanburg Boy's Home, and
was a member of Clemson University's board of visitors. He was also a director
for Morgan Bank & Trust Company of Spartanburg and the Spartanburg Area Chamber
of Commerce. Mr. Pulliam currently serves as chairman of the board of
commissioners for the South Carolina School for the Deaf and Blind, and trustee
of the Foundation for the Multihandicapped, Blind, and Deaf of South Carolina.
Peter E. Weisman, Class II director, is an owner and managing member
of Peter Weisman / Kinney Hill Associates, LLC, a real estate development
company established in 1989 and located in Spartanburg. Mr. Weisman has also
been a general partner of P & J Realty Co., a real estate development company
located in New York, New York, since 1969. He graduated from the University of
Pennsylvania in 1961 with a degree in architecture. Mr. Weisman is an AIA
licensed architect and an active member of the Society of 1921 Spartanburg
Regional Foundation.
Donald B. Wildman, Class II director, is a managing partner of the law
firm of Johnson, Smith, Hibbard, and Wildman, LLP. Mr. Wildman has been a
transactions attorney with the firm since 1974. He maintains an active role in
the business community with ownership interests in several real estate
properties in the Spartanburg area. He graduated from Wofford College in 1971
with a bachelor of arts degree, and received his juris doctor from the
University of South Carolina, School of Law in 1974. Mr. Wildman is licensed as
an attorney and title insurance agent in South Carolina. He served on the local
advisory board for NationsBank from 1991 until April 1999, currently is an
active member of the Spartanburg County Home Builders Association, the
Spartanburg County Historical Association, and a member and elder of
Westminster Presbyterian Church of Spartanburg. Mr. Wildman is currently
chairman of the City of Spartanburg Board of Architectural Design and
Historical Review.
Coleman L. Young, Jr., Class III director, has been the president of
CLY, Inc., a dry cleaning business located in Spartanburg, since 1994. Mr.
Young also serves as property manager for Coleman Young Family Limited
Partnership, a real estate development company, and chairman of Upward
Unlimited, a non-profit ministry. Mr. Young graduated from Clemson University
in 1979 with a bachelor of science degree. Mr. Young
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<PAGE> 37
served on the advisory board of First Union Bank in Spartanburg from 1995 until
May 1999 and is a former board member of the Better Business Bureau of the
Foothills. He is currently an active member of First Baptist Church of
Spartanburg.
EMPLOYMENT AGREEMENT
We have entered into an employment agreement with Jerry Calvert for a
three-year term, pursuant to which he will serve as the president, the chief
executive officer, and a director of First National Bancshares and First
National Bank of Spartanburg. Mr. Calvert will be paid an initial salary of
$99,500, plus his yearly medical insurance premium. When the bank opens for
business, his annual salary will increase to $110,000. The board of directors
may increase Mr. Calvert's salary at its discretion. He is entitled to receive
a bonus of $10,000 upon the opening of the bank and will be eligible to receive
an annual bonus of up to 5% of the net pre-tax income of the bank, if the bank
meets performance goals set by the board. He will be eligible to participate in
any management incentive program of the bank or any long-term equity incentive
program and will be eligible for grants of stock options and other awards under
these plans. Upon the closing of the offering, or as soon thereafter as an
appropriate stock option plan is adopted by the company, Mr. Calvert will be
granted options to purchase a number of shares of common stock equal to 5% of
the number of shares sold in this offering. These options will vest over a
five-year period and will have a term of ten years. Additionally, Mr. Calvert
will participate in the bank's retirement, welfare, and other benefit programs
and is entitled to a life insurance policy and an accident liability policy,
and reimbursement for automobile expenses, club dues, and travel and business
expenses.
Mr. Calvert's employment agreement also provides that following
termination of his employment and for a period of twelve months thereafter, he
may not (a) compete with the company, the bank, or any of its affiliates by,
directly or indirectly, forming, serving as an organizer, director or officer
of, or consultant to, or acquiring or maintaining more than 1% passive
investment in, a depository financial institution or holding company of a
depository financial institution, if the depository institution or holding
company has one or more offices or branches within radius of 30 miles from the
main office of the company or any branch office of the company, (b) solicit
major customers of the bank for the purpose of providing financial services, or
(c) solicit employees of the bank for employment.
If Mr. Calvert terminates his employment following a change in control
and (i) the termination is for a good reason as that term is defined in the
employment agreement, or (ii) the termination notice is delivered within a 90
day period beginning on the one year anniversary of the change in control, he
will be entitled to severance compensation of his then current monthly salary
for a period of 12 months, plus accrued bonus, and all outstanding options and
incentives shall vest immediately. If the company terminates Mr. Calvert's
employment and the termination is not for cause as that term is defined in the
employment agreement, then he will be entitled to severance compensation of his
then current monthly salary each month for a period of 24 months, plus accrued
bonus, and all outstanding options and incentives shall vest according to the
stock option plan in place at that time. In the event of Mr. Calvert's death,
his salary shall continue through the month, plus his accrued bonus, and all
outstanding options shall vest according to the stock option plan in place at
that time. In the event the company terminates Mr. Calvert's employment because
of a disability which continues for more than 180 days, he shall receive his
salary until his insurance payments begin, plus his accrued bonus through the
disability date, and all outstanding options shall vest according to the stock
option plan in place at that time. Finally, if the effort to organize the bank
is abandoned, then he will be entitled to severance compensation of his then
current monthly salary each month for a period of three months.
DIRECTOR COMPENSATION
We do not intend to pay our directors fees until the bank is
profitable. However, we reserve the right to pay directors' fees.
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STOCK OPTION PLAN
After the offering, we expect to adopt a stock option plan which will
permit First National Bancshares to grant options to its officers, directors,
and employees. We anticipate that we will initially authorize the issuance of a
number of shares under the stock option plan equal to 15% of the shares
outstanding after the offering, including options granted to Jerry Calvert
pursuant to our employment agreement with him. We do not intend to issue stock
options at less than the fair market value of the common stock on the date of
grant.
STOCK WARRANTS
The organizers have invested significant time and effort to form First
National Bancshares and First National Bank of Spartanburg, and they have
individually guaranteed a $500,000 line of credit to the bank to cover
organizational expenses. In recognition of the financial risk and efforts they
have undertaken in organizing the bank, each organizer will also receive, for
no additional consideration, a warrant to purchase two shares of common stock
at a purchase price of $10.00 per share for every three shares purchased by
that organizer in the offering. The warrants, which will be represented by
separate warrant agreements, will vest over a three year period beginning one
year from the date of the completion of this offering, and will be exercisable
in whole or in part during the ten year period following that date. The
warrants and shares issued pursuant to the exercise of such warrants will not
be transferable, subject to compliance with applicable securities laws. If the
Office of the Comptroller of the Currency issues a capital directive or other
order requiring the bank to obtain additional capital, the warrants will be
forfeited if not immediately exercised.
The organizers plan to purchase approximately 425,000 shares of common
stock for a total investment of $4,250,000. As a result, the organizers will
own approximately 35.4% of the common stock outstanding upon completion of the
offering. If each organizer exercises his warrant in full, the organizers'
ownership of First National Bancshares will increase to 47.8% of the
outstanding common stock. Although they have not promised to do so, the
organizers may purchase additional shares in the offering, including up to 100%
of the offering. All shares purchased by the organizers will be for investment
and not intended for resale. Because purchases by the organizers may be
substantial, you should not assume that the sale of a specified offering amount
indicates the merits of this offering.
EXCULPATION AND INDEMNIFICATION
First National Bancshares's articles of incorporation contain a
provision which, subject to certain limited exceptions, limits the liability of
a director for any breach of duty as a director. There is no limitation of
liability for:
- a breach of duty involving appropriation of a business
opportunity;
- an act or omission which involves intentional misconduct or a
knowing violation of law;
- any transaction from which the director derives an improper
personal benefit; or
- as to any payments of a dividend or any other type of
distribution that is illegal under Section 33-8-330 of the
South Carolina Business Corporation Act of 1988.
In addition, if such act is amended to authorize further elimination or
limitation of the liability of director, then the liability of each director
shall be eliminated or limited to the fullest extent permitted by such
provisions, as so amended, without further action by the shareholders, unless
the law requires such action. The provision does not limit the right of the
company or its shareholders to seek injunctive or other equitable relief not
involving payments in the nature of monetary damages.
First National Bancshare's bylaws contain certain provisions which
provide that the company shall indemnify directors to the maximum extent
provided by South Carolina law. This protection is broader than the protection
expressly mandated in Sections 33-8-510 and 33-8-520 of the South Carolina
Business Corporation Act. These statutory sections provide that a company shall
indemnify a director or an officer only to the extent that he has been wholly
successful, on the merits or otherwise, in the defense of any action or
proceeding brought by
37
<PAGE> 39
reason of the fact that the person was a director or officer. This requirement
would include indemnifying directors against expenses, including attorney's
fees, actually and reasonably incurred in connection with the matter. In
addition to this mandatory indemnification right, our bylaws provide additional
mandatory protection that includes, but is not limited to, situations where the
director (a) conducted himself in good faith, (b) reasonably believed that
conduct in his official capacity with the corporation was either in the
corporation's best interest or was not opposed to the best interest of the
corporation; and (c) that he had no reasonable cause to believe his conduct was
unlawful.
Our board of directors also has the authority to extend to officers,
employees, and agents the same indemnification rights held by directors,
subject to all of the accompanying conditions and obligations. The board of
directors intends to extend indemnification rights to all of its executive
officers.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of First National Bancshares pursuant to the foregoing provisions, or
otherwise, First National Bancshares has been informed that in the opinion of
the Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act of 1933 and is, therefore,
unenforceable.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
INTERESTS OF MANAGEMENT AND OTHERS IN CERTAIN TRANSACTIONS
We expect to have banking and other transactions in the ordinary
course of business with the organizers, directors, and officers and their
affiliates, including members of their families or corporations, partnerships,
or other organizations in which such organizers, officers, or directors have a
controlling interest, on substantially the same terms, including price, or
interest rates and collateral, as those prevailing at the time for comparable
transactions with unrelated parties. These transactions are also restricted by
our regulatory agencies, including the Federal Reserve Board. For a discussion
of the Federal Reserve Board regulations, please see "Transactions with
Affiliates and Insiders" on page 28. These transactions are not expected to
involve more than the normal risk of collectibility nor present other
unfavorable features. Loans to individual directors and officers must also
comply with the bank's lending policies, regulatory restrictions, and statutory
lending limits, and directors with a personal interest in any loan application
will be excluded from the consideration of such loan application. We intend for
all of our transactions with organizers or other affiliates to be on terms no
less favorable than could be obtained from an unaffiliated third party and to
be approved by a majority of our disinterested directors.
DESCRIPTION OF CAPITAL STOCK OF FIRST NATIONAL BANCSHARES
GENERAL
The authorized capital stock of First National Bancshares consists of
10,000,000 shares of common stock, par value $0.01 per share, and 10,000,000
shares of preferred stock, par value $0.01 per share. The following summary
describes the material terms of First National Bancshares's capital stock.
Reference is made to the articles of incorporation of First National Bancshares
which is filed as an exhibit to the Registration Statement of which this
prospectus forms a part, for a detailed description of the provisions
summarized below.
COMMON STOCK
Holders of shares of the common stock are entitled to receive such
dividends as may from time to time be declared by the board of directors out of
funds legally available for distribution. We do not plan to declare any
dividends in the immediate future. See "Dividend Policy" on page 14. Holders of
common stock are entitled to one vote per share on all matters on which the
holders of common stock are entitled to vote and do not have any cumulative
voting rights. Shareholders have no preemptive, conversion, redemption, or
sinking fund rights. In the event of a liquidation, dissolution, or winding-up
of the company, holders of common stock are entitled to
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<PAGE> 40
share equally and ratably in the assets of the company, if any, remaining after
the payment of all debts and liabilities of the company and the liquidation
preference of any outstanding preferred stock. The outstanding shares of common
stock are, and the shares of common stock offered by the company when issued
will be, fully paid and nonassessable. The rights, preferences and privileges
of holders of common stock are subject to any classes or series of preferred
stock that the company may issue in the future.
PREFERRED STOCK
First National Bancshares' articles of incorporation provide that the
board of directors is authorized, without further action by the holders of the
common stock, to provide for the issuance of shares of preferred stock in one
or more classes or series and to fix the designations, powers, preferences, and
relative, participating, optional and other rights, qualifications,
limitations, and restrictions, including the dividend rate, conversion rights,
voting rights, redemption price, and liquidation preference, and to fix the
number of shares to be included in any such classes or series. Any preferred
stock so issued may rank senior to the common stock with respect to the payment
of dividends or amounts upon liquidation, dissolution or winding-up, or both.
In addition, any such shares of preferred stock may have class or series voting
rights. Upon completion of this offering, we will not have any shares of
preferred stock outstanding. Issuances of preferred stock, while providing the
company with flexibility in connection with general corporate purposes, may,
among other things, have an adverse effect on the rights of holders of common
stock. For example, the issuance of any preferred stock with voting or
conversion rights may adversely affect the voting power of the holders of
common stock, and such issuances could have the effect of decreasing the market
price of the common stock. We do not plan to issue any shares of preferred
stock, and will not issue preferred stock to organizers on terms more
favorable than those on which we issue preferred stock to shareholders other
than organizers.
ANTI-TAKEOVER EFFECTS
The provisions of the articles, the bylaws, and South Carolina law
summarized in the following paragraphs may have anti-takeover effects and may
delay, defer, or prevent a tender offer or takeover attempt that a shareholder
might consider to be in such shareholder's best interest, including those
attempts that might result in a premium over the market price for the shares
held by shareholders, and may make removal of management more difficult.
Restriction on Acquisition. Sections 34-25-50 and 34-25-240 of the
Code of Laws of South Carolina prohibit a company from "acquiring" First
National Bancshares or First National Bank of Spartanburg until the bank has
been in existence and continuous operation for five years.
Control Share Act. First National Bancshares has specifically elected
to opt out of a provision of South Carolina law which may deter or frustrate
unsolicited attempts to acquire certain South Carolina corporations. This
statute, commonly referred to as the "Control Share Act" applies to public
corporations organized in South Carolina, unless the corporation specifically
elects to opt out. The Control Share Act generally provides that shares of a
public corporation acquired in excess of certain specific thresholds will not
possess any voting rights unless such voting rights are approved by a majority
vote of the corporation's disinterested shareholders.
Authorized but Unissued Stock. The authorized but unissued shares of
common stock and preferred stock will be available for future issuance without
shareholder approval. These additional shares may be used for a variety of
corporate purposes, including future public offerings to raise additional
capital, corporate acquisitions, and employee benefit plans. The existence of
authorized but unissued and unreserved shares of common stock and preferred
stock may enable the board of directors to issue shares to persons friendly to
current management, which could render more difficult or discourage any attempt
to obtain control of First National Bancshares by means of a proxy contest,
tender offer, merger or otherwise, and thereby protect the continuity of the
company's management.
Number of Directors. The bylaws provide that the number of directors
shall be fixed from time to time by resolution by at least a majority of the
directors then in office, but may not consist of fewer than five nor more than
twenty-five members. Initially we will have 13 directors.
39
<PAGE> 41
Classified Board of Directors. Our articles and bylaws divide the
board of directors into three classes of directors serving staggered three-year
terms. As a result, approximately one-third of the board of directors will be
elected at each annual meeting of shareholders. The classification of
directors, together with the provisions in the articles and bylaws described
below that limit the ability of shareholders to remove directors and that
permit the remaining directors to fill any vacancies on the board of directors,
will have the effect of making it more difficult for shareholders to change the
composition of the board of directors. As a result, at least two annual
meetings of shareholders may be required for the shareholders to change a
majority of the directors, whether or not a change in the board of directors
would be beneficial and whether or not a majority of shareholders believe that
such a change would be desirable.
Number, Term, and Removal of Directors. We currently have 13
directors, but our bylaws authorize this number to be increased or decreased by
our board of directors. Our directors are elected to three year terms by a
plurality vote of our shareholders. Our bylaws provide that our shareholders,
by a majority vote of those entitled to vote in an election of directors, or
our board of directors, by a unanimous vote, excluding the director in
question, may remove a director with or without cause. Our bylaws provide that
all vacancies on our board may be filled by a majority of the remaining
directors for the unexpired term.
Advance Notice Requirements for Shareholder Proposals and Director
Nominations. The bylaws establish advance notice procedures with regard to
shareholder proposals and the nomination, other than by or at the direction of
the board of directors or a committee of the board of directors, of candidates
for election as directors. These procedures provide that the notice of
shareholder proposals must be in writing and delivered to the secretary of the
company no earlier than 30 days and no later than 60 days in advance of the
annual meeting. Shareholder nominations for the election of directors must be
made in writing and delivered to the secretary of the company no later than 90
days prior to the annual meeting, and in the case of election to be held at a
special meeting of shareholders for the election of directors, the close of
business on the seventh day following the date on which notice of the meeting
is first given to shareholders. We may reject a shareholder proposal or
nomination that is not made in accordance with these procedures.
Nomination Requirements. Pursuant to the bylaws, we have established
certain nomination requirements for an individual to be elected as a director,
including that the nominating party provide (i) notice that the party intends
to nominate the proposed director; (ii) the name of and certain biographical
information on the nominee; and (iii) a statement that the nominee has
consented to the nomination. The chairman of any shareholders' meeting may, for
good cause shown, waive the operation of these provisions. These provisions
could reduce the likelihood that a third party would nominate and elect
individuals to serve on the board of directors.
SHARES ELIGIBLE FOR FUTURE SALE
Upon completion of this offering, we will have 1,200,000 shares of
common stock outstanding. The shares sold in this offering will be freely
tradable, without restriction or registration under the Securities Act of 1933,
except for shares purchased by "affiliates" of First National Bancshares, which
will be subject to resale restrictions under the Securities Act of 1933. An
affiliate of the issuer is defined in Rule 144 under the Securities Act of 1933
as a person that directly or indirectly, through one or more intermediaries,
controls, is controlled by, or is under common control with the issuer. Rule
405 under the Securities Act of 1933 defines the term "control" to mean the
possession, direct or indirect, of the power to direct or cause the direction
of the management and policies of the person whether through the ownership of
voting securities, by contract or otherwise. Directors will likely be deemed to
be affiliates. These securities held by affiliates may be sold without
registration in accordance with the provisions of Rule 144 or another exemption
from registration.
In general, under Rule 144, an affiliate of the company or a person
holding restricted shares may sell, within any three-month period, a number of
shares no greater than 1% of the then outstanding shares of the common stock or
the average weekly trading volume of the common stock during the four calendar
weeks preceding the sale, whichever is greater. Rule 144 also requires that the
securities must be sold in "brokers' transactions," as defined in the
Securities Act of 1933, and the person selling the securities may not solicit
orders or make any payment in connection with the offer or sale of securities
to any person other than the broker who
40
<PAGE> 42
executes the order to sell the securities. This requirement may make the sale
of the common stock by affiliates of First National Bancshares pursuant to Rule
144 difficult if no trading market develops in the common stock. Rule 144 also
requires persons holding restricted securities to hold the shares for at least
one year prior to sale.
LEGAL MATTERS
The validity of the common stock offered hereby will be passed upon
for First National Bancshares by Nelson Mullins Riley & Scarborough, L.L.P.,
Atlanta, Georgia.
EXPERTS
First National Bancshares's financial statements dated August 30, 1999
and for the period from April 1, 1999 (inception), until July 31, 1999 have
been audited by Crisp Hughes Evans, LLP, as stated in their report appearing
elsewhere herein, and have been so included in reliance on the report of this
firm given upon their authority as an expert in accounting and auditing.
ADDITIONAL INFORMATION
We have filed with the SEC a registration statement on Form SB-2
(together with all amendments, exhibits, schedules and supplements thereto, the
"Registration Statement"), under the Securities Act of 1933 and the rules and
regulations thereunder, for the registration of the common stock offered
hereby. This prospectus, which forms a part of the Registration Statement, does
not contain all of the information set forth in the Registration Statement. For
further information with respect to First National Bancshares, First National
Bank of Spartanburg, and the common stock, you should refer to the Registration
Statement and the exhibits thereto.
You can examine and obtain copies of the Registration Statement at the
Public Reference Section of the SEC, Room 1024, 450 Fifth Street, N.W.,
Washington, D.C. 20549. You may obtain information on the operation of the
Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC also
maintains a Web site at http://www.sec.gov that contains all of the reports,
proxy and information statements and other information regarding registrants
that file electronically with the SEC using the EDGAR filing system, including
First National Bancshares.
We have filed or will file various applications with the Office of the
Comptroller of the Currency and the FDIC. You should only rely on information
in this prospectus and in our related Registration Statement in making an
investment decision. If other available information is inconsistent with
information in this prospectus, including information in public files or
provided by the Office of the Comptroller of the Currency and the FDIC, then
this other information is superseded by the information in this prospectus.
Projections appearing in the applications to our regulatory agencies were based
on assumptions that the organizers believed were reasonable at the time, but
which may have changed or otherwise be wrong. First National Bancshares and
First National Bank of Spartanburg specifically disclaim all projections for
purposes of this prospectus and caution prospective investors against placing
reliance on them for purposes of making an investment decision. Statements
contained in this prospectus regarding the contents of any contract or other
document referred to are not necessarily complete. If one of these contracts or
documents is an exhibit to the Registration Statement, you may obtain and read
the document or contract for more information.
As a result of this offering, First National Bancshares will become a
reporting company subject to the full informational requirements of the
Securities Exchange Act of 1934. We will fulfill our obligations with respect
to these requirements by filing periodic reports and other information with the
SEC. We will furnish our shareholders with annual reports containing audited
financial statements and with quarterly reports for the first three quarters of
each fiscal year containing unaudited summary financial information. Our fiscal
year ends on December 31.
41
<PAGE> 43
FIRST NATIONAL BANCSHARES, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
Table of Contents
July 31, 1999
<TABLE>
<CAPTION>
PAGE(S)
------
<S> <C>
Independent Auditors' Report............................................................................ F-2
Financial Statements:
Balance Sheet ...................................................................................... F-3
Statement of Operations.............................................................................. F-4
Statements of Changes in Organizers' Equity.......................................................... F-5
Statement of Cash Flows.............................................................................. F-6
Notes to Financial Statements........................................................................... F-7
</TABLE>
<PAGE> 44
INDEPENDENT AUDITORS' REPORT
The Directors
First National Bancshares, Inc.
Spartanburg, South Carolina
We have audited the accompanying balance sheet of First National Bancshares,
Inc. (a development stage enterprise) as of July 31, 1999, and the related
statements of operations, changes in organizers' deficit, and cash flows for
the period from July 14, 1999 (date of inception) through July 31, 1999. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of First National Bancshares,
Inc. (a development stage enterprise) as of July 31, 1999, and the results of
its operations and its cash flows for the period from July 14, 1999 through
July 31, 1999, in conformity with generally accepted accounting principles.
