UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended March 31, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Transition Period from to
Commission file number 333-87503
First National Bancshares, Inc.
------------------------------------------------
(Exact name of registrant as specified in its charter)
South Carolina 58-2466370
(State of Incorporation) (I.R.S. Employer Identification No.)
451 E. St. John Street
Spartanburg, South Carolina 29302
---------------------------------------- -------
(Address of principal executive offices) (Zip Code)
864-948-9001
--------------------------
(Telephone Number)
Not Applicable
--------------------------------
(Former name, former address
and former fiscal year,
if changed since last report)
Check whether the issuer: (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
YES X NO
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: 1,200,000 shares outstanding on
May 10, 2000
Transitional Small Business Disclosure Format (check one): YES NO X
-- --
<PAGE>
FIRST NATIONAL BANCSHARES, INC. AND SUBSIDIARY
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
2
<PAGE>
FIRST NATIONAL BANCSHARES, INC. AND SUBSIDIARY
<TABLE>
<CAPTION>
Consolidated Balance Sheet
March 31, 2000
(unaudited)
Assets
<S> <C>
Cash and cash equivalents $ 295,359
Federal funds sold 10,450,000
Loans, net 1,405,358
Premises and equipment, net 725,707
Other 371,953
--------------
Total assets $ 13,248,377
==============
Liabilities and Shareholders' Equity
Liabilities:
Deposits $ 1,661,359
Accounts payable and accrued expenses 35,544
-------------
Total liabilities $ 1,696,903
-------------
Commitments and contingencies
Shareholders' Equity:
Preferred stock, par value $.01 per share, 10,000,000 shares
authorized, no shares issued or outstanding -
Common stock, par value $.01 per share, 10,000,000 shares
authorized, 1,200,000 shares issued and outstanding $ 12,000
Additional paid-in capital 11,791,311
Retained earnings/(deficit) (251,837)
-------------
Total shareholders' equity $ 11,551,474
=============
Total liabilities and shareholders' equity $ 13,248,377
=============
</TABLE>
See accompanying notes to financial statements.
3
<PAGE>
FIRST NATIONAL BANCSHARES, INC. AND SUBSIDIARY
Consolidated Statement of Operations
For the three months ended March 31, 2000
(unaudited)
Interest income:
Loans $ 784
Investment securities 126,897
Federal funds sold 33,291
---------
Total interest income $ 160,972
---------
Interest expense:
Line of credit $ 6,481
Deposits 552
---------
Total interest expense 7,033
---------
Net interest income 153,939
---------
Provision for loan losses 14,196
---------
Net interest income after provision for loan losses 139,743
---------
Noninterest expense:
Salaries and employee benefits 121,901
Professional fees 13,105
Insurance 3,888
Occupancy and equipment expense 17,345
Telephone and supplies 7,273
Other 15,122
----------
Total noninterest expense 178,634
Loss before income taxes (38,891)
----------
Provision for income taxes 0
----------
Net loss (38,891)
==========
See accompanying notes to financial statements.
4
<PAGE>
FIRST NATIONAL BANCSHARES, INC. AND SUBSIDIARY
<TABLE>
<CAPTION>
Consolidated Statement of Changes in Shareholders' Equity
For the three months ended March 31, 2000
(unaudited)
Common Stock Additional Retained Total
---------------------------------- Paid-In Earnings/ Shareholders
Shares Amount Capital (Deficit) Equity
------- ------ ---------- ---------- -------------
<S> <C> <C> <C> <C> <C>
Balance, December 31, 1999 $ 10 $ -- $ 100 $ (212,946) $ (212,846)
Redemption of stock from organizer (10) (100) (100)
Proceeds from sale of stock, net of
Offering costs of $196,689 1,200,000 12,000 11,791,311 11,803,311
Net loss (38,891) (38,891)
Balance, March 31, 2000 1,200,000 $ 12,000 $11,791,311 $ (251,837) $ 11,551,474
========= ========= =========== ================ =============
</TABLE>
See accompanying notes to financial statements.
5
<PAGE>
<TABLE>
<CAPTION>
FIRST NATIONAL BANCSHARES, INC. AND SUBSIDIARY
Consolidated Statement of Cash Flows
For the three months ended March 31, 2000
(unaudited)
Cash flows from operating activities:
<S> <C>
Net income (loss) $ (38,891)
Adjustments to reconcile net loss to cash provided by operating activities:
Provision for loan losses 14,196
Depreciation 6,945
Discount accretion (126,901)
Changes in deferred and accrued amounts:
Prepaid expenses and other assets 61,297
Accrued expenses and other liabilities 28,290
--------
Net cash used by operating activities $ (55,064)
--------
Cash flows from investing activities:
Purchases of investment securities $ (34,269,732)
Proceeds from maturity of investment securities 45,594,000
Net (increase) decrease in loans (1,419,554)
Net purchases of premises and equipment (690,932)
Purchase of investment in Federal Reserve Bank stock (330,000)
-----------
Net cash provided by investing activities $ 8,883,782
-----------
Cash flows from financing activities:
Proceeds from sale of stock, net of stock offering costs $ 519,261
Redemption of stock of organizer
(100)
Repayment of line of credit (390,000)
Net increase in deposits 1,661,359
----------
Net cash provided by financing activities $ 1,790,520
----------
Net increase in cash and cash equivalents $ 10,619,238
Cash and cash equivalents at beginning of period 126,121
----------
Cash and cash equivalents, end of period $ 10,745,359
----------
</TABLE>
See accompanying notes to financial statements.
6
<PAGE>
FIRST NATIONAL BANCSHARES, INC. AND SUBSIDIARY
Notes to Unaudited Consolidated Financial Statements
March 31, 2000
Summary of Significant Accounting Policies and Activities
A summary of these policies is included in the 1999 Form 10K-SB filed
with the Securities and Exchange Commission and is incorporated herein by
reference.
Statement of Cash Flows
In accordance with the provisions of SFAS No. 95, "Statement of Cash
Flows", the Company considers cash and cash equivalents to be those amounts
included in the balance sheet captions "Cash and due from banks" and "Federal
funds sold". Cash paid for interest during the three months ended March 31, 2000
totaled $6,741.
Overview
First National Bancshares, Inc. ("the Company") was incorporated to
operate as a bank holding company pursuant to the Federal Bank Holding Company
Act of 1956 and the South Carolina Bank Holding Company Act, and to purchase
100% of the issued and outstanding stock of First National Bank of Spartanburg
("the Bank"), an association organized under the laws of the United States, to
conduct a general banking business in Spartanburg, South Carolina. Since our
inception on July 14, 1999, as a South Carolina corporation, we have engaged in
organizational and pre-opening activities necessary to obtain regulatory
approvals and to prepare our subsidiary, First National Bank of Spartanburg, to
commence business as a financial institution.
Common Stock
On November 10, 1999, we commenced our public offering of 1,200,000
shares of our common stock at $10 per share, which we closed on February 10,
2000. The offering raised $11,803,311, net of sales expenses and commissions.
Our directors and executive officers purchased 471,700 shares of common stock at
$10 per share, for a total of $4,717,000. Upon purchase of these shares, we
issued stock warrants to the organizers to purchase an additional 313,333 shares
of common stock for $10 per share.
We capitalized the bank with $11 million of the proceeds on March 27,
2000. The Company will retain the balance of the proceeds and intends initially
to invest it in United States government securities or as a deposit with the
Bank. In the long-term, the Company will use these sums for working capital and
other general corporate purposes, including payments of expenses of the company
and the provision of additional capital for the Bank, if necessary. The Bank
opened for business on March 27, 2000.
Basis of Presentation
The accompanying unaudited financial statements have been prepared in
accordance with generally accepted accounting principles ("GAAP") for interim
financial information and with the instructions to Form 10-QSB and Item 310(b)
of Regulation S-B of the Securities and Exchange Commission. Accordingly, they
do not include all information and footnotes required by GAAP for complete
financial statements. However, in the opinion of management, all adjustments
(consisting of normal recurring adjustments) considered necessary for a fair
presentation have been included.
Operating results for the three-month period ended March 31, 2000 are not
necessarily indicative of the results that may be expected for the year ending
December 31, 2000. For further information, refer to the financial statements
and footnotes thereto included in the Company's Registration Statement on Form
SB-2 (Registration Number 333-70589) as filed with and declared effective by the
Securities and Exchange Commission.
7
<PAGE>
Until the Bank opened for business on March 27, 2000, the Company was
accounted for as a development stage enterprise as defined by Statement of
Financial Accounting Standards No. 7, "Accounting and Reporting by Development
Stage Enterprises," as the Company devoted substantially all of its efforts to
establishing a new business. When the Bank opened on March 27, 2000, certain
reclassifications and adjustments were made to the financial statements to
reflect that the Company is now accounted for as an operating company.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Forward-Looking Statements
The following is a discussion of the Company's financial condition as of
and for the period ended March 31, 2000. These comments should be read in
conjunction with the Company's condensed consolidated financial statements and
accompanying footnotes appearing in this report.
