EXHIBIT 10.2

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GUARANTEE AGREEMENT

by and between

FIRST NATIONAL BANCSHARES, INC.

and

WILMINGTON TRUST COMPANY

Dated as of March 30, 2006

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GUARANTEE AGREEMENT

                    This GUARANTEE AGREEMENT (this “Guarantee”), dated as of
March 30, 2006, is executed and delivered by First National Bancshares, Inc., a
South Carolina corporation (the “Guarantor”), and Wilmington Trust Company, a
Delaware banking corporation, as trustee (the “Guarantee Trustee”), for the
benefit of the Holders (as defined herein) from time to time of the Capital
Securities (as defined herein) of FNSC Statutory Trust III, a Delaware statutory
trust (the “Issuer”).

                    WHEREAS, pursuant to an Amended and Restated Declaration of
Trust (the “Declaration”), dated as of the date hereof among Wilmington Trust
Company, not in its individual capacity but solely as institutional trustee, the
administrators of the Issuer named therein, the Guarantor, as sponsor, and the
holders from time to time of undivided beneficial interests in the assets of the
Issuer, the Issuer is issuing on the date hereof those undivided beneficial
interests, having an aggregate liquidation amount of $7,000,000.00 (the “Capital
Securities”); and

          WHEREAS, as incentive for the Holders to purchase the Capital
Securities, the Guarantor desires irrevocably and unconditionally to agree, to
the extent set forth in this Guarantee, to pay to the Holders of Capital
Securities the Guarantee Payments (as defined herein) and to make certain other
payments on the terms and conditions set forth herein;

          NOW, THEREFORE, in consideration of the purchase by each Holder of the
Capital Securities, which purchase the Guarantor hereby agrees shall benefit the
Guarantor, the Guarantor executes and delivers this Guarantee for the benefit of
the Holders.

ARTICLE I

DEFINITIONS AND INTERPRETATION

          Section 1.1.          Definitions and Interpretation.  In this
Guarantee, unless the context otherwise requires:

          (a)          capitalized terms used in this Guarantee but not defined
in the preamble above have the respective meanings assigned to them in this
Section 1.1;

          (b)          a term defined anywhere in this Guarantee has the same
meaning throughout;

          (c)          all references to “the Guarantee” or “this Guarantee” are
to this Guarantee as modified, supplemented or amended from time to time;

          (d)          all references in this Guarantee to “Articles” or
“Sections” are to Articles or Sections of this Guarantee, unless otherwise
specified;

          (e)          terms defined in the Declaration as at the date of
execution of this Guarantee have the same meanings when used in this Guarantee,
unless otherwise defined in this Guarantee or unless the context otherwise
requires; and

          (f)          a reference to the singular includes the plural and vice
versa.

          “Affiliate” has the same meaning as given to that term in Rule 405 of
the Securities Act of 1933, as amended, or any successor rule thereunder.

          “Beneficiaries” means any Person to whom the Issuer is or hereafter
becomes indebted or liable.

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          “Capital Securities” has the meaning set forth in the recitals to this
Guarantee.

          “Common Securities” means the common securities issued by the Issuer
to the Guarantor pursuant to the Declaration.

          “Corporate Trust Office” means the office of the Guarantee Trustee at
which the corporate trust business of the Guarantee Trustee shall, at any
particular time, be principally administered, which office at the date of
execution of this Guarantee is located at Rodney Square North, 1100 North Market
Street, Wilmington, Delaware  19890-1600, Attention:  Corporate Trust
Administration.

          “Covered Person” means any Holder of Capital Securities.

          “Debentures” means the debt securities of the Guarantor designated the
Floating Rate Junior Subordinated Deferrable Interest Debentures due 2036 held
by the Institutional Trustee (as defined in the Declaration) of the Issuer.

          “Declaration Event of Default” means an “Event of Default” as defined
in the Declaration.

          “Event of Default” has the meaning set forth in Section 2.4(a).

          “Guarantee Payments” means the following payments or distributions,
without duplication, with respect to the Capital Securities, to the extent not
paid or made by the Issuer:  (i) any accrued and unpaid Distributions (as
defined in the Declaration) which are required to be paid on such Capital
Securities to the extent the Issuer shall have funds available therefor,
(ii) the Redemption Price to the extent the Issuer has funds available therefor,
with respect to any Capital Securities called for redemption by the Issuer,
(iii) the Special Redemption Price to the extent the Issuer has funds available
therefor, with respect to Capital Securities redeemed upon the occurrence of a
Special Event, and (iv) upon a voluntary or involuntary liquidation,
dissolution, winding-up or termination of the Issuer (other than in connection
with the distribution of Debentures to the Holders of the Capital Securities in
exchange therefor as provided in the Declaration), the lesser of (a) the
aggregate of the liquidation amount and all accrued and unpaid Distributions on
the Capital Securities to the date of payment, to the extent the Issuer shall
have funds available therefor, and (b) the amount of assets of the Issuer
remaining available for distribution to Holders in liquidation of the Issuer (in
either case, the “Liquidation Distribution”).

          “Guarantee Trustee” means Wilmington Trust Company, until a Successor
Guarantee Trustee has been appointed and has accepted such appointment pursuant
to the terms of this Guarantee and thereafter means each such Successor
Guarantee Trustee.

          “Guarantor” means First National Bancshares, Inc. and each of its
successors and assigns.