/s/ Crisp Hughes Evans, LLP
- ---------------------------
Crisp Hughes Evans, LLP
Spartanburg, South Carolina
August 30, 1999
F-2
<PAGE> 45
FIRST NATIONAL BANCSHARES, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
Balance Sheet
July 31, 1999
<TABLE>
<CAPTION>
ASSETS
------
<S> <C>
Cash and cash equivalents $ 517
Furniture and equipment, net 2,668
Deferred stock offering costs 5,000
Prepaid expenses 2,633
Other 10,000
---------
Total assets $ 20,818
=========
LIABILITIES AND ORGANIZERS' EQUITY
-----------------------------------
Liabilities:
Line of credit $ 128,000
Interest payable 1,000
---------
Total liabilities 129,000
---------
Commitments and contingencies (Notes 3 and 4)
Organizers' deficit:
Common stock, par value $.01 per share, 10,000,000 shares
authorized, 10 shares issued and outstanding --
Additional paid-in capital 100
Retained deficit accumulated during the development stage (108,282)
---------
Total organizers' deficit (108,182)
Total liabilities and organizers' deficit $ 20,818
=========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-3
<PAGE> 46
FIRST NATIONAL BANCSHARES, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
Statement of Operations
For the Period from July 14, 1999 (date of inception)
through July 31, 1999
<TABLE>
<S> <C>
Expenses:
Salaries and payroll taxes $ 38,501
Professional fees 45,872
Insurance 355
Rent 2,600
Telephone and supplies 3,959
Depreciation 125
Application fees 15,000
Interest 1,000
Other 870
---------
Loss before provision for income taxes (108,282)
Provision for income taxes --
---------
Net loss $(108,282)
=========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-4
<PAGE> 47
FIRST NATIONAL BANCSHARES, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
Statement of Changes in Organizers' Deficit
For the Period from July 14, 1999 (date of inception)
through July 31, 1999
<TABLE>
<CAPTION>
RETAINED
DEFICIT
ACCUMULATED
COMMON STOCK ADDITIONAL DURING THE
------------------------------- PAID-IN DEVELOPMENT
SHARES AMOUNT CAPITAL STAGE TOTAL
------ ------ ------- ----- -----
<S> <C> <C> <C> <C> <C>
Proceeds from the sale of stock
to organizers 10 $ -- $ 100 $ -- $ 100
Net loss -- -- -- (108,282) (108,282)
--------- -------------- --------- --------- ---------
Balance, July 31, 1999 10 $ -- $ 100 $(108,282) $(108,182)
========= ============== ========= ========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-5
<PAGE> 48
FIRST NATIONAL BANCSHARES, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
Statement of Cash Flows
For the Period from July 14, 1999 (date of inception)
through July 31, 1999
<TABLE>
<S> <C>
Net cash used for pre-operating activities:
Net loss $ (108,282)
Depreciation 125
Deferred stock offering costs (5,000)
Prepaid expense (2,633)
Interest payable 1,000
-----------
Net cash used for pre-operating activities (114,790)
-----------
Investing activities:
Purchase of furniture and equipment (2,793)
Escrow deposits on land (10,000)
-----------
Net cash used in Investing activities (12,793)
-----------
Financing activities:
Proceeds from borrowings on line of credit 128,000
Loans from organizers 65,000
Repayment of organizers' loans (65,000)
Proceeds from the sale of stock to organizers 100
-----------
Net cash provided by financing activities 128,100
-----------
Net increase in cash and cash equivalents 517
Cash and cash equivalents, July 14, 1999 (date of inception) --
-----------
Cash and cash equivalents, end of period $ 517
===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-6
<PAGE> 49
FIRST NATIONAL BANCSHARES, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
Notes to Consolidated Financial Statements
July 31, 1999
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACTIVITIES
First National Bancshares, Inc. (the "Company") is a South Carolina
corporation organized for the purpose of owning and controlling all of the
capital stock of First National Bank of Spartanburg (in organization) (the
"Bank"). The Bank is being organized as a national bank under the laws of the
United States with the purpose of becoming a new bank to be located in
Spartanburg County, South Carolina. The Company has filed a charter application
with the OCC and an application for deposit insurance with the FDIC. Provided
that the applications are timely approved and the necessary capital is raised,
it is expected that banking operations will commence in the first or second
quarter of 2000.
The Company was formally incorporated in July 1999. We have prepared
these financial statements including financial information from April 1, 1999,
the initial financial transaction date. It was on that date that the Company's
organizers began pre-organizational activities.
The Company is a development stage enterprise as defined by Statement of
Financial Accounting Standard No. 7, "Accounting and Reporting by Development
Stage Enterprises," as it devotes substantially all its efforts to establishing
a new business. The Company's planned principal operations have not commenced
and revenue has not been recognized from the planned principal operations.
The Company intends to sell 1,200,000 shares of its common stock at $10
per share. The offering will raise approximately $11,763,000, net of estimated
underwriting discounts and commissions and offering expenses. The directors and
executive officers of the Company plan to purchase 425,000 shares of common
stock at $10 per share, for a total of $4,250,000. Upon purchase of these
shares, the Company will issue stock warrants to the organizers to purchase up
to an additional 283,333 shares of common stock for $10 per share. The
remaining shares will be sold through a public offering. The Company will use
$11 million of the proceeds to capitalize the proposed bank.
YEAR END - The Company has adopted a fiscal year ending on December 31,
effective for the period ending December 31, 1999. The transactions
occurred prior to the Company's incorporation have been combined in
these financial statements for ease of presentation.
ESTIMATES - The financial statements include estimates and assumptions
that effect the Company's financial position and results of operations
and disclosure of contingent assets and liabilities. Actual results
could differ from these estimates.
CASH EQUIVALENTS - The Company considers all highly liquid investments
with original maturities of three months or less to be cash equivalents.
The Company places its temporary cash investments with high credit
quality financial institutions. At times, such investments may be in
excess of the FDIC insurance limits.
DEFERRED STOCK OFFERING COSTS - Deferred stock offering costs will be
incurred by the Company in connection with the offering and issuance of
its stock. The deferred stock offering costs will be deducted from the
Company's additional paid-in capital after the stock offering. If the
stock offering is deemed unsuccessful, all deferred stock offering costs
will be charged to operations during the period in which the offering is
deemed unsuccessful.
ORGANIZATION COSTS - Organization costs include incorporation, legal and
consulting fees incurred in connection with establishing the Company. In
accordance with Statement of Position (SOP) 98-5, "Reporting on the
Costs of Start-Up Activities," organization costs are expensed when
incurred.
F-7
<PAGE> 50
INCOME TAXES - Income taxes are provided for the tax effects of
transactions reported in the financial statements and consist of taxes
currently due plus deferred taxes related primarily to differences
between the financial reporting and income tax bases of assets and
liabilities. At July 31, 1999, no taxable income has been generated and,
therefore, no tax provision has been included in these financial
statements.
2. LINE OF CREDIT
The Company has established a $500,000 line of credit with a financial
institution to fund operating expenses of the Company during the development
stage. The line is uncollateralized and is guaranteed by the organizers. The
line bears interest at the prime rate minus 1/2% and expires June 2000. As of
July 31, 1999, $128,000 was outstanding on this line of credit.
3. OTHER ASSETS
Included in other assets are two (2) $5,000 escrow deposits for
potential locations for the Bank's main office and a branch office.
4. COMMITMENTS AND CONTINGENCIES
The Company has engaged a law firm to assist in preparing the filing
all organizational, incorporation, and bank applications and to assist in
preparing stock offering documents and consummating the Company's initial
offering. The aggregate cost of the services is expected to approximate
$40,000.
The Company leases temporary office space under a six month operating
lease requiring monthly payments of $650.
The Company has engaged a bank consultant to assist in establishing
the Bank and bank holding company. The consultant will also assist in the
application process. The aggregate cost of the services is expected to
approximate $60,000, plus expenses.
5. YEAR 2000 ISSUE
The Year 2000 issue relates to limitations in computer systems and
applications that may prevent proper recognition of the Year 2000. The
potential effect of the Year 2000 issue on the Company will not be fully
determinable until the Year 2000 and thereafter. If Year 2000 modifications are
not properly completed either by the Company or entities with which the Company
conducts business, the Company's revenues and financial condition could be
adversely impacted.
F-8
<PAGE> 51
FIRST NATIONAL BANCSHARES, INC.
STOCK ORDER FORM/SUBSCRIPTION AGREEMENT
TO: First National Bancshares, Inc.
248 N. Church Street
Spartanburg, South Carolina 29304
Ladies and Gentlemen:
You have informed me that First National Bancshares, Inc., a South
Carolina corporation (the "Company"), is offering 1,200,000 shares of its
common stock, at a price of $10.00 per share payable as provided herein and as
described in and offered pursuant to the prospectus furnished with this
Subscription Agreement to the undersigned (the "prospectus").
1. SUBSCRIPTION. Subject to the terms and conditions included,
the undersigned tenders this subscription, together with payment in United
States currency by check, bank draft, or money order payable to "The Bankers
Bank as escrow agent for First National Bancshares, Inc." the amount indicated
below (the "Funds"), representing the payment of $10.00 per share for the
number of shares of common stock indicated below. The total subscription price
must be paid at the time the Subscription Agreement is executed.
2. ACCEPTANCE OF SUBSCRIPTION. It is understood and agreed that
First National Bancshares, Inc. shall have the right to accept or reject this
subscription in whole or in part, for any reason whatsoever. First National
Bancshares, Inc. may reduce the number of shares for which the undersigned has
subscribed, indicating acceptance of less than all of the shares subscribed on
its written form of acceptance.
3. ACKNOWLEDGMENTS. The undersigned acknowledges that he or she
has received a copy of the prospectus. This Subscription Agreement creates a
legally binding obligation and the undersigned agrees to be bound by the terms
of this Agreement.
4. REVOCATION. The undersigned agrees that once this
Subscription Agreement is tendered to First National Bancshares, Inc., it may
not be withdrawn and that this Agreement shall survive the death or disability
of the undersigned.
BY EXECUTING THIS AGREEMENT, THE SUBSCRIBER IS NOT WAIVING ANY RIGHTS HE OR SHE
MAY HAVE UNDER FEDERAL SECURITIES LAWS, INCLUDING THE SECURITIES ACT OF 1933
AND THE SECURITIES EXCHANGE ACT OF 1934.
THE SHARES OF COMMON STOCK OFFERED HERE ARE NOT SAVINGS ACCOUNTS OR SAVINGS
DEPOSITS ACCOUNTS AND ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION OR ANY OTHER GOVERNMENTAL AGENCY.
A-1
<PAGE> 52
Please indicate in the space provided below the exact name or names
and address in which the stock certificate representing shares subscribed for
hereunder should be registered.
<TABLE>
<S> <C>
- ----------------------------------------------------- ---------------------------------------------------------
Number of Shares Subscribed Name or Names of Subscribers (Please Print)
for (at least 100 shares and no more than
5% of the minimum offering)
$
- ----------------------------------------------------- ---------------------------------------------------------
Total Subscription Price at Please indicate form of ownership desired (individual,
$10.00 per share (funds must be enclosed) joint tenants with right of survivorship, tenants in
common, trust corporation, partnership, custodian, etc.)
Date: (L.S.)
- ------------------------------------------------------ ---------------------------------------------------------
Signature of Subscriber(s)
(L.S.)
- ------------------------------------------------------ ---------------------------------------------------------
Social Security Number or Federal Signature of Subscriber(s)
Taxpayer Identification Number
</TABLE>
Street (Residence) Address:
------------------------------------------
------------------------------------------
------------------------------------------
City, State and Zip Code
When signing as attorney, trustee, administrator, or guardian, please
give your full title as such. If a corporation, please sign in full corporate
name by president or other authorized officer. In the case of joint tenants or
tenants in common, each owner must sign.
TO BE COMPLETED BY FIRST NATIONAL BANCSHARES, INC.:
Accepted as of _____________, _______, as to ____________ shares.
FIRST NATIONAL BANCSHARES, INC.
----------------------------------
By:
Title:
A-2
<PAGE> 53
FEDERAL INCOME TAX BACKUP WITHHOLDING
In order to prevent the application of federal income tax backup
withholding, each subscriber must provide the escrow agent with a correct
Taxpayer Identification Number ("TIN"). An individual's social security number
is his or her TIN. The TIN should be provided in the space provided in the
Substitute Form W-9 below.
Under federal income tax law, any person who is required to furnish
his or her correct TIN to another person, and who fails to comply with such
requirements, may be subject to a $50 penalty imposed by the IRS.
Backup withholding is not an additional tax. Rather, the tax liability
of persons subject to backup withholding will be reduced by the amount of tax
withheld. If backup withholding results in an overpayment of taxes, a refund
may be obtained from the IRS. Certain taxpayers, including all corporations,
are not subject to these backup withholding and reporting requirements.
If the shareholder has not been issued a TIN and has applied for a TIN
or intends to apply for a TIN in the near future, "Applied For" should be
written in the space provided for the TIN on the Substitute Form W-9.
SUBSTITUTE FORM W-9
Under penalties of perjury, I certify that: (i) The number shown on
this form is my correct Taxpayer Identification Number (or I am waiting for a
Taxpayer Identification Number to be issued to me), and (ii) I am not subject
to backup withholding because: (a) I am exempt from backup withholding; or (b)
I have not been notified by the Internal Revenue Service ("IRS") that I am
subject to backup withholding as a result of a failure to report all interest
or dividends; or (c) the IRS has notified me that I am no longer subject to
backup withholding.
You must cross out item (ii) above if you have been notified by the
IRS that you are subject to backup withholding because of underreporting
interest or dividends on your tax return. However, if after being notified by
the IRS that you were subject to backup withholding you received another
notification from the IRS that you are not longer subject to backup
withholding, do not cross out item (ii).
Each subscriber should complete this section.
<TABLE>
<S> <C>
- -------------------------------------------- ----------------------------------------------------
Signature of Subscriber Signature of Subscriber
- -------------------------------------------- ----------------------------------------------------
Printed Name Printed Name
- -------------------------------------------- ----------------------------------------------------
- -------------------------------------------- ----------------------------------------------------
Social Security or Employer Employer
Identification No. Identification No.
</TABLE>
A-3
<PAGE> 54
==============================================================================
TABLE OF CONTENTS
<TABLE>
<S> <C>
Summary ................................................ 3
Risk Factors ........................................... 6
Use of Proceeds ........................................ 12
Capitalization ......................................... 14
Dividend Policy ........................................ 14
Plan of Operation ...................................... 15
Proposed Business ...................................... 18
Supervision and Regulation ............................. 25
Management's Discussion and Analysis of
Financial Condition and Plan of Operation .............. 32
Certain Relationships and Related Transactions ......... 38
Description of Capital Stock ........................... 38
Legal Matters .......................................... 41
Experts ................................................ 41
Additional Information ................................. 41
Index to Financial Statements .......................... F-1
Subscription Agreement ................................. A-1
</TABLE>
----------------------
1,200,000 SHARES
COMMON STOCK
FIRST NATIONAL BANCSHARES, INC.
A PROPOSED BANK HOLDING COMPANY FOR
[BANK LOGO HERE]
FIRST NATIONAL BANK OF SPARTANBURG (PROPOSED)
----------
PROSPECTUS
----------
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS DOCUMENT. WE HAVE
NOT AUTHORIZED ANYONE TO GIVE ANY INFORMATION THAT IS DIFFERENT. THIS PROSPECTUS
IS NOT AN OFFER TO SELL THESE SECURITIES AND IS NOT SOLICITING AN OFFER TO BUY
THESE SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED. THE
INFORMATION IN THIS PROSPECTUS IS COMPLETE AND ACCURATE AS OF THE DATE ON THE
COVER, BUT THE INFORMATION MAY CHANGE IN THE FUTURE.
UNTIL ____________________, ALL DEALERS THAT EFFECT TRANSACTIONS IN THESE
SECURITIES, WHETHER OR NOT PARTICIPATING IN THIS OFFERING, MAY BE REQUIRED TO
DELIVER A PROSPECTUS. THIS IS IN ADDITION TO THE DEALER'S OBLIGATION TO DELIVER
A PROSPECTUS WHEN ACTING AS UNDERWRITER, AND WITH RESPECT TO THEIR UNSOLD
ALLOTMENTS OR SUBSCRIPTIONS.
SEPTEMBER ___, 1999
==============================================================================
<PAGE> 55
PART II
INDEMNIFICATION OF DIRECTORS AND OFFICERS
Item 24. Indemnification of Directors and Officers
First National Bancshares' articles of incorporation contain a
provision which, subject to certain limited exceptions, limits the liability of
a director to First National Bancshares or its shareholders for any breach of
duty as a director. There is no limitation of liability for: a breach of duty
involving appropriation of a business opportunity of First National Bancshares;
an act or omission which involves intentional misconduct or a knowing violation
of law; any transaction from which the director derives an improper personal
benefit; or as to any payments of a dividend or any other type of distribution
that is illegal under Section 33-8-330 of the South Carolina Business
Corporation Act of 1988 (The "Corporation Act"). In addition, if at any time
the Corporation Act shall have been amended to authorize further elimination or
limitation of the liability of director, then the liability of each director of
First National Bancshares shall be eliminated or limited to the fullest extent
permitted by these provisions, as so amended, without further action by the
shareholders, unless the provisions of the Corporation Act require additional
action. The provision does not limit the right of First National Bancshares or
its shareholders to seek injunctive or other equitable relief not involving
payments in the nature of monetary damages.
First National Bancshare's bylaws contain certain provisions which
provide that the company shall indemnify directors to the maximum extent
provided by South Carolina law. This protection is broader than the protection
expressly mandated in Sections 33-8-510 and 33-8-520 of the South Carolina
Business Corporation Act. These statutory sections provide that a company shall
indemnify a director or an officer only to the extent that he has been wholly
successful, on the merits or otherwise, in the defense of any action or
proceeding brought by reason of the fact that the person was a director or
officer. This requirement would include indemnifying directors against
expenses, including attorney's fees, actually and reasonably incurred in
connection with the matter. In addition to this mandatory indemnification
right, our bylaws provide additional mandatory protection that includes, but is
not limited to, situations where the director (a) conducted himself in good
faith, (b) reasonably believed that conduct in his official capacity with the
corporation was either in the corporation's best interest or was not opposed to
the best interest of the corporation; and (c) that he had no reasonable cause
to believe his conduct was unlawful.
Our board of directors also has the authority to extend to officers,
employees, and agents the same indemnification rights held by directors,
subject to all of the accompanying conditions and obligations. The board of
directors intends to extend indemnification rights to all of its executive
officers.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of First National Bancshares pursuant to the foregoing provisions, or
otherwise, First National Bancshares has been informed that in the opinion of
the Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act of 1933 and is, therefore,
unenforceable.
We have the power to purchase and maintain insurance on behalf of any
person who is or was a director, officer, employee, or agent against any
liability asserted against him or incurred by him in any of these capacities,
whether or not we would have the power to indemnify him against these types of
liability under the bylaws.
II-1
<PAGE> 56
Item 25. Other Expenses of Issuance and Distribution.
Estimated expenses (other than sales agency commissions) of the sale
of the shares of common stock are as follows:
<TABLE>
<S> <C>
Registration Fee $ 3,343
NASD Filing Fee 1,700
Printing and Engraving 35,000
Legal Fees and Expenses 50,000
Accounting Fees 5,000
Blue Sky Fees and Expenses 10,000
Miscellaneous Disbursements 14,957
---------
TOTAL $ 120,000
=========
</TABLE>
Item 26. Recent Sales of Unregistered Securities.
From inception, First National Bancshares has issued a total of 10
shares of its common stock to one of its organizers. The price per share was
$10.00 for a total purchase price of $100.00. There were no sales agency
commissions paid with respect to these transactions. These shares will be
redeemed at $10.00 per share after the offering. All sales were exempt under
Section 4(2) of the Securities Act of 1933.
Item 27. Exhibits.
1.1 Form of Sales Agency Agreement between First National Bancshares and
J.C. Bradford and Company
3.1. Articles of Incorporation
3.2. Bylaws
4.1. See Exhibits 3.1 and 3.2 for provisions in First National Bancshares's
Articles of Incorporation and Bylaws defining the rights of holders of
the common stock
4.2. Form of certificate of common stock
5.1. Opinion Regarding Legality
10.1. Employment Agreement dated July 20, 1999 between First National
Bancshares and Jerry Calvert
10.2. *Data Processing Services Agreement dated __________ between First
National Bancshares and _____________
10.3 Form of Stock Warrant Agreement
10.4 Line of Credit Promissory Note dated June 29,1999 between The Banker's
Bank and First National Bank of Spartanburg
10.5 Purchase and Sale Agreement dated June 8, 1999 between First National
Bancshares, Inc. and HBJ Properties
10.6 Lease Agreement dated July 12, 1999 between First National Bancshares,
Inc. and Oak Grove Associates, LLC
10.7 Form of Escrow Agreement between First National Bancshares, Inc. and
The Bankers Bank
23.1. Consent of Independent Public Accountants
23.2. Consent of Nelson Mullins Riley & Scarborough, L.L.P. (appears in its
opinion filed as Exhibit 5.1)
II-2
<PAGE> 57
<TABLE>
<S> <C>
24.1. Power of Attorney (filed as part of the signature page to the
Registration Statement)
27.1. *Financial Data Schedule (for electronic filing purposes)
* To be filed by Amendment
Item 28. Undertakings.
</TABLE>
The undersigned Company will:
(a)(1) File, during any period in which it offers or sells
securities, a post-effective amendment to this registration
statement to:
(i) Include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) Reflect in the prospectus any facts or events which,
individually or together, represent a fundamental change in
the information in the registration statement; and
(iii) Include any additional or changed material information on the
plan of distribution.
(2) For determining liability under the Securities Act of 1933,
treat each post-effective amendment as a new registration statement of the
securities offered, and the offering of the securities at that time to be the
initial bona fide offering.
(3) File a post-effective amendment to remove from registration
any of the securities that remain unsold at the end of the offering.
(b) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 (the "Act") may be permitted to directors, officers and
controlling persons of First National Bancshares pursuant to the provisions
described in Item 24 above, or otherwise, First National Bancshares has been
advised that in the opinion of the SEC for matters under the securities laws,
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable.
If a claim for indemnification against such liabilities (other than
the payment by First National Bancshares of expenses incurred or paid by a
director, officer or controlling person of First National Bancshares in the
successful defense of any action, suit, or proceeding) is asserted by such
director, officer, or controlling person in connection with the securities
being registered, First National Bancshares will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act of 1933 and will be
governed by the final adjudication of such issue.
II-3
<PAGE> 58
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the city of
Spartanburg, State of South Carolina, on September 20, 1999.
FIRST NATIONAL BANCSHARES, INC.
By: /s/ Jerry L. Calvert
----------------------------
Jerry L. Calvert
Chief Executive Officer
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Jerry L. Calvert and Norman F. Pulliam
as the true and lawful attorney-in-fact and agent with full power of
substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities, to sign any and all amendments to this Registration
Statement, and to file the same, with all exhibits thereto, and other documents
in connection therewith, with the Securities and Exchange Commission, granting
unto such attorney-in-fact and agent, full power and authority to do and
perform each and every act and thing requisite or necessary to be done in and
about the premises, as fully to all intents and purposes as he might or could
do in person, hereby ratifying and confirming all that such attorney-in-fact
and agent, or his substitute or substitutes, may lawfully do or cause to be
done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following in the capacities and
on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
/s/ C. Dan Adams Director September 20, 1999
- --------------------------------------------
C. Dan Adams
/s/ Mellnee G. Buchheit Director September 20, 1999
- --------------------------------------------
Mellnee G. Buchheit
/s/ Jerry L. Calvert Director, September 20, 1999
- -------------------------------------------- President, and
Jerry L. Calvert Chief Executive Officer
/s/ Martha Cloud Chapman Director September 20, 1999
- ------------------------------------------
Martha Cloud Chapman
/s/ W. Russel Floyd, Jr Director September 20, 1999
- --------------------------------------------
W. Russel Floyd, Jr.
/s/ C. Tyrone Gilmore, Sr. Director September 20, 1999
- --------------------------------------------
C. Tyrone Gilmore, Sr.
</TABLE>
<PAGE> 59
<TABLE>
<S> <C> <C>
/s/ Gaines W. Hammond, Jr., M.D. Director September 20, 1999
- --------------------------------------------
Gaines W. Hammond, Jr., M.D.
/s/ Benjamin R. Hines Director September 20, 1999
- --------------------------------------------
Benjamin R. Hines
/s/ William A. Hudson Director September 20, 1999
- --------------------------------------------
William A. Hudson
/s/ Norman F. Pulliam Director, Chairman September 20, 1999
- -------------------------------------------- of the Board
Norman F. Pulliam
/s/ Peter E. Weisman Director September 20, 1999
- --------------------------------------------
Peter E. Weisman
/s/ Donald B. Wildman Director September 20, 1999
- --------------------------------------------
Donald B. Wildman
/s/ Coleman L. Young, Jr. Director September 20, 1999
- ------------------------------------
Coleman L. Young, Jr.
</TABLE>
<PAGE> 60
EXHIBIT INDEX
<TABLE>
EXHIBIT DESCRIPTION
- ------ -----------
<S> <C>
1.1 Form of Sales Agency Agreement between First National Bancshares and
J.C. Bradford and Company
3.1. Articles of Incorporation
3.2. Bylaws
4.1. See Exhibits 3.1 and 3.2 for provisions in First National Bancshares's
Articles of Incorporation and Bylaws defining the rights of holders of
the common stock
4.2. Form of certificate of common stock
5.1. Opinion Regarding Legality
10.1. Employment Agreement dated July 20, 1999 between First National Bancshares and Jerry Calvert
10.2. *Data Processing Services Agreement dated __________ between First National Bancshares and _____________
10.3 Form of Stock Warrant Agreement
10.4 Line of Credit Promissory Note dated June 29, 1999 between The Banker's Bank and First National Bank of Spartanburg
10.5 Purchase and Sale Agreement dated June 8, 1999 between First National Bancshares, Inc. and HBJ Properties
10.6 Lease Agreement dated July 12, 1999 between First National Bancshares, Inc. and Oak Grove Associates, LLC
10.7 Form of Escrow Agreement between First National Bancshares, Inc. and The Bankers Bank
23.1. Consent of Independent Public Accountants
23.2. Consent of Nelson Mullins Riley & Scarborough, L.L.P. (appears in its opinion filed as Exhibit 5.1)
24.1. Power of Attorney (filed as part of the signature page to the Registration Statement)
27.1 *Financial Data Schedule (for electronic filing purposes)
* To be filed by Amendment
</TABLE>
<PAGE> 1
EXHIBIT 1.1
SALES AGENCY AGREEMENT
J.C. Bradford & Co. September _______ , 1999
400 Second Avenue NW
First Lawyers Building, 2nd Floor
Hickory, North Carolina 28601
Ladies and Gentlemen:
This letter sets forth and confirms the terms and conditions of the
engagement (the "Agreement") of J.C. Bradford & Co. ("Bradford") by First
National Bancshares, Inc. (the "Company") as exclusive selling agent of the
Company with respect to the Company's proposed public offering (the "Offering")
of its common stock (the "Common Stock"). The Offering will be made by means of
a prospectus (the "Prospectus"), which will be provided to Bradford.