This report contains "forward-looking statements" relating to, without
limitation, future economic performance, plans and objectives of management for
future operations, and projections of revenues and other financial items that
are based on the beliefs of the Company's management, as well as assumptions
made by and information currently available to the Company's management. The
words "expect," "anticipate," and "believe," as well as similar expressions, are
intended to identify forward-looking statements. The Company's actual results
may differ materially from the results discussed in the forward-looking
statements, and the Company's operating performance each quarter is subject to
various risks and uncertainties that are discussed in detail in the Company's
filings with the Securities and Exchange Commission, including the "Risk
Factors" section in the Company's Registration Statement (Registration Number
333-70589) as filed with and declared effective by the Securities and Exchange
Commission.
Financial Condition
First National Bancshares was organized on July 14, 1999, and its
initial principal activities have been related to its organization, conducting
its initial public offering, and pursuing regulatory approvals from the Office
of the Comptroller of the Currency, the FDIC, and the Federal Reserve Board. We
closed our initial public offering on February 10, 2000, after selling 1,200,000
shares and raising $11,803,311. The Bank opened for business on March 27, 2000.
At March 31, 2000, the Company had total assets of $13,248,377,
consisting principally of federal funds sold of $10,450,000; loans, net of loan
loss allowance, of $1,405,358; property, at cost less accumulated depreciation,
of $725,707; other assets of $371,953, including an investment in Federal
Reserve Bank stock required by law; and cash of $295,359. The Company currently
expects that it will have sufficient cash flow to fund ongoing operations and
the Company does not expect to raise any additional funds in the next 12 months.
The Company's liabilities at March 31, 2000 were $1,696,903, consisting
of deposits, accrued expenses and other liabilities. The Company had
shareholders' equity of $11,551,474 at March 31, 2000.
First National Bancshares had a net loss of $38,891 for the three
months ended March 31, 2000, or a net loss of $.03 per share based on the
1,200,000 shares outstanding as of March 31, 2000. This loss resulted primarily
from expenses incurred in connection with activities related to the organization
of First National Bancshares and First National Bank of Spartanburg. These
regulatory activities included preparing and filing an application with the
Office of the Comptroller of the Currency and the FDIC to charter First National
Bank of Spartanburg and to obtain deposit insurance, preparing an application
with the Federal Reserve Board for approval of First National Bancshares to
acquire all of the capital stock of First National Bank of Spartanburg, and
responding to questions and providing additional information to the Office of
the Comptroller of the Currency, the FDIC, and the Federal Reserve Board in
connection with the application process. We also prepared a prospectus and filed
a registration statement with the Securities and Exchange Commission to sell
First National Bancshares' common stock; held meetings and discussions among
various organizers regarding various preopening issues; hired qualified
personnel to work for First National Bank of Spartanburg; conducted public
relations activities on behalf of First National Bank of Spartanburg; developed
prospective business contacts for First National Bank of Spartanburg and First
National Bancshares; and took other actions necessary for a successful bank
opening. The Company believes that it is adequately staffed and does not expect
to hire significant number of employees during the next 12 months. The Company
incurred a total of $402,480 in organizational expenses from inception (July 14,
1999) to the Bank's opening date. Because the Bank did not open until March 27,
2000, it has had minimal operations from which to generate revenues.
8
<PAGE>
The Bank generated in excess of $1.5 million in deposits between its
opening date and March 31, 2000 and has placed the bulk of the funds it raised
in the stock offering in federal funds sold until the Bank begins to generate
loans. Since principal banking operations only commenced on March 27, 2000, a
more detailed discussion of the Bank's results of operations is not meaningful.
The Bank expects to generate significant amounts of deposits and loans during
the next 12 months.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
There are no material pending legal proceedings to which the Company
is a party or of which any of their property is the subject.
Item 2. Changes in Securities and Use of Proceeds
(a) Not applicable
(b) Not applicable
Item 3. Defaults Upon Senior Securities
Not applicable
Item 4. Submission of Matters to a Vote of Security Holders
There were no matters submitted to security holders for a vote during
the three months ended March 31, 2000.
Item 5. Other Information
None.
Item 6. Exhibits and Reports on Form 8-K
(a) The following documents are filed as part of this report:
1.1 Form of Sales Agency Agreement between First National Bancshares and
J.C. Bradford and Company (incorporated by reference to Exhibit 1.1 of
the Registration Statement on Form SB-2, File No. 333-70589).
3.1. Articles of Incorporation (incorporated by reference to Exhibit 3.1 of
the Registration Statement on Form SB-2, File No. 333-70589).
3.2. Bylaws (incorporated by reference to Exhibit 3.2 of the Registration
Statement on Form SB-2, File No. 333-70589).
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 (incorporated by reference to Exhibit 4.1 of the
Registration Statement on Form SB-2, File No. 333-70589).
4.2. Form of certificate of common stock (incorporated by reference to
Exhibit 4.2 of the Registration Statement on Form SB-2, File No.
333-70589).
5.1. Opinion Regarding Legality (incorporated by reference to Exhibit 5.1 of
the Registration Statement on Form SB-2, File No. 333-70589).
10.1. Employment Agreement dated July 20, 1999 between First National
Bancshares and Jerry Calvert (incorporated by reference to Exhibit 10.1
of the Registration Statement on Form SB-2, File No. 333-70589).
9
<PAGE>
10.2. Form of Stock Warrant Agreement (incorporated by reference to Exhibit
10.2 of the Registration Statement on Form SB-2, File No. 333-70589).
10.3. Line of Credit Promissory Note dated June 29,1999 between The Banker's
Bank and First National Bank of Spartanburg (incorporated by reference
to Exhibit 10.3 of the Registration Statement on Form SB-2, File No.
333-70589).
10.4. Purchase and Sale Agreement dated June 8, 1999 between First National
Bancshares, Inc. and HBJ Properties (incorporated by reference to
Exhibit 10.4 of the Registration Statement on Form SB-2, File No.
333-70589).
10.5. Lease Agreement dated July 12, 1999 between First National Bancshares,
Inc. and Oak Grove Associates, LLC (incorporated by reference to
Exhibit 10.5 of the Registration Statement on Form SB-2, File No.
333-70589).
10.6. Form of Escrow Agreement between First National Bancshares, Inc. and
The Bankers Bank (incorporated by reference to Exhibit 10.6 of the
Registration Statement on Form SB-2, File No. 333-70589).
10.7 First National Bancshares, Inc. 2000 Stock Incentive Plan.*
23.1. Consent of Independent Public Accountants (incorporated by reference to
Exhibit 23.1 the Registration Statement on Form SB-2, File No.
333-70589).
23.2. Consent of Nelson Mullins Riley & Scarborough, L.L.P. appears in its
opinion filed as Exhibit 23.2 incorporated by reference to Exhibit 1.1
of the Registration Statement on Form SB-2, File No. 333-70589).
24.1 Power of Attorney filed as part of the signature page to the
Registration Statement (incorporated by reference to Exhibit 24.1 of
the Registration Statement on Form SB-2, File No. 333-70589).
27.1 Financial Data Schedule (for electronic filing purposes).*
(b) Reports on Form 8-K
None.
--------------------
* Filed herewith
10
<PAGE>
SIGNATURES
Pursuant to the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
FIRST NATIONAL BANCSHARES, INC.
Date: May 15, 2000 By: /s/ Jerry L. Calvert
---------------------------------
Jerry L. Calvert
Chief Executive Officer
Date: May 15, 2000 By: /s/ Kitty B. Payne
-----------------------------------
Kitty B. Payne
Chief Financial Officer
11
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description
- ------- -----------
1.1 Form of Sales Agency Agreement between First National Bancshares and
J.C. Bradford and Company (incorporated by reference to Exhibit 1.1 of
the Registration Statement on Form SB-2, File No. 333-70589).
3.1. Articles of Incorporation (incorporated by reference to Exhibit 3.1 of
the Registration Statement on Form SB-2, File No. 333-70589).
3.2. Bylaws (incorporated by reference to Exhibit 3.2 of the Registration
Statement on Form SB-2, File No. 333-70589).
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 (incorporated by reference to Exhibit 4.1 of the
Registration Statement on Form SB-2, File No. 333-70589).
4.2. Form of certificate of common stock (incorporated by reference to
Exhibit 1.1 of the Registration Statement on Form SB-2, File No.
333-70589).
5.1. Opinion Regarding Legality (incorporated by reference to Exhibit 5.1 of
the Registration Statement on Form SB-2, File No. 333-70589).
10.1 Employment Agreement dated July 20, 1999 between First National
Bancshares and Jerry Calvert (incorporated by reference to Exhibit 10.1
of the Registration Statement on Form SB-2, File No. 333-70589).
10.2 Form of Stock Warrant Agreement (incorporated by reference to Exhibit
10.2 of the Registration Statement on Form SB-2, File No. 333-70589).
10.3 Line of Credit Promissory Note dated June 29,1999 between The Banker's
Bank and First National Bank of Spartanburg (incorporated by reference
to Exhibit 10.3 of the Registration Statement on Form SB-2, File No.