          “Holder” means any holder, as registered on the books and records of
the Issuer, of any Capital Securities; provided, however, that, in determining
whether the Holders of the requisite percentage of Capital Securities have given
any request, notice, consent or waiver hereunder, “Holder” shall not include the
Guarantor or any Affiliate of the Guarantor.

          “Indemnified Person” means the Guarantee Trustee, any Affiliate of the
Guarantee Trustee, or any officers, directors, shareholders, members, partners,
employees, representatives, nominees, custodians or agents of the Guarantee
Trustee.

          “Indenture” means the Indenture dated as of the date hereof between
the Guarantor and Wilmington Trust Company, not in its individual capacity but
solely as trustee, and any indenture supplemental thereto pursuant to which the
Debentures are to be issued to the institutional trustee of the Issuer.

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          “Issuer” has the meaning set forth in the opening paragraph to this
Guarantee.

          “Liquidation Distribution” has the meaning set forth in the definition
of “Guarantee Payments” herein.

           “Majority in liquidation amount of the Capital Securities” means
Holder(s) of outstanding Capital Securities, voting together as a class, but
separately from the holders of Common Securities, of more than 50% of the
aggregate liquidation amount (including the stated amount that would be paid on
redemption, liquidation or otherwise, plus accrued and unpaid Distributions to
the date upon which the voting percentages are determined) of all Capital
Securities then outstanding.

          “Obligations” means any costs, expenses or liabilities (but not
including liabilities related to taxes) of the Issuer other than obligations of
the Issuer to pay to holders of any Trust Securities the amounts due such
holders pursuant to the terms of the Trust Securities.

          “Officer’s Certificate” means, with respect to any Person, a
certificate signed by one Authorized Officer of such Person. Any Officer’s
Certificate delivered with respect to compliance with a condition or covenant
provided for in this Guarantee shall include:

 

          (a)          a statement that the officer signing the Officer’s
Certificate has read the covenant or condition and the definitions relating
thereto;

 

 

 

          (b)          a brief statement of the nature and scope of the
examination or investigation undertaken by the officer in rendering the
Officer’s Certificate;

 

 

 

          (c)          a statement that the officer has made such examination or
investigation as, in such officer’s opinion, is necessary to enable such officer
to express an informed opinion as to whether or not such covenant or condition
has been complied with; and

 

 

 

          (d)          a statement as to whether, in the opinion of the officer,
such condition or covenant has been complied with.

          “Person” means a legal person, including any individual, corporation,
estate, partnership, joint venture, association, joint stock company, limited
liability company, trust, unincorporated association, or government or any
agency or political subdivision thereof, or any other entity of whatever nature.

          “Redemption Price” has the meaning set forth in the Indenture.

          “Responsible Officer” means, with respect to the Guarantee Trustee,
any officer within the Corporate Trust Office of the Guarantee Trustee including
any Vice President, Assistant Vice President, Secretary, Assistant Secretary or
any other officer of the Guarantee Trustee customarily performing functions
similar to those performed by any of the above designated officers and also,
with respect to a particular corporate trust matter, any other officer to whom
such matter is referred because of that officer’s knowledge of and familiarity
with the particular subject.

          “Special Event” has the meaning set forth in the Indenture.

          “Special Redemption Price” has the meaning set forth in the Indenture.

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          “Successor Guarantee Trustee” means a successor Guarantee Trustee
possessing the qualifications to act as Guarantee Trustee under Section 3.1.

          “Trust Securities” means the Common Securities and the Capital
Securities.

ARTICLE II

POWERS, DUTIES AND RIGHTS OF
GUARANTEE TRUSTEE

          Section 2.1.          Powers and Duties of the Guarantee Trustee.

          (a)          This Guarantee shall be held by the Guarantee Trustee for
the benefit of the Holders of the Capital Securities, and the Guarantee Trustee
shall not transfer this Guarantee to any Person except a Holder of Capital
Securities exercising his or her rights pursuant to Section 4.4(b) or to a
Successor Guarantee Trustee on acceptance by such Successor Guarantee Trustee of
its appointment to act as Successor Guarantee Trustee.  The right, title and
interest of the Guarantee Trustee shall automatically vest in any Successor
Guarantee Trustee, and such vesting and cessation of title shall be effective
whether or not conveyancing documents have been executed and delivered pursuant
to the appointment of such Successor Guarantee Trustee.

          (b)          If an Event of Default actually known to a Responsible
Officer of the Guarantee Trustee has occurred and is continuing, the Guarantee
Trustee shall enforce this Guarantee for the benefit of the Holders of the
Capital Securities.

          (c)          The Guarantee Trustee, before the occurrence of any Event
of Default and after curing all Events of Default that may have occurred, shall
undertake to perform only such duties as are specifically set forth in this
Guarantee, and no implied covenants shall be read into this Guarantee against
the Guarantee Trustee.  In case an Event of Default has occurred (that has not
been waived pursuant to Section 2.4) and is actually known to a Responsible
Officer of the Guarantee Trustee, the Guarantee Trustee shall exercise such of
the rights and powers vested in it by this Guarantee, and use the same degree of
care and skill in its exercise thereof, as a prudent person would exercise or
use under the circumstances in the conduct of his or her own affairs.