1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants to, and agrees with Bradford as
follows:
(a) The Global Prospectus does not and will not contain any
untrue statements of material fact or omit to state any
material facts required to be stated therein or necessary to
make the statements therein, in the light of the
circumstances under which they were made, not misleading.
(b) The Company is a corporation validly existing and in good
standing under the laws of the state of its incorporation;
has full corporate and other power and authority under such
laws to own its properties and conduct its business as
described in the Prospectus; and is duly qualified to do
business as a foreign corporation in each other jurisdiction
in which it owns or leases properties or conducts it business
so as to require qualification and is in good standing in
each such jurisdiction, except where failure to be so
qualified would not have a material adverse effect on the
condition, financial or otherwise, results of operations,
affairs or business prospects of the Company.
(c) The shares of common stock to be issued and sold by the
Company hereunder (the "Shares"), when issued and delivered
against payment therefor as provided herein, will be duly and
validly authorized and issued and fully paid and will conform
to the description thereof contained in the Prospectus.
<PAGE> 2
(d) Except as disclosed in the Prospectus or information
incorporated therein by reference, there are no (i)
outstanding securities or obligations of the Company
convertible into or exchangeable for any capital stock of the
Company, (ii) warrants, rights or options to subscribe for or
purchase from the Company any such capital stock or any such
convertible or exchangeable securities or obligations (iii)
obligations of the Company to issue any such convertible or
exchangeable securities or obligations, or any such warrants,
rights or options.
(e) The Company has the full legal right, power and authority to
enter into and perform this Agreement and sell and deliver
the Shares as provided herein, and this Agreement has been
duly authorized by its Board of Directors and duly executed
and delivered on behalf of the Company.
(f) Other than filings with, and any necessary registrations,
qualifications or exemptions from the Securities and Exchange
Commission and applicable state securities and "blue sky"
authorities, no consent, approval, authorization or order,
registration or qualification of or with any court or
governmental agency or body is required for the issuance and
sale of the Shares or for the consummation of the other
transactions contemplated by this Agreement.
(g) Except as provided in section 2(a), there are no contracts,
agreements or understanding between the Company and any
person which would give rise to a valid claim against the
Company for a brokerage commission, finder's fee or other
like payment in connection with the offering of the Shares,
other than compensation due and payable to Bradford.
(h) No action, suit or proceeding at law or in equity is pending
or, to the Company's knowledge, threatened to which the
Company is a party, and no proceedings are pending or, to the
Company's knowledge, threatened against or affecting the
Company before or by any governmental official, commission,
board or other administrative agency, (other than in
connection with required regulatory approvals) wherein an
unfavorable decision, ruling or finding could have a material
adverse effect on the consummation of this Agreement or the
condition, financial or otherwise, results of operations,
affairs or business prospects of the Company.
(i) The Company has such permits, licenses, franchises and
governmental and regulatory authorizations ("permits") as are
necessary to own its properties and conduct its business in
the manner described in the Prospectus, subject to such
qualifications as may be set forth in the Prospectus, and
except where the failure to have such permits would not have
a material adverse effect on the consummation of this
Agreement or the condition, financial or otherwise, results
of operations, affairs, or business prospects of the Company.
<PAGE> 3
(j) The Company is not an "investment company" or a company
"controlled" by an "investment company" within the meaning of
the Investment Company Act of 1940.
(k) The Company agrees as follows:
(i) The Company will notify Bradford immediately, and
confirm such notice in writing, of the receipt of
any comments from any state securities commission or
regulatory authority that relate to the Prospectus
or any amendment thereto or requests by any state
securities commission or regulatory authority for
amendments to the Prospectus or amendments or
supplements to the Prospectus or for additional
information;
(ii) The Company will use the net proceeds from the sale
of the Shares received by it in the manner specified
in the Prospectus under the caption "Use of
Proceeds."
(iii) The Company will supply Bradford with such number of
Prospectuses as Bradford shall reasonably request.
(iv) For three years from the date of this Agreement, the
Company will furnish to Bradford copies of all
reports and communications (financial or otherwise)
furnished by the Company to its stockholders, copies
of all reports or financial statements filed with
the regulatory agencies as soon as such are
available, and such other publicly available
documents, reports and information concerning the
business and financial condition of the Company as
Bradford may reasonably request.
2. SERVICES TO BE PROVIDED BY BRADFORD.
In connection with this Agreement, the scope of Bradford's services
shall include, but not be limited to, the following:
(a) Pursuant to this Agreement, Bradford will serve as the
exclusive selling agent for the Company and will offer at
least 150,000 Shares and no more than 240,000 Shares for
sale, on a "Best Efforts" basis.
(b) Bradford will perform its duties pursuant to this Agreement
in compliance with all applicable federal and state
securities laws, and will offer and sell the Shares only by
means of the Prospectus and only in such Jurisdictions
specified by the Company and in which such offers and sales
may be made lawfully.
In exchange for the services of Bradford pursuant to this
Agreement, the Company agrees to pay Bradford a selling
commission of $ .57 for each Share sold by Bradford as
selling agent. The selling commission shall be payable at
<PAGE> 4
such time as the subscription Shares sold by Bradford as
selling agent are accepted by and payment in full is received
therefor by the Company and the funds are released from
escrow. The Company shall make and pay all NASD and SEC and
blue sky filings and fees.
3. INDEMNIFICATION AND CONTRIBUTION.
(a) The Company agrees to indemnify and hold harmless Bradford
and each person, if any, who controls Bradford within the
meaning of Section 15 of the Securities Act of 1933 (the
"1933 Act"), against any and all losses, claims, damages,
liabilities and expenses (including reasonable cost of
investigation and counsel's fees) arising out of or based
upon any untrue statement or alleged untrue statement of a
material fact contained in the Prospectus, or in any
amendment or supplement thereto, or arising out of or based
upon any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to
make the statements therein not misleading or arising out of
any breach of this Agreement except insofar as such losses,
claims, damages, liabilities and expenses arise out of or are
based upon any untrue statement or omission or alleged untrue
statement or omission made by any means by Bradford or its
agents, directors or employees in connection with the offer
and sale of the Common Stock. The foregoing indemnity shall
not, with respect to untrue statements or omissions in the
Prospectus inure to the benefit of Bradford or any affiliate
or person who controls Bradford, from whom the person
asserting any such loss, liability, claim, damage or expense
purchased any of the Shares that are the subject hereof, if
such person was not sent or given a copy of the Prospectus
(as amended or supplemented).
(b) If any action or claim shall be brought or asserted against
Bradford or any person controlling Bradford in respect of
which indemnity may be sought from the Company, Bradford or
such controlling person shall promptly notify the Company in
writing, enclosing copies of all papers served on or
delivered to such party, and the Company shall assume the
defense thereof, including the employment of one counsel for
all of Bradford and the payment of all expenses. The failure
to notify an indemnifying party shall not relieve the
indemnifying party from any liability hereunder to the extent
it is not materially prejudiced as a result of such failure.
Bradford or any such controlling person shall have the right
to employ separate counsel in any such action and to
participate in the defense thereof, but the fees and expenses
of such counsel shall be at the sole expense of Bradford or
such controlling person unless (i) the employment thereof has
been specifically authorized in advance by the Company in
writing, (ii) the Company failed to assume the defense and
employ counsel as described above or (iii) the named parties
to any such action (including any impleaded parties) include
both Bradford or such controlling person and the Company, and
Bradford or such controlling person shall have been advised
by such counsel that there may be one or more legal defenses
available to it that are different
<PAGE> 5
from or in addition to those available to the Company (in
which case, if Bradford or such controlling person notifies
the Company in writing that it elects to employ separate
counsel at the expense of the Company, the Company shall not
have the right to assume the defense of such action on behalf
of Bradford or such controlling person). No indemnified party
shall settle, compromise or consent to the entry of any
judgment with respect to any litigation, any investigation or
proceeding by any governmental agency or body, commenced or
threatened, or claim whatsoever in respect of which
indemnification or contribution can be sought under this
Section 3 (whether or not the indemnified parties are actual
or potential parties), unless the indemnified party gives
prior written notification to the indemnifying party and such
settlement, compromise or consent does not include any
statement or admission of fault, culpability or failure to
act on behalf of, or with respect to, any indemnified party.
(c) Bradford agrees individually, and not jointly with any other
selling agent for the Shares, to indemnify and hold harmless
the Company and its respective directors and each person, if
any who controls the Company within the meaning of Section 15
of the 1933 Act or Section 20 of the Securities Exchange Act
of 1934 against, any and all loss, liability, claim, damage
and expenses described in the indemnity contained in
subsection (a) of this Section 3 but only with respect to
untrue statements or omissions, or alleged untrue statements
or omissions made in the Prospectus (as amended or
supplemental) based upon information furnished to the Company
by Bradford.
(d) If the indemnification provided for in this Section 3 is
unavailable to an indemnified party under paragraphs (a), (b)
or (c) hereof in respect of any losses, claims, damages,
liabilities or expenses referred to therein, then the
indemnifying party, in lieu of indemnifying such indemnified
party, shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims,
damages, liabilities or expenses (i) in such proportion as is
appropriate to reflect the relative benefits received by the
Company on the one hand and Bradford on the other from the
Offering or (ii) if the allocation provided by clause (i)
above is not permitted by applicable law, in such proportion
as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault
of the Company on the one hand and of Bradford on the other
in connection with the statements or omissions that resulted
in such losses, claims, damages, liabilities or expenses, as
well as any other relevant equitable considerations. The
relative benefits received by the Company on the one hand and
Bradford on the other shall be deemed to be in the same
proportion as the total net proceeds received by the Company
from the Shares sold by Bradford in the Offering (before
deducting expenses), and the total selling commission
received by Bradford. The relative fault of the Company on
the one hand and of Bradford on the other shall be determined
by references to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission
to state a material fact relates to
<PAGE> 6
information supplied by the Company, or by Bradford and the
parties relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.
The Company on the one hand and Bradford on the other agree
that it would not be just and equitable if contribution be
made pursuant to this Section 3 were determined by pro rata
allocation or by any other method of allocation that does not
take account of the equitable considerations referred to in
the immediately preceding paragraph. The amount paid or
payable by, an indemnified party as a result of the losses,
claims, damages, liabilities and expenses referred to in the
immediately preceding paragraph shall be deemed to include,
subject to the limitations set forth above, any legal or
other expenses reasonably incurred by such indemnified party
in connection with defending any such action or claim.
Notwithstanding the provisions of this Section 3, Bradford
shall not be required to contribute any amount in excess of
the amount by which the total price at which the Shares sold
by it exceeds the amount of any damages that Bradford has
otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. No
person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the 1993 Act) shall be entitled
to contribution from any person who was not guilty of such
fraudulent misrepresentation.
4. REPRESENTATION, WARRANTIES AND AGREEMENTS TO SURVIVE DELIVERY.
The representations, warranties, indemnities, agreements and
other statements of the Company set forth in or made pursuant
to this Agreement shall remain operative and in full force
and effect regardless of any investigation made by or on
behalf of Bradford or the Company or controlling person of
the Company, and shall survive delivery of and payment for
the Shares.
5. GOVERNING LAW; ASSIGNMENTS.
This Agreement shall be governed by the laws of the State of
South Carolina. Neither party may assign this Agreement
without the prior written consent of the other party.
6. COUNTERPARTS.
This Agreement may be executed in one or more counterparts,
and when a counterpart has been executed by each party hereto
all such counterparts taken together shall constitute one and
the same Agreement. Signatures sent by facsimile shall have
the same effect as if manually signed copies had been
delivered, and shall be binding upon the parties.
<PAGE> 7
7. NO PERSONAL LIABILITY.
In no event shall any officer or director of the Company have
any personal liability to Bradford or to any other person
under this Agreement.
If the foregoing is in accordance with your understanding of
our agreement, please sign and return to us a counterpart
hereof, whereupon this shall become a binding agreement
between the Company and Bradford.
Very truly yours,
First National Bancshares, Inc.
By:
---------------------------
CONFIRMED AND ACCEPTED,
J.C. Bradford & Co.
By:
---------------------
Name:
------------------
Title:
-----------------
<PAGE> 8
COMPENSATION
(a) Pursuant to this Agreement, Bradford will serve as the exclusive
selling agent for the Company and will offer as many shares as the
Company may allot, but in no case less than 150,000 shares and more
than 240,000 shares for sale on a "best efforts" basis.
(b) Bradford may associate with other dealers as the need arises at its
discretion.
(c) The Company agrees to pay Bradford a general selling commission of
$.50 per share for each share sold by Bradford at the public offering
price of $10.00.
(d) The Company agrees to pay Bradford a general and administrative fee of
$.07 per share sold by or through Bradford at the public offering
price of $10.00.
(e) No selling commission will be payable on shares sold to the Company's
employees, officers, directors and immediate families of the
employees, officers and directors.
<PAGE> 1
EXHIBIT 3.1
ARTICLES OF INCORPORATION
OF
FIRST NATIONAL BANCSHARES, INC.
ARTICLE ONE
NAME
The name of the corporation is First National Bancshares, Inc. (the
"Corporation").
ARTICLE TWO
ADDRESS AND REGISTERED AGENT
The street address of the initial registered office of the Corporation
shall be 248 North Church Street, Spartanburg, South Carolina 29306. The name
of the Corporation's initial registered agent at such address shall be Jerry L.
Calvert.
Date: July 9 , 1999 Signature: /s/ Jerry Calvert
------------------- -----------------------
Registered Agent
ARTICLE THREE
CAPITALIZATION
The Corporation shall have the authority, exercisable by its board of
directors, to issue up to 10,000,000 shares of voting common stock, par value
$.01 per share, and to issue up to 10,000,000 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 of each class of
preferred stock.
ARTICLE FOUR
PREEMPTIVE RIGHTS
The shareholders shall not have any preemptive rights to acquire
additional stock in the Corporation.
ARTICLE FIVE
NO CUMULATIVE VOTING RIGHTS
The Corporation elects not to have cumulative voting, and no shares
issued by this Corporation may be cumulatively voted for directors of the
Corporation (or for any other decision).
<PAGE> 2
ARTICLE SIX
LIMITATION ON DIRECTOR LIABILITY
No director of the Corporation shall be personally liable to the
Corporation or its shareholders for monetary damages for breach of the duty of
care or any other duty as a director, except that such liability shall not be
eliminated for:
(i) any breach of the director's duty of loyalty to the
Corporation or its shareholders;
(ii) acts or omissions not in good faith or which involve
gross negligence, intentional misconduct, or a knowing violation of
law;
(iii) liability imposed under Section 33-8-330 (or any
successor provision or redesignation thereof) of the Act; and
(iv) any transaction from which the director derived an
improper personal benefit.
If at any time the Act shall have been amended to authorize the
further elimination or limitation of the liability of a director, then the
liability of each director of the Corporation shall be eliminated or limited to
the fullest extent permitted by the Act, as so amended, without further action
by the shareholders, unless the provisions of the Act, as amended, require
further action by the shareholders.
Any repeal or modification of the foregoing provisions of this Article
Six shall not adversely affect the elimination or limitation of liability or
alleged liability pursuant hereto of any director of the Corporation for or
with respect to any alleged act or omission of the director occurring prior to
such a repeal or modification.
ARTICLE SEVEN
CONTROL SHARE ACQUISITIONS
The provisions of Title 35, Chapter 2, Article 1 of the Code of Laws
of South Carolina shall not apply to control share acquisitions of shares of
the Corporation.
ARTICLE EIGHT
CLASSIFIED BOARD OF DIRECTORS
At any time that the Board has six or more members the terms of office
of directors will be staggered by dividing the total number of directors into
three classes, with each class accounting for one-third, as near as may be, of
the total. The terms of directors in the first class expire at the first annual
shareholders' meeting after their election, the terms of the second class
expire at the second annual shareholders' meeting after their election, and the
terms of the third class expire at the third annual shareholders' meeting after
their election. At each annual
2
<PAGE> 3
shareholders' meeting held thereafter, directors shall be chosen for a term of
three years to succeed those whose terms expire. If the number of directors is
changed, any increase or decrease shall be so apportioned among the classes as
to make all classes as nearly equal in number as possible, and when the number
of directors is increased and any newly created directorships are filled by the
board, the terms of the additional directors shall expire at the next election
of directors by the shareholders. Each director, except in the case of his
earlier death, written resignation, retirement, disqualification or removal,
shall serve for the duration of his term, as staggered, and thereafter until
his successor shall have been elected and qualified.
ARTICLE NINE
CONSIDERATION OF OTHER CONSTITUENCIES
In discharging the duties of their respective positions and in
determining what is in the best interests of the Corporation, the board of
directors, committees of the board of directors, and individual directors, in
addition to considering the effects of any actions on the Corporation and its
shareholders, may consider the interests of the employees, customers,
suppliers, creditors, and other constituencies of the Corporation and its
subsidiaries, the communities and geographical areas in which the Corporation
and its subsidiaries operate or are located, and all other factors such
directors consider pertinent. This provision solely grants discretionary
authority to the board of directors and shall not be deemed to provide to any
other constituency any right to be considered.
ARTICLE TEN
NAME AND ADDRESS OF THE SOLE INCORPORATOR
The sole incorporator is Jerry L. Calvert, whose address is 248 North
Church Street, Spartanburg, South Carolina 29306.
IN WITNESS WHEREOF, the undersigned has executed these Articles of
Incorporation as of the date indicated below.
/s/ Jerry L. Calvert
--------------------
Jerry L. Calvert
Sole Incorporator
Date: July 9 , 1999
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<PAGE> 4
CERTIFICATION
I, Daniel J. Fritze, an attorney licensed to practice in the State of
South Carolina, certify that the Corporation has complied with the requirements
of Chapter 2, Title 33 of the Code of Laws of South Carolina 1976, relating to
the Articles of Incorporation.
Date: July 13, 1999
/s/ Daniel J. Fritze
------------------------------------------
(Signature)
Nelson Mullins Riley & Scarborough, L.L.P.
Keenan Building, Third Floor
1330 Lady Street
Columbia, South Carolina 29201-3332
4
<PAGE> 1
EXHIBIT 3.2
BYLAWS
OF
FIRST NATIONAL BANCSHARES, INC.
<PAGE> 2
FIRST NATIONAL BANCSHARES, INC.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C> <C> <C>
ARTICLE 1
OFFICES ............................................................................................1
Section 1: Registered Office and Agent.....................................................1
Section 2: Other Offices...................................................................1
ARTICLE 2
SHAREHOLDERS........................................................................................1
Section 1: Place of Meetings...............................................................1
Section 2: Annual Meetings.................................................................1
Section 3: Special Meetings................................................................1
Section 4: Notice..........................................................................2
Section 5: Quorum..........................................................................2
Section 6: Majority Vote; Withdrawal of Quorum.............................................3
Section 7: Method of Voting................................................................3
Section 8: Record Date.....................................................................3
Section 9: Shareholder Proposals...........................................................3
ARTICLE 3
DIRECTORS...........................................................................................4
Section 1: Management......................................................................4
Section 2: Number, Classification and Terms of Office
of Directors....................................................................4
Section 3: Qualifications of Directors.....................................................5
Section 4: Election of Directors...........................................................5
Section 5: Nomination of Directors.........................................................5
Section 6: ***Intentionally Deleted***.....................................................6
Section 7: Emeritus Directors..............................................................6
Section 8: Vacancies.......................................................................7
Section 9: Removal of Directors............................................................7
Section 10: Place of Meetings..............................................................7
Section 11: Regular Meetings...............................................................7
Section 12: Special Meetings...............................................................7
Section 13: Telephone and Similar Meetings.................................................8
Section 14: Quorum; Majority Vote..........................................................8
Section 15: Compensation...................................................................8
Section 16: Procedure......................................................................8
Section 17: Action Without Meeting.........................................................8
ARTICLE 4
BOARD COMMITTEES....................................................................................8
Section 1: Designation.....................................................................9
Section 2: Meetings........................................................................9
Section 3: Quorum; Majority Vote...........................................................9
Section 4: Procedure.......................................................................9
Section 5: Action Without Meeting..........................................................9
</TABLE>
<PAGE> 3
<TABLE>
<S> <C> <C> <C>
Section 6: Telephone and Similar Meetings.................................................10
ARTICLE 5
OFFICERS...........................................................................................10
Section 1: Offices........................................................................10
Section 2: Term...........................................................................10
Section 3: Vacancies......................................................................10
Section 4: Compensation...................................................................10
Section 5: Removal........................................................................10
Section 6: Chairman of the Board..........................................................11
Section 7: Chief Executive Officer........................................................11
Section 8: President......................................................................11
Section 9: Vice Presidents................................................................11
Section 10: Secretary.....................................................................11
Section 11: Assistant Secretary...........................................................12
Section 12: Treasurer.....................................................................12
ARTICLE 6
INDEMNIFICATION....................................................................................12
Section 1: Indemnification of Directors...................................................12
Section 2: Advancement of Expenses........................................................13
Section 3: Indemnification of Officers, Employees and Agents..............................14
Section 4: Insurance......................................................................14
Section 5: Nonexclusivity of Rights; Agreements...........................................14
Section 6: Continuing Benefits; Successors................................................14
Section 7: Interpretation; Construction...................................................15
Section 8: Amendment......................................................................15
Section 9: Severability...................................................................15
ARTICLE 7
CERTIFICATES AND SHAREHOLDERS......................................................................16
Section 1: Certificates...................................................................16
Section 2: Issuance of Shares.............................................................16
Section 3: Rights of Corporation with Respect to
Registered Owners..............................................................16
Section 4: Transfers of Shares............................................................16
Section 5: Registration of Transfer.......................................................16
Section 6: Lost, Stolen or Destroyed Certificates.........................................17
Section 7: Restrictions on Shares.........................................................17
Section 8: Control Share Acquisitions Statute.............................................17
Section 9: Voting of Stock Held...........................................................17
ARTICLE 8
GENERAL PROVISIONS.................................................................................18
Section 1: Distributions..................................................................18
Section 2: Books and Records..............................................................18
Section 3: Execution of Documents.........................................................18
Section 4: Fiscal Year....................................................................18
Section 5: Seal...........................................................................18
Section 6: Resignation....................................................................18
</TABLE>
<PAGE> 4
<TABLE>
<S> <C> <C>
Section 7: Computation of Days............................................................19
Section 8: Amendment of Bylaws............................................................19
Section 9: Construction...................................................................19
Section 10: Headings......................................................................19
</TABLE>
<PAGE> 5
BYLAWS
OF
FIRST NATIONAL BANCSHARES, INC.
ARTICLE 1: OFFICES
Section 1: Registered Office and Agent. The registered office of the
Corporation shall be at 248 North Church Street, Spartanburg, South Carolina
29306. The registered agent shall be Jerry L. Calvert.
Section 2: Other Offices. The Corporation may also have offices at
such other places within and without the State of South Carolina as the Board
of Directors may from time to time determine or the business of the Corporation
may require.
ARTICLE 2: SHAREHOLDERS
Section 1: Place of Meetings. Meetings of shareholders shall be held
at the time and place, within or without the State of South Carolina, stated in
the notice of the meeting or in a waiver of notice.
Section 2: Annual Meetings. An annual meeting of the shareholders
shall be held each year on the third Thursday of April, if not a legal holiday,
but if a legal holiday, then on the next Thursday not a legal holiday, or on
such other date and at a time to be set by the Board of Directors in accordance
with all applicable notice requirements. At the meeting, the shareholders shall
elect directors and transact such other business as may properly be brought
before the meeting.
Section 3: Special Meetings.
(a) Special meetings of the shareholders, for any
purpose or purposes, unless otherwise required by the South Carolina Business
Corporation Act of 1988, as amended from time to time (the "Act"), the Articles
of Incorporation of the Corporation (the "Articles"), or these Bylaws, may be
called by the chief executive officer, the president, the chairman of the Board
of Directors or a majority of the Board of Directors.