333-70589).
10.4 Purchase and Sale Agreement dated June 8, 1999 between First National
Bancshares, Inc. and HBJ Properties (incorporated by reference to
Exhibit 10.4 of the Registration Statement on Form SB-2, File No.
333-70589).
10.5 Lease Agreement dated July 12, 1999 between First National Bancshares,
Inc. and Oak Grove Associates, LLC (incorporated by reference to
Exhibit 10.5 of the Registration Statement on Form SB-2, File No.
333-70589).
10.6 Form of Escrow Agreement between First National Bancshares, Inc. and
The Bankers Bank (incorporated by reference to Exhibit 10.6 of the
Registration Statement on Form SB-2, File No. 333-70589).
10.7 First National Bancshares, Inc. 2000 Stock Incentive Plan.*
23.1. Consent of Independent Public Accountants (incorporated by reference to
Exhibit 23.1 the Registration Statement on Form SB-2, File No.
333-70589).
23.2. Consent of Nelson Mullins Riley & Scarborough, L.L.P. appears in its
opinion filed as Exhibit 23.2 incorporated by reference to Exhibit 1.1
of the Registration Statement on Form SB-2, File No. 333-70589).
24.1. Power of Attorney filed as part of the signature page to the
Registration Statement (incorporated by reference to Exhibit 24.1 of
the Registration Statement on Form SB-2, File No. 333-70589).
27.1 Financial Data Schedule (for electronic filing purposes).*
---------------
* Filed herewith
FIRST NATIONAL BANCSHARES, INC.
2000 STOCK INCENTIVE PLAN
<PAGE>
FIRST NATIONAL BANCSHARES, INC.
2000 STOCK INCENTIVE PLAN
TABLE OF CONTENTS
ARTICLE I DEFINITIONS...........................................1
ARTICLE II THE PLAN 4
2.1 NAME....................................................4
----
2.2 PURPOSE.................................................4
-------
2.3 EFFECTIVE DATE..........................................4
--------------
ARTICLE III PARTICIPANTS....................................4
ARTICLE IV ADMINISTRATION.........................................4
4.1 DUTIES AND POWERS OF THE COMMITTEE......................4
----------------------------------
4.2 INTERPRETATION; RULES...................................5
---------------------
4.3 NO LIABILITY............................................5
------------
4.4 MAJORITY RULE...........................................5
-------------
4.5 COMPANY ASSISTANCE......................................5
------------------
ARTICLE V SHARES OF STOCK SUBJECT TO PLAN........................5
5.2 ANTIDILUTION............................................6
------------
ARTICLE VI OPTIONS 7
6.1 TYPES OF OPTIONS GRANTED................................7
------------------------
6.2 OPTION GRANT AND AGREEMENT..............................7
--------------------------
6.3 OPTIONEE LIMITATIONS....................................7
--------------------
6.4 $100,000 LIMITATION.....................................8
-------------------
6.5 EXERCISE PRICE..........................................8
--------------
6.6 EXERCISE PERIOD.........................................8
---------------
6.7 OPTION EXERCISE.........................................8
---------------
6.8 RELOAD OPTIONS..........................................9
--------------
6.9 NONTRANSFERABILITY OF OPTION...........................10
----------------------------
6.10 TERMINATION OF EMPLOYMENT OR SERVICE...................10
------------------------------------
6.11 EMPLOYMENT RIGHTS......................................10
-----------------
6.12 CERTAIN SUCCESSOR OPTIONS..............................10
-------------------------
6.13 EFFECT OF A CORPORATE TRANSACTION.....................10
---------------------------------
6.14 FORFEITURE BY ORDER OF REGULATORY AGENCY...............10
----------------------------------------
ARTICLE VII STOCK CERTIFICATES...................................11
ARTICLE VIII TERMINATION AND AMENDMENT...........................11
8.2 EFFECT ON GRANTEE'S RIGHTS.............................11
--------------------------
ARTICLE IX RELATIONSHIP TO OTHER COMPENSATION PLANS..............12
i
<PAGE>
ARTICLE X MISCELLANEOUS..........................................12
EXHIBIT A to FIRST NATIONAL BANCSHARES, INC. 2000 STOCK INCENTIVE PLAN - Form of
Stock Option Agreement
ii
<PAGE>
FIRST NATIONAL BANCSHARES, INC.
2000 STOCK INCENTIVE PLAN
ARTICLE I
DEFINITIONS
As used herein, the following terms have the following meanings unless
the context clearly indicates to the contrary:
"Board" shall mean the Board of Directors of the Company.
"Cause" (i) with respect to the Company or any subsidiary which employs
the recipient of an Option (the "recipient") or for which such recipient
primarily performs services, the commission by the recipient of an act of fraud,
embezzlement, theft or proven dishonesty, or any other illegal act or practice
(whether or not resulting in criminal prosecution or conviction), or any act or
practice which the Committee shall, in good faith, deem to have resulted in the
recipient's becoming unbondable under the Company's or the subsidiary's fidelity
bond; (ii) the willful engaging by the recipient in misconduct which is deemed
by the Committee, in good faith, to be materially injurious to the Company or
any subsidiary, monetarily or otherwise, including, but not limited, improperly
disclosing trade secrets or other confidential or sensitive business information
and data about the Company or any subsidiaries and competing with the Company or
its subsidiaries, or soliciting employees, consultants or customers of the
Company in violation of law or any employment or other agreement to which the
recipient is a party; or (iii) the willful and continued failure or habitual
neglect by the recipient to perform his or her duties with the Company or the
subsidiary substantially in accordance with the operating and personnel policies
and procedures of the Company or the subsidiary generally applicable to all
their employees. For purposes of this Plan, no act or failure to act by the
recipient shall be deemed be "willful" unless done or omitted to be done by
recipient not in good faith and without reasonable belief that the recipient's
action or omission was in the best interest of the Company and/or the
subsidiary. Notwithstanding the foregoing, if the recipient has entered into an
employment agreement that is binding as of the date of employment termination,
and if such employment agreement defines "Cause," then the definition of "Cause"
in such agreement shall apply to the recipient in this Plan. "Cause" under
either (i), (ii) or (iii) shall be determined by the Committee.
"Code" shall mean the United States Internal Revenue Code of 1986,
including effective date and transition rules (whether or not codified). Any
reference herein to a specific section of the Code shall be deemed to include a
reference to any corresponding provision of future law.
"Committee" shall mean a committee of at least two Directors appointed
from time to time by the Board, having the duties and authority set forth herein
in addition to any other authority granted by the Board. In selecting the
Committee, the Board shall consider (i) the benefits under Section 162(m) of the
Code of having a Committee composed of "outside directors" (as that term is
defined in the Code) for certain grants of Options to highly compensated
executives, and (ii) the benefits under Rule 16b-3 of having a Committee
composed of either the entire Board or a Committee of at least two Directors who
are Non-Employee Directors for Options granted to or held by any Section 16
Insider. At any time that the Board shall not have appointed a committee as
described above, any reference herein to the Committee shall mean the Board.
"Company" shall mean First National Bancshares, Inc., a South Carolina
corporation.
"Corporate Transaction" shall mean the occurrence of any of the
following events:
<PAGE>
(i) a merger or consolidation in which securities
possessing more than 50% of the total combined voting
power of the Company's outstanding securities are
transferred to a person or persons different from the
persons holding those securities immediately prior to
such transaction;
(ii) the sale, transfer or other disposition of all or
substantially all of the Company's assets in complete
liquidation or dissolution of the Company; or
(iii) the grant of any bank regulatory approval (or notice
of no disapproval) for permission to acquire control
of the Company or any of its banking subsidiaries.
"Director" shall mean a member of the Board and any person who is an
advisory or honorary director of the Company if such person is considered a
director for the purposes of Section 16 of the Exchange Act, as determined by
reference to such Section 16 and to the rules, regulations, judicial decisions,
and interpretative or "no-action" positions with respect thereto of the
Securities and Exchange Commission, as the same may be in effect or set forth
from time to time.
"Employee" shall mean a person who constitutes an employee of the
Company as such term is defined in the instructions to the Form S-8 Registration
Statement under the Securities Act of 1933, and also includes non-employees to
whom an offer of employment has been extended.
"Exchange Act" shall mean the Securities Exchange Act of 1934. Any
reference herein to a specific section of the Exchange Act shall be deemed to
include a reference to any corresponding provision of future law.
"Exercise Price" shall mean the price at which an Optionee may purchase
a share of Stock under a Stock Option Agreement.
"Fair Market Value" on any date shall mean (i) the closing sales price
of the Stock, regular way, on such date on the national securities exchange
having the greatest volume of trading in the Stock during the thirty-day period
preceding the day the value is to be determined or, if such exchange was not
open for trading on such date, the next preceding date on which it was open;
(ii) if the Stock is not traded on any national securities exchange, the average
of the closing high bid and low asked prices of the Stock on the
over-the-counter market on the day such value is to be determined, or in the
absence of closing bids on such day, the closing bids on the next preceding day
on which there were bids; or (iii) if the Stock also is not traded on the
over-the-counter market, the fair market value as determined in good faith by
the Board or the Committee based on such relevant facts as may be available to
the Board, which may include opinions of independent experts, the price at which
recent sales have been made, the book value of the Stock, and the Company's
current and future earnings.