          (d)          No provision of this Guarantee shall be construed to
relieve the Guarantee Trustee from liability for its own negligent action, its
own negligent failure to act, or its own willful misconduct, except that:

 

               (i)          prior to the occurrence of any Event of Default and
after the curing or waiving of all such Events of Default that may have
occurred:

 

 

 

 

               (A)          the duties and obligations of the Guarantee Trustee
shall be determined solely by the express provisions of this Guarantee, and the
Guarantee Trustee shall not be liable except for the performance of such duties
and obligations as are specifically set forth in this Guarantee, and no implied
covenants or obligations shall be read into this Guarantee against the Guarantee
Trustee; and

 

 

 

 

 

               (B)          in the absence of bad faith on the part of the
Guarantee Trustee, the Guarantee Trustee may conclusively rely, as to the truth
of the statements and the correctness of the opinions expressed therein, upon
any certificates or opinions furnished to the Guarantee Trustee and conforming
to the requirements of this Guarantee; but in the case of any such certificates
or opinions that by any provision hereof are specifically required to be
furnished to the Guarantee Trustee, the Guarantee Trustee shall be under a duty
to examine the same to determine whether or not they conform to the requirements
of this Guarantee;

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               (ii)          the Guarantee Trustee shall not be liable for any
error of judgment made in good faith by a Responsible Officer of the Guarantee
Trustee, unless it shall be proved that such Responsible Officer of the
Guarantee Trustee or the Guarantee Trustee was negligent in ascertaining the
pertinent facts upon which such judgment was made;

 

 

 

 

               (iii)          the Guarantee Trustee shall not be liable with
respect to any action taken or omitted to be taken by it in good faith in
accordance with the written direction of the Holders of not less than a Majority
in liquidation amount of the Capital Securities relating to the time, method and
place of conducting any proceeding for any remedy available to the Guarantee
Trustee, or relating to the exercise of any trust or power conferred upon the
Guarantee Trustee under this Guarantee; and

 

 

 

               (iv)          no provision of this Guarantee shall require the
Guarantee Trustee to expend or risk its own funds or otherwise incur personal
financial liability in the performance of any of its duties or in the exercise
of any of its rights or powers, if the Guarantee Trustee shall have reasonable
grounds for believing that the repayment of such funds is not reasonably assured
to it under the terms of this Guarantee or security and indemnity, reasonably
satisfactory to the Guarantee Trustee, against such risk or liability is not
reasonably assured to it.

          Section 2.2.          Certain Rights of Guarantee Trustee.

          (a)          Subject to the provisions of Section 2.1:

 

               (i)          The Guarantee Trustee may conclusively rely, and
shall be fully protected in acting or refraining from acting upon, any
resolution, certificate, statement, instrument, opinion, report, notice,
request, direction, consent, order, bond, debenture, note, other evidence of
indebtedness or other paper or document believed by it to be genuine and to have
been signed, sent or presented by the proper party or parties.

 

 

 

               (ii)          Any direction or act of the Guarantor contemplated
by this Guarantee shall be sufficiently evidenced by an Officer’s Certificate.

 

 

 

               (iii)          Whenever, in the administration of this Guarantee,
the Guarantee Trustee shall deem it desirable that a matter be proved or
established before taking, suffering or omitting any action hereunder, the
Guarantee Trustee (unless other evidence is herein specifically prescribed) may,
in the absence of bad faith on its part, request and conclusively rely upon an
Officer’s Certificate of the Guarantor which, upon receipt of such request,
shall be promptly delivered by the Guarantor.

 

 

 

               (iv)          The Guarantee Trustee shall have no duty to see to
any recording, filing or registration of any instrument (or any re-recording,
refiling or re-registration thereof).

 

 

 

               (v)          The Guarantee Trustee may consult with counsel of
its selection, and the advice or opinion of such counsel with respect to legal
matters shall be full and complete authorization and protection in respect of
any action taken, suffered or omitted by it hereunder in good faith and in
accordance with such advice or opinion. Such counsel may be counsel to the
Guarantor or any of its Affiliates and may include any of its employees.  The
Guarantee Trustee shall have the right at any time to seek instructions
concerning the administration of this Guarantee from any court of competent
jurisdiction.

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               (vi)          The Guarantee Trustee shall be under no obligation
to exercise any of the rights or powers vested in it by this Guarantee at the
request or direction of any Holder, unless such Holder shall have provided to
the Guarantee Trustee such security and indemnity, reasonably satisfactory to
the Guarantee Trustee, against the costs, expenses (including attorneys’ fees
and expenses and the expenses of the Guarantee Trustee’s agents, nominees or
custodians) and liabilities that might be incurred by it in complying with such
request or direction, including such reasonable advances as may be requested by
the Guarantee Trustee; provided, however, that nothing contained in this Section
2.2(a)(vi) shall relieve the Guarantee Trustee, upon the occurrence of an Event
of Default, of its obligation to exercise the rights and powers vested in it by
this Guarantee.

 

 

 

               (vii)          The Guarantee Trustee shall not be bound to make
any investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request, direction,
consent, order, bond, debenture, note, other evidence of indebtedness or other
paper or document, but the Guarantee Trustee, in its discretion, may make such
further inquiry or investigation into such facts or matters as it may see fit.

 

 

 

               (viii)          The Guarantee Trustee may execute any of the
trusts or powers hereunder or perform any duties hereunder either directly or by
or through agents, nominees, custodians or attorneys, and the Guarantee Trustee
shall not be responsible for any misconduct or negligence on the part of any
agent or attorney appointed with due care by it hereunder.