(b) In addition to a special meeting called in
accordance with subsection 3(a) of this Article 2, the Corporation shall, if
and to the extent that it is required by applicable law, hold a special meeting
of shareholders if the holders of at least ten percent of all the votes
entitled to be cast on any issue proposed to be considered at such special
meeting sign, date and deliver to the secretary of the Corporation one or more
written demands for the meeting. Such written demands shall be delivered to the
secretary by certified mail, return receipt
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requested. Such written demands sent to the secretary of the Corporation shall
set forth as to each matter the shareholder or shareholders propose to be
presented at the special meeting (i) a description of the purpose or purposes
for which the meeting is to be held (including the specific proposal(s) to be
presented); (ii) the name and record address of the shareholder or shareholders
proposing such business; (iii) the class and number of shares of the
Corporation that are owned of record by the shareholder or shareholders as of a
date within ten days of the delivery of the demand; (iv) the class and number
of shares of the Corporation that are held beneficially, but not held of
record, by the shareholder or shareholders as of a date within ten days of the
delivery of the demand; and (v) any interest of the shareholder or shareholders
in such business. Any such special shareholders' meeting shall be held at a
location designated by the Board of Directors. The Board of Directors may set
such rules for any such meeting as it may deem appropriate, including when the
meeting will be held (subject to any requirements of the Act), the agenda for
the meeting (which may include any proposals made by the Board of Directors),
who may attend the meeting in addition to shareholders of record and other such
matters.
(c) Business transacted at any special meeting shall be
confined to the specific purpose or purposes stated in the notice of the
meeting.
Section 4: Notice.
(a) Written or printed notice stating the place, day and
hour of the meeting and, in the case of a special meeting, the specific purpose
or purposes for which the meeting is called, shall be delivered by the
Corporation not less than ten nor more than sixty days before the date of the
meeting, either personally or by mail, to each shareholder of record entitled
to vote at such meeting. If mailed, such notice shall be deemed effective when
deposited with postage prepaid in the United States mail, addressed to the
shareholder at the address appearing on the stock transfer books of the
Corporation. Except as may be expressly provided by law, no failure or
irregularity of notice of any regular meeting shall invalidate the same or any
proceeding thereat.
(b) The notice of each special shareholders meeting
shall include a description of the specific purpose or purposes for which the
meeting is called. Except as provided by law, the Articles or these Bylaws, the
notice of an annual shareholders meeting need not include a description of the
purpose or purposes for which the meeting is called.
Section 5: Quorum. The holders of a majority of the shares issued and
outstanding and entitled to vote thereat, present in person or represented by
proxy, shall be requisite and shall constitute a quorum at meetings of the
shareholders for the transaction of business except as otherwise provided by
statute, by the Articles or by these Bylaws. If a quorum is not present or
represented at a meeting of the shareholders, the shareholders entitled to
vote, present in person or represented by proxy, shall have the power to
adjourn the meeting from time to time, without notice other than announcement
at the meeting, until a quorum is present or represented. At an adjourned
meeting at which a quorum is present or represented, any business may be
transacted which might have been transacted at the meeting as originally
notified. Once a share is represented for any purpose at a meeting it is deemed
present for quorum purposes.
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Section 6: Majority Vote; Withdrawal of Quorum. Except in regards to
the election of directors, when a quorum is present at a meeting, the vote of
the holders of a majority of the shares having voting power, present in person
or represented by proxy, shall decide any question brought before the meeting,
unless the question is one on which, by express provision of the statutes, the
Articles or these Bylaws, a higher vote is required in which case the express
provision shall govern. Directors shall be elected by a plurality vote of the
shareholders. The shareholders present at a duly constituted meeting may
continue to transact business until adjournment, despite the withdrawal of
enough shareholders to leave less than a quorum.
Section 7: Method of Voting. Each outstanding share of common stock
shall be entitled to one vote on each matter submitted to a vote at a meeting
of shareholders. Each outstanding share of other classes of stock, if any,
shall have such voting rights as may be prescribed by the Board of Directors.
Proxies delivered by facsimile to the Corporation, if otherwise in order, shall
be valid. Votes shall be taken by voice, by hand or in writing, as directed by
the chairman of the meeting. Voting for directors shall be in accordance with
Article 3, Section 3 of these Bylaws.
Section 8: Record Date. For the purpose of determining shareholders
entitled to notice of or to vote at any meeting of shareholders, including any
special meeting, or shareholders entitled to receive payment of dividends, or
in order to make a determination of shareholders for any other purpose, the
Board of Directors may fix in advance a date as the record date for any such
determination of shareholders, such date in any case to be not less than ten
nor more than seventy days prior to the date on which the particular action,
requiring such determination of shareholders, is to be taken. Except as
otherwise provided by law, if no record date is fixed for the determination of
shareholders entitled to notice of or to vote at a meeting of shareholders, or
of shareholders entitled to receive payment of dividends, the date on which
notice of the meeting is mailed, or the date on which the resolution of the
Board of Directors declaring such dividend is adopted, as the case may be,
shall be the record date.
Section 9: Shareholder Proposals.
(a) To the extent required by applicable law, a
shareholder may bring a proposal before an annual meeting of shareholders as
set forth in this Section 9. To be properly brought before an annual meeting of
shareholders, business must be (i) specified in the notice of meeting (or any
supplement thereto) given by or at the direction of the Board of Directors;
(ii) otherwise properly brought before the meeting by or at the direction of
the Board of Directors; or (iii) otherwise properly brought before the meeting
by a shareholder. In addition to any other applicable requirements, for
business to be properly brought before an annual meeting by a shareholder, the
shareholder must have given timely notice thereof in writing to the secretary
of the Corporation. To be timely, a shareholder's notice must be given, either
by personal delivery or by United States mail, postage prepaid, return receipt
requested, to the secretary of the Corporation not less than 30 nor more than
60 days in advance of the annual meeting (provided, however, that if less than
31 days' notice of the meeting is given to shareholders, such written notice
shall be delivered or mailed, as prescribed, to the Secretary of Corporation
not later than the close of the tenth day following the day on which notice of
the meeting was mailed to shareholders). A shareholder's notice to the
secretary of the Corporation shall set forth for each
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<PAGE> 8
matter the shareholder proposes to bring before the annual meeting (i) a
description of the business desired to be brought before the annual meeting
(including the specific proposal(s) to be presented) and the reasons for
conducting such business at the annual meeting; (ii) the name and record
address of the shareholder proposing such business; (iii) the class and number
of shares of the Corporation that are owned of record, and the class and number
of shares of the Corporation that are held beneficially, but not held of
record, by the shareholder as of the record date for the meeting, if such date
has been made publicly available, or as of a date within ten days of the
effective date of the notice by the shareholder if the record date has not been
made publicly available; and (iv) any interest of the shareholder in such
business. In the event that a shareholder attempts to bring business before an
annual meeting without complying with the provisions of this Section 9, the
chairman of the meeting shall declare to the meeting that the business was not
properly brought before the meeting in accordance with the foregoing
procedures, and such business shall not be transacted. The chairman of any
annual meeting, for good cause shown and with proper regard for the orderly
conduct of business at the meeting, may waive in whole or in part the operation
of this Section 9.
(b) If any shareholder of the Corporation notifies the
Corporation that such shareholder intends to present a proposal for action at a
forthcoming meeting of the Corporation's shareholders and requests that the
Corporation include the proposal in its proxy statement and such shareholder
complies with all the requirements of Rule 14a-8 promulgated under the
Securities Exchange Act of 1934, the Corporation shall consider inclusion of
such proposal in the proxy statement unless it determines that the proposal is
inappropriate for consideration by the shareholders at the meeting.
ARTICLE 3: DIRECTORS
Section 1: Management. The business and affairs of the Corporation
shall be managed by the Board of Directors who may exercise all such powers of
the Corporation and do all such lawful acts and things as are not by law, the
Articles or these Bylaws directed or required to be done or exercised by the
shareholders.
Section 2: Number, Classification and Terms of Office of Directors.
Unless otherwise provided in the Articles of Incorporation, the number of
directors of the Corporation shall be that number as may be fixed from time to
time by resolution of the Board of Directors, but in no event shall the number
be less than five or greater than 25. The initial number of directors shall be
13. The number of members of the Board of Directors can be increased or
decreased within the foregoing range at any time by the Board of Directors. In
addition, unless provided otherwise by resolution of the Board of Directors,
if, in any case after proxy materials for an annual meeting of shareholders
have been mailed to shareholders, any person named therein to be nominated at
the direction of the Board of Directors becomes unable or unwilling to serve,
the number of authorized directors shall be automatically reduced by a number
equal to the number of such persons. The members of the Board of Directors need
not be shareholders nor need they be residents of any particular state. At any
time that the Board has six or more members, unless provided otherwise by the
Articles of Incorporation, the terms of office of
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directors will be staggered by dividing the total number of directors into
three classes, with each class accounting for one-third, as near as may be, of
the total. The terms of directors in the first class expire at the first annual
shareholders' meeting after their election, the terms of the second class
expire at the second annual shareholders' meeting after their election, and the
terms of the third class expire at the third annual shareholders' meeting after
their election. At each annual shareholders' meeting held thereafter, directors
shall be chosen for a term of three years to succeed those whose terms expire.
If the number of directors is changed, any increase or decrease shall be so
apportioned among the classes as to make all classes as nearly equal in number
as possible, and when the number of directors is increased and any newly
created directorships are filled by the board, the terms of the additional
directors shall expire at the next election of directors by the shareholders.
Each director, except in the case of his earlier death, written resignation,
retirement, disqualification or removal, shall serve for the duration of his
term, as staggered, and thereafter until his successor shall have been elected
and qualified.
Section 3: Qualifications of Directors. No individual who is
or becomes a Business Competitor (as defined below) or who is or becomes
affiliated with, employed by or a representative of any individual,
corporation, association, partnership, firm, business enterprise or other
entity or organization which the Board of Directors, after having such matter
formally brought to its attention, determines to be in competition with the
Corporation or any of its subsidiaries (any such individual, corporation,
association, partnership, firm, business enterprise or other entity or
organization being hereinafter referred to as a "Business Competitor") shall be
eligible to serve as a director if the Board of Directors determines that it
would not be in the Corporation's best interests for such individual to serve
as a director of the Corporation. Such affiliation, employment or
representation may include, without limitation, service or status as an owner,
partner, shareholder, trustee, director, officer, consultant, employee, agent,
or counsel, or the existence of any relationship which results in the affected
person having an express or implied obligation to act on behalf of a Business
Competitor; provided, however, that passive ownership of a debt or equity
interest not exceeding 2% of the outstanding debt or equity, as the case may
be, in any Business Competitor shall not constitute such affiliation,
employment or representation. Any financial institution having branches or
affiliates in Spartanburg County, South Carolina, shall be presumed to be a
Business Competitor unless the Board of Directors determines otherwise.
Section 4: Election of Directors. Directors shall be elected
by a plurality vote.
Section 5: Nomination of Directors.
(a) Nomination of persons to serve as directors
of the Corporation, other than those made by or on behalf of the Board of
Directors of the Corporation, shall be made in writing and shall be delivered
either by personal delivery or by United States mail, postage prepaid, return
receipt requested, to the secretary of the Corporation no later than (i) with
respect to an election to be held at an annual meeting of shareholders, ninety
days in advance of such meeting; and (ii) with respect to an election to be
held at a special meeting of shareholders for the election of directors, the
close of business on the seventh day following the date on which notice of such
meeting is first given to shareholders. Each notice shall set forth: (i) the
name and address of the shareholder who intends to make the nomination and of
the person or persons to be
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nominated; (ii) a representation that the shareholder is a holder of record of
stock of the Corporation entitled to vote at such meeting and intends to appear
in person or by proxy at the meeting to nominate the person or persons
specified in the notice; (iii) a description of all arrangements or
understandings between the shareholder and each nominee and any other person or
persons (naming such person or persons) pursuant to which the nomination or
nominations are to be made by the shareholder; (iv) such other information
regarding each nominee proposed by such shareholder as would be required to be
included in a proxy statement filed pursuant to the proxy rules of the
Securities and Exchange Commission, had the nominee been nominated, or intended
to be nominated, by the Board of Directors; and (v) the consent of each nominee
to serve as a director of the Corporation if so elected. The chairman of the
meeting may refuse to acknowledge the nomination of any person not made in
compliance with the foregoing procedure. The chairman of any such meeting, for
good cause shown and with proper regard for the orderly conduct of business at
the meeting, may waive in whole or in part the operation of this Section 4.
(b) Notwithstanding subsection (a) of this Section 4, if
the Corporation or any banking subsidiary of the Corporation is subject to the
requirements of Title 12, Section 1831(i) of the United States Code, then no
person may be nominated by a shareholder for election as a director at any
meeting of shareholders unless the shareholder furnishes the written notice
required by subsection (a) of this Section 4 to the secretary of the
Corporation at least ninety days prior to the date of the meeting and the
nominee has received regulatory approval to serve as a director prior to the
date of the meeting.
Section 6: Retirement of Directors. *** Intentionally
Deleted.***
Section 7: Emeritus Directors. The Board of Directors may,
from time to time, appoint individuals (including individuals who have retired
from the Board of Directors) to serve as members of the Emeritus Board of
Directors of the Corporation. Each member of the Emeritus Board of Directors of
the Corporation, except in the case of his earlier death, resignation,
retirement, disqualification or removal, shall serve until the next succeeding
annual meeting of the Board of Directors of the Corporation. Members of the
Emeritus Board of Directors may be removed without cause by a vote of the
members of the Board of Directors. Any individual appointed as a member of the
Emeritus Board of Directors of the Corporation may, but shall not be required
to, attend meetings of the Board of Directors of the Corporation and may
participate in any discussions at such meetings, but such individual may not
vote or be counted in determining a quorum at any meeting of the Board of
Directors of the Corporation. It shall be the duty of the members of the
Emeritus Board of Directors of the Corporation to serve as goodwill ambassadors
of the Corporation, but such individuals shall not have any responsibility or
be subject to any liability imposed upon a member of the Board of Directors of
the Corporation or in any manner otherwise be deemed to be a member of the
Board of Directors of the Corporation. Each member of the Emeritus Board of
Directors of the Corporation shall be paid such compensation as may be set from
time to time by the Chairman of the Board of Directors of the Corporation and
shall remain eligible to participate in any stock option plan in which
directors are eligible to participate which is maintained by, or participated
in, from time to time by the Corporation, according to the terms and conditions
thereof.
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Section 8: Vacancies. Except as otherwise provided by law, in
the Articles of Incorporation, or in these Bylaws (a) the office of a director
shall become vacant if he dies, resigns, or is removed from office, and (b) the
Board of Directors may declare vacant the office of a director if (i) he is
interdicted or adjudicated an incompetent, (ii) an action is filed by or
against him, or any entity of which he is employed as his principal business
activity, under the bankruptcy laws of the United States, (iii) in the sole
opinion of the Board of Directors he becomes incapacitated by illness or other
infirmity so that he is unable to perform his duties for a period of six months
or longer, or (iv) he ceases at any time to have the qualifications required by
law, the Articles of Incorporation or these Bylaws. The remaining directors
may, by a majority vote, fill any vacancy on the Board of Directors (including
any vacancy resulting from an increase in the authorized number of directors,
or from the failure of the shareholders to elect the full number of authorized
directors) for an unexpired term; provided that the shareholders shall have the
right at any special meeting called for such purpose prior to action by the
Board of Directors to fill the vacancy.
Section 9: Removal of Directors. Unless provided otherwise by
the Articles of Incorporation, directors may be removed with or without cause
by unanimous vote of the Board of Directors (with the abstention of any
director who is the subject of such vote) or the affirmative vote of the
holders of at least a majority of the shares entitled to vote at an election of
directors, such vote being taken at a meeting of the shareholders called for
that purpose at which a quorum is present.
Section 10: Place of Meetings. Meetings of the Board of
Directors, regular or special, may be held either within or without the State
of South Carolina.
Section 11: Regular Meetings. Regular meetings of the Board
of Directors may be held without notice at such time and place as shall from
time to time be determined by the Board of Directors.
Section 12: Special Meetings. Special meetings of the Board
of Directors may be called by the chairman, the chief executive officer, or the
president of the Corporation, on not less than twenty-four hours notice. Notice
of a special meeting may be given by personal notice, telephone, facsimile,
electronic communication, overnight courier or United States mail to each
director. Any such special meeting shall be held at such time and place as
shall be stated in the notice of the meeting. The notice need not describe the
purpose or purposes of the special meeting.
Section 13: Telephone and Similar Meetings. Directors may
participate in and hold a meeting by means of conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other. Participation in such a meeting shall constitute
presence in person at the meeting, except where a person participates in the
meeting for the express purpose of objecting to the holding of the meeting or
the transacting of any business at the meeting on the ground that the meeting
is not lawfully called or convened, and does not thereafter vote for or assent
to action taken at the meeting.
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Section 14: Quorum; Majority Vote. At meetings of the Board
of Directors a majority of the number of directors then in office shall
constitute a quorum for the transaction of business. The act of a majority of
the directors present at a meeting at which a quorum is present shall be the
act of the Board of Directors, except as otherwise specifically provided by
law, the Articles or these Bylaws. If a quorum is not present at a meeting of
the Board of Directors, the directors present may adjourn the meeting from time
to time, without notice other than announcement at the meeting, until a quorum
is present.
Section 15: Compensation. Each director shall be entitled to
receive such reasonable compensation as may be determined by resolution of the
Board of Directors. By resolution of the Board of Directors, the directors may
be paid their expenses, if any, of attendance at each meeting of the Board of
Directors and may be paid a fixed sum for attendance at each meeting of the
Board of Directors. No such payment shall preclude any director from serving
the Corporation in any other capacity and receiving compensation therefor.
Members of committees may, by resolution of the Board of Directors, be allowed
compensation for attending committee meetings.
Section 16: Procedure. The Board of Directors shall keep
regular minutes of its proceedings. The minutes shall be placed in the minute
book of the Corporation.
Section 17: Action Without Meeting. Any action required or
permitted to be taken at a meeting of the Board of Directors may be taken
without a meeting if the action is assented to by all the members of the Board.
Such consent shall have the same force and effect as a meeting vote and may be
described as such in any document.
ARTICLE 4: BOARD COMMITTEES
Section 1: Designation. The Board of Directors may, by
resolution adopted by a majority of the full Board, designate one or more
committees. Each committee must have two or more members who serve at the
pleasure of the Board of Directors. To the extent specified by the Board of
Directors, in the Articles or in these Bylaws, each committee may exercise the
authority of the Board of Directors. So long as prohibited by law, however, a
committee of the Board may not (a) authorize distributions; (b) approve or
propose to shareholders action required by the Act to be approved by
shareholders; (c) fill vacancies on the Board of Directors or on any of its
committees; (d) amend the Articles; (e) adopt, amend or repeal these Bylaws;
(f) approve a plan of merger not requiring shareholder approval; (g) authorize
or approve reacquisition of shares, except according to a formula or method
prescribed by the Board of Directors; or (h) authorize or approve the issuance
or sale or contract for sale of shares, or determine the designation and
relative rights, preferences and limitations of a class or series of shares,
except that the Board of Directors may authorize a committee (or a senior
executive officer of the Corporation) to do so within limits specifically
prescribed by the Board of Directors. Any director may serve one or more
committee. Any committee appointed under this Section 1 shall perform such
duties and assume such responsibility as may from time to time be placed upon
it by the Board of Directors.
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Section 2: Meetings. Time, place and notice of all committee
meetings shall be as called and specified by the chief executive officer, the
committee chairman or any two members of each committee.
Section 3: Quorum; Majority Vote. At meetings of committees,
a majority of the number of members designated by the Board of Directors shall
constitute a quorum for the transaction of business. The act of a majority of
the members present at any meeting at which a quorum is present shall be the
act of such committee, except as otherwise specifically provided by the Act,
the Articles or these Bylaws. If a quorum is not present at a meeting of the
committee, the members present may adjourn the meeting from time to time,
without notice other than an announcement at the meeting, until a quorum is
present.
Section 4: Procedure. Committees shall keep regular minutes
of their proceedings and report the same to the Board of Directors at its next
regular meeting. The minutes of the proceedings of the committee shall be
placed in the minute book of the Corporation.
Section 5: Action Without Meeting. Any action required or
permitted to be taken at a meeting of any committee may be taken without a
meeting if the action is assented to by all the members of the committee. Such
consent shall have the same force and effect as a meeting vote and may be
described as such in any document.
Section 6: Telephone and Similar Meetings. Committee members
may participate in and hold a meeting by means of conference telephone or
similar communications equipment by means of which all persons participating in
the meeting can hear each other. Participation in such a meeting shall
constitute presence in person at the meeting, except where a person
participates in the meeting for the express purpose of objecting to the holding
of the meeting or the transacting of any business at the meeting on the ground
that the meeting is not lawfully called or convened, and does not thereafter
vote for or assent to action taken at the meeting.
ARTICLE 5: OFFICERS
OFFICERS
Section 1: Officers. The officers of the Corporation shall
consist of a chief executive officer, president and secretary, each of whom
shall be elected by the Board of Directors. The Board of Directors may also
create and establish the duties of other offices as it deems appropriate. The
Board of Directors shall also elect a chairman of the Board and may elect a
vice chairman of the Board from among its members. The Board of Directors from
time to time may appoint, or may authorize the president to appoint or
authorize specific officers to appoint, the persons who shall hold such other
offices as may be established by the Board of Directors, including one or more
vice presidents (including executive vice presidents, senior vice presidents,
assistant vice presidents), one or more assistant secretaries, and one or more
assistant treasurers. Any two or more offices may be held by the same person.
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<PAGE> 14
Section 2: Term. Each officer shall serve at the pleasure of
the Board of Directors (or, if appointed pursuant to this Article, at the
pleasure of the Board of Directors, the president, or the officer authorized to
have appointed the officer) until his or her death, resignation, or removal, or
until his or her replacement is elected or appointed in accordance with this
Article.
Section 3: Vacancies. Any vacancy occurring in any office of
the Corporation may be filled by the Board of Directors. Any vacancy in an
office which was filled by the president or another officer may also be filled
by the president or by any officer authorized to have filled the office vacant.
Section 4: Compensation. The compensation of all officers of
the Corporation shall be fixed by the Board of Directors or by a committee or
officer appointed by the Board of Directors. Officers may serve without
compensation.
Section 5: Removal. All officers (regardless of how elected
or appointed) may be removed, with or without cause, by the Board of Directors.
Any officer appointed by the president or another officer may also be removed,
with or without cause, by the president or by any officer authorized to have
appointed the officer to be removed. Removal will be without prejudice to the
contract rights, if any, of the person removed, but shall be effective
notwithstanding any damage claim that may result from infringement of such
contract rights.
Section 6: Chairman of the Board. The office of the chairman
of the board may be filled by the Board at its pleasure by the election of one
of its members to the office. The chairman shall preside at all meetings of the
Board and meetings of the shareholders and shall perform such other duties as
may be assigned to him by the Board of Directors.
Section 7: Chief Executive Officer. The chief executive
officer shall be responsible for the general and active management of the
business and affairs of the Corporation, and shall see that all orders and
resolutions of the Board are carried into effect. He shall perform such other
duties and have such other authority and powers as the Board of Directors may
from time to time prescribe.
Section 8: President. The president shall be responsible for
the general and active management of the business and affairs of the
Corporation, and shall see that all orders and resolutions of the Board are
carried into effect. He shall perform such other duties and have such other
authority and powers as the Board of Directors may from time to time prescribe.
The president shall preside as chairman of the Board of Directors during the
absence of the Board chairman.
Section 9: Vice Presidents. The vice presidents (executive,
senior, or assistant), as such offices are appointed by the Board of Directors,
in the order of their seniority, unless otherwise determined by the Board of
Directors, shall, in the absence or disability of the president, perform the
duties and have the authority and exercise the powers of the president. They
shall perform such other duties and have such other authority and powers as the
Board of Directors may from time to time prescribe or as the president may from
time to time delegate.
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<PAGE> 15
Section 10: Secretary.
(a) The secretary shall attend all meetings of
the Board of Directors and all meetings of the shareholders and record all
votes, actions and the minutes of all proceedings in a book to be kept for that
purpose and shall perform like duties for the executive and other committees
when required.
(b) The secretary shall give, or cause to be
given, notice of all meetings of the shareholders and special meetings of the
Board of Directors.
(c) The secretary shall keep in safe custody
the seal of the Corporation and, when authorized by the Board of Directors or
the executive committee, affix it to any instrument requiring it. When so
affixed, it shall be attested by the secretary's signature or by the signature
of the treasurer or an assistant secretary.
(d) The secretary shall be under the
supervision of the president and shall perform such other duties and have such
other authority and powers as the Board of Directors may from time to time
prescribe or as the president may from time to time delegate.
Section 11: Assistant Secretary. The assistant secretaries,
as such offices are created by the Board of Directors, in the order of their
seniority, unless otherwise determined by the Board of Directors, shall, in the
absence or disability of the secretary, perform the duties and have the
authority and exercise the powers of the secretary. They shall perform such
other duties and have such other powers as the Board of Directors may from time
to time prescribe or as the president may from time to time delegate.