"Incentive Stock Option" shall mean an option to purchase any stock of
the Company, which complies with and is subject to the terms, limitations and
conditions of Section 422 of the Code and any regulations promulgated with
respect thereto.
"Non-Employee Director" shall have the meaning set forth in Rule 16b-3
under the Exchange Act, as the same may be in effect from time to time, or in
any successor rule thereto, and shall be determined for all purposes under the
Plan according to interpretative or "no-action" positions with respect thereto
issued by the Securities and Exchange Commission.
2
<PAGE>
"Officer" shall mean a person who constitutes an officer of the Company
for the purposes of Section 16 of the Exchange Act, as determined by reference
to such Section 16 and to the rules, regulations, judicial decisions, and
interpretative or "no-action" positions with respect thereto of the Securities
and Exchange Commission, as the same may be in effect or set forth from time to
time.
"Option" shall mean an option, whether or not an Incentive Stock
Option, to purchase Stock granted pursuant to the provisions of Article VI
hereof.
"Optionee" shall mean a person to whom an Option has been granted
hereunder.
"Parent" shall mean any corporation (other than the Company or a
Subsidiary) in an unbroken chain of corporations ending with the Company if, at
the time of the grant (or modification) of the Option, each of the corporations
other than the Company or a Subsidiary owns stock possessing 50% or more of the
total combined voting power of the classes of stock in one of the other
corporations in such chain.
"Permanent and Total Disability" shall have the same meaning as given
to that term by Code Section 22(e)(3) and any regulations or rulings promulgated
thereunder.
"Plan" shall mean the First National Bancshares, Inc. 2000 Stock
Incentive Plan, the terms of which are set forth herein.
"Purchasable" shall refer to Stock which may be purchased by an
Optionee under the terms of this Plan on or after a certain date specified in
the applicable Stock Option Agreement.
"Qualified Domestic Relations Order" shall have the meaning set forth
in the Code or in the Employee Retirement Income Security Act of 1974, or the
rules and regulations promulgated under the Code or such Act.
"Reload Option" shall have the meaning set forth in Section 6.8 hereof.
"Section 16 Insider" shall mean any person who is subject to the
provisions of Section 16 of the Exchange Act, as provided in Rule 16a-2
promulgated pursuant to the Exchange Act.
"Stock" shall mean the Common Stock, par value $0.01 per share, of the
Company or, in the event that the outstanding shares of Stock are hereafter
changed into or exchanged for shares of a different stock or securities of the
Company or some other entity, such other stock or securities.
"Stock Option Agreement" shall mean an agreement between the Company
and an Optionee under which the Optionee may purchase Stock hereunder, a sample
form of which is attached hereto as Exhibit A (which form may be varied by the
Committee in granting an Option).
"Subsidiary" shall mean any corporation (other than the Company) in an
unbroken chain of corporations beginning with the Company if, at the time of the
grant (or modification) of the Option, each of the corporations other than the
last corporation in the unbroken chain owns stock possessing 50% or more of the
total combined voting power of all classes of stock in one of the other
corporations in such chain.
3
<PAGE>
ARTICLE II
THE PLAN
2.1 Name. This Plan shall be known as "First National Bancshares, Inc.
2000 Stock Incentive Plan."
2.2 Purpose. The purpose of the Plan is to advance the interests of the
Company, its Subsidiaries, and its shareholders by affording Employees and
Directors of the Company and its Subsidiaries an opportunity to acquire or
increase their proprietary interests in the Company. The objective of the
issuance of the Options is to promote the growth and profitability of the
Company and its Subsidiaries because the Optionees will be provided with an
additional incentive to achieve the Company's objectives through participation
in its success and growth and by encouraging their continued association with or
service to the Company.
2.3 Effective Date. The Plan shall become effective on March 6, 2000;
provided, however, that if the shareholders of the Company have not approved the
Plan on or prior to the first anniversary of such effective date, then all
options granted under the Plan shall be non-incentive Stock Options. If, at the
time of any amendment to the Plan, shareholder approval is required by the Code
for Incentive Stock Options and such shareholder approval has not been obtained
(or is not obtained within 12 months thereof), any Incentive Stock Options
issued under the Plan shall automatically become options which do not qualify as
Incentive Stock Options.
ARTICLE III
PARTICIPANTS
The class of persons eligible to participate in the Plan shall consist
of all Directors and Employees of the Company or any Subsidiary.
ARTICLE IV
ADMINISTRATION
4.1 Duties and Powers of the Committee. The Plan shall be administered
by the Committee. The Committee shall select one of its members as its Chairman
and shall hold its meetings at such times and places as it may determine. The
Committee shall keep minutes of its meetings and shall make such rules and
regulations for the conduct of its business as it may deem necessary. The
Committee shall have the power to act by unanimous written consent in lieu of a
meeting, and to meet telephonically. In administering the Plan, the Committee's
actions and determinations shall be binding on all interested parties. The
Committee shall have the power to grant Options in accordance with the
provisions of the Plan and may grant Options singly, in combination, or in
tandem. Subject to the provisions of the Plan, the Committee shall have the
discretion and authority to determine those individuals to whom Options will be
granted and whether such Options shall be accompanied by the right to receive
Reload Options, the number of shares of Stock subject to each Option, such other
matters as are specified herein, and any other terms and conditions of a Stock
Option Agreement. The Committee shall also have the discretion and authority to
delegate to any Officer its power to grant Options under the Plan to Employees,
but not to Employees who are Officers or Directors. To the extent not
inconsistent with the provisions of the Plan, the Committee may give an Optionee
an election to surrender an Option in exchange for the grant of a new Option,
and shall have the authority to amend or modify an outstanding Stock Option
Agreement, or to waive any provision thereof, provided that the Optionee
consents to such action.
4
<PAGE>
4.2 Interpretation; Rules. Subject to the express provisions of the
Plan, the Committee also shall have complete authority to interpret the Plan, to
prescribe, amend, and rescind rules and regulations relating to it, to determine
the details and provisions of each Stock Option Agreement, and to make all other
determinations necessary or advisable for the administration of the Plan,
including, without limitation, the amending or altering of the Plan and any
Options granted hereunder as may be required to comply with or to conform to any
federal, state, or local laws or regulations. If an option granted under the
Plan is intended to be an Incentive Stock Option but does not qualify as an
Incentive Stock Option for any reason, then the option granted shall remain
valid but shall be a non-Incentive Stock Option.
4.3 No Liability. Neither any member of the Board nor any member of the
Committee shall be liable to any person for any act or determination made in
good faith with respect to the Plan or any Option granted hereunder.
4.4 Majority Rule. A majority of the members of the Committee shall
constitute a quorum, and any action taken by a majority at a meeting at which a
quorum is present, or any action taken without a meeting evidenced by a writing
executed by all the members of the Committee, shall constitute the action of the
Committee.
4.5 Company Assistance. The Company shall supply full and timely
information to the Committee on all matters relating to eligible persons, their
employment, death, retirement, disability, or other termination of employment,
and such other pertinent facts as the Committee may require. The Company shall
furnish the Committee with such clerical and other assistance as is necessary in
the performance of its duties.
ARTICLE V
SHARES OF STOCK SUBJECT TO PLAN
5.1 Limitations. The maximum number of shares that may be issued
hereunder shall initially be 180,000 and thereafter shall automatically be
increased each time the Company issues additional shares of Stock so that the
total number of shares issuable hereunder shall at all times equal 15% of the
then outstanding shares of Stock, unless in any case the Board of Directors
adopts a resolution providing that the number of shares issuable under this Plan
shall not be so increased. Notwithstanding the above, the total number of shares
of Stock issuable pursuant to Incentive Stock Options may not be increased to
more than 180,000 (other than pursuant to antidilution adjustments) without
shareholder approval. In addition, the number of shares that may be issued
hereunder shall be subject to any antidilution adjustment pursuant to the
provisions of Section 5.2 hereof. Any or all shares of Stock subject to the Plan
may be issued in any combination of Incentive Stock Options or non-Incentive
Stock Options. Shares subject to an Option may be either authorized and unissued
shares or shares issued and later acquired by the Company. The shares covered by
any unexercised portion of an Option that has terminated for any reason (except
as set forth in the following paragraph) may again be optioned under the Plan,
and such shares shall not be considered as having been optioned or issued in
computing the number of shares of Stock remaining available for option
hereunder.
If Options are issued in respect of options to acquire stock of any
entity acquired, by merger or otherwise, by the Company (or any Subsidiary of
the Company), to the extent that such issuance shall not be inconsistent with
the terms, limitations and conditions of Code section 422 or Rule 16b-3 under
the Exchange Act, the aggregate number of shares of Stock for which Options may
be granted hereunder shall automatically be increased by the number of shares
subject to the Options so issued; provided, however, that the aggregate number
of shares of Stock for which Options may be granted hereunder shall
automatically be decreased by the number of shares covered by any unexercised
portion of an Option so issued that has terminated for any reason, and the
shares subject to any such unexercised portion may not be optioned to any other
person.