 

 

 

               (ix)          Any action taken by the Guarantee Trustee or its
agents hereunder shall bind the Holders of the Capital Securities, and the
signature of the Guarantee Trustee or its agents alone shall be sufficient and
effective to perform any such action.  No third party shall be required to
inquire as to the authority of the Guarantee Trustee to so act or as to its
compliance with any of the terms and provisions of this Guarantee, both of which
shall be conclusively evidenced by the Guarantee Trustee’s or its agent’s taking
such action.

 

 

 

               (x)          Whenever in the administration of this Guarantee the
Guarantee Trustee shall deem it desirable to receive instructions with respect
to enforcing any remedy or right or taking any other action hereunder, the
Guarantee Trustee (i) may request instructions from the Holders of a Majority in
liquidation amount of the Capital Securities, (ii) may refrain from enforcing
such remedy or right or taking such other action until such instructions are
received, and (iii) shall be protected in conclusively relying on or acting in
accordance with such instructions.

 

 

 

               (xi)          The Guarantee Trustee shall not be liable for any
action taken, suffered, or omitted to be taken by it in good faith, without
negligence, and reasonably believed by it to be authorized or within the
discretion or rights or powers conferred upon it by this Guarantee.

          (b)          No provision of this Guarantee shall be deemed to impose
any duty or obligation on the Guarantee Trustee to perform any act or acts or
exercise any right, power, duty or obligation conferred or imposed on it, in any
jurisdiction in which it shall be illegal or in which the Guarantee Trustee
shall be unqualified or incompetent in accordance with applicable law to perform
any such act or acts or to exercise any such right, power, duty or obligation. 
No permissive power or authority available to the Guarantee Trustee shall be
construed to be a duty.

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          Section 2.3.          Not Responsible for Recitals or Issuance of
Guarantee.  The recitals contained in this Guarantee shall be taken as the
statements of the Guarantor, and the Guarantee Trustee does not assume any
responsibility for their correctness.  The Guarantee Trustee makes no
representation as to the validity or sufficiency of this Guarantee.

          Section 2.4.          Events of Default; Waiver.

          (a)          An Event of Default under this Guarantee will occur upon
the failure of the Guarantor to perform any of its payment or other obligations
hereunder.

          (b)          The Holders of a Majority in liquidation amount of the
Capital Securities may, voting or consenting as a class, on behalf of the
Holders of all of the Capital Securities, waive any past Event of Default and
its consequences.  Upon such waiver, any such Event of Default shall cease to
exist, and shall be deemed to have been cured, for every purpose of this
Guarantee, but no such waiver shall extend to any subsequent or other default or
Event of Default or impair any right consequent thereon.

          Section 2.5.          Events of Default; Notice.

          (a)          The Guarantee Trustee shall, within 90 days after the
occurrence of an Event of Default, transmit by mail, first class postage
prepaid, to the Holders of the Capital Securities and the Guarantor, notices of
all Events of Default actually known to a Responsible Officer of the Guarantee
Trustee, unless such defaults have been cured before the giving of such notice,
provided, however, that the Guarantee Trustee shall be protected in withholding
such notice if and so long as a Responsible Officer of the Guarantee Trustee in
good faith determines that the withholding of such notice is in the interests of
the Holders of the Capital Securities.

          (b)          The Guarantee Trustee shall not be deemed to have
knowledge of any Event of Default unless the Guarantee Trustee shall have
received written notice from the Guarantor or a Holder of the Capital Securities
(except in the case of a payment default), or a Responsible Officer of the
Guarantee Trustee charged with the administration of this Guarantee shall have
obtained actual knowledge thereof.

ARTICLE III

GUARANTEE TRUSTEE

          Section 3.1.          Guarantee Trustee; Eligibility.

          (a)          There shall at all times be a Guarantee Trustee which
shall:

 

               (i)          not be an Affiliate of the Guarantor, and

 

 

 

               (ii)          be a corporation organized and doing business under
the laws of the United States of America or any State or Territory thereof or of
the District of Columbia, or Person authorized under such laws to exercise
corporate trust powers, having a combined capital and surplus of at least
50 million U.S. dollars ($50,000,000), and subject to supervision or examination
by Federal, State, Territorial or District of Columbia authority.  If such
corporation publishes reports of condition at least annually, pursuant to law or
to the requirements of the supervising or examining authority referred to above,
then, for the purposes of this Section 3.1(a)(ii), the combined capital and
surplus of such corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published.

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          (b)          If at any time the Guarantee Trustee shall cease to be
eligible to so act under Section 3.1(a), the Guarantee Trustee shall immediately
resign in the manner and with the effect set out in Section 3.2(c).

          (c)          If the Guarantee Trustee has or shall acquire any
“conflicting interest” within the meaning of Section 310(b) of the Trust
Indenture Act, the Guarantee Trustee shall either eliminate such interest or
resign to the extent and in the manner provided by, and subject to this
Guarantee.

          Section 3.2.          Appointment, Removal and Resignation of
Guarantee Trustee.

          (a)          Subject to Section 3.2(b), the Guarantee Trustee may be
appointed or removed without cause at any time by the Guarantor except during an
Event of Default.

          (b)          The Guarantee Trustee shall not be removed in accordance
with Section 3.2(a) until a Successor Guarantee Trustee has been appointed and
has accepted such appointment by written instrument executed by such Successor
Guarantee Trustee and delivered to the Guarantor.