Section 12: Treasurer.
(a) The treasurer shall have the custody of the
corporate funds and securities and shall keep full and accurate accounts of
receipts and disbursements of the Corporation and shall deposit all moneys and
other valuables in the name and to the credit of the Corporation in appropriate
depositories.
(b) The treasurer shall disburse the funds of
the Corporation ordered by the Board of Directors and prepare financial
statements as they direct.
(c) The treasurer shall perform such other
duties and have such other authority and powers as the Board of Directors may
from time to time prescribe or as the president may from time to time delegate.
(d) The treasurer's books and accounts shall be
opened at any time during business hours to the inspection of any directors of
the Corporation.
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<PAGE> 16
ARTICLE 6: INDEMNIFICATION
Section 1: Indemnification of Directors.
(a) The Corporation shall indemnify and hold
harmless, to the fullest extent permitted by applicable law, any person (an
"Indemnified Person") who was or is a party or is threatened to be made a party
to or is otherwise involved in any threatened, pending or completed action,
suit or other proceeding, whether civil, criminal, administrative or
investigative and whether formal or informal, by reason of the fact that he, or
a person for whom he is a legal representative (or other similar
representative), is or was a director of the Corporation or is or was serving
at the Corporation's request as a director, officer, partner, trustee, employee
or agent of another corporation, partnership, joint venture, trust, employee
benefit plan or other enterprise, against expenses (including attorneys' fees),
judgments, fines, amounts paid in settlement or other similar costs actually
and reasonably incurred in connection with such action, suit or proceeding. For
purposes of this Article 6, all terms used herein that are defined in Section
33-8-500 of the Act or any successor provision or provisions shall have the
meanings so prescribed in such Section.
(b) Without limiting the provisions of Section
1(a) of this Article 6, the Corporation shall indemnify a director who was
wholly successful, on the merits or otherwise, in the defense of any proceeding
to which he was a party because he is or was a director of the Corporation
against reasonable expenses incurred by him in connection with the proceeding.
In addition, the Corporation shall indemnify an individual made a party to a
proceeding because he is or was a director against liability incurred in the
proceeding if: (i) he conducted himself in good faith; (ii) he reasonably
believed: (A) in the case of conduct in his official capacity with the
Corporation, that his conduct was in its best interest; and (B) in all other
cases, that his conduct was at least not opposed to its best interest; and
(iii) in the case of any criminal proceeding, he had no reasonable cause to
believe his conduct was unlawful. The termination of a proceeding by judgment,
order, settlement, conviction, or upon a plea of nolo contendere or its
equivalent is not, of itself, determinative that the director did not meet the
standard of conduct described in this subsection (b). The determination of
whether the director met the standard of conduct described in this subsection
(b) shall be made in accordance with Section 33-8-550 of the Act or any
successor provision or provisions.
Section 2: Advancement of Expenses.
(a) With respect to any proceeding to which an
Indemnified Person is a party because he is or was a director of the
Corporation, the Corporation shall, to the fullest extent permitted by
applicable law, pay for or reimburse the Indemnified Person's reasonable
expenses (including, but not limited to, attorneys' fees and disbursements,
court costs, and expert witness fees) incurred by the Indemnified Person in
advance of final disposition of the proceeding.
(b) Without limiting the provisions of Section
2(a) of this Article 6, the Corporation shall, to the fullest extent permitted
by applicable law, pay for or reimburse the reasonable expenses (including, but
not limited to, attorneys' fees and disbursements, court costs
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<PAGE> 17
and expert witness fees) incurred by a director who is a party to a proceeding
in advance of final disposition of the proceeding if: (a) the director
furnishes the Corporation a written affirmation of his good faith belief that
he has met the standard of conduct described in Section 1(b) of this Article 6;
(b) the director furnishes the Corporation a written undertaking, executed
personally or on his behalf, to repay the advance if it is ultimately
determined that he did not meet such standard of conduct; and (c) a
determination is made that the facts then known to those making the
determination would not preclude indemnification under this Article 6. The
Corporation shall expeditiously pay the amount of such expenses to the director
following the director's delivery to the Corporation of a written request for
an advance pursuant to this Section 2 together with a reasonable accounting of
such expenses. The undertaking required by this Section 2 shall be an unlimited
general obligation of the director but need not be secured and may be accepted
without reference to financial ability to make repayment. Determinations and
authorizations of payments under this Section 2 shall be made in the manner
specified in Section 33-8-550 of the Act or any successor provision or
provisions.
Section 3: Indemnification of Officers, Employees and Agents.
An officer of the Corporation who is not a director is entitled to the same
indemnification rights which are provided to directors of the Corporation in
Section 1 of this Article 6 and the Corporation shall advance expenses to
officers of the Corporation who are not directors to the same extent and in the
same manner as to directors as provided in Section 2 of this Article 6. In
addition, the Board of Directors shall have the power to cause the Corporation
to indemnify, hold harmless and advance expenses to any officer, employee or
agent of the Corporation who is not a director to the fullest extent permitted
by public policy, by adopting a resolution to that effect identifying such
officers, employees or agents (by position and name) and specifying the
particular rights provided, which may be different for each of the persons
identified. Any officer entitled to indemnification pursuant to the first
sentence of this Section 3 and any officer, employee or agent granted
indemnification by the Board of Directors in accordance with the second
sentence of this Section 3 shall, to the extent specified herein or by the
Board of Directors, be an "Indemnified Party" for the purposes of the
provisions of this Article 6.
Section 4: Insurance. The Corporation may purchase and
maintain insurance on behalf of an individual who is or was a director,
officer, employee or agent of the Corporation, or who, while a director,
officer, employee or agent of the Corporation, is or was serving at the request
of the Corporation as a director, officer, partner, trustee, employee or agent
of another foreign or domestic corporation, partnership, joint venture, trust,
employee benefit plan or other enterprise, against liability asserted against
or incurred by him in that capacity or arising from his status as a director,
officer, employee or agent, whether or not the Corporation would have the power
to indemnify him against the same liability under this Article 6.
Section 5: Nonexclusivity of Rights; Agreements. The rights
conferred on any person by this Article 6 shall neither limit nor be exclusive
of any other rights which such person may have or hereafter acquire under any
statute, agreement, provision of the Articles, these Bylaws, vote of
shareholders or otherwise. The provisions of this Article 6 shall be deemed to
constitute an agreement between the Corporation and each person entitled to
indemnification hereunder. In addition to the rights provided in this Article
6, the Corporation shall have the power, upon authorization by the Board of
Directors, to enter into an agreement or agreements
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<PAGE> 18
providing to any person who is or was a director, officer, employee or agent of
the Corporation certain indemnification rights. Any such agreement between the
Corporation and any director, officer, employee or agent of the Corporation
concerning indemnification shall be given full force and effect, to the fullest
extent permitted by applicable law, even if it provides rights to such
director, officer, employee or agent more favorable than, or in addition to,
those rights provided under this Article 6.
Section 6: Continuing Benefits; Successors. The
indemnification and advancement of expenses provided by or granted pursuant to
this Article 6 shall, unless otherwise provided when authorized or ratified,
continue as to a person who has ceased to be a director, officer, employee or
agent and shall inure to the benefit of the heirs, executors and administrators
of such person. For purposes of this Article 6, the term "Corporation" shall
include any corporation, joint venture, trust, partnership or unincorporated
business association that is the successor to all or substantially all of the
business or assets of this Corporation, as a result of merger, consolidation,
sale, liquidation or otherwise, and any such successor shall be liable to the
persons indemnified under this Article 6 on the same terms and conditions and
to the same extent as this Corporation.
Section 7: Interpretation; Construction. This Article 6 is
intended to provide indemnification to the directors and permit indemnification
to the officers of the Corporation to the fullest extent permitted by
applicable law as it may presently exist or may hereafter be amended and shall
be construed in order to accomplish this result. To the extent that a provision
herein prevents a director or officer from receiving indemnification to the
fullest extent intended, such provision shall be of no effect in such
situation. If at any time the Act is amended so as to permit broader
indemnification rights to the directors and officers of this Corporation, then
these Bylaws shall be deemed to automatically incorporate these broader
provisions so that the directors and officers of the Corporation shall continue
to receive the intended indemnification to the fullest extent permitted by
applicable law.
Section 8: Amendment. Any amendment to this Article 6 that
limits or otherwise adversely affects the right of indemnification, advancement
of expenses or other rights of any Indemnified Person hereunder shall, as to
such Indemnified Person, apply only to claims, actions, suits or proceedings
based on actions, events or omissions (collectively, "Post Amendment Events")
occurring after such amendment and after delivery of notice of such amendment
to the Indemnified Person so affected. Any Indemnified Person shall, as to any
claim, action, suit or proceeding based on actions, events or omissions
occurring prior to the date of receipt of such notice, be entitled to the right
of indemnification, advancement of expenses and other rights under this Article
6 to the same extent as if such provisions had continued as part of the Bylaws
of the Corporation without such amendment. This Section 8 cannot be altered,
amended or repealed in a manner effective as to any Indemnified Person (except
as to Post Amendment Events) without the prior written consent of such
Indemnified Person.
Section 9: Severability. Each of the Sections of this Article
6, and each of the clauses set forth herein, shall be deemed separate and
independent, and should any part of any such Section or clause be declared
invalid or unenforceable by any court of competent jurisdiction, such
invalidity or unenforceability shall in no way render invalid or unenforceable
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<PAGE> 19
any other part thereof or any separate Section or clause of this Article 6 that
is not declared invalid or unenforceable.
ARTICLE 7: CERTIFICATES AND SHAREHOLDERS
Section 1: Certificates. Certificates in the form determined
by the Board of Directors shall be delivered representing all shares of which
shareholders are entitled. Certificates shall be consecutively numbered and
shall be entered in the books of the Corporation as they are issued. At a
minimum, each share certificate must state on its face: (a) the name of the
Corporation and that it is organized under the laws of South Carolina; (b) the
name of the person to whom the certificate is issued; and (c) the number and
class of shares and the designation of the series, if any, the certificate
represents. Each share certificate (a) must be signed (either manually or in
facsimile) by at least two officers, including the president, the secretary, or
such other officer or officers as the Board of Directors shall designate; and
(b) may bear the corporate seal or its facsimile. If the person who signed
(either manually or in facsimile) a share certificate no longer holds office
when the certificate is issued, the certificate is nevertheless valid.
Section 2: Issuance of Shares. The Board of Directors may
authorize shares to be issued for consideration consisting of any tangible or
intangible property or benefit to the Corporation, including cash, promissory
notes, services performed, written contracts for services to be performed or
other securities of the Corporation. Before the Corporation issues shares, the
Board of Directors must determine that the consideration received or to be
received for shares to be issued is adequate. That determination by the Board
of Directors is conclusive insofar as the adequacy of consideration for the
issuance of shares relates to whether the shares are validly issued, fully paid
and nonassessable. When the Corporation receives the consideration for which
the Board of Directors authorized the issuance of shares, the shares issued
therefor are fully paid and nonassessable.
Section 3: Rights of Corporation with Respect to Registered
Owners. Prior to due presentation for transfer of registration of its shares,
the Corporation may treat the registered owner of the shares as the person
exclusively entitled to vote the shares, to receive any dividend or other
distribution with respect to the shares, and for all other purposes; and the
Corporation shall not be bound to recognize any equitable or other claim to or
interest in the shares on the part of any other person, whether or not it has
express or other notice of such a claim or interest, except as otherwise
provided by law.
Section 4: Transfers of Shares. Transfers of shares shall be
made upon the books of the Corporation kept by the Corporation or by the
transfer agent designated to transfer the shares, only upon direction of the
person named in the certificate or by an attorney lawfully constituted in
writing. Before a new certificate is issued, the old certificate shall be
surrendered for cancellation or, in the case of a certificate alleged to have
been lost, stolen or destroyed, the provisions of these Bylaws shall have been
complied with.
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<PAGE> 20
Section 5: Registration of Transfer. The Corporation shall
register the transfer of a certificate for shares presented to it for transfer
if: (a) the certificate is properly endorsed by the registered owner or by his
duly authorized attorney; (b) the signature of such person has been guaranteed
by a commercial bank or brokerage firm that is a member of the National
Association of Securities Dealers and reasonable assurance is given that such
endorsements are effective; (c) the Corporation has no notice of an adverse
claim or has discharged any duty to inquire into such a claim; (d) any
applicable law relating to the collection of taxes has been complied with; and
(e) the transfer is in compliance with applicable provisions of any transfer
restrictions of which the Corporation shall have notice.
Section 6: Lost, Stolen or Destroyed Certificates. The
Corporation shall issue a new certificate in place of any certificate for
shares previously issued if the registered owner of the certificate: (a) makes
proof in affidavit form that the certificate has been lost, destroyed or
wrongfully taken; (b) requests the issuance of a new certificate before the
Corporation has notice that the certificate has been acquired by a purchaser
for value in good faith and without notice of an adverse claim; (c) gives a
bond in such form, and with such surety or sureties, with fixed or open
penalty, as the Corporation may direct, to indemnify the Corporation (and its
transfer agent and registrar, if any) against any claim that may be made on
account of the alleged loss, destruction or theft of the certificate; and (d)
satisfies any other reasonable requirements imposed by the Corporation. When a
certificate has been lost, apparently destroyed or wrongfully taken, and the
holder of record fails to notify the Corporation within a reasonable time after
he has notice of it, and the Corporation registers a transfer of the shares
represented by the certificate before receiving such notification, the holder
of record is precluded from making any claim against the Corporation for the
transfer or for a new certificate.
Section 7: Restrictions on Shares. The Board of Directors, on
behalf of the Corporation, or the shareholders may impose restrictions on the
transfer of shares (including any security convertible into, or carrying a
right to subscribe for or acquire shares) to the maximum extent permitted by
law. A restriction does not affect shares issued before the restriction was
adopted unless the holders of the shares are parties to the restriction
agreement or voted in favor of the restriction. A restriction on the transfer
of shares is valid and enforceable against the holder or a transferee of the
holder if the restriction is authorized by this Section 7 and its existence is
noted conspicuously on the front or back of the certificate.
Section 8: Control Share Acquisitions Statute. The
Corporation elects not to be subject to or governed by the South Carolina
Control Share Acquisitions Statute contained in Sections 35-2-101 to 35-2-111
of the South Carolina Code, or any successor provision or provisions.
Section 9: Voting of Stock Held. Unless otherwise provided by
resolution of the Board of Directors, the president or any executive vice
president shall from time to time appoint an attorney or attorneys or agent or
agents of this Corporation, in the name and on behalf of this Corporation, to
cast the vote which this Corporation may be entitled to cast as a shareholder
or otherwise in any other corporation, any of whose stock or securities may be
held by this Corporation, at meetings of the holders of the stock or other
securities of such other corporation, or to consent in writing to any action by
any of such other corporation, and shall instruct the
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<PAGE> 21
person or persons so appointed as to the manner of casting such votes or giving
such consent and may execute or cause to be executed on behalf of this
Corporation and under its corporate seal or otherwise, such written proxies,
consents, waivers or other instruments as may be necessary or proper; or, in
lieu of such appointment, the president or any executive vice president may
attend in person any meetings of the holders of stock or other securities of
any such other corporation and their vote or exercise any or all power of this
Corporation as the holder of such stock or other securities of such other
corporation.
ARTICLE 8: GENERAL PROVISIONS
Section 1: Distributions. The Board of Directors may
authorize, and the Corporation may make, distributions (including dividends on
its outstanding shares) in the manner and upon the terms and conditions
provided by applicable law and the Articles.
Section 2: Books and Records. The Corporation shall keep
correct and complete books and records of account and shall keep minutes of the
proceedings of its shareholders and Board of Directors.
Section 3: Execution of Documents. The Board of Directors or
these Bylaws shall designate the officers, employees and agents of the
Corporation who shall have the power to execute and deliver deeds, contracts,
mortgages, bonds, debentures, checks and other documents for and in the name of
the Corporation, and may authorize such officers, employees and agents to
delegate such power (including authority to redelegate) to other officers,
employees or agents of the Corporation. Unless so designated or expressly
authorized by these Bylaws, no officer, employee or agent shall have any power
or authority to bind the Corporation by any contract or engagement or to pledge
its credit or to render it liable pecuniarily for any purpose or any amount.
Section 4: Fiscal Year. The fiscal year of the Corporation
shall be the same as the calendar year.
Section 5: Seal. The Corporation may provide a seal which
contains the name of the Corporation and the name of the state of
incorporation. The seal may be used by impressing it or reproducing a facsimile
of it or otherwise.
Section 6: Resignation. A director may resign by delivering
written notice to the Board of Directors, the chairman or the Corporation. Such
resignation of a director is effective when the notice is delivered unless the
notice specifies a later effective date. An officer may resign at any time by
delivering notice to the Corporation. Such resignation of an officer is
effective when the notice is delivered unless the notice specifies a later
effective date. If a resignation of an officer is made effective at a later
date and the Corporation accepts the future effective date, the Board of
Directors may fill the pending vacancy before the effective date if the Board
of Directors provides that the successor does not take office until the
effective date.
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Section 7: Computation of Days. In computing any period of
days prescribed hereunder the day of the act after which the designated period
of days begins to run is not to be included. The last day of the period so
computed is to be included.
Section 8: Amendment of Bylaws.
(a) Except to the extent required otherwise by
law, these Bylaws, or the Articles of Incorporation, these Bylaws may be
altered, amended or repealed or new Bylaws may be adopted at any meeting of the
Board of Directors at which a quorum is present, by the affirmative vote of a
majority of the directors then in office, provided notice of the proposed
alteration, amendment or repeal is contained in the notice of the meeting.
(b) Except to the extent required otherwise by
law, these Bylaws, or the Articles of Incorporation, these Bylaws may also be
altered, amended or repealed or new Bylaws may be adopted at any meeting of the
shareholders at which a quorum is present or represented by proxy, by the
affirmative vote of the holders of a majority of each class of shares entitled
to vote thereon, provided notice of the proposed alteration, amendment or
repeal is contained in the notice of the meeting.
(c) Upon adoption of any new bylaw by the
shareholders, the shareholders may provide expressly that the Board of
Directors may not adopt, amend or repeal that bylaw or any bylaw on that
subject.
Section 9: Construction. If any portion of these Bylaws shall
be invalid or inoperative, then, so far as is reasonable and possible: (a) the
remainder of these Bylaws shall be considered valid and operative and (b)
effect shall be given to the intent manifested by the portion held invalid or
inoperative.
Section 10: Headings. The headings are for convenience of
reference only and shall not affect in any way the meaning or interpretation of
these Bylaws.
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<PAGE> 23
The undersigned, as President of the Corporation, hereby certifies
that the bylaws contained herein are the true and correct bylaws adopted by the
Corporation's board of directors in compliance with any procedural requirements
of the Corporation's Articles of Incorporation and the laws of the State of
South Carolina, and the rules and regulations promulgated thereunder.
/s/ Jerry L. Calvert
--------------------
Jerry L. Calvert
President
Date: 6/22/99
-------------
19
<PAGE> 1
EXHIBIT 4.2
[FORM OF FACE OF CERTIFICATE]
FIRST NATIONAL BANCSHARES, INC.
INCORPORATED UNDER THE LAWS OF SOUTH CAROLINA
THE CORPORATION IS TO ISSUE 10,000,000 SHARES OF COMMON STOCK - PAR VALUE $.01
EACH
This certifies that _______________________________is the registered holder of
_______________________________ Shares of Common Stock which are fully paid and
non-assessable and transferable only on the books of the Corporation by the
holder hereof in person or by Attorney upon surrender of this Certificate
properly endorsed.
In Witness Whereof, the said Corporation has caused this Certificate
to be signed by its duly authorized officers and its Corporate Seal to be
hereunto affixed this ______________ day of _______________ A.D. 19____
- --------------------------------- ----------------------------------
SECRETARY PRESIDENT
<PAGE> 2
[FORM OF BACK OF CERTIFICATE]
The following abbreviations, when used in the inscription on the face
of this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations.
<TABLE>
<S> <C>
TEN COM --as tenants in common UNIF GIFT MIN ACT--____ Custodian
TEN ENT --as tenants by the entireties (Cust) (Minor)
JT TEN --as joint tenants with right of under Uniform Gifts to Minors
survivorship and not as tenants Act ______________
in common (State)
</TABLE>
Additional abbreviations may also be used though not in the above list.
For value received, _________________ hereby sell, assign and transfer unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
_______________________________________________________________________________
_______________________________________________________________________________
PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS OF ASSIGNEE
_______________________________________________________________________________
_________________________________________________________________________Shares
represented by the within Certificate, and do hereby irrevocably constitute and
appoint ____________________ Attorney to transfer the said shares on the books
of the within-named Corporation with full power of substitution in the
premises.
Dated, _____________________
In presence of
________________________________________
NOTICE: THE SIGNATURE TO THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME AS
WRITTEN UPON THE FACE OF THE CERTIFICATE IN EVERY PARTICULAR, WITHOUT
ALTERATION OR ENLARGEMENT, OR ANY CHANGE WHATEVER.
<PAGE> 1
EXHIBIT 5.1
LAW OFFICES
Nelson Mullins Riley & Scarborough, L.L.P.
A REGISTERED LIMITED LIABILITY PARTNERSHIP
<TABLE>
<S> <C> <C>
Neil E. Grayson 999 PEACHTREE STREET, N.E. OTHER OFFICES:
(404) 817-6113 FIRST UNION PLAZA Charleston, South Carolina
Internet Address: [email protected] SUITE 1400 Charlotte, North Carolina
Atlanta, Georgia 30309 Columbia, South Carolina
TELEPHONE (404) 817-6000 Greenville, South Carolina
FACSIMILE (404) 817-6050 Myrtle Beach, South Carolina
www.nmrs.com ________
Munich, Germany
</TABLE>
September 17, 1999
First National Bancshares, Inc.
248 North Church Street
Spartanburg, South Carolina 29306
Re: Registration Statement on Form SB-2
Ladies and Gentlemen:
We have acted as counsel to First National Bancshares, Inc. (the
"Company") in connection with the filing of a Registration Statement on Form
SB-2 (the "Registration Statement"), under the Securities Act of 1933, covering
the offering of up to 1,000,000 shares (the "Shares") of the Company's Common
Stock, par value $.01 per share. In connection therewith, we have examined such
corporate records, certificates of public officials, and other documents and
records as we have considered necessary or proper for the purpose of this
opinion.
The opinions set forth herein are limited to the laws of the State of
South Carolina and applicable federal laws.
Based on the foregoing, and having regard to legal considerations
which we deem relevant, we are of the opinion that the Shares, when issued and
delivered as subscribed in the Registration Statement, will be legally issued,
fully paid, and nonassessable.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to our firm under the caption
"Legal Matters" in the Prospectus contained in the Registration Statement.
NELSON MULLINS RILEY & SCARBOROUGH
By: /s/ Neil E. Grayson
---------------------
Neil E. Grayson
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EXHIBIT 10.1
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") dated as of July 20, 1999,
is made by and between First National Bancorporation, Inc., a South Carolina
corporation (the "Employer" or the "Company") which is the proposed bank holding
company for First National Bank of Spartanburg (Proposed), a proposed national
bank (the "Bank"), and Jerry L. Calvert, an individual resident of South
Carolina (the "Executive").
The Employer is in the process of organizing the Bank, and the
Executive has agreed to serve as President and Chief Executive Officer of the
Bank and the Company. Upon organization of the Bank, the Employer and the
Executive contemplate that this Agreement will be assigned by the Employer to
the Bank and that the Bank will assume the duties of the Company hereunder
(except pursuant to Section 3). Following any such assignment, the term
"Employer" as used herein from time to time shall refer to the Bank.
The Employer recognizes that the Executive's contribution to the growth
and success of the Bank during its organization and initial years of operations
will be a significant factor in the success of the Bank. The Employer desires to
provide for the employment of the Executive in a manner which will reinforce and
encourage the dedication of the Executive to the Bank and promote the best
interests of the Bank and its shareholders. The Executive is willing to serve
the Employer on the terms and conditions herein provided. Certain terms used in
this Agreement are defined in Section 17 hereof.
In consideration of the foregoing, the mutual covenants contained
herein, and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto, intending to be legally
bound, hereby agree as follows:
1. Employment. The Employer shall employ the Executive, and the
Executive shall serve the Employer, as President and Chief Executive Officer of
the Bank and the Company upon the terms and conditions set forth herein. The
Executive shall also serve on the Board of Directors of the Company and the
Bank. The Executive shall have such authority and responsibilities consistent
with his position as are set forth in the Company's or the Bank's Bylaws or
assigned by the Company's or the Bank's Board of Directors (the "Board") from
time to time. The Executive shall devote his full business time, attention,
skill and efforts to the performance of his duties hereunder, except during
periods of illness or periods of vacation and leaves of absence consistent with
Bank policy. The Executive may devote reasonable periods to service as a
director or advisor to other organizations, to charitable and community
activities, and to managing his personal investments, provided that such
activities do not materially interfere with the performance of his duties
hereunder and are not in conflict or competitive with, or adverse to, the
interests of the Company or the Bank.