5
<PAGE>
5.2 Antidilution.
(a) If (x) the outstanding shares of Stock are changed into or
exchanged for a different number or kind of shares or other securities of the
Company by reason of merger, consolidation, reorganization, recapitalization,
reclassification, combination or exchange of shares, or stock split or stock
dividend, (y) any spin-off, spin-out or other distribution of assets materially
affects the price of the Company's stock, or (z) there is any assumption and
conversion to the Plan by the Company of an acquired company's outstanding
option grants, then:
(i) the aggregate number and kind of shares of Stock
for which Options may be granted hereunder shall be adjusted
proportionately by the Committee; and
(ii) the rights of Optionees (concerning the number
of shares subject to Options and the Exercise Price) under
outstanding Options shall be adjusted proportionately by the
Committee.
(b) If the Company shall be a party to any reorganization in
which it does not survive, involving merger, consolidation, or acquisition of
the stock or substantially all the assets of the Company, the Committee, in its
sole discretion, may (but is not required to):
(i) notwithstanding other provisions hereof, declare
that all Options granted under the Plan shall become
exercisable immediately notwithstanding the provisions of the
respective Stock Option Agreements regarding exercisability,
that all such Options shall terminate 30 days after the
Committee gives written notice of the immediate right to
exercise all such Options and of the decision to terminate all
Options not exercised within such 30-day period; and/or
(ii) notify all Optionees that all Options granted
under the Plan shall be assumed by the successor corporation
or substituted on an equitable basis with options issued by
such successor corporation.
(c) If the Company is to be liquidated or dissolved in
connection with a reorganization described in Section 5.2(b), the provisions of
such Section shall apply. In all other instances, the adoption of a plan of
dissolution or liquidation of the Company shall, notwithstanding other
provisions hereof, cause every Option outstanding under the Plan to terminate to
the extent not exercised prior to the adoption of the plan of dissolution or
liquidation by the shareholders, provided that, notwithstanding other provisions
hereof, the Committee may declare all Options granted under the Plan to be
exercisable at any time on or before the fifth business day following such
adoption notwithstanding the provisions of the respective Stock Option
Agreements regarding exercisability.
(d) The adjustments described in paragraphs (a) through (c) of
this Section 5.2, and the manner of their application, shall be determined
solely by the Committee, and any such adjustment may provide for the elimination
of fractional share interests; provided, however, that any adjustment made by
the Board or the Committee shall be made in a manner that will not cause an
Incentive Stock Option to be other than an Incentive Stock Option under
applicable statutory and regulatory provisions.
6
<PAGE>
The adjustments required under this Article V shall apply to any successors of
the Company and shall be made regardless of the number or type of successive
events requiring such adjustments.
ARTICLE VI
OPTIONS
6.1 Types of Options Granted. The Committee may, under this Plan, grant
either Incentive Stock Options or Options which do not qualify as Incentive
Stock Options. Within the limitations provided in this Plan, both types of
Options may be granted to the same person at the same time, or at different
times, under different terms and conditions, as long as the terms and conditions
of each Option are consistent with the provisions of the Plan. Without
limitation of the foregoing, Options may be granted subject to conditions based
on the financial performance of the Company or any other factor the Committee
deems relevant.
6.2 Option Grant and Agreement. Each Option granted hereunder shall be
evidenced by minutes of a meeting or the written consent of the Committee and by
a written Stock Option Agreement executed by the Company and the Optionee. The
terms of the Option, including the Option's duration, time or times of exercise,
exercise price, whether the Option is intended to be an Incentive Stock Option,
and whether the Option is to be accompanied by the right to receive a Reload
Option, shall be stated in the Stock Option Agreement. In structuring the terms
of each Option, the Committee shall follow the guidelines set forth in the FDIC
statement of policy relating to applications for deposit insurance, including
that the terms should encourage each Optionee to remain involved in the Company
and/or its Subsidiaries, such as by having a vesting period of equal percentages
each year over the initial three years following the grant of the Option and a
requirement that the Option be exercised or expire within a reasonable time
after termination as an active officer, employee, or director. No Incentive
Stock Option may be granted more than ten years after the earlier to occur of
the effective date of the Plan or the date the Plan is approved by the Company's
shareholders. Separate Stock Option Agreements may be used for Options intended
to be Incentive Stock Options and those not so intended, but any failure to use
such separate agreements shall not invalidate, or otherwise adversely affect the
Optionee's interest in, the Options evidenced thereby.
6.3 Optionee Limitations. The Committee shall not grant an Incentive
Stock Option to any person who, at the time the Incentive Stock Option is
granted:
(a) is not an employee of the Company or any of its
Subsidiaries (as the term "employee" is defined by the Code); or
(b) owns or is considered to own stock possessing at least 10%
of the total combined voting power of all classes of stock of the Company or any
of its Parent or Subsidiary corporations; provided, however, that this
limitation shall not apply if at the time an Incentive Stock Option is granted
the Exercise Price is at least 110% of the Fair Market Value of the Stock
subject to such Option and such Option by its terms would not be exercisable
after five years from the date on which the Option is granted. For the purpose
of this subsection (b), a person shall be considered to own: (i) the stock
owned, directly or indirectly, by or for his or her brothers and sisters
(whether by whole or half blood), spouse, ancestors and lineal descendants; (ii)
the stock owned, directly or indirectly, by or for a corporation, partnership,
estate, or trust in proportion to such person's stock interest, partnership
interest or beneficial interest therein; and (iii) the stock which such person
may purchase under any outstanding options of the Company or of any Parent or
Subsidiary.
<PAGE>
6.4 $100,000 Limitation. Except as provided below, the Committee shall
not grant an Incentive Stock Option to, or modify the exercise provisions of
outstanding Incentive Stock Options held by, any person who, at the time the
Incentive Stock Option is granted (or modified), would thereby receive or hold
any Incentive Stock Options of the Company and any Parent or Subsidiary, such
that the aggregate Fair Market Value (determined as of the respective dates of
grant or modification of each option) of the stock with respect to which such
Incentive Stock Options are exercisable for the first time during any calendar
year is in excess of $100,000 (or such other limit as may be prescribed by the
Code from time to time); provided that the foregoing restriction on modification
of outstanding Incentive Stock Options shall not preclude the Committee from
modifying an outstanding Incentive Stock Option if, as a result of such
modification and with the consent of the Optionee, such Option no longer
constitutes an Incentive Stock Option; and provided that, if the $100,000
limitation (or such other limitation prescribed by the Code) described in this
Section 6.4 is exceeded, the Incentive Stock Option, the granting or
modification of which resulted in the exceeding of such limit, shall be treated
as an Incentive Stock Option up to the limitation and the excess shall be
treated as an Option not qualifying as an Incentive Stock Option.
6.5 Exercise Price. The Exercise Price of the Stock subject to each
Option shall be determined by the Committee. Subject to the provisions of
Section 6.3(b) hereof, the Exercise Price of an Option shall not be less than
the Fair Market Value of the Stock as of the date the Option is granted (or in
the case of an Incentive Stock Option that is subsequently modified, on the date
of such modification).
6.6 Exercise Period. The period for the exercise of each Option granted
hereunder shall be determined by the Committee, but the Stock Option Agreement
with respect to each Option shall provide that such Option shall not be
exercisable after ten years from the date of grant (or modification) of the
Option.
6.7 Option Exercise.
(a) Unless otherwise provided in the Stock Option Agreement or
Section 6.6 hereof, an Option may be exercised at any time or from time to time
during the term of the Option as to any or all full shares which have become
Purchasable under the provisions of the Option, but not at any time as to less
than 100 shares unless the remaining shares that have become so Purchasable are
less than 100 shares. The Committee shall have the authority to prescribe in any
Stock Option Agreement that the Option may be exercised only in accordance with
a vesting schedule during the term of the Option.
(b) An Option shall be exercised by (i) delivery to the
Company at its principal office a written notice of exercise with respect to a
specified number of shares of Stock and (ii) payment to the Company at that
office of the full amount of the Exercise Price for such number of shares in
accordance with Section 6.7(c). If requested by an Optionee, an Option may be
exercised with the involvement of a stockbroker in accordance with the federal
margin rules set forth in Regulation T (in which case the certificates
representing the underlying shares will be delivered by the Company directly to
the stockbroker).