          (c)          The Guarantee Trustee appointed to office shall hold
office until a Successor Guarantee Trustee shall have been appointed or until
its removal or resignation.  The Guarantee Trustee may resign from office
(without need for prior or subsequent accounting) by an instrument in writing
executed by the Guarantee Trustee and delivered to the Guarantor, which
resignation shall not take effect until a Successor Guarantee Trustee has been
appointed and has accepted such appointment by an instrument in writing executed
by such Successor Guarantee Trustee and delivered to the Guarantor and the
resigning Guarantee Trustee.

          (d)          If no Successor Guarantee Trustee shall have been
appointed and accepted appointment as provided in this Section 3.2 within
60 days after delivery of an instrument of removal or resignation, the Guarantee
Trustee resigning or being removed may petition any court of competent
jurisdiction for appointment of a Successor Guarantee Trustee.  Such court may
thereupon, after prescribing such notice, if any, as it may deem proper, appoint
a Successor Guarantee Trustee.

          (e)          No Guarantee Trustee shall be liable for the acts or
omissions to act of any Successor Guarantee Trustee.

          (f)          Upon termination of this Guarantee or removal or
resignation of the Guarantee Trustee pursuant to this Section 3.2, the Guarantor
shall pay to the Guarantee Trustee all amounts owing to the Guarantee Trustee
under Sections 7.2 and 7.3 accrued to the date of such termination, removal or
resignation.

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ARTICLE IV

GUARANTEE

          Section 4.1.          Guarantee.

          (a)          The Guarantor irrevocably and unconditionally agrees to
pay in full to the Holders the Guarantee Payments (without duplication of
amounts theretofore paid by the Issuer), as and when due, regardless of any
defense (except the defense of payment by the Issuer), right of set-off or
counterclaim that the Issuer may have or assert.  The Guarantor’s obligation to
make a Guarantee Payment may be satisfied by direct payment of the required
amounts by the Guarantor to the Holders or by causing the Issuer to pay such
amounts to the Holders.

          (b)          The Guarantor hereby also agrees to assume any and all
Obligations of the Issuer and in the event any such Obligation is not so
assumed, subject to the terms and conditions hereof, the Guarantor hereby
irrevocably and unconditionally guarantees to each Beneficiary the full payment,
when and as due, of any and all Obligations to such Beneficiaries.  This
Guarantee is intended to be for the benefit of, and to be enforceable by, all
such Beneficiaries, whether or not such Beneficiaries have received notice
hereof.

          Section 4.2.          Waiver of Notice and Demand.  The Guarantor
hereby waives notice of acceptance of this Guarantee and of any liability to
which it applies or may apply, presentment, demand for payment, any right to
require a proceeding first against the Issuer or any other Person before
proceeding against the Guarantor, protest, notice of nonpayment, notice of
dishonor, notice of redemption and all other notices and demands.

          Section 4.3.          Obligations Not Affected.  The obligations,
covenants, agreements and duties of the Guarantor under this Guarantee shall in
no way be affected or impaired by reason of the happening from time to time of
any of the following:

          (a)          the release or waiver, by operation of law or otherwise,
of the performance or observance by the Issuer of any express or implied
agreement, covenant, term or condition relating to the Capital Securities to be
performed or observed by the Issuer;

          (b)          the extension of time for the payment by the Issuer of
all or any portion of the Distributions, Redemption Price, Special Redemption
Price, Liquidation Distribution or any other sums payable under the terms of the
Capital Securities or the extension of time for the performance of any other
obligation under, arising out of or in connection with, the Capital Securities
(other than an extension of time for payment of Distributions, Redemption Price,
Special Redemption Price, Liquidation Distribution or other sum payable that
results from the extension of any interest payment period on the Debentures or
any extension of the maturity date of the Debentures permitted by the
Indenture);

          (c)          any failure, omission, delay or lack of diligence on the
part of the Holders to enforce, assert or exercise any right, privilege, power
or remedy conferred on the Holders pursuant to the terms of the Capital
Securities, or any action on the part of the Issuer granting indulgence or
extension of any kind;

          (d)          the voluntary or involuntary liquidation, dissolution,
sale of any collateral, receivership, insolvency, bankruptcy, assignment for the
benefit of creditors, reorganization, arrangement, composition or readjustment
of debt of, or other similar proceedings affecting, the Issuer or any of the
assets of the Issuer;

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          (e)          any invalidity of, or defect or deficiency in, the
Capital Securities;

          (f)          the settlement or compromise of any obligation guaranteed
hereby or hereby incurred; or

          (g)          any other circumstance whatsoever that might otherwise
constitute a legal or equitable discharge or defense of a guarantor, it being
the intent of this Section 4.3 that the obligations of the Guarantor hereunder
shall be absolute and unconditional under any and all circumstances.

          There shall be no obligation of the Holders to give notice to, or
obtain consent of, the Guarantor with respect to the happening of any of the
foregoing.

          Section 4.4.          Rights of Holders.

          (a)          The Holders of a Majority in liquidation amount of the
Capital Securities have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Guarantee Trustee in
respect of this Guarantee or to direct the exercise of any trust or power
conferred upon the Guarantee Trustee under this Guarantee; provided, however,
that (subject to Section 2.1) the Guarantee Trustee shall have the right to
decline to follow any such direction if the Guarantee Trustee being advised by
counsel determines that the action or proceeding so directed may not lawfully be
taken or if the Guarantee Trustee in good faith by its board of directors or
trustees, executive committees or a trust committee of directors or trustees
and/or Responsible Officers shall determine that the action or proceedings so
directed would involve the Guarantee Trustee in personal liability.