2. Term. Unless earlier terminated as provided herein, the
Executive's employment under this Agreement shall commence on the date hereof
and be for a term (the "Term") of three years. At the end of each year of the
Term, the Term shall be extended for an additional year so
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that the remaining term shall continue to be three years; provided that the
Executive or the Bank may at any time, by written notice, fix the Term to a
finite term of three years commencing with the year of the notice.
Notwithstanding the foregoing, the Term of employment hereunder will end on the
date that the Executive attains the retirement age, if any, specified in the
Bylaws of the Bank for directors of the Bank.
3. Compensation and Benefits.
(a) Executive's annual salary is $99,500, plus his
medical insurance premium. The salary will increase to $110,000 per year on day
the bank opens for business. The Board (or an appropriate committee of the
Board) shall review the Executive's salary at least annually and may increase
the Executive's salary if it determines in its sole discretion that an increase
is appropriate.
(b) The Executive shall receive a cash bonus in the
amount of $10,000 on the date that the Bank opens for business (the "Opening
Date"). For each anniversary of the Opening Date thereafter, the Executive shall
be eligible to receive a cash bonus equaling up to 5% of the net pretax
consolidated income of the Company (determined in accordance with generally
accepted accounting principals) if the Bank achieves certain performance levels
established by the board of directors from time to time (the "Bonus Plan").
(c) The Executive shall participate in the Bank's
long-term equity incentive program and be eligible for the grant of stock
options, restricted stock, and other awards thereunder or under any similar plan
adopted by the Company. As soon as an appropriate stock option plan is adopted
by the Board, the Company shall grant to the Executive an option to purchase a
number of shares of Common Stock equal to 5% of the number of shares sold in the
offering. The award agreement for the stock option shall provide that one-fifth
of the shares subject to the option will vest on each of the first five
anniversaries of the Opening Date, but only if the Executive remains employed by
the Company on such date, and shall contain other customary terms and
conditions. Nothing herein shall be deemed to preclude the granting to the
Executive of warrants or options under a director option plan in addition to the
options granted hereunder.
(d) The Executive shall participate in all retirement,
welfare and other benefit plans or programs of the Employer now or hereafter
applicable generally to employees of the Employer or to a class of employees
that includes senior executives of the Employer.
(e) The Employer shall provide the Executive with a term
life insurance policy providing for death benefits totaling $500,000 payable to
the Executive's spouse and heirs (and may provide for additional death benefits
of up to $500,000 payable to the Employer), and the Executive shall cooperate
with the Employer in the securing and maintenance of such policy. The Employer
shall also pay for an accident liability policy on the Executive totaling
$1,000,000 to protect the Employer from damages or lawsuits resulting from
injuries to third parties caused by the Executive.
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(f) Prior to the Opening Date, the Employer shall provide
the Executive with a reasonable allowance each month for an automobile.
Beginning upon the Opening Date, the Company shall provide Executive with either
an automobile (at a cost not to exceed $30,000) owned or leased by the Company
of a make and model appropriate to the Executive's status, or a monthly
automobile allowance not to exceed $700 per month. The Company shall provide for
reasonable expenses associated with the automobile, including, but not limited
to insurance, taxes, etc.
(g) In addition, commencing on the Opening Date, the
Employer shall pay Executive's membership dues pertaining to an area country
club and The Piedmont Club for so long as the Executive remains the President
and CEO of the Employer and this Agreement remains in force.
(h) The Employer shall reimburse the Executive for
reasonable travel and other business development expenses related to the
Executive's duties which are incurred and accounted for in accordance with the
normal practices of the Employer.
4. Termination.
(a) The Executive's employment under this
Agreement may be terminated prior to the end of the Term only as follows:
(i) upon the death of the Executive;
(ii) upon the disability of the Executive for a
period of 180 days which, in the opinion of the Board of
Directors, renders him unable to perform the essential
functions of his job and for which reasonable accommodation
is unavailable. For purposes of this Agreement, a
"disability" is defined as a physical or mental impairment
that substantially limits one or more major life activities,
and a "reasonable accommodation" is one that does not impose
an undue hardship on the Employer;
(iii) by the Employer for Cause upon delivery of a
Notice of Termination to the Executive;
(iv) by the Executive by Notice of Termination
which follows a Change in Control and either (i) follows the
occurrence of a Good Reason or (ii) is delivered within a
90-day period beginning on the one year anniversary of the
occurrence of a Change in Control;
(v) by the Employer if its effort to organize
the Bank is abandoned;
(vi) by the Executive effective upon the 30th
day after delivery of a Notice of
Termination; or
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(vii) by the Employer effective upon the 30th day
after delivery of a Notice of Termination.
(b) If the Executive's employment is terminated
because of the Executive's death under Section 4(a)(i), the Executive's estate
shall receive any sums due him as base salary and/or reimbursement of expenses
through the end of the month during which death occurred, plus any bonus earned
or accrued under the Bonus Plan through the date of death (including any amounts
awarded for previous years but which were not yet vested) and a pro rata share
of any bonus with respect to the current fiscal year which had been earned as of
the date of the Executive's death.
(c) During the period of any incapacity leading
up to the termination of the Executive's employment under Section 4(a)(ii), the
Employer shall continue to pay the Executive his full base salary at the rate
then in effect and all perquisites and other benefits (other than any bonus)
until the Executive becomes eligible for benefits under any long-term disability
plan or insurance program maintained by the Employer, provided that the amount
of any such payments to the Executive shall be reduced by the sum of the
amounts, if any, payable to the Executive for the same period under any
disability benefit or pension plan of the Employer or any of its subsidiaries.
Furthermore, the Executive shall receive any bonus earned or accrued under the
Bonus Plan through the date of incapacity (including any amounts awarded for
previous years but which were not yet vested) and a pro rata share of any bonus
with respect to the current fiscal year which had been earned as of the date of
the Executive's incapacity.
(d) If the Executive's employment is terminated
for Cause under Section 4(a)(iii), or if the Executive resigns under Section
4(a)(vi), the Executive shall receive any sums due him as base salary and/or
reimbursement of expenses through the date of such termination.
(e) If the Executive's employment is terminated
by the Executive pursuant to clause 4(a)( iv), in addition to other rights and
remedies available in law or equity, the Executive shall be entitled to the
following:
(i) the Employer shall pay the Executive in cash
within fifteen days of the date of termination severance
compensation in an amount equal to his then current monthly
base salary multiplied by [12, 18, 24], plus any bonus earned
or accrued under the Bonus Plan through the date of
termination (including any amounts awarded for previous years
but which were not yet vested) and a pro rata share of any
bonus with respect to the current fiscal year which had been
earned as of the date of termination.
(ii) for a period of one year, the Employer shall
at its expense continue on behalf of the Executive and his
dependents and beneficiaries the life insurance, disability,
medical, dental, and hospitalization benefits provided (x) to
the Executive at any time during the 90-day period prior to
the Change in Control or at any time thereafter or (y) to
other similarly situated executives who continue in the employ
of the Employer during the Continuation Period. Such coverage
and benefits (including
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deductibles and costs) shall be no less favorable to the Executive and
his dependents and beneficiaries than the most favorable of such
coverages and benefits during any of the periods referred to above.
The Employer's obligation hereunder with respect to the foregoing
benefits shall be limited to the extent that the Executive obtains any
such benefits pursuant to a subsequent employer's benefit plans, in
which case the Employer may reduce the coverage of any benefits it is
required to provide the Executive hereunder as long as the aggregate
coverages and benefits of the combined benefit plans is no less
favorable to the Executive than the coverages and benefits required to
be provided hereunder. This subsection (ii) shall not be interpreted
so as to limit any benefits to which the Executive or his dependents
or beneficiaries may be entitled under any of the Employer's employee
benefit plans, programs, or practices following the Executive's
termination of employment, including, without limitation, retiree
medical and life insurance benefits; and
(iii) the restrictions on any outstanding
incentive awards (including restricted stock) granted to the Executive
under the Company's or the Bank's long-term equity incentive program
or any other incentive plan or arrangement shall lapse and such awards
shall become 100% vested, all stock options and stock appreciation
rights granted to the Executive shall become immediately exercisable
and shall become 100% vested, all performance units granted to the
Executive shall become 100% vested, and the restrictive covenants
contained in Section 9 shall not apply to the Executive.
(f) If the Executive's employment is terminated pursuant
to Section 4(a)(v), the Employer shall pay to the Executive severance
compensation in an amount equal to 100% of his then current monthly base salary
each month for three months from the date of termination and this Agreement
shall be terminated in its entirety, including the effects of Section 9 below.
(g) If the Employer terminates the Executive's
employment pursuant to clause 4(a)(vii), the Employer shall pay to the
Executive severance compensation in an amount equal to 100% of his then current
monthly base salary each month for [12, 18, 24] months from the date of
termination, plus any bonus earned or accrued under the Bonus Plan through the
date of termination (including any amounts awarded for previous years but which
were not yet vested) and a pro rata share of any bonus with respect to the
current fiscal year which had been earned as of the date of the Executive's
termination.
(h) With the exceptions of the provisions of this
Section 4, and the express terms of any benefit plan under which the Executive
is a participant, it is agreed that, upon termination of the Executive's
employment, the Employer shall have no obligation to the Executive for, and the
Executive waives and relinquishes, any further compensation or benefits
(exclusive of COBRA benefits). Unless otherwise stated in this Section 4, the
effect of termination on any outstanding incentive awards, stock options, stock
appreciation rights, performance units, or other incentives shall be governed
by the terms of the applicable benefit or incentive plan and/or the agreements
governing such incentives. At the time of termination of employment, the
Employer and the Executive shall enter into a mutually satisfactory form of
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release acknowledging such remaining obligations and discharging both parties,
as well as the Employer's officers, directors and employees with respect to
their actions for or on behalf of the Employer, from any other claims or
obligations arising out of or in connection with the Executive's employment by
the Employer, including the circumstances of such termination.
(i) In the event that the Executive's employment is
terminated for any reason, the Executive shall tender his resignation as a
director of the Employer and effective as of the date of termination.
(j) The parties intend that the severance payments and
other compensation provided for herein are reasonable compensation for the
Executive's services to the Employer and shall not constitute "excess parachute
payments" within the meaning of Section 280G of the Internal Revenue Code of
1986 and any regulations thereunder. In the event that the Employer's
independent accountants acting as auditors for the Employer on the date of a
Change in Control determine that the payments provided for herein constitute
"excess parachute payments," then the compensation payable hereunder shall be
increased, on a tax gross-up basis, so as to reimburse the Executive for the
tax payable by the Executive, pursuant to Section 4999 of the Internal Revenue
Code, on such "excess parachute payments," taking into account all taxes
payable by the Executive with respect to such tax gross-up payments hereunder,
so that the Executive shall be, after payment of all taxes, in the same
financial position as if no taxes under Section 4999 had been imposed upon him.
5. Ownership of Work Product. The Employer shall own all Work
Product arising during the course of the Executive's employment (prior, present
or future). For purposes hereof, "Work Product" shall mean all intellectual
property rights, including all Trade Secrets, U.S. and international
copyrights, patentable inventions, and other intellectual property rights in
any programming, documentation, technology or other work product that relates
to the Employer, its business or its customers and that Executive conceives,
develops, or delivers to the Employer at any time during his employment, during
or outside normal working hours, in or away from the facilities of the
Employer, and whether or not requested by the Employer. If the Work Product
contains any materials, programming or intellectual property rights that the
Executive conceived or developed prior to, and independent of, the Executive's
work for the Employer, the Executive agrees to point out the pre-existing items
to the Employer and the Executive grants the Employer a worldwide,
unrestricted, royalty-free right, including the right to sublicense such items.
The Executive agrees to take such actions and execute such further
acknowledgments and assignments as the Employer may reasonably request to give
effect to this provision.
6. Protection of Trade Secrets. The Executive agrees to maintain
in strict confidence and, except as necessary to perform his duties for the
Employer, the Executive agrees not to use or disclose any Trade Secrets of the
Employer during or after his employment. "Trade Secret" means information,
including a formula, pattern, compilation, program, device, method, technique,
process, drawing, cost data or customer list, that: (i) derives economic value,
actual or potential, from not being generally known to, and not being readily
ascertainable by proper means by, other persons who can obtain economic value
from its disclosure or use; and (ii) is the subject of efforts that are
reasonable under the circumstances to maintain its secrecy.
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7. Protection of Other Confidential Information. In addition,
the Executive agrees to maintain in strict confidence and, except as necessary
to perform his duties for the Employer, not to use or disclose any Confidential
Business Information of the Employer during his employment and for a period of
24 months following termination of the Executive's employment. "Confidential
Business Information" shall mean any internal, non-public information (other
than Trade Secrets already addressed above) concerning the Employer's financial
position and results of operations (including revenues, assets, net income,
etc.); annual and long-range business plans; product or service plans;
marketing plans and methods; training, educational and administrative manuals;
customer and supplier information and purchase histories; and employee lists.
The provisions of Sections 6 and 7 above shall also apply to protect Trade
Secrets and Confidential Business Information of third parties provided to the
Employer under an obligation of secrecy.
8. Return of Materials. The Executive shall surrender to the
Employer, promptly upon its request and in any event upon termination of the
Executive's employment, all media, documents, notebooks, computer programs,
handbooks, data files, models, samples, price lists, drawings, customer lists,
prospect data, or other material of any nature whatsoever (in tangible or
electronic form) in the Executive's possession or control, including all copies
thereof, relating to the Employer, its business, or its customers. Upon the
request of the Employer, Executive shall certify in writing compliance with the
foregoing requirement.
9. Restrictive Covenants.
(a) No Solicitation of Customers. During the Executive's
employment with the Employer, and for a period of twelve months thereafter, or
during any period the Employer is paying Executive severance under Section 4 if
longer than twelve months, the Executive shall not (except on behalf of or with
the prior written consent of the Employer), either directly or indirectly, on
the Executive's own behalf or in the service or on behalf of others, (A)
solicit, divert, or appropriate to or for a Competing Business, or (B) attempt
to solicit, divert, or appropriate to or for a Competing Business, any person or
entity that is or was a customer of the Employer or any of its Affiliates on the
date of termination and is located in the Territory and with whom the Executive
has had material contact.
(b) No Recruitment of Personnel. During the Executive's
employment with the Employer, and for a period of twelve months thereafter, or
during any period the Employer is paying Executive severance under Section 4 if
longer than twelve months, the Executive shall not, either directly or
indirectly, on the Executive's own behalf or in the service or on behalf of
others, (A) solicit, divert, or hire away, or (B) attempt to solicit, divert, or
hire away, to any Competing Business located in the Territory, any employee of
or consultant to the Employer or any of its Affiliates engaged or experienced in
the Business, regardless of whether the employee or consultant is full-time or
temporary, the employment or engagement is pursuant to written agreement, or the
employment is for a determined period or is at will.
(c) Non-Competition Agreement. During the Executive's
employment with the Employer, and for a period of twelve months thereafter, or
during any period the Employer is
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paying Executive severance under section 4 if longer than twelve months, the
Executive shall not (without the prior written consent of the Employer) compete
with the Employer or any of its Affiliates by, directly or indirectly, forming,
serving as an organizer, director or officer of, or consultant to, or acquiring
or maintaining more than a 1% passive investment in, a depository financial
institution or holding company therefor if such depository institution or
holding company has one or more offices or branches located in the Territory.
Notwithstanding the foregoing, the Executive may serve as an officer of or
consultant to a depository institution or holding company therefor even though
such institution operates one or more offices or branches in the Territory, if
the Executive's employment does not directly involve, in whole or in part, the
depository financial institution's or holding company's operations in the
Territory.
10. Independent Provisions. The provisions in each of
the above Sections 9(a), 9(b), and 9(c) are independent, and the
unenforceability of any one provision shall not affect the enforceability of
any other provision.
11. Successors; Binding Agreement. The rights and
obligations of this Agreement shall bind and inure to the benefit of the
surviving corporation in any merger or consolidation in which the Employer is a
party, or any assignee of all or substantially all of the Employer's business
and properties. The Executive's rights and obligations under this Agreement may
not be assigned by him, except that his right to receive accrued but unpaid
compensation, unreimbursed expenses and other rights, if any, provided under
this Agreement which survive termination of this Agreement shall pass after
death to the personal representatives of his estate.
12. Notice. For the purposes of this Agreement, notices
and all other communications provided for in the Agreement shall be in writing
and shall be deemed to have been duly given when personally delivered or sent
by certified mail, return receipt requested, postage prepaid, addressed to the
respective addresses last given by each party to the other; provided, however,
that all notices to the Employer shall be directed to the attention of the
Employer with a copy to the Secretary of the Employer. All notices and
communications shall be deemed to have been received on the date of delivery
thereof.
13. Governing Law. This Agreement shall be governed by
and construed and enforced in accordance with the laws of the State of South
Carolina without giving effect to the conflict of laws principles thereof. Any
action brought by any party to this Agreement shall be brought and maintained
in a court of competent jurisdiction in State of South Carolina.
14. Non-Waiver. Failure of the Employer to enforce any
of the provisions of this Agreement or any rights with respect thereto shall in
no way be considered to be a waiver of such provisions or rights, or in any way
affect the validity of this Agreement.
15. Enforcement. The Executive agrees that in the event
of any breach or threatened breach by the Executive of any covenant contained
in Section 9(a), 9(b), or 9(c) hereof, the resulting injuries to the Employer
would be difficult or impossible to estimate accurately, even though
irreparable injury or damages would certainly result. Accordingly, an award of
legal damages, if without other relief, would be inadequate to protect the
Employer. The Executive,
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therefore, agrees that in the event of any such breach, the Employer shall be
entitled to obtain from a court of competent jurisdiction an injunction to
restrain the breach or anticipated breach of any such covenant, and to obtain
any other available legal, equitable, statutory, or contractual relief. Should
the Employer have cause to seek such relief, no bond shall be required from the
Employer, and the Executive shall pay all attorney's fees and court costs which
the Employer may incur to the extent the Employer prevails in its enforcement
action.
16. Saving Clause. The provisions of this Agreement
shall be deemed severable and the invalidity or unenforceability of any
provision shall not affect the validity or enforceability of the other
provisions hereof. If any provision or clause of this Agreement, or portion
thereof, shall be held by any court or other tribunal of competent jurisdiction
to be illegal, void, or unenforceable in such jurisdiction, the remainder of
such provision shall not be thereby affected and shall be given full effect,
without regard to the invalid portion. It is the intention of the parties that,
if any court construes any provision or clause of this Agreement, or any
portion thereof, to be illegal, void, or unenforceable because of the duration
of such provision or the area or matter covered thereby, such court shall
reduce the duration, area, or matter of such provision, and, in its reduced
form, such provision shall then be enforceable and shall be enforced. The
Executive and the Employer hereby agree that they will negotiate in good faith
to amend this Agreement from time to time to modify the terms of Sections 9(a),
9(b), and 9(c), the definition of the term "Territory," and the definition of
the term "Business," to reflect changes in the Employer's business and affairs
so that the scope of the limitations placed on the Executive's activities by
Section 9 accomplishes the parties' intent in relation to the then current
facts and circumstances. Any such amendment shall be effective only when
completed in writing and signed by the Executive and the Employer.
17. Certain Definitions.
(a) "Affiliate" shall mean any business entity
controlled by, controlling or under common control with the Employer.
(b) "Business" shall mean the operation of a depository
financial institution, including, without limitation, the solicitation and
acceptance of deposits of money and commercial paper, the solicitation and
funding of loans and the provision of other banking services, and any other
related business engaged in by the Employer or any of its Affiliates as of the
date of termination.
(c) "Cause" shall consist of any of (A) the
commission by the Executive of a willful act (including, without limitation, a
dishonest or fraudulent act) or a grossly negligent act, or the willful or
grossly negligent omission to act by the Executive, which is intended to cause,
causes or is reasonably likely to cause material harm to the Employer
(including harm to its business reputation), (B) the indictment of the
Executive for the commission or perpetration by the Executive of any felony or
any crime involving dishonesty, moral turpitude or fraud, (C) the material
breach by the Executive of this Agreement that, if susceptible of cure, remains
uncured ten days following written notice to the Executive of such breach, (D)
the receipt of any form of notice, written or otherwise, that any regulatory
agency having jurisdiction over the Employer
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intends to institute any form of formal or informal (e.g., a memorandum of
understanding which relates to the Executive's performance) regulatory action
against the Executive or the Employer or the Employer (provided that the Board
of Directors determines in good faith, with the Executive abstaining from
participating in the consideration of and vote on the matter, that the subject
matter of such action involves acts or omissions by or under the supervision of
the Executive or that termination of the Executive would materially advance the
Employer's compliance with the purpose of the action or would materially assist
the Employer in avoiding or reducing the restrictions or adverse effects to the
Employer related to the regulatory action); (E) the exhibition by the Executive
of a standard of behavior within the scope of his employment that is materially
disruptive to the orderly conduct of the Employer's business operations
(including, without limitation, substance abuse or sexual misconduct) to a
level which, in the Board of Directors' good faith and reasonable judgment,
with the Executive abstaining from participating in the consideration of and
vote on the matter, is materially detrimental to the Employer's best interest,
that, if susceptible of cure remains uncured ten days following written notice
to the Executive of such specific inappropriate behavior; or (F) the failure of
the Executive to devote his full business time and attention to his employment
as provided under this Agreement that, if susceptible of cure, remains uncured
30 days following written notice to the Executive of such failure.
(d) "Change in Control" shall mean the
occurrence during the Term of any of the following events, unless such event is
a result of a Non-Control Transaction:
(i) The individuals who, as of the
date of this Agreement, are members of the Board of Directors
of the Employer (the "Incumbent Board") cease for any reason
to constitute at least fifty percent of the Board of
Directors of the Employer; provided, however, that if the
election, or nomination for election by the Employer's
shareholders, of any new director was approved in advance by
a vote of at least fifty percent of the Incumbent Board, such
new director shall, for purposes of this Agreement, be
considered as a member of the Incumbent Board; provided,
further, that no individual shall be considered a member of
the Incumbent Board if such individual initially assumed
office as a result of either an actual or threatened
"Election Contest" (as described in Rule 14a-11 promulgated
under the Securities Exchange Act of 1934 (the "Exchange
Act"), or other actual or threatened solicitation of proxies
or consents by or on behalf of any person other than the
Board of Directors of the Employer (a "Proxy Contest"),
including by reason of any agreement intended to avoid or
settle any Election Contest or Proxy Contest.
(ii) An acquisition (other than directly from
the Employer) of any voting securities of the Employer (the
"Voting Securities") by any "Person" (as the term "person" is
used for purposes of Section 13(d) or 14(d) of the Exchange
Act) immediately after which such Person has "Beneficial
Ownership" (within the meaning of Rule 13d-3 promulgated
under the Exchange Act) of 20% or more of the combined voting
power of the Employer's then outstanding Voting Securities;
provided, however, that in determining whether a Change in
Control has occurred,
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Voting Securities which are acquired in a Non-Control
Acquisition shall not constitute an acquisition which would
cause a Change in Control.
(iii) Approval by the shareholders of the
Employer of: (i) a merger, consolidation, or reorganization
involving the Employer; (ii) a complete liquidation or
dissolution of the Employer; or (iii) an agreement for the
sale or other disposition of all or substantially all of the
assets of the Employer to any Person (other than a transfer
to a Subsidiary).
(iv) A notice of an application is filed with
the Office of Comptroller of the Currency (the "OCC") or the
Federal Reserve Board or any other bank or thrift regulatory
approval (or notice of no disapproval) is granted by the
Federal Reserve, the OCC, the Federal Deposit Insurance
Corporation, or any other regulatory authority for permission
to acquire control of the Employer or any of its banking
subsidiaries.
(e) "Competing Business" shall mean any business that,
in whole or in part, is the same or substantially the same as the Business.