(c) The Exercise Price is to be paid in full in cash upon the
exercise of the Option and the Company shall not be required to deliver
certificates for the shares purchased until such payment has been made;
provided, however, that in lieu of cash, in the Company's discretion all or any
portion of the Exercise Price may be paid by tendering to the Company shares of
Stock duly endorsed for transfer and owned by the Optionee, or by authorization
to the Company to withhold shares of
8
<PAGE>
Stock otherwise issuable upon exercise of the Option, in each case to be
credited against the Exercise Price at the Fair Market Value of such shares on
the date of exercise (however, no fractional shares may be so transferred, and
the Company shall not be obligated to make any cash payments in consideration of
any excess of the aggregate Fair Market Value of shares transferred over the
aggregate Exercise Price); provided further, that the Board may provide in a
Stock Option Agreement (or may otherwise determine in its sole discretion at the
time of exercise) that, in lieu of cash or shares, all or a portion of the
Exercise Price may be paid by the Optionee's execution of a recourse note equal
to the Exercise Price or relevant portion thereof, subject to compliance with
applicable state and federal laws, rules and regulations. Notwithstanding the
above, the Company shall not be obligated to accept tender of shares of Stock as
payment of the Exercise Price if doing so would result in a charge to the
Company's earnings for financial reporting purposes.
(d) In addition to and at the time of payment of the Exercise
Price, the Optionee shall pay to the Company in cash the full amount of any
federal, state, and local income, employment, or other withholding taxes
applicable to the taxable income of such Optionee resulting from such exercise;
provided, however, that in the discretion of the Committee any Stock Option
Agreement may provide that all or any portion of such tax obligations, together
with additional taxes not exceeding the actual additional taxes to be owed by
the Optionee as a result of such exercise, may, upon the irrevocable election of
the Optionee, be paid by tendering to the Company whole shares of Stock duly
endorsed for transfer and owned by the Optionee, or by authorization to the
Company to withhold shares of Stock otherwise issuable upon exercise of the
Option, in either case in that number of shares having a Fair Market Value on
the date of exercise equal to the amount of such taxes thereby being paid, and
subject to such restrictions as to the approval and timing of any such election
as the Committee may from time to time determine to be necessary or appropriate
to satisfy the conditions of the exemption set forth in Rule 16b-3 under the
Exchange Act, if such rule is applicable.
(e) The holder of an Option shall not have any of the rights
of a shareholder with respect to the shares of Stock subject to the Option until
such shares have been issued and transferred to the Optionee upon the exercise
of the Option.
6.8 Reload Options.
(a) The Committee may specify in a Stock Option Agreement (or
may otherwise determine in its sole discretion) that a Reload Option shall be
granted, without further action of the Committee, (i) to an Optionee who
exercises an Option (including a Reload Option) by surrendering shares of Stock
in payment of amounts specified in Sections 6.7(c) or 6.7(d) hereof, (ii) for
the same number of shares as are surrendered to pay such amounts, (iii) as of
the date of such payment and at an Exercise Price equal to the Fair Market Value
of the Stock on such date, and (iv) otherwise on the same terms and conditions
as the Option whose exercise has occasioned such payment, except as provided
below and subject to such other contingencies, conditions, or other terms as the
Committee shall specify at the time such exercised Option is granted; provided,
that the Committee may require that the shares surrendered in payment as
provided above must have been held by the Optionee for at least six months prior
to such surrender.
(b) Unless provided otherwise in the Stock Option Agreement, a
Reload Option may not be exercised by an Optionee (i) prior to the end of a
one-year period from the date that the Reload Option is granted, and (ii) unless
the Optionee retains beneficial ownership of the shares of Stock issued to such
Optionee upon exercise of the Option referred to above in Section 6.8(a)(i) for
a period of one year from the date of such exercise.
8
<PAGE>
6.9 Nontransferability of Option. Other than as provided below, no
Option shall be transferable by an Optionee other than by will or the laws of
descent and distribution or, in the case of non-Incentive Stock Options,
pursuant to a Qualified Domestic Relations Order, and, during the lifetime of an
Optionee, Options shall be exercisable only by such Optionee (or by such
Optionee's guardian or legal representative, should one be appointed). However,
a Non-Incentive Stock Option may, in connection with the Optionee's estate plan,
be assigned in whole or in part during Optionee's lifetime to one or more
members of the Optionee's immediate family or to a trust established for the
exclusive benefit of one or more such family members. The assigned portion shall
be exercisable only by the person or persons who acquire a proprietary interest
in the Option pursuant to such assignment. The terms applicable to the assigned
portion shall be the same as those in effect for this Option immediately prior
to such assignment and shall be set forth in such documents issued to the
assignee as the Committee may deem appropriate.
6.10 Termination of Employment or Service. The Committee shall have the
power to specify the effect upon an Optionee's right to exercise an Option upon
termination of such Optionee's employment or service under various
circumstances, which effect may include immediate or deferred termination of
such Optionee's rights under an Option, or acceleration of the date at which an
Option may be exercised in full. Unless a Stock Option Agreement specifically
provides otherwise, in the event the recipient of an Option is terminated from
his or her employment or other service to the Company or its subsidiaries for
Cause, Options, whether vested or unvested, granted to such person shall
terminate immediately and shall not thereafter be exercisable.
6.11 Employment Rights. Nothing in the Plan or in any Stock Option
Agreement shall confer on any person any right to continue in the employ of the
Company or any of its Subsidiaries, or shall interfere in any way with the right
of the Company or any of its Subsidiaries to terminate such person's employment
at any time.
6.12 Certain Successor Options. To the extent not inconsistent with the
terms, limitations and conditions of Code section 422 and any regulations
promulgated with respect thereto, an Option issued in respect of an option held
by an employee to acquire stock of any entity acquired, by merger or otherwise,
by the Company (or any Subsidiary of the Company) may contain terms that differ
from those stated in this Article VI, but solely to the extent necessary to
preserve for any such employee the rights and benefits contained in such
predecessor option, or to satisfy the requirements of Code section 424(a).
6.13 Effect of a Corporate Transaction. All Options, to the extent
outstanding at the time of a Corporate Transaction but not otherwise fully
exercisable, shall automatically accelerate so that the Options shall,
immediately prior to the effective date of the Corporate Transaction, become
exercisable for all shares at the time subject to such Options and may be
exercised for any or all of those shares as fully vested shares of Stock.
6.14 Forfeiture by Order of Regulatory Agency. If the Company's or any
of its financial institution Subsidiaries' capital falls below the minimum
requirements contained in 12 CFR 3 or below a higher requirement as determined
by the Company's or such Subsidiary's primary bank regulatory agency, such
agency may direct the Company to require Optionees to exercise or forfeit some
or all of their Options. All options granted under this Plan are subject to the
terms of any such directive.
10
<PAGE>
ARTICLE VII
STOCK CERTIFICATES
The Company shall not be required to issue or deliver any certificate
for shares of Stock purchased upon the exercise of any Option granted hereunder
or any portion thereof prior to fulfillment of all of the following conditions:
(a) The admission of such shares to listing on all stock exchanges
on which the Stock is then listed;
(b) The completion of any registration or other qualification of such
shares which the Committee shall deem necessary or advisable under any federal
or state law or under the rulings or regulations of the Securities and Exchange
Commission or any other governmental regulatory body;
(c) The obtaining of any approval or other clearance from any federal
or state governmental agency or body which the Committee shall determine to be
necessary or advisable; and
(d) The lapse of such reasonable period of time following the exercise
of the Option as the Board from time to time may establish for reasons of
administrative convenience.
Stock certificates issued and delivered to Optionees shall bear such
restrictive legends as the Company shall deem necessary or advisable pursuant to
applicable federal and state securities laws. The inability of the Company to
obtain approval from any regulatory body having authority deemed by the Company
to be necessary to the lawful issuance and sale of any Stock pursuant to Options
shall relieve the Company of any liability with respect to the non-issuance or
sale of the Stock as to which such approval shall not have been obtained.
However, the Company shall use its best efforts to obtain all such approvals.
ARTICLE VIII
TERMINATION AND AMENDMENT
8.1 Termination and Amendment. The Board may at any time terminate the
Plan; provided, however, that the Board (unless its actions are approved or
ratified by the shareholders of the Company within twelve months of the date
that the Board amends the Plan) may not amend the Plan to:
(a) Increase the total number of shares of Stock issuable
pursuant to Incentive Stock Options under the Plan, except as contemplated in
Section 5.2 hereof; or
(b) Change the class of employees eligible to receive
Incentive Stock Options that may participate in the Plan.
8.2 Effect on Optionee's Rights. No termination, amendment, or
modification of the Plan shall affect adversely a Optionee's rights under a
Stock Option Agreement without the consent of the Optionee or his legal
representative.
11
<PAGE>
ARTICLE IX
RELATIONSHIP TO OTHER COMPENSATION PLANS
The adoption of the Plan shall not affect any other stock option,
incentive, or other compensation plans in effect for the Company or any of its
Subsidiaries; nor shall the adoption of the Plan preclude the Company or any of
its Subsidiaries from establishing any other form of incentive or other
compensation plan for employees or Directors of the Company or any of its
Subsidiaries.
ARTICLE X
MISCELLANEOUS
10.1 Replacement or Amended Grants. At the sole discretion of the
Committee, and subject to the terms of the Plan, the Committee may modify
outstanding Options or accept the surrender of outstanding Options and grant new
Options in substitution for them. However no modification of an Option shall
adversely affect a Optionee's rights under a Stock Option Agreement without the
consent of the Optionee or his legal representative.