          (b)          Any Holder of Capital Securities may institute a legal
proceeding directly against the Guarantor to enforce the Guarantee Trustee’s
rights under this Guarantee, without first instituting a legal proceeding
against the Issuer, the Guarantee Trustee or any other Person.  The Guarantor
waives any right or remedy to require that any such action be brought first
against the Issuer, the Guarantee Trustee or any other Person before so
proceeding directly against the Guarantor.

          Section 4.5.          Guarantee of Payment.  This Guarantee creates a
guarantee of payment and not of collection.

          Section 4.6.          Subrogation.  The Guarantor shall be subrogated
to all (if any) rights of the Holders of Capital Securities against the Issuer
in respect of any amounts paid to such Holders by the Guarantor under this
Guarantee; provided, however, that the Guarantor shall not (except to the extent
required by mandatory provisions of law) be entitled to enforce or exercise any
right that it may acquire by way of subrogation or any indemnity, reimbursement
or other agreement, in all cases as a result of payment under this Guarantee,
if, after giving effect to any such payment, any amounts are due and unpaid
under this Guarantee.  If any amount shall be paid to the Guarantor in violation
of the preceding sentence, the Guarantor agrees to hold such amount in trust for
the Holders and to pay over such amount to the Holders.

          Section 4.7.          Independent Obligations.  The Guarantor
acknowledges that its obligations hereunder are independent of the obligations
of the Issuer with respect to the Capital Securities and that the Guarantor
shall be liable as principal and as debtor hereunder to make Guarantee Payments
pursuant to the terms of this Guarantee notwithstanding the occurrence of any
event referred to in subsections (a) through (g), inclusive, of Section 4.3
hereof.

          Section 4.8.          Enforcement by a Beneficiary.  A Beneficiary may
enforce the obligations of the Guarantor contained in Section 4.1(b) directly
against the Guarantor and the Guarantor waives any right or remedy to require
that any action be brought against the Issuer or any other person or entity

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before proceeding against the Guarantor.  The Guarantor shall be subrogated to
all rights (if any) of any Beneficiary against the Issuer in respect of any
amounts paid to the Beneficiaries by the Guarantor under this Guarantee;
provided, however, that the Guarantor shall not (except to the extent required
by mandatory provisions of law) be entitled to enforce or exercise any rights
that it may acquire by way of subrogation or any indemnity, reimbursement or
other agreement, in all cases as a result of payment under this Guarantee, if at
the time of any such payment, and after giving effect to such payment, any
amounts are due and unpaid under this Guarantee.

ARTICLE V

LIMITATION OF TRANSACTIONS; SUBORDINATION

          Section 5.1.          Limitation of Transactions.  So long as any
Capital Securities remain outstanding, if (a) there shall have occurred and be
continuing an Event of Default or a Declaration Event of Default or (b) the
Guarantor shall have selected an Extension Period as provided in the Declaration
and such period, or any extension thereof, shall have commenced and be
continuing, then the Guarantor shall not and shall not permit any Affiliate to
(x) declare or pay any dividends or distributions on, or redeem, purchase,
acquire, or make a liquidation payment with respect to, any of the Guarantor’s
or such Affiliate’s capital stock (other than payments of dividends or
distributions to the Guarantor) or make any guarantee payments with respect to
the foregoing or (y) make any payment of principal of or interest or premium, if
any, on or repay, repurchase or redeem any debt securities of the Guarantor or
any Affiliate that rank pari passu in all respects with or junior in interest to
the Debentures (other than, with respect to clauses (x) and (y) above,
(i) repurchases, redemptions or other acquisitions of shares of capital stock of
the Guarantor in connection with any employment contract, benefit plan or other
similar arrangement with or for the benefit of one or more employees, officers,
directors or consultants, in connection with a dividend reinvestment or
stockholder stock purchase plan or in connection with the issuance of capital
stock of the Guarantor (or securities convertible into or exercisable for such
capital stock) as consideration in an acquisition transaction entered into prior
to the occurrence of the Event of Default, Declaration Event of Default or
Extension Period, as applicable, (ii) as a result of any exchange or conversion
of any class or series of the Guarantor’s capital stock (or any capital stock of
a subsidiary of the Guarantor) for any class or series of the Guarantor’s
capital stock or of any class or series of the Guarantor’s indebtedness for any
class or series of the Guarantor’s capital stock, (iii) the purchase of
fractional interests in shares of the Guarantor’s capital stock pursuant to the
conversion or exchange provisions of such capital stock or the security being
converted or exchanged, (iv) any declaration of a dividend in connection with
any stockholders’ rights plan, or the issuance of rights, stock or other
property under any stockholders’ rights plan, or the redemption or repurchase of
rights pursuant thereto, (v) any dividend in the form of stock, warrants,
options or other rights where the dividend stock or the stock issuable upon
exercise of such warrants, options or other rights is the same stock as that on
which the dividend is being paid or ranks pari passu with or junior to such
stock and any cash payments in lieu of fractional shares issued in connection
therewith, or (vi) payments under this Guarantee).

          Section 5.2.          Ranking.  This Guarantee will constitute an
unsecured obligation of the Guarantor and will rank subordinate and junior in
right of payment to all present and future Senior Indebtedness (as defined in
the Indenture) of the Guarantor.  By their acceptance thereof, each Holder of
Capital Securities agrees to the foregoing provisions of this Guarantee and the
other terms set forth herein.