(f) "Good Reason" shall mean the occurrence after a
Change in Control of any of the events or conditions described in subsections
(i) through (viii) hereof:
(i) a change in the Executive's status, title,
position or responsibilities (including reporting
responsibilities) which, in the Executive's reasonable
judgment, represents an adverse change from his status, title,
position or responsibilities as in effect at any time within
ninety days preceding the date of a Change in Control or at
any time thereafter; the assignment to the Executive of any
duties or responsibilities which, in the Executive's
reasonable judgment, are inconsistent with his status, title,
position or responsibilities as in effect at any time within
ninety days preceding the date of a Change in Control or at
any time thereafter; any removal of the Executive from or
failure to reappoint or reelect him to any of such offices or
positions, except in connection with the termination of his
employment for Disability or Cause, as a result of his death,
or by the Executive other than for Good Reason, or any other
change in condition or circumstances that in the Executive's
reasonable judgment makes it materially more difficult for the
Executive to carry out the duties and responsibilities of his
office than existed at any time within ninety days preceding
the date of Change in Control or at any time thereafter;
(ii) a reduction in the Executive's base salary
or any failure to pay the Executive any compensation or
benefits to which he is entitled within five days of the date
due;
(iii) the Employer's requiring the Executive to
be based at any place outside a 30-mile radius from the
executive offices occupied by the Executive
11
<PAGE> 12
immediately prior to the Change in Control, except for
reasonably required travel on the Employer's business which
is not materially greater than such travel requirements prior
to the Change in Control;
(iv) the failure by the Employer to (A) continue
in effect (without reduction in benefit level and/or reward
opportunities) any material compensation or employee benefit
plan in which the Executive was participating at any time
within ninety days preceding the date of a Change in Control
or at any time thereafter, unless such plan is replaced with
a plan that provides substantially equivalent compensation or
benefits to the Executive, or (B) provide the Executive with
compensation and benefits, in the aggregate, at least equal
(in terms of benefit levels and/or reward opportunities) to
those provided for under each other employee benefit plan,
program and practice in which the Executive was participating
at any time within ninety days preceding the date of a Change
in Control or at any time thereafter;
(v) the insolvency or the filing (by any party,
including the Employer) of a petition for bankruptcy of the
Employer, which petition is not dismissed within sixty days;
(vi) any material breach by the Employer of any
material provision of this Agreement;
(vii) any purported termination of the
Executive's employment for Cause by the Employer which does
not comply with the terms of this Agreement; or
(viii) the failure of the Employer to obtain an
agreement, satisfactory to the Executive, from any successor
or assign to assume and agree to perform this Agreement, as
contemplated in Section 11 hereof.
Any event or condition described in clause (i) through (viii) above
which occurs prior to a Change in Control but which the Executive reasonably
demonstrates (A) was at the request of a third party, or (B) otherwise arose in
connection with, or in anticipation of, a Change in Control which actually
occurs, shall constitute Good Reason for purposes of this Agreement,
notwithstanding that it occurred prior to the Change in Control. The Executive's
right to terminate his employment for Good Reason shall not be affected by his
incapacity due to physical or mental illness.
(g) Non-Control Transaction" shall mean a transaction
described below:
(i) the shareholders of the Employer,
immediately before such merger, consolidation or
reorganization, own, directly or indirectly, immediately
following such merger, consolidation or reorganization, at
least 50% of the combined voting power of the outstanding
voting securities of the corporation resulting from such
merger, consolidation or reorganization (the "Surviving
Corporation") in
12
<PAGE> 13
substantially the same proportion as their ownership of the
Voting Securities immediately before such merger,
consolidation or reorganization; and
(ii) immediately following such merger,
consolidation or reorganization, the number of directors on
the board of directors of the Surviving Corporation who were
members of the Incumbent Board shall at least equal the
number of directors who were affiliated with or appointed by
the other party to the merger, consolidation or
reorganization.
(h) "Territory" shall mean a radius of thirty miles from
(i) the main office of the Employer or (ii) any branch office of the Employer.
(i) "Notice of Termination" shall mean a written notice
of termination from the Employer or the Executive which specifies an effective
date of termination, indicates the specific termination provision in this
Agreement relied upon, and sets forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the Executive's
employment under the provision so indicated.
18. Entire Agreement. This Agreement constitutes the entire
agreement between the parties hereto and supersedes all prior agreements, if
any, understandings and arrangements, oral or written, between the parties
hereto with respect to the subject matter hereof.
19. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the Employer has caused this Agreement to be
executed and its seal to be affixed hereunto by its officers thereunto duly
authorized, and the Executive has signed and sealed this Agreement, effective as
of the date first above written.
FIRST NATIONAL
BANCORPORATION, INC.
ATTEST:
/s/ Michelle A. Stark By: /s/ Norman Pulliam
- -------------------------------- --------------------------------
Witness Title: Chairman
/s/ Donald B. Wildman
- --------------------------------
Witness EXECUTIVE
/s/ Jerry L. Calvert
--------------------------------
Jerry L. Calvert
13
<PAGE> 1
EXHIBIT 10.3
THE WARRANTS EVIDENCED BY THIS CERTIFICATE HAVE BEEN ISSUED OR SOLD IN RELIANCE
ON EXEMPTIONS FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933 AND APPLICABLE
STATE SECURITIES LAWS AND MAY NOT BE SOLD OR TRANSFERRED EXCEPT IN A
TRANSACTION WHICH IS EXEMPT UNDER SUCH ACT AND STATE LAWS OR PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND STATE LAWS.
FIRST NATIONAL BANCSHARES, INC.
STOCK WARRANT AGREEMENT
__________, 1999
WARRANT HOLDER: ____________________________________ NO. OF SHARES: _________
First National Bancshares, Inc. (the "Company"), a South Carolina
corporation and the holding company for First National Bank of Spartanburg
(proposed) (the "Bank"), hereby grants to the person identified above as the
Warrant Holder Warrants (the "Warrants") to purchase the number of shares set
forth above, representing two shares of common stock of for every three shares
of common stock purchased by the Warrant Holder in the offering, in
consideration of the financial risk associated with Warrant Holder's investment
in the Company during its organizational stage and the time, expertise, and
continuing involvement of the Warrant Holder in the management of the Bank.
Such Warrants are granted on the following terms and conditions:
1. EXERCISE OF WARRANTS. One-third of the shares (the "Shares")
subject to the Warrants granted in this Agreement shall vest on each of the
first three anniversaries of the date of the Company's incorporation (the
"Incorporation Date"). Exercise of the Warrants is subject to the following:
(a) EXERCISE PRICE. The exercise price (the "Exercise Price")
shall be $10.00 per Share, subject to adjustment pursuant to
Section 2 below.
(b) EXPIRATION OF WARRANT TERM. The Warrants will expire at 5:00
p.m. Eastern Standard Time on the tenth anniversary of the
Incorporation Date, and may not be exercised thereafter (the
"Expiration Date").
(c) PAYMENT. The purchase price for Shares as to which the
Warrants are being exercised shall be paid in cash, by wire
transfer, by certified or bank cashier's check, or by
personal check drawn on funds on deposit with the Bank.
(d) METHOD OF EXERCISE. The Warrants shall be exercisable by a
written notice delivered to the President or Secretary of the
Company which shall:
(i) State the owner's election to exercise the Warrants,
the number of Shares with respect to which it is
being exercised, the person in whose name the stock
certificate for such Shares is to be registered, and
such person's address and tax identification number
(or, if more than one, the names, addresses and tax
identification numbers of such persons);
<PAGE> 2
(ii) Be signed by the person or persons entitled to
exercise the Warrants and, if the Warrants are being
exercised by any person or persons other than the
original holder thereof, be accompanied by proof
satisfactory to counsel for the Bank of the right of
such person or persons to exercise the Warrants; and
(iii) Be accompanied by the originally executed copy of
this Stock Warrant Agreement.
(e) PARTIAL EXERCISE. In the event of a partial exercise of the
Warrants, the Company shall either issue a new agreement for
the balance of the Shares subject to this Stock Warrant
Agreement after such partial exercise, or it shall
conspicuously note hereon the date and number of Shares
purchased pursuant to such exercise and the number of Shares
remaining covered by this Stock Warrant Agreement.
(f) RESTRICTIONS ON EXERCISE. The Warrants may not be exercised
(i) if the issuance of the Shares upon such exercise would
constitute a violation of any applicable federal or state
securities or banking laws or other law or regulation or (ii)
unless the Bank or the holder hereof, as applicable, obtains
any approval or other clearance which the Bank determines to
be necessary or advisable from the Federal Reserve Board, the
Office of the Comptroller of the Currency, the Federal
Deposit Insurance Corporation or any other state or federal
banking regulatory agency with regulatory authority over the
operation of Company or the Bank (collectively the
"Regulatory Agencies"). The Company may require
representations and warranties from the Warranty Holder as
required to comply with applicable laws or regulations,
including the Securities Act of 1933 and state securities
laws.
2. ANTI-DILUTION; MERGER. If, prior to the exercise of Warrants
hereunder, the Company (i) declares, makes or issues, or fixes a record date
for the determination of holders of common stock entitled to receive, a
dividend or other distribution payable on the Shares in shares of its capital
stock, (ii) subdivides the outstanding Shares, (iii) combines the outstanding
Shares, (iv) issues any shares of its capital stock by reclassification of the
Shares, capital reorganization or otherwise (including any such
reclassification or reorganization in connection with a consolidation or merger
or and sale of all or substantially all of the Company's assets to any person),
then the Exercise Price, and the number and kind of shares receivable upon
exercise, in effect at the time of the record date for such dividend or of the
effective date of such subdivision, combination or reclassification shall be
proportionately adjusted so that the holder of any Warrant exercised after such
time shall be entitled to receive the aggregate number and kind of shares
which, if such Warrant had been exercised immediately prior to such time, he
would have owned upon such exercise and been entitled to receive by virtue of
such dividend, distribution, subdivision, combination, reclassification,
reorganization, consideration, merger or sale.
3. VALID ISSUANCE OF COMMON STOCK. The Company possesses the full
authority and legal right to issue, sell, transfer, and assign this Warrant and
the Shares issuable pursuant to this Warrant. The issuance of this Warrant
vests in the holder the entire legal and beneficial interests in this Warrant,
free and clear of any liens, claims, and encumbrances and subject to no legal
or equitable restrictions of any kind except as described herein. The Shares
that are
-2-
<PAGE> 3
issuable upon exercise of this Warrant, when issued, sold and delivered in
accordance with the terms of this Agreement for the consideration expressed
herein, will be duly and validly issued, fully paid, and non-assessable, and
will be free of restrictions on transfer other than restrictions under
applicable state and federal securities.
4. COMPLIANCE WITH SECURITIES LAWS. This Agreement and the Warrants
represented hereby were issued in reliance on an exemption from registration
under the Securities Act of 1933 (the "Act") for financial institutions, and
other applicable exemptions under state securities laws. The Company's reliance
on such exemption is predicated in part on the Warrant Holder's representations
set forth herein. Warrant Holder understands that the Warrants and the Shares
issuable upon exercise of the Warrants may not be sold, transferred or
otherwise disposed of without registration under the Securities Act of 1933, or
an exemption therefrom, and that in the absence of an effective registration
statement covering such shares or an available exemption from registration
under the Securities Act, such Shares must be held indefinitely.
5. RESTRICTIONS ON TRANSFERABILITY. This the Agreement and the
Warrants may not be assigned, transferred (except as provided above), pledged,
or hypothecated in any way (whether by operation of law or otherwise) and shall
not be subject to execution, attachment, or similar process. Any attempted
assignment, transfer, pledge, hypothecation, or other disposition of these
Warrants contrary to the provisions hereof shall be without legal effect. The
Shares issuable on exercise of the Warrants may not be assigned or transferred
by the Warrant Holder without the Company's prior written consent and, if so
requested by the Company, the delivery by the Warrant Holder to the Company of
an opinion of counsel in form and substance satisfactory to the Company stating
that such transfer or assignment is in compliance with the Securities Act of
1933 and applicable state securities laws.
6. RESTRICTIVE LEGEND. Each certificate for Shares issued upon
exercise of the Warrant shall bear a legend stating that they have not been
registered under the Securities Act of 1933 or any state securities laws and
referring to the restrictions on transferability and sale herein.
7. MANDATORY EXERCISE; TERMINATION.
(a) Warrant Holder shall exercise all of Warrant Holder's then
exercisable Warrants within 120 days of the date that Warrant
Holder ceases to serve the Company as an executive officer,
employee, or director. Warrant Holder agrees to exercise any
Warrants that are not exercisable on the date in which
Warrant Holder ceases to serve the Company within 120 days of
the date that those Warrants become exercisable.
(b) The Company may be required to increase its capital to meet
capital requirements imposed by statute, rule, regulation, or
guideline. In order to achieve such capital increase, the
Regulatory Agencies may direct the Company to require the
Warrant Holders to either (i) exercise all part of their
Warrants or (ii) allow the Warrants to be terminated. If the
Regulatory Agencies so direct the Company, then the Warrant
Holder must exercise or forfeit the Warrants as set forth
below.
(c) When the Company is required to increase its capital as
described in subsection (a) above, the Company shall send a
notice (the "Notice") to the Warrant Holder
-3-
<PAGE> 4
(i) specifying the number of Shares relating to the Warrants
for which the Warrants must be exercised (the "Number") (if
less than all shares relating to warrants held by all holders
of warrants of the Company under agreements substantially
similar to this one are required by the Company to be
exercised or cancelled, the Number for the Warrant Holder
shall reflect a proportionate allocation based on the number
of Shares subject to this Agreement as compared to the total
number of shares subject to warrants held by all such warrant
holders as a group); (ii) specifying the date prior to which
the Warrants must be totally or partially exercised, as the
case may be (the "Deadline"); (iii) specifying the Exercise
Price for the Shares to be purchased pursuant to the Warrants
(such Exercise Price not to be less than current book value
per share); and (iv) stating that the failure of the Warrant
holder to exercise the Warrants shall result in their
automatic termination.
(d) If the Warrant Holder does not exercise the Warrants pursuant
to the terms of the Notice, this Agreement shall be
automatically terminated on the Deadline, without further act
or action by the Warrant Holder or the Company, and the
Warrant Holder shall deliver this Agreement to the Company
for cancellation. If the Number is less than the total number
of Shares that are then subject to exercise under this
Agreement, the Company shall issue a new Stock Warrant
Agreement in compliance with Section 1(e) hereof.
8. COVENANTS OF THE COMPANY. During the term of the Warrants, the
Company shall:
(a) at all times authorize, reserve and keep available, solely
for issuance upon exercise of this Warrant, sufficient shares
of common stock from time to time issuable upon exercise of
this Warrant;
(b) on receipt of evidence reasonably satisfactory to the Company
of the loss, theft, destruction or mutilation of this Warrant
and, in the case of loss, theft, or destruction, on delivery
of any indemnity agreement or bond reasonably satisfactory in
form and amount to the Company or, in the case of mutilation,
on surrender and cancellation of this Warrant, at its expense
execute and deliver, in lieu of this Warrant, a new Warrant
of like tenor; and
(c) on surrender for exchange of this Warrant or any Warrant
substituted therefor pursuant hereto, properly endorsed, to
the Company, at its expense, issue and deliver to or on the
order of the holder thereof a new Warrant or Warrants of like
tenor, in the name of such holder or as such holder (on
payment by such holder of any applicable transfer taxes) may
direct, calling in the aggregate on the face or faces thereof
for the issuances of the number of shares of common stock
issuable pursuant to the terms of the Warrant or Warrants so
surrendered.
9. NO DILUTION OR IMPAIRMENT. The Company shall not amend its
Certificate of Incorporation or participate in any reorganization, transfer of
assets, consolidation, merger, dissolution, issuance or sale of securities or
any other voluntary action for the purpose of avoiding or seeking to avoid the
observance or performance of any of the terms to be observed or performed
hereunder by the Company, but will at all times in good faith assist in
carrying out all
-4-
<PAGE> 5
such action as may be reasonably necessary in order to protect the exercise
rights of the holder against improper dilution or other impairment.
10. AMENDMENT. Neither this Agreement nor the rights granted hereunder
may be amended, changed or waived except in writing signed by each party
hereto.
IN WITNESS WHEREOF, the Company has executed and the holder has
accepted this Stock Warrant Agreement as of the date and year first above
written.
FIRST NATIONAL BANCSHARES, INC.
By:
---------------------------
President
(CORPORATE SEAL)
Attest:
-----------------------
Secretary
WARRANT HOLDER:
By:
---------------------------
Signature
-------------------------------
Print Name
-5-
<PAGE> 1
EXHIBIT 10.4
PROMISSORY NOTE
<TABLE>
<CAPTION>
- ----------------- ------------- -------------- -------------- --------- -------------- -------------- -------------- --------------
Principal Loan Date Maturity Loan No Call Collateral Account Officer Initials
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$500,000.00 06-29-1999 06-29-2000 PMC
- ----------------- ------------- -------------- -------------- --------- -------------- -------------- -------------- --------------
</TABLE>
References in the shaded area are for Lender's use only and do not limit the
applicability of this document to any particular loan or item.
<TABLE>
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Borrower: First National Bank of Spartanburg, (IO) Lender: THE BANKERS BANK
P. O. Box 3508 2410 PACES FERRY ROAD
Spartanburg, SC 29304 600 PACES SUMMIT
ATLANTA, GA 30339
===================================================================================================================================
</TABLE>
<TABLE>
<S> <C> <C>
PRINCIPAL AMOUNT: $500,000.00 INITIAL RATE: 7.250% DATE OF NOTE: JUNE 29, 1999
</TABLE>
PROMISE TO PAY. FIRST NATIONAL BANK OF SPARTANBURG, (IO) ("BORROWER") PROMISES
TO PAY TO THE BANKERS BANK ("LENDER"), OR ORDER, IN LAWFUL MONEY OF THE UNITED
STATES OF AMERICA, THE PRINCIPAL AMOUNT OF FIVE HUNDRED THOUSAND & 00/100
DOLLARS ($500,000.00) OR SO MUCH AS MAY BE OUTSTANDING, TOGETHER WITH INTEREST
ON THE UNPAID OUTSTANDING PRINCIPAL BALANCE OF EACH ADVANCE. INTEREST SHALL BE
CALCULATED FROM THE DATE OF EACH ADVANCE UNTIL REPAYMENT OF EACH ADVANCE.
PAYMENT. BORROWER WILL PAY THIS LOAN IN ONE PAYMENT OF ALL OUTSTANDING
PRINCIPAL PLUS ALL ACCRUED UNPAID INTEREST ON JUNE 29, 2000. IN ADDITION,
BORROWER WILL PAY REGULAR QUARTERLY PAYMENTS OF ACCRUED UNPAID INTEREST
BEGINNING SEPTEMBER 29, 1999, AND ALL SUBSEQUENT INTEREST PAYMENTS ARE DUE ON
THE SAME DAY OF EACH QUARTERLY AFTER THAT. Borrower will pay Lender at Lender's
address shown above or at such other place as Lender may designate in writing.
Unless otherwise agreed or required by applicable law, payments will be applied
first to accrued unpaid interest, then to principal, and any remaining amount
to any unpaid collection costs and late charges.
VARIABLE INTEREST RATE. The interest rate on this Note is subject to change
from time to time based on changes in an index which is the Prime rate as
published in the Money Rates section of the Wall Street Journal, (the "Index").
If two or more rates exist, then the highest rate will prevail. Lender will
tell Borrower the current index rate upon Borrower's request. Borrower
understand that Lender may make loans based on other rates as well. The
interest rate change will not occur more often than each day. THE INDEX
CURRENTLY IS 7.750% PER ANNUM. THE INTEREST RATE TO BE APPLIED TO THE UNPAID
PRINCIPAL BALANCE OF THIS NOTE WILL BE AT A RATE OF 0.500 PERCENTAGE POINTS
UNDER THE INDEX, RESULTING IN AN INITIAL ANNUAL RATE OF SIMPLE INTEREST OF
7.250%. NOTICE: Under no circumstances will the interest rate on this Note be
more than the maximum rate allowed by applicable law.
PREPAYMENT. Borrower may pay without penalty all or a portion of the amount
owed earlier than it is due. Early payments will not, unless agreed to by
Lender in writing, relieve Borrower of Borrower's obligations to continue to
make payments of accrued unpaid interest. Rather, they will reduce the
principal balance due.
LATE CHARGE. If a payment is 15 DAYS OR MORE LATE, Borrower will be charged
$100.00.
DEFAULT. Borrower will be in default if any of the following happens: (a)
Borrower fails to make any payment when due. (b) Borrower breaks any promise
Borrower has made to Lender, or Borrower fails to comply with or to perform
when due any other term, obligation, covenant, or condition contained in this
Note or any agreement related to this Note, or in any other agreement or loan
Borrower has with Lender. (c) Any representation or statement made or furnished
to Lender by Borrower or on Borrower's behalf is false or misleading in any
material respect either now or at the time made or furnished. (d) Borrower
becomes insolvent, a receiver is appointed for any part of Borrower's property,
Borrower makes an assignment for the benefit of creditors, or any proceeding is
commenced either by Borrower or against Borrower under any bankruptcy or
insolvency laws. (e) Any creditor tries to take any of Borrower's property on
or in which Lender has a lien or security interest. This includes a garnishment
of any of Borrower's accounts with Lender. (f) A material adverse change occurs
in Borrower's financial condition, or Lender believes the prospect of payment
or performance of the Indebtedness is impaired. (g) Lender in good faith deems
itself insecure.
LENDER'S RIGHTS. Upon default, Lender may declare the entire unpaid principal
balance on this Note and all accrued unpaid interest immediately due, without
notice, and then Borrower will pay that amount. Upon default, including failure
to pay upon final maturity, Lender, at its option, may also, if permitted under
applicable law, increase the variable interest rate on this Note 3,000
percentage points. The interest rate will not exceed the maximum rate permitted
by applicable law. Lender may hire or pay someone else to help collect this
Note if Borrower does not pay. Borrower also will pay Lender that amount. This
includes, subject to any limits under applicable law, Lender's, costs of
collection, including court costs and reasonably and actual attorneys' fees, if
any sums owing under this Note are collected by or through an attorney-at-law,
whether or not there is a lawsuit, and legal expense for bankruptcy proceedings
(including efforts to modify or vacate any automatic stay or injunction),
appeals, and any anticipated post-judgment collection services. If not
prohibited by applicable law, Borrower also will pay any court costs, in
addition to all other sums provided by law. THIS NOTE HAS BEEN DELIVERED TO
LENDER AND ACCEPTED BY LENDER IN THE STATE OF GEORGIA. SUBJECT TO THE
PROVISIONS ON ARBITRATION, THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF GEORGIA.
DISHONORED ITEM FEE. Borrower will pay a fee to Lender of twenty dollars
($20.00) or five percent (5%) of the face amount of the check, whichever is
greater, if Borrower makes a payment on Borrower's loan and the check or
preauthorized charge with which Borrower pays is later dishonored.
RIGHT OF SETOFF. Borrower grants to Lender a contractual possessory security
interest in, and hereby assigns, conveys, delivers, pledges, and transfers to
Lender all Borrower's right, title and interest in and to, Borrower's accounts
with Lender (whether checking, savings, or some other account), including
without limitation all accounts held jointly with someone else and all accounts
Borrower may open in the future, excluding however all IRA and Keogh accounts,
and all trust accounts for which the grant of a security interest would be
prohibited by law. Borrower authorizes Lender, to the extent permitted by
applicable law, to charge or setoff all sums owing on this Note against any and
all such accounts.
LINE OF CREDIT. This Note evidences a revolving line of credit. Advances under
this Note, as well as directions for payment from Borrower's accounts, may be
requested orally or in writing by Borrower or by an authorized person. Lender
may, but need not, require that all oral requests be confirmed in writing. The
following party or parties are authorized to request advances under the line of
credit until Lender receives from Borrower at Lender's address shown above
written notice of revocation of their authority: JERRY L. CALVERT, PRESIDENT;
BENJAMIN R. HINES, SECRETARY; AND NORMAN F. PULLIAM, CHAIRMAN. Borrower agrees
to be liable for all sums either: (a) advanced in accordance with the
instructions of an authorized person or (b) credited to any of Borrower's
accounts with Lender. The unpaid principal balance owing on this Note at any
time may be evidenced by endorsements on this Note or by Lender's internal
records, including daily computer print-outs. Lenders will have no obligation
to advance funds under this Note if: (a) Borrower or any guarantor is in
default under the terms of this Note or any agreement that Borrower or any
guarantor has with Lender, including any agreement made in connection with the
signing of this Note; (b) Borrower or any guarantor ceases doing business or is
insolvent; (c) any guarantor seeks, claims or otherwise attempts to limit,
modify or revoke such guarantor's guarantee of this Note or any other loan with
Lender; (d) Borrower has applied funds provided pursuant to this Note for
purposes other than those authorized by Lender; or (e) Lender in good faith
deems itself insecure under this Note or any other agreement between Lender and
Borrower.