10.2 Forfeiture for Competition. If a Optionee provides services to a
competitor of the Company or any of its Subsidiaries, whether as an employee,
officer, director, independent contractor, consultant, agent, or otherwise, such
services being of a nature that can reasonably be expected to involve the skills
and experience used or developed by the Optionee while an Employee, then that
Optionee's rights under any Options outstanding hereunder shall be forfeited and
terminated subject in each case to a determination to the contrary by the
Committee.
10.3 Leave of Absence. Unless provided otherwise in a particular Stock
Option Agreement, the following provisions shall apply upon an Optionee's
commencement of an authorized leave of absence:
(a) The exercise schedule in effect for such Option shall be frozen as
of the first day of the authorized leave, and the Option shall not become
exercisable for any additional installments of shares of Stock during the period
Optionee remains on such leave.
(b) Should the Optionee resume active Employee status within 60 days
after the start date of the authorized leave, Optionee shall, for purposes of
the applicable exercise schedule, receive service credit for the entire period
of such leave. If the Optionee does not resume active Employee status within
such 60-day period, then no service credit shall be given for the entire period
of such leave.
(c) If the Option is an Incentive Stock Option, then the following
additional provision shall apply:
If the leave of absence continues for more than three
months, then the Option shall automatically convert to a Non-Incentive
Stock Option under the Federal tax laws upon the expiration of such
three-month period, unless the Optionee's reemployment rights are
guaranteed by statute or written agreement. Following any such
conversion of the Option, all subsequent exercises of the Option,
whether effected before or after Optionee's return to active Employee
status, shall result in an immediate taxable event, and the Company
shall be required to collect from Optionee the Federal, state and local
income and employment withholding taxes applicable to such exercise.
12
<PAGE>
(d) In no event shall the Option become exercisable for any additional
shares or otherwise remain outstanding if Optionee does not resume Employee
status prior to the Expiration Date of the option term.
10.4 Plan Binding on Successors. The Plan shall be binding upon the
successors and assigns of the Company.
10.5 Headings, etc., No Part of Plan. Headings of Articles and Sections
hereof are inserted for convenience and reference; they do not constitute part
of the Plan.
10.6 Section 16 Compliance. With respect to Section 16 Insiders,
transactions under this Plan are intended to comply with all applicable
conditions of Rule 16b-3 or its successors under the Exchange Act. To the extent
any provision of the Plan or action by the Committee fails to so comply, it
shall be deemed void to the extent permitted by law and deemed advisable by the
Committee. In addition, if necessary to comply with Rule 16b-3 with respect to
any grant of an Option hereunder, and in addition to any other vesting or
holding period specified hereunder or in an applicable Stock Option Agreement,
any Section 16 Insider acquiring an Option shall be required to hold either the
Option or the underlying shares of Stock obtained upon exercise of the Option
for a minimum of six months.
IN WITNESS WHEREOF, the Company has caused this Plan to be executed as
of March 6, 2000, in accordance with the authority provided by the Board of
Directors.
FIRST NATIONAL BANCSHARES, INC.
By: /s/ Jerry Calvert
--------------------------------
Name: Jerry Calvert
Title: President
<PAGE>
EXHIBIT A
to
FIRST NATIONAL BANCSHARES, INC.
2000 STOCK INCENTIVE PLAN
Form of Employee of Stock Option Agreement
FIRST NATIONAL BANCSHARES, INC.
STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT (this "Agreement") is entered into as of
this ___ day of February, 2000, between First National Bancshares, Inc., a South
Carolina corporation (the "Company"), and __________ (the "Optionee").
WHEREAS, on February __, 2000, the Board of Directors of the Company
adopted a Stock Incentive Plan known as the "First National Bancshares, Inc.
2000 Stock Incentive Plan" (the "Stock Incentive Plan"), and recommended that
the Plan be approved by the Company's shareholders; and
WHEREAS, the Committee has granted the Optionee a stock option to
purchase the number of shares of the Company's common stock as set forth below,
and in consideration of the granting of that stock option the Optionee intends
to remain in the employ of the Company; and
WHEREAS, the Company considers it desirable and in its best interest
that the Optionee be provided an inducement to acquire an ownership interest in
the Company and an additional incentive to advance the interest of the Company
through the grant of an option to purchase shares of common stock of the Company
pursuant to the Stock Incentive Plan; and
WHEREAS, the Company and the Optionee desire to enter into a written
agreement with respect to such option in accordance with the Stock Incentive
Plan.
NOW, THEREFORE, as an employment incentive and to encourage stock
ownership, and also in consideration of the mutual covenants contained herein,
the Company and the Optionee agree as follows.
1. Incorporation of Stock Incentive Plan. This option is granted pursuant to the
provisions of the Stock Incentive Plan and the terms and definitions of the
Stock Incentive Plan are incorporated herein by reference and made a part
hereof. A copy of the Stock Incentive Plan has been delivered to, and receipt is
hereby acknowledged by, the Optionee.
2. Grant of Option. Subject to the provisions stated in this Agreement, the
Company hereby evidences its grant to the Optionee, not in lieu of salary or
other compensation, of the right and option (the "Option") to purchase the
number of shares of the Company's Common Stock, par value $0.01 per share (the
"Stock"), set forth below, exercisable in the amounts and at the time specified
below. This Option is intended to be an Incentive Stock Option, as defined in
the Internal Revenue Code.
Number of Shares: .*****
Exercise Price: $ *** per share
<PAGE>
Option Vesting Schedule: Options are exercisable
with respect the shares of Stock as follows,
subject in each case to continued employment
by the Company or a subsidiary of the
Company through such date, and subject to
the provisions of Section 7 of this
Agreement:
No. of Shares Vesting Date
***** _________ __, 2001
***** _________ __, 2002
***** _________ __, 2003
***** _________ __, 2004
***** _________ __, 2005
Option Exercise Period: All options expire and are void unless
exercised on or before
___________ ___, 2010.
3. Exercise Terms. The Optionee must exercise the Option for at least
the lesser of 100 shares or the number of shares of Purchasable Stock as to
which the Option remains unexercised. If this Option is not exercised with
respect to all or any part of the shares subject to this Option prior to its
expiration, the shares with respect to which this Option was not exercised shall
no longer be subject to this Option.
4. Restrictions on Transferability. No Option shall be transferable by
an Optionee other than by will or the laws of descent and distribution or
pursuant to a Qualified Domestic Relations Order. During the lifetime of an
Optionee, Options shall be exercisable only by such Optionee (or by such
Optionee's guardian or legal representative, should one be appointed). The
shares purchased pursuant to the exercise of an Incentive Stock Option shall not
be transferred by the Optionee except pursuant to the Optionee's will, or the
laws of descent and distribution, until such date which is the later of two
years after the grant of such Incentive Stock Option or one year after the
transfer of the shares to the Optionee pursuant to the exercise of such
Incentive Stock Option.
5. Notice of Exercise of Option. This Option may be exercised by the
Optionee, or by the Optionee's administrators, executors or personal
representatives, by a written notice (in substantially the form of the Notice of
Exercise attached hereto as Schedule A) signed by the Optionee, or by such
administrators, executors or personal representatives, and delivered or mailed
to the Company as specified in this Agreement to the attention of the President
or such other officer as the Company may designate. Any such notice shall (a)
specify the number of shares of Stock which the Optionee or the Optionee's
administrators, executors or personal representatives, as the case may be, then
elects to purchase hereunder, (b) contain such information as may be reasonably
required by the Company pursuant to this Agreement, and (c) be accompanied by
(i) a certified or cashier's check payable to the Company in payment of the
total Exercise Price applicable to such shares as provided herein, (ii) shares
of stock owned by the Optionee and duly endorsed or accompanied by stock
transfer powers having a Fair Market Value equal to the total Exercise Price
applicable to such Shares purchased hereunder, or
<PAGE>
(iii) a certified or cashier's check accompanied by the number of shares of
stock where Fair Market Value when added to the amount of the check equal the
total Exercise Price applicable to such shares purchased hereunder. Upon receipt
of any such notice and accompanying payment, and subject to the terms hereof,
the Company agrees to issue to the Optionee or the Optionee's administrators,
executors or personal representatives, as the case may be, stock certificates
for the number of shares specified in such notice registered in the name of the
person exercising this Option.
6. Adjustment in Option. The number of Shares subject to this Option,
the Exercise Price, and other matters are subject to adjustment during the term
of this Option in accordance with Section 5.2 of the Stock Incentive Plan.
7. Termination of Employment.
(a) In the event of the termination of the Optionee's employment with
the Company or any of its Subsidiaries, other than a termination that is either
(i) for Cause, (ii) voluntary on the part of the Optionee and without written
consent of the Company, or (iii) for reasons of death or disability or
retirement, the Optionee may exercise this Option at any time within 30 days
after such termination to the extent of the number of shares which were
Purchasable hereunder at the date of such termination.