          The right of the Guarantor to participate in any distribution of
assets of any of its subsidiaries upon any such subsidiary’s liquidation or
reorganization or otherwise is subject to the prior claims of creditors of that
subsidiary, except to the extent the Guarantor may itself be recognized as a
creditor of that subsidiary.  Accordingly, the Guarantor’s obligations under
this Guarantee will be effectively subordinated to all existing and future
liabilities of the Guarantor’s subsidiaries, and claimants should look only to
the assets of the Guarantor for payments hereunder.  This Guarantee does not
limit the incurrence or issuance of other secured or unsecured debt of the
Guarantor, including Senior Indebtedness of the Guarantor, under any indenture
that the Guarantor may enter into in the future or otherwise.

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ARTICLE VI

TERMINATION

          Section 6.1.          Termination.  This Guarantee shall terminate as
to the Capital Securities (i) upon full payment of the Redemption Price or
Special Redemption Price of all Capital Securities then outstanding, (ii) upon
the distribution of all of the Debentures to the Holders of all of the Capital
Securities or (iii) upon full payment of the amounts payable in accordance with
the Declaration upon dissolution of the Issuer.  This Guarantee will continue to
be effective or will be reinstated, as the case may be, if at any time any
Holder of Capital Securities must restore payment of any sums paid under the
Capital Securities or under this Guarantee.

ARTICLE VII

INDEMNIFICATION

          Section 7.1.          Exculpation.

          (a)          No Indemnified Person shall be liable, responsible or
accountable in damages or otherwise to the Guarantor or any Covered Person for
any loss, damage or claim incurred by reason of any act or omission performed or
omitted by such Indemnified Person in good faith in accordance with this
Guarantee and in a manner that such Indemnified Person reasonably believed to be
within the scope of the authority conferred on such Indemnified Person by this
Guarantee or by law, except that an Indemnified Person shall be liable for any
such loss, damage or claim incurred by reason of such Indemnified Person’s
negligence or willful misconduct with respect to such acts or omissions.

          (b)          An Indemnified Person shall be fully protected in relying
in good faith upon the records of the Issuer or the Guarantor and upon such
information, opinions, reports or statements presented to the Issuer or the
Guarantor by any Person as to matters the Indemnified Person reasonably believes
are within such other Person’s professional or expert competence and who, if
selected by such Indemnified Person, has been selected with reasonable care by
such Indemnified Person, including information, opinions, reports or statements
as to the value and amount of the assets, liabilities, profits, losses, or any
other facts pertinent to the existence and amount of assets from which
Distributions to Holders of Capital Securities might properly be paid.

          Section 7.2.          Indemnification.

          (a)          The Guarantor agrees to indemnify each Indemnified Person
for, and to hold each Indemnified Person harmless against, any and all loss,
liability, damage, claim or expense incurred without negligence or willful
misconduct on the part of the Indemnified Person, arising out of or in
connection with the acceptance or administration of the trust or trusts
hereunder, including, but not limited to, the costs and expenses (including
reasonable legal fees and expenses) of the Indemnified Person defending itself
against, or investigating, any claim or liability in connection with the
exercise or performance of any of the Indemnified Person’s powers or duties
hereunder.  The obligation to indemnify as set forth in this Section 7.2 shall
survive the resignation or removal of the Guarantee Trustee and the termination
of this Guarantee.

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          (b)          Promptly after receipt by an Indemnified Person under
this Section 7.2 of notice of the commencement of any action, such Indemnified
Person will, if a claim in respect thereof is to be made against the Guarantor
under this Section 7.2, notify the Guarantor in writing of the commencement
thereof; but the failure so to notify the Guarantor (i) will not relieve the
Guarantor from liability under paragraph (a) above unless and to the extent that
the Guarantor did not otherwise learn of such action and such failure results in
the forfeiture by the Guarantor of substantial rights and defenses and (ii) will
not, in any event, relieve the Guarantor from any obligations to any Indemnified
Person other than the indemnification obligation provided in paragraph (a)
above.  The Guarantor shall be entitled to appoint counsel of the Guarantor’s
choice at the Guarantor’s expense to represent the Indemnified Person in any
action for which indemnification is sought (in which case the Guarantor shall
not thereafter be responsible for the fees and expenses of any separate counsel
retained by the Indemnified Person or Persons except as set forth below);
provided, however, that such counsel shall be reasonably satisfactory to the
Indemnified Person.  Notwithstanding the Guarantor’s election to appoint counsel
to represent the Guarantor in an action, the Indemnified Person shall have the
right to employ separate counsel (including local counsel), and the Guarantor
shall bear the reasonable fees, costs and expenses of such separate counsel if
(i) the use of counsel chosen by the Guarantor to represent the Indemnified
Person would present such counsel with a conflict of interest, (ii) the actual
or potential defendants in, or targets of, any such action include both the
Indemnified Person and the Guarantor and the Indemnified Person shall have
reasonably concluded that there may be legal defenses available to it and/or
other Indemnified Person(s) which are different from or additional to those
available to the Guarantor, (iii) the Guarantor shall not have employed counsel
satisfactory to the Indemnified Person to represent the Indemnified Person
within a reasonable time after notice of the institution of such action or
(iv) the Guarantor shall authorize the Indemnified Person to employ separate
counsel at the expense of the Guarantor.  The Guarantor will not, without the
prior written consent of the Indemnified Persons, settle or compromise or
consent to the entry of any judgment with respect to any pending or threatened
claim, action, suit or proceeding in respect of which indemnification or
contribution may be sought hereunder (whether or not the Indemnified Persons are
actual or potential parties to such claim or action) unless such settlement,
compromise or consent includes an unconditional release of each Indemnified
Person from all liability arising out of such claim, action, suit or proceeding.