ARBITRATION. LENDER AND BORROWER AGREE THAT ALL DISPUTES, CLAIMS AND
CONTROVERSIES BETWEEN THEM, WHETHER INDIVIDUAL, JOINT, OR CLASS IN NATURE,
ARISING FROM THIS NOTE OR OTHERWISE, INCLUDING WITHOUT LIMITATION CONTRACT AND
FORT DISPUTES, SHALL BE ARBITRATED PURSUANT TO THE RULES OF THE AMERICAN
ARBITRATION ASSOCIATION, UPON REQUEST OF EITHER PARTY. No act to take or
dispose of any collateral securing this Note shall constitute a waiver of this
arbitration agreement or be prohibited by this arbitration agreement. This
includes, without limitation, obtaining injunctive relief or a temporary
restraining order; invoking a power of sale under any deed of trust or
mortgage; obtaining a writ of attachment or imposition of a receiver; or
exercising any rights relating to personal property, including taking or
disposing of such property with or without judicial process pursuant to Article
9 of the Uniform Commercial Code. Any disputes, claims, or controversies
concerning the lawfulness or reasonableness or any act, or exercise of any
right, concerning any collateral securing this Note, including any claim to
rescind, reform, or otherwise modify any agreement relating to the collateral
securing this Note, shall also be arbitrated, provided however that no
arbitrator shall have the right or the power to enjoin or restrain any act of
any party. Judgement upon any award rendered by any arbitrator may be entered
in any court having jurisdiction. Nothing in this Note shall preclude any party
from seeking equitable relief from a court of competent jurisdiction. The
statute of limitations, estoppel, waiver, laches, and similar doctrines which
would otherwise be applicable in an action brought by a party shall be
applicable in any arbitration proceeding, and the commencement of an
arbitration proceeding shall be deemed the commencement of an action for these
purposes. The Federal Arbitration Act shall apply to the construction,
interpretation, and enforcement of this arbitration provision.
ACCRUAL METHOD. Interest will be calculated on an Actual/360 basis.
GENERAL PROVISIONS. Lender may delay or forego enforcing any of its rights or
remedies under this Note without losing them. Borrower and any other person who
signs, guarantees or endorses this Note, to the extent allowed by law, waive
presentment, demand for payment, protest and notice of dishonor. Upon any
change in the terms of this Note, and unless otherwise expressly stated in
writing, no party who signs this Note, whether as maker, guarantor,
accommodation maker or endorser, shall be released from liability. All such
parties waive any right to require Lender to take action against any other
party who signs this Note as provided in O.C.G.A. Section 10-7-24 and agree
that Lender may renew or extend (repeatedly and for any length of time) this
loan, or release any party or guarantor or collateral; or impair, fail to
realize upon or perfect Lender's security interest in the collateral; and take
any other action deemed necessary by Lender without the consent of or notice to
anyone. All such parties also agree that Lender may modify this loan without
the consent of or notice of anyone other than the party with whom the
modification is made.
IN WITNESS WHEREOF, THIS NOTE HAS BEEN SIGNED AND SEALED BY THE UNDERSIGNED,
WHO ACKNOWLEDGES A COMPLETED COPY HEREOF.
BORROWER:
<TABLE>
<S> <C>
FIRST NATIONAL BANK OF SPARTANBURG, (IO)
By: /s/ Jerry L. Calvert (SEAL) By: /s/ Benjamin R. Hines (SEAL)
---------------------------------------- ----------------------------------------
Jerry L. Calvert Benjamin R. Hines
By: /s/ Norman F. Pulliam (SEAL)
----------------------------------------
Norman F. Pulliam
LENDER:
THE BANKERS BANK
By:
----------------------------------------
Authorized Officer
</TABLE>
================================================================================
<PAGE> 1
EXHIBIT 10.5
AGREEMENT TO SELL AND BUY
SELLER HBJ Properties hereby covenants and agrees to convey to BUYER First
-------------- -----
National Bancshares, Inc. and/or assigns and BUYER covenants and agrees to
- ----------------------------------------
purchase, upon the within terms and conditions and on a mutually agreed upon
date within 30 days after all contingencies are met, the following property:
The land located on Pine Street, Spartanburg, SC
A portion of tax map #7-12-7-168.00, 7-12-7-200.00 &
7-12-7-154.1
As per attached Exhibit A.
Approximate boundaries are in black, highlighted in pink.
Title to the property shall be taken in the name of to be determined and/or
-----------------------
assigns
- -------
The purchase price is Five Hundred Thousand and no/100 Dollars ($500,000) of
---------------------------------------------------
which Five Thousand Dollars ($5,000) shall be paid within 48 hours of
------------- --------
acceptance to HBJ Properties to be held in escrow as earnest money and to be
refunded should contract be declared null and void within the due diligence
period (see below). The balance of this contract to be paid at time of closing,
provided:
- - BUYER will be granted a 60 day diligence period from the date of the
last signature on this contract to complete feasibility analysis and
may declare this contract null and void if, in the purchaser's sole
opinion, said premises does not meet purchaser's approval. During the
due diligence period, purchaser shall have the right to perform soil
tests, engineering studies, environmental survey, DOT approvals, and
any other inspection deemed necessary for his intended use, all of
which shall be at the BUYER'S sole expense.
- - BUYER agrees to grant cross easement ingress and egress to the
adjoining property.
- - THIS CONTRACT shall be contingent upon the approval of the OCC as well
as on the approval of the Board of Directors of the First National
Bank of Spartanburg (proposed). This contract is also contingent on
approval to close Jolly Street.
Possession to be given to BUYER on Closing SELLER covenants and agrees to bind
-------
its heirs, executors, administrators, successors or assigns, by good and
- --
sufficient warrant deed, subject to restrictions and easements of record, with
dower duty renounced, free from encumbrances except as are herein agreed to be
assumed by BUYER.
- - SELLER agrees to deliver the property at sale closing with all
fixtures free of liens and encumbrances and in good working condition.
Seller agrees not to enter into any negotiations with a third party
until the existing offer has been rejected in writing by both parties.
- - IT IS EXPRESSLY agreed that in the event of any default or failure on
the part of the BUYER to comply with the terms and conditions of this
agreement, the deposit solely, shall be at risk. In the event that all
contingencies are not met in the specified time, Seller agrees to
extend said period for an additional 60 days.
- - IF ANY FLAW in title to the property is found which cannot be
corrected within a reasonable time, the deposit is to be refunded to
BUYER and this agreement deemed null and void.
<PAGE> 2
- - THIS AGREEMENT expresses the entire agreement between the parties,
there is no other agreement, oral or otherwise, modifying the terms
hereof, and it shall bind the parties hereto, their heirs, executors,
administrators, successors and assigns. Both parties acknowledge there
are no real estate commissions involved in this transaction.
- - IT IS UNDERSTOOD and agreed between the signatures of this Contract
that this is the complete agreement between the parties and that there
are no written or oral understandings, directly or indirectly
connected with the Contract, that are not contained herein. Facsimile
signatures will be recognized and accepted as originals.
- - LIABILITY. The BUYER shall have the right to and shall be responsible
for any and all inspections regarding, but not limited to,
governmental liens, lead base paint, radon, asbestos, underground
tanks, and any other physical or environmental issues related to the
purchase of the property.
- - IN THE EVENT the closing does not occur, BUYER shall turn over all
documents related to the transaction and shall be reimbursed by the
SELLER for the cost of any such documentation.
- - BUYER shall be granted a sixty (60) day extension to the closing date
in the event of reasonable and ordinary delays on the part of either
party.
- - BUYER shall have the right to withdraw this offer if an acceptable
response is not received on or before June 10, 1999
------------------ .
- - BUYER agrees to keep landscaped "A" areas on attached.
<TABLE>
<S> <C>
SIGNED AND SEALED THIS 8TH DAY OF JUNE 1999. DATE OF LAST SIGNATURE JUNE 8, 1999.
--- ------
/S/ John R. Fowler /S/ Julian Williams, General Partner (SEAL)
------------------------------------ ----------------------------------------
WITNESS SELLER
/S/ John R. Fowler /S/HBJ Properties / H.E. Fleming, (SEAL)
------------------------------------ ----------------------------------------
WITNESS SELLER
1st National Bancshares, Inc.
/S/ Norman Pulliam /S/ Jerry L. Calvert Pres / CEO (SEAL)
------------------------------------ ----------------------------------------
WITNESS BUYER
</TABLE>
2
<PAGE> 1
EXHIBIT 10.6
July 12, 1999
Oak Grove Associates, LLC
c/o Foster Chapman, President
Johnson Development Assoc.
P. O. Box 3524
Spartanburg, SC 29304
RE: Letter of Intent to Lease
Parcel on SC Highway 296 (Reidville Road)
Spartanburg, SC
Dear Foster:
Please accept this letter an expression of our intent in leasing the above
referenced property under the following terms and conditions:
<TABLE>
<S> <C>
1. Lessee: First National Bank of Spartanburg (Proposed) and/or assigns
2. Property: 1.00 +/- acres located on Reidville Road as an out parcel to
the Oak Grove Shopping Center (Harris Teeter), not to
exceed 200 feet of frontage from curb line on entrance road
into center, as measured 100' back of Reidville Road R/W.
3. Length of Lease: 20 Years
4. Lease Rate: Years 1-5 Years 6-10 Years 11-15 Years 16-20
--------- ---------- ----------- -----------
$48,000 $53,000 $59,000 $68,000
5. Options: (4) Five year options based on the same escalation as
provided during the last five years of the base term.
6. Inspection Period: Lessee shall have Ninety (90) days to inspect the property to
determine if the site is suitable for its building layout and
design and to receive the OCC approval and Bank Board
approval.
7. Start Date: Rent shall commence on the first day of business or six
months after Bank Regulatory Authority approval, whichever
comes first, but in all instances, rent shall begin on / or
before May 1, 2000.
8. Survey/Title: Lessor to provide the boundary survey and clear title showing
no unacceptable defects or limitations.
</TABLE>
<PAGE> 2
<TABLE>
<CAPTION>
Oak Grove Associates, LLC July 12, 1999 Page 2
- -------------------------------------------------------------------------------------------------------------
<S> <C>
9. Utilities & Storm All utilities shall be stubbed out to the property lines,
Water Retention: including water, sewer, and natural gas. Lessor agrees to
provide for Lessee's storm water retention so the Lessee can
develop entire site.
10. Curb Cut/Driveway Lease shall be contingent upon Lessor providing Lessee
Easement: a shared curb cut to the access driveway from Reidville Road.
11. Environmental: Lessor warrants and represents that, to the best of its
knowledge, the Property has not environmental containment
and/or defects, and that soil is acceptable for Lessee to
build upon.
12. Commissions: There are no real estate commissions to be paid in this
transaction.
13. Information: Lessor agree to share any pertinent studies, information,
material(s), etc. as they relate to the property.
14. Temporary Facility: It is anticipated that it will take 6 to 9 months to complete
construction of the permanent facility. Lessor agrees to allow a
temporary, or modular facility, to be placed on this property, or the
adjacent property, during construction of the permanent facility,
which construction will be commenced and will proceed with all
reasonable haste.
15. Approvals: Agreement shall be contingent upon Lessee obtaining
approvals from all local and state government authorities and
utility companies, as well as the above mentioned Board
approvals. Architecture and layout subject to Oak Grove
Associates, LLC approval.
16. Deposit: A $5,000 deposit as earnest money shall be paid to Oak Grove
Associates, LLC within 48 hours of acceptance by the limited
liability company. This deposit will be credited to the lease
if lessor accepts this offer to lease.
</TABLE>
The terms and conditions of the Letter of Intent are valid only if accepted by
the Lessor and the letter is returned to me prior to 5:00 PM Eastern Standard
Time, Friday, July 16, 1999. If you are prepared to proceed to a Lease
Agreement upon these terms and conditions, please indicate your acknowledgement
where indicated below and Lessee will prepare a Lease draft. Otherwise, please
call me with any questions.
<PAGE> 3
Oak Grove Associates, LLC July 12, 1999 Page 3
- -------------------------------------------------------------------------------
I look forward to working with you on the transactions.
Sincerely,
/s/ Jerry Calvert
- ------------------------
Jerry L. Calvert
President & CEO
Agreed and Accepted:
Lessor: Oak Grove Associates, LLC
By: /s/ A. Foster Chapman
-------------------------------
(Print Name) A. Foster Chapman
---------------------
Its: Manager
-----------------------------
Date: 7/15/97
----------------------------
<PAGE> 1
EXHIBIT 10.7
ESCROW AGREEMENT
THIS ESCROW AGREEMENT (this "Agreement") is entered into and effective
as of the ___ day of September, 1999, by and between First National Bancshares,
Inc., a South Carolina corporation (the "Company"), and The Bankers Bank (the
"Escrow Agent").
W I T N E S S E T H :
WHEREAS, the Company proposes to offer and sell (the "Offering")
1,200,000 shares of Common Stock, $.01 par value per share (the "Shares"), to
investors at $10.00 per Share pursuant to a registered public offering; and
WHEREAS, the Company desires to establish an escrow for funds
forwarded by subscribers for Shares, and the Escrow Agent is willing to serve
as Escrow Agent upon the terms and conditions herein set forth.
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
1. DEPOSIT WITH ESCROW AGENT.
(a) The Escrow Agent agrees that it will from time to time accept,
from the Company in its capacity as escrow agent, subscription funds for the
Shares (the "Escrowed Funds") in the form of checks received by the Company
from subscribers. All checks shall be made payable to the Escrow Agent. If any
check does not clear normal banking channels in due course, the Escrow Agent
will promptly notify the Company. Any check which does not clear normal banking
channels and is returned by the drawer's bank to Escrow Agent will be promptly
turned over to the Company along with all other subscription documents relating
to such check. Any check received that is made payable to a party other than
the Escrow Agent shall be returned to the Company for return to the proper
party. The Company in its sole and absolute discretion may reject any
subscription for shares for any reason and upon such rejection it shall notify
and instruct the Escrow Agent in writing to return the Escrowed Funds by check
made payable to the subscriber.
(b) Subscription agreements for the Shares shall be reviewed for
accuracy by the Company and, immediately thereafter, the Company shall deliver
to the Escrow Agent the following information: (i) the name and address of the
subscriber; (ii) the number of Shares subscribed for by such subscriber; (iii)
the subscription price paid by such subscriber; (iv) the subscriber's tax
identification number certified by such subscriber; and (v) a copy of the
subscription agreement.
<PAGE> 2
2. INVESTMENT OF ESCROWED FUNDS. Upon collection of each check by the
Escrow Agent, the Escrow Agent shall invest the funds in deposit accounts or
certificates of deposit which are fully insured by the Federal Deposit
Insurance Corporation or another agency of the United States government,
short-term securities issued or fully guaranteed by the United States
government, or such other investments as the Escrow Agent and the Company shall
agree. All investments shall comply with applicable laws, rules and
regulations, including Rule 15c2-4 under the Securities Exchange Act of 1934.
The Company shall provide the Escrow Agent with instructions from time to time
concerning in which of the specific investment instruments described above the
Escrowed Funds shall be invested, and the Escrow Agent shall adhere to such
instructions. Interest and other earnings shall start accruing on such funds as
soon as such funds would be deemed to be available for access under applicable
banking laws and pursuant to the Escrow Agent's own banking policies.
3. DISTRIBUTION OF ESCROWED FUNDS. The Escrow Agent shall distribute
the Escrowed Funds in the amounts, at the times, and upon the conditions
hereinafter set forth in this Agreement.
(a) If at any time on or prior to the expiration date of the offering
as described in the prospectus relating to the offering (the "Closing Date"),
(i) the Escrow Agent has certified to the Company in writing that the Escrow
Agent has received $12,000,000 in Escrowed Funds, and (ii) the Escrow Agent has
received a certificate from the President or the Chairman of the Board of the
Company that all other conditions to the release of funds as described in the
Company's Registration Statement filed with the Securities and Exchange
Commission pertaining to the public offering have been met, then the Escrow
Agent shall deliver the Escrowed Funds to the Company to the extent such
Escrowed Funds are collected funds. If any portion of the Escrowed Funds are
not collected funds, then the Escrow Agent shall notify the Company of such
facts and shall distribute such funds to the Company only after such funds
become collected funds. For purposes of this Agreement, "collected funds" shall
mean of all funds received by the Escrow Agent which have cleared normal
banking channels.
(b) If the Escrowed Funds do not, on or prior to the Closing Date,
become deliverable to the Company based on failure to meet the conditions
described in Paragraph 3(a), or if the Company terminates the offering at any
time prior to the Closing Date and delivers written notice to the Escrow Agent
of such termination (the "Termination Notice"), the Escrow Agent shall return
the Escrowed Funds which are collected funds as directed in writing by the
Company to the respective subscribers in amounts equal to the subscription
amount theretofore paid by each of them. All uncleared checks representing
Escrowed Funds which are not collected funds as of the initial Closing Date
shall be collected by the Escrow Agent, and together with all related
subscription documents thereof shall be delivered to the Company by the Escrow
Agent, unless the Escrow Agent is otherwise specifically directed in writing by
the Company.
4. DISTRIBUTION OF INTEREST. Any interest earned on the Escrowed Funds
shall be retained by the Company.
2
<PAGE> 3
5. FEE OF ESCROW AGENT. The escrow account will accrue a service
charge of $15.00 per month. In addition, a $20.00 per check fee will be charged
if the escrow account has to be refunded due to a failure to complete the
subscription All of these fees are payable upon the release of the Escrowed
Funds, and the Escrow Agent is hereby authorized to deduct such fees from the
Escrow Funds prior to any release thereof pursuant to Section 3 hereof.
6. LIABILITY OF ESCROW AGENT.
(a) In performing any of its duties under the Agreement, or upon the
claimed failure to perform its duties hereunder, the Escrow Agent shall not be
liable to anyone for any damages, losses or expenses which it may incur as a
result of the Escrow Agent so acting, or failing to act; provided, however, the
Escrow Agent shall be liable for damages arising out of its willful default or
misconduct or its gross negligence under this Agreement. Accordingly, the
Escrow Agent shall not incur any such liability with respect to (i) any action
taken or omitted to be taken in good faith upon advice of its counsel or
counsel for the Company which is given with respect to any questions relating
to the duties and responsibilities of the Escrow Agent hereunder; or (ii) any
action taken or omitted to be taken in reliance upon any document, including
any written notice or instructions provided for this Escrow Agreement, not only
as to its due execution and to the validity and effectiveness of its provisions
but also as to the truth and accuracy of any information contained therein, if
the Escrow Agent shall in good faith believe such document to be genuine, to
have been signed or presented by a proper person or persons, and to conform
with the provisions of this Agreement.
(b) The Company agrees to indemnify and hold harmless the Escrow Agent
against any and all losses, claims, damages, liabilities and expenses,
including, without limitation, reasonable costs of investigation and counsel
fees and disbursements which may be imposed by the Escrow Agent or incurred by
it in connection with its acceptance of this appointment as Escrow Agent
hereunder or the performance of its duties hereunder, including, without
limitation, any litigation arising from this Escrow Agreement or involving the
subject matter thereof; except, that if the Escrow Agent shall be found guilty
of willful misconduct or gross negligence under this Agreement, then, in that
event, the Escrow Agent shall bear all such losses, claims, damages and
expenses.
(c) If a dispute ensues between any of the parties hereto which, in
the opinion of the Escrow Agent, is sufficient to justify its doing so, the
Escrow Agent shall retain legal counsel of its choice as it reasonably may deem
necessary to advise it concerning its obligations hereunder and to represent it
in any litigation to which it may be a part by reason of this Agreement. The
Escrow Agent shall be entitled to tender into the registry or custody of any
court of competent jurisdiction all money or property in its hands under the
terms of this Agreement, and to file such legal proceedings as it deems
appropriate, and shall thereupon be discharged from all further duties under
this Agreement. Any such legal action may be brought in any such court as the
Escrow Agent shall determine to have jurisdiction thereof. In connection with
such dispute, the Company shall indemnify the Escrow Agent against its court
3
<PAGE> 4
costs and reasonable attorney's fees incurred.
(d) The Escrow Agent may resign at any time upon giving 30 days'
written notice to the Company. If a successor escrow agent is not appointed by
Company within 30 days after notice of resignation, the Escrow Agent may
petition any court of competent jurisdiction to name a successor escrow agent,
and the Escrow Agent herein shall be fully relieved of all liability under this
Agreement to any and all parties upon the transfer of the Escrowed Funds and
all related documentation thereto, including appropriate information to assist
the successor escrow agent with the reporting of earnings of the Escrowed Funds
to the appropriate state and federal agencies in accordance with the applicable
state and federal income tax laws, to the successor escrow agent designated by
the Company appointed by the court.
7. APPOINTMENT OF SUCCESSOR. The Company may, upon the delivery of 30
days' written notice appointing a successor escrow agent to the Escrow Agent,
terminate the services of the Escrow Agent hereunder. In the event of such
termination, the Escrow Agent shall immediately deliver to the successor escrow
agent selected by the Company all documentation and Escrowed Funds including
interest earnings thereon in its possession, less any fees and expenses due to
the Escrow Agent or required to be paid by the Escrow Agent to a third party
pursuant to this Agreement.
8. NOTICE. All notices, requests, demands and other communications or
deliveries required or permitted to be given hereunder shall be in writing and
shall be deemed to have been duly given three days after having been deposited
for mailing if sent by registered mail, or certified mail return receipt
requested, or delivery by courier, to the respective addressees set forth
below:
<TABLE>
<S> <C>
IF TO THE SUBSCRIBERS FOR SHARES: To their respective addresses as specified in
their Subscription Agreements.
THE COMPANY First National Bancshares, Inc.
248 North Church Street
Spartanburg, SC 29304
Attention: Jerry Calvert
President
WITH A COPY TO: Nelson Mullins Riley & Scarborough, LLP
Suite 1400
999 Peachtree Street, NE
Atlanta, GA 30309
Attention: Neil E. Grayson, Esq.
</TABLE>
4
<PAGE> 5
<TABLE>
<S> <C>
WITH A COPY TO: J.C. Bradford
400 2nd Ave., NW
2nd Floor
Hickory, NC 28601
Attention: Carl V. Cline
Partner
THE ESCROW AGENT: The Bankers Bank
2410 Paces Ferry Road
600 Paces Summit
Atlanta, GA 30339-4098
Attention: William R. Burkett
Senior Vice President
</TABLE>
9. REPRESENTATION OF THE COMPANY. The Company hereby acknowledges that
the status of the Escrow Agent with respect to the offering of the Shares is
that of agent only for the limited purposes herein set forth, and hereby agrees
it will not represent or imply that the Escrow Agent, by serving as the Escrow
Agent hereunder or otherwise, has investigated the desirability or advisability
in an investment in the Shares, or has approved, endorsed or passed upon the
merits of the Shares, nor shall the Company use the name of the Escrow Agent in
any manner whatsoever in connection with the offer or sale of the Shares, other
than by acknowledgement that it has agreed to serve as Escrow Agent for the
limited purposes herein set forth.
10. GENERAL.
(a) This Agreement shall be governed by and construed and enforced in
accordance with the laws of the State of Georgia.
(b) The section headings contained herein are for reference purposes
only and shall not in any way affect the meaning or interpretation of this
Agreement.
(c) This Agreement sets forth the entire agreement and understanding
of the parties with regard to this escrow transaction and supersedes all prior
agreements, arrangements and understandings relating to the subject matter
hereof.
5
<PAGE> 6
(d) This Agreement may be amended, modified, superseded or canceled,
and any of the terms or conditions hereof may be waived, only by a written
instrument executed by each party hereto or, in the case of a waiver, by the
party waiving compliance. The failure of any part at any time or times to
require performance of any provision hereof shall in no manner affect the right
at a later time to enforce the same. No waiver in any one or more instances by
any part of any condition, or of the breach of any term contained in this
Agreement, whether by conduct or otherwise, shall be deemed to be, or construed
as, a further or continuing waiver of any such condition or breach, or a waiver
of any other condition or of the breach of any other terms of this Agreement.
(e) This Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
(f) This Agreement shall inure to the benefit of the parties hereto
and their respective administrators, successors and assigns. The Escrow Agent
shall be bound only by the terms of this Escrow Agreement and shall not be
bound by or incur any liability with respect to any other agreement or
understanding between the parties except as herein expressly provided. The
Escrow Agent shall not have any duties hereunder except those specifically set
forth herein.
(g) No interest in any part to this Agreement shall be assignable in
the absence of a written agreement by and between all the parties to this
Agreement, executed with the same formalities as this original Agreement.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as
the date first written above.
COMPANY: ESCROW AGENT:
FIRST NATIONAL BANCSHARES, INC. THE BANKERS BANK
By: By:
----------------------------- -------------------------------
Jerry L. Calvert William R. Burkett
President Senior Vice President
6
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS
We hereby consent to the use in this Registration Statement by
reference of First National Bancshares, Inc. on Form SB-2 of our report dated
August 30, 1999, relating to the financial statements of First National
Bancshares, Inc. as of and for the period ending July 31, 1999 to the reference
to our firm therein under the caption "Experts" in the Prospectus.
/s/ Crisp Hughes Evans, LLP
- -------------------------------
Crisp Hughes Evans, LLP
Spartanburg, South Carolina
September 20, 1999