(b) In the event of a termination of the Optionee's employment that is
either (i) for Cause or (ii) voluntary on the part of the Optionee and without
the written consent of the Company, this Option, to the extent not previously
exercised, shall terminate immediately and shall not thereafter be or become
exercisable.
(c) In the event of the retirement of the Optionee at the normal
retirement date as prescribed from time to time by the Company or any
Subsidiary, the Optionee shall continue to have the right to exercise any
Options for shares which were Purchasable at the date of the Optionee's
retirement provided that, on the date which is three months after the date of
retirement, the Options will become void and unexercisable unless on the date of
retirement the Optionee enters into a noncompete agreement with the Company and
continues to comply with such noncompete agreement. This Option does not confer
upon the Optionee any right with respect to continuance of employment by the
Company or by any of its Subsidiaries. This Option shall not be affected by any
change of employment so long as the Optionee continues to be an employee of the
Company or one of its Subsidiaries.
(d) In the event of termination of employment because of the Optionee's
Permanent and Total Disability, the Optionee (or his or her personal
representative) may exercise this Option, within a period ending on the earlier
of (a) the last day of the one year period following the Optionee's Permanent
and Total Disability or (b) the expiration date of this Option, to the extent of
the number of shares which were Purchasable hereunder at the date of such
termination.
(e) In the event of the Optionee's death while employed by the Company
or any of its Subsidiaries or within three months after a termination of such
employment (if such termination was neither (i) for Cause nor (ii) voluntary on
the part of the Optionee and without the written consent of the Company), the
appropriate persons described in Section 5 hereof or persons to whom all or a
portion of this Option is transferred in accordance with Section 4 hereof may
exercise this Option at any time within a period ending on the earlier of (a)
the last day of the one year period following the Optionee's death or (b) the
expiration date of this Option. If the Optionee was an employee of the Company
at the time of death, this Option may be so exercised to the extent of the
number of shares that were Purchasable hereunder at the date of death. If the
Optionee's employment terminated prior to his or her death, this Option may be
exercised only to the extent of the number of shares covered by
<PAGE>
this Option which were Purchasable hereunder at the date of such termination.
8. Compliance with Regulatory Matters. The Optionee acknowledges that
the issuance of capital stock of the Company is subject to limitations imposed
by federal and state law and the Optionee hereby agrees that the Company shall
not be obligated to issue any shares of Stock upon exercise of this Option that
would cause the Company to violate law or any rule, regulation, order or consent
decree of any regulatory authority (including without limitation the Securities
and Exchange Commission) having jurisdiction over the affairs of the Company.
The Optionee agrees that he or she will provide the Company with such
information as is reasonably requested by the Company or its counsel to
determine whether the issuance of Stock complies with the provisions described
by this Section 8.
9. Forfeiture. The purpose of the Stock Incentive Plan is to attract,
retain, and reward employees, to increase stock ownership and identification
with the Company's interests, and to provide incentive for remaining with and
enhancing the value of the Company over the long-term. Therefore, the Company
and the Optionee agree as follows:
(a) If, at any time within the later of (i) one year after
termination of the Optionee's employment or (ii) one year after the Optionee's
exercise of any portion of this Option, the Optionee engages in any activity
which constitutes a violation of any confidentiality, noncompetition,
nonsolicitation, or similar provision of any employment or other agreement
between the Company and the Optionee (or, if no agreement is in place between
the Company and the Optionee, any Company policies pertaining to such matters),
or if the Optionee engages in any activity which is inimical, contrary, or
harmful to the interests of the Company (including conduct related to the
Optionee's employment for which either criminal or civil penalties against the
Optionee may be sought or violation of the Company's policies, including the
Company's insider trading policy), then (1) this Option shall terminate
effective the date on which the Optionee enters into such activity, unless
terminating sooner by operation of another term or condition of this Option or
the Stock Incentive Plan, and (2) any Option Gain realized by the Optionee from
exercising all or a portion of this Option shall be paid by the Optionee to the
Company. "Option Gain" shall mean the gain represented by the mean market price
on the date of exercise over the Exercise Price, multiplied by the number of
shares purchased through exercise of the Option, without regard to any
subsequent market price decrease or increase. The forfeiture provisions
described in this Section shall apply even if the Company does not elect
otherwise to enforce the employment agreement or take other action against the
Optionee, but shall not apply if termination of the Optionee's employment with
the Company occurs in connection with or following a Corporate Transaction
involving the Company (as defined in the Stock Incentive Plan).
(b) By accepting this Agreement, the Optionee consents to a deduction
from any amounts the Company owes the Optionee from time to time (including
amounts owed as wages or other compensation, fringe benefits, or vacation pay),
to the extent of the amounts the Optionee owes the Company under this Section.
Whether or not the Company elects to make any set-off in whole or in part, if
the Company does not recover by means of set-off the full amount owed by the
Optionee to the Company, calculated as set forth above, the Optionee shall pay
immediately the unpaid balance to the Company. The Optionee hereby appoints the
Company as its attorney-in-fact to execute any documents or do any acts
necessary to exercise its rights under this Section.
(c) The Optionee may be released from its obligations under this
Section only if the Board of Directors (or its duly appointed agent) determines
in its sole discretion that such action is in the best interests of the Company.
<PAGE>
10. Miscellaneous.
(a) This Agreement shall be binding upon the parties hereto and their
representatives, successors and assigns.
(b) Unless the context clearly indicates to the contrary, all
capitalized terms used herein shall have the meanings as set forth in this
Agreement, or in the event a capitalized term is not clearly described in this
Agreement, the meanings as set forth in the First National Bancshares, Inc. 2000
Stock Incentive Plan dated February __, 2000.
(b) This Agreement is executed and delivered in, and shall be governed
by the laws of, the State of South Carolina .
(c) Any requests or notices to be given hereunder shall be deemed
given, and any elections or exercises to be made or accomplished shall be deemed
made or accomplished, upon actual delivery thereof to the designated recipient,
or three days after deposit thereof in the United States mail, registered,
return receipt requested and postage prepaid, addressed, if to the Optionee, at
the address set forth below and, if to the Company, to the executive offices of
the Company at 248 North Church Street (29306), Spartanburg, South Carolina
29304
(d) This Agreement may not be modified except in writing executed by
each of the parties hereto.
IN WITNESS WHEREOF, the Board of Directors of the Company has caused
this Stock Option Agreement to be executed on behalf of the Company and the
Company's seal to be affixed hereto and attested by the Secretary or an
Assistant Secretary of the Company, and the Optionee has executed this Stock
Option Agreement under seal, all as of the day and year first above written.
FIRST NATIONAL BANCSHARES, INC..
By: __________________________________
Name: Jerry Calvert
Title: President and Chief Executive
Officer
OPTIONEE
By: ________________________________
Name: *********
Address:______________________________
<PAGE>
SCHEDULE A
NOTICE OF EXERCISE
To exercise Stock Options, the Optionee should
complete this Schedule, execute it, and return it to the Company
The undersigned hereby notifies First National Bancshares, Inc. (the
"Company") of this election to exercise the undersigned's stock option to
purchase shares of the Company's common stock, par value $0.01 per share (the
"Common Stock"), pursuant to the Stock Option Agreement (the "Agreement")
between the undersigned and the Company dated _______________________________.
Accompanying this Notice is a check in the amount of $___________________
payable to the Company such amount being equal to the purchase price per share
set forth in the Agreement multiplied by the number of shares being purchased
hereby.
IN WITNESS WHEREOF, the undersigned has set his hand and seal, this
________ day of _________________, ---------.
OPTIONEE [OR OPTIONEE'S
ADMINISTRATOR,
EXECUTOR OR PERSONAL
REPRESENTATIVE]
Name:____________________________________
Print Name: _______________________________
<TABLE> <S> <C>
<ARTICLE> 9
<CIK> 0001095274
<NAME> First National Bancshares
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 295,359
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 10,450,000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 0
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 1,419,554
<ALLOWANCE> 14,196
<TOTAL-ASSETS> 13,248,377
<DEPOSITS> 1,661,359
<SHORT-TERM> 0
<LIABILITIES-OTHER> 35,544
<LONG-TERM> 0
0
0
<COMMON> 12,000
<OTHER-SE> 11,539,474
<TOTAL-LIABILITIES-AND-EQUITY> 13,248,377
<INTEREST-LOAN> 784
<INTEREST-INVEST> 126,897
<INTEREST-OTHER> 33,292
<INTEREST-TOTAL> 160,972
<INTEREST-DEPOSIT> 552
<INTEREST-EXPENSE> 7,033
<INTEREST-INCOME-NET> 153,939
<LOAN-LOSSES> 14,196
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 178,634
<INCOME-PRETAX> (38,891)
<INCOME-PRE-EXTRAORDINARY> (38,891)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (38,891)
<EPS-BASIC> (.03)
<EPS-DILUTED> (.03)
<YIELD-ACTUAL> 0
<LOANS-NON> 0
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 0
<CHARGE-OFFS> 0
<RECOVERIES> 0
<ALLOWANCE-CLOSE> 14,196
<ALLOWANCE-DOMESTIC> 14,196
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