          Section 7.3.          Compensation; Reimbursement of Expenses.  The
Guarantor agrees:

          (a)          to pay to the Guarantee Trustee from time to time such
compensation for all services rendered by it hereunder as the parties shall
agree to from time to time (which compensation shall not be limited by any
provision of law in regard to the compensation of a trustee of an express
trust); and

          (b)          except as otherwise expressly provided herein, to
reimburse the Guarantee Trustee upon request for all reasonable expenses,
disbursements and advances incurred or made by it in accordance with any
provision of this Guarantee (including the reasonable compensation and the
expenses and disbursements of its agents and counsel), except any such expense,
disbursement or advance as may be attributable to its negligence or willful
misconduct.

          For purposes of clarification, this Section 7.3 does not contemplate
the payment by the Guarantor of acceptance or annual administration fees owing
to the Guarantee Trustee for services to be provided by the Guarantee Trustee
under this Guarantee or the fees and expenses of the Guarantee Trustee’s counsel
in connection with the closing of the transactions contemplated by this
Guarantee.  The provisions of this Section 7.3 shall survive the resignation or
removal of the Guarantee Trustee and the termination of this Guarantee.

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ARTICLE VIII

MISCELLANEOUS

          Section 8.1.          Successors and Assigns.  All guarantees and
agreements contained in this Guarantee shall bind the successors, assigns,
receivers, trustees and representatives of the Guarantor and shall inure to the
benefit of the Holders of the Capital Securities then outstanding.  Except in
connection with any merger or consolidation of the Guarantor with or into
another entity or any sale, transfer or lease of the Guarantor’s assets to
another entity, in each case, to the extent permitted under the Indenture, the
Guarantor may not assign its rights or delegate its obligations under this
Guarantee without the prior approval of the Holders of at least a Majority in
liquidation amount of the Capital Securities.

          Section 8.2.          Amendments.  Except with respect to any changes
that do not adversely affect the rights of Holders of the Capital Securities in
any material respect (in which case no consent of Holders will be required),
this Guarantee may be amended only with the prior approval of the Holders of not
less than a Majority in liquidation amount of the Capital Securities.  The
provisions of the Declaration with respect to amendments thereof apply to the
giving of such approval.

          Section 8.3.          Notices.  All notices provided for in this
Guarantee shall be in writing, duly signed by the party giving such notice, and
shall be delivered, telecopied or mailed by first class mail, as follows:

          (a)          If given to the Guarantee Trustee, at the Guarantee
Trustee’s mailing address set forth below (or such other address as the
Guarantee Trustee may give notice of to the Holders of the Capital Securities
and the Guarantor):

Wilmington Trust Company

 

Rodney Square North

 

1100 North Market Street

 

Wilmington, Delaware  19890-1600

 

Attention:  Corporate Trust Administration

 

Telecopy:  302-636-4140

 

          (b)          If given to the Guarantor, at the Guarantor’s mailing
address set forth below (or such other address as the Guarantor may give notice
of to the Holders of the Capital Securities and to the Guarantee Trustee):

First National Bancshares, Inc.

 

215 North Pine Street

 

Spartanburg, South Carolina  29302

 

Attention:  Kitty B. Payne

 

Telecopy:  864-594-5688

 

          (c)          If given to any Holder of the Capital Securities, at the
address set forth on the books and records of the Issuer.

          All such notices shall be deemed to have been given when received in
person, telecopied with receipt confirmed, or mailed by first class mail,
postage prepaid, except that if a notice or other document is refused delivery
or cannot be delivered because of a changed address of which no notice was
given, such notice or other document shall be deemed to have been delivered on
the date of such refusal or inability to deliver.

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          Section 8.4.          Benefit.  This Guarantee is solely for the
benefit of the Beneficiaries and, subject to Section 2.1(a), is not separately
transferable from the Capital Securities.

          Section 8.5.          Governing Law.  THIS GUARANTEE SHALL BE GOVERNED
BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF
NEW YORK, WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES THEREOF (OTHER THAN
SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW).

          Section 8.6.          Counterparts.  This Guarantee may be executed in
one or more counterparts, each of which shall be an original, but all of which
taken together shall constitute one and the same instrument.

          Section 8.7          Separability.  In case one or more of the
provisions contained in this Guarantee shall for any reason be held to be
invalid, illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provisions of this Guarantee, but
this Guarantee shall be construed as if such invalid or illegal or unenforceable
provision had never been contained herein.

Signatures appear on the following page

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THIS GUARANTEE is executed as of the day and year first above written.

 

FIRST NATIONAL BANCSHARES, INC., as Guarantor

 

 

 

 

 

By:

 

 

 

--------------------------------------------------------------------------------

 

Name:

 

 

Title:

 

 

 

 

 

WILMINGTON TRUST COMPANY, as Guarantee Trustee

 

 

 

 

 

By:

 

 

 

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Name:

 

 

Title

 

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