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STATE OF SOUTH
CAROLINA
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LOAN
AGREEMENT
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COUNTY OF
SPARTANBURG
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THIS
LOAN AGREEMENT (the “Agreement”), made this 28
th day of December, 2007, by and among NEXITY BANK,
a banking association with its principal office and place of
business at 1122 Lady Street, Suite 1000, Columbia, South Carolina
29201 (hereinafter called the “Lender”), and FIRST
NATIONAL BANCSHARES, INC., a South Carolina
corporation (hereinafter called the
“Borrower”).
W I T N E S S E T H:
THAT
THE LENDER AND THE BORROWER for consideration, the receipt and
adequacy of which is hereby acknowledged, covenant and agree as
follows:
Section
1. The
Loan. Subject to the terms and
conditions and relying upon the representations and warranties set
forth in this Agreement, the Lender agrees to make loans (each, a
“Loan” and, collectively, the “Loans”) to
the Borrower at any time and from time to time on or after the
Closing Date and to and including December 31, 2009 (the
“Draw Period”), in an aggregate principal amount not
exceeding at any time outstanding
$15,000,000.00. Subject to the provisions of this
Agreement, during the Draw Period, the Borrower may borrow, repay
and reborrow under this Section 1. On December 31, 2009,
the outstanding principal balance of all Loans shall be converted
to a term loan. The Loan by the Lender to the Borrower shall be
evidenced by the promissory note or notes of the Borrower (each, a
"Note" and collectively, the “Notes”), the terms of the
Notes being incorporated by reference, with interest on so much of
such sum as shall have been disbursed and remain
unpaid. To secure the payment of each Note and to secure
the performance of the Borrower’s covenants contained herein
and in the Commitment (as defined in Section 7 below), the Borrower
has given or will give the Lender a first priority stock pledge
agreement satisfactory to the Lender (the “Stock Pledge
Agreement”) covering the outstanding shares of common stock
(the “Stock”) of First National Bank of the South, a
national banking association and a wholly owned Subsidiary of the
Borrower (the "Bank"), and described in more detail in the Stock
Pledge Agreement and loan documents given to evidence or secure the
Loan or applicable portion thereof.
Section
2. Use
of Loan Proceeds. The proceeds of the
Loan are to be used to pay cash in exchange for certain shares of
common stock of Carolina National Corporation pursuant to the terms
of an Agreement providing for the merger of Carolina National
Corporation with and into the Borrower, with the Borrower surviving
the merger, all as further described in the filings made by the
Borrower with the Securities and Exchange Commission (the
"SEC").
Section
3. Warranties
of the Borrower; Conditions to Disbursement. Prior to
the disbursement of any portion of the Loan, the Lender must have
received, in addition to other requirements set forth in the
Commitment, confirmation of the following warranties from the
Borrower, such confirmation being a condition to
disbursement:
(a)
The Borrower is a corporation duly organized, validly existing, and
in good standing under the laws of the State of South Carolina and
is qualified to do business in all jurisdictions where such
qualification is necessary. The Borrower is registered
as a bank holding company with the Board of Governors of the
Federal Reserve System and the South Carolina Board of Financial
Institutions. The chief executive office of the Borrower
and the principal place of business of the Borrower where the
records of the Borrower are kept are located at 215 North Pine
Street, Spartanburg, South Carolina 29302.
(b)
The Bank is a national banking association duly organized, validly
existing, and in good standing pursuant to the laws of the United
States of America and subject to examination by the Office of the
Comptroller of the Currency. The Borrower owns all the
Stock (consisting of One Million One Hundred Thousand (1,100,000
shares) of the Bank and there are no other outstanding shares of
capital stock and no outstanding options, warrants or other rights
that can be converted into shares of capital stock of the
Bank. The Bank has all requisite corporate power and
authority and possesses all licenses, permits and authorizations
necessary for it to own its properties and conduct its business as
presently conducted.
(c)
Each financial statement of the Borrower or any Subsidiary, which
has been delivered to the Lender, presents fairly the financial
condition of the Borrower or such Subsidiary as of the date
indicated therein and the results of its operations for the periods
shown therein. There has been no material adverse
change, either existing or threatened, in the financial condition
or operations of the Borrower or any Subsidiary since the date of
the most recent financial statements delivered to the Lender or the
most recent SEC report filed with the SEC.
(d)
The Borrower has full power and authority to execute and perform
the Financing Documents. The execution, delivery, and
performance by the Borrower of the Financing Documents (i) have
been duly authorized by all requisite action by the Borrower, (ii)
do not violate any provision of law, and (iii) do not result in a
breach of or constitute a default under any agreement or other
instrument to which the Borrower or any Subsidiary is a party or
which the Borrower or any Subsidiary is bound. Each of
the Financing Documents constitutes the legal, valid, and binding
obligation of the Borrower enforceable in accordance with its
terms.
(e)
Except for the security interest created by this Agreement, the
Borrower owns the Stock free and clear of all liens, charges, and
encumbrances. The Stock is duly issued, fully paid and
non-assessable, and the Borrower has the unencumbered right to
pledge the Stock.
(f)
There is no action, arbitration, or other proceeding at law or in
equity, or by or before any court, agency, or arbitrator, nor is
there any judgment, order, or other decree pending, anticipated, or
threatened against the Borrower or any Subsidiary or against any of
their properties or assets which might have a material adverse
effect on the Borrower, any Subsidiary, or their respective
properties or assets, or which might call into question the
validity or enforceability of the Financing Documents, or which
might involve the alleged violation by the Borrower or any
Subsidiary of any law, rule or regulation.
(g)
No consent or other authorization or filing with or of any
governmental authority or other public body on the part of the
Borrower or any Subsidiary is required in connection with the
Borrower's execution, delivery, or performance of the Financing
Documents; or if required, all such prerequisites have been fully
satisfied.
(h)
None of the transactions contemplated in this Agreement (including,
without limitation, the use of the proceeds of the Loan) will
violate or result in a violation of Section 7 of the Securities
Exchange Act of 1934, or any regulations issued pursuant
thereto.
(i)
The following are attached as exhibits hereto: true, correct and
complete copies of (i) the Borrower's articles of incorporation as
in effect as of the date hereof (as certified by the South Carolina
Secretary of State on December 27, 2007); (ii) the Bank's charter
as in effect as of the date hereof (as certified by the Office of
the Comptroller of the Currency on December 27, 2007); (iii)
certificate of existence for the Borrower issued by the South
Carolina Secretary of State on December 27, 2007; (iv) the bylaws
of the Borrower in effect immediately prior to the adoption of the
resolutions referred to below (and such bylaws have not been
further altered or amended and have been in full force and effect
at all times since the adoption of such resolutions through the
date hereof); (v) the bylaws of the Bank as of the date hereof;
(vi) resolutions (the "Resolutions") of the Board of Directors of
the Borrower adopted at a duly called meeting on December 17,
2007. The Resolutions are now in full force and effect
and have not been modified in any respect. There have
been no further amendments or other documents affecting or altering
the Borrower's or the Bank's articles of incorporation since the
date of the certifications referred to above through the date
hereof, and the Borrower and the Bank have remained in valid
existence under the laws of the State of South Carolina since such
dates.
Section
4. Covenants
of the Borrower. The Borrower hereby covenants and agrees with the
Lender as follows:
Affirmative Covenants:
(a)
The Borrower shall promptly furnish to the
Lender: (i) not later than 120 days after the end
of each fiscal year, audited consolidated financial statements of
the Borrower prepared in accordance with accounting principles
generally accepted in the Un
