Agreement Regarding Capital Loan

Exhibit 10.26


AGREEMENT REGARDING CAPITAL LOAN


This Agreement (this " Agreement" ) is entered into this 30th day of June, 2005 by and between First National Banc, Inc. (" FNBI" ) and ABC Bancorp (" ABC" ).


W I T N E S S E T H :

WHEREAS, FNBI and ABC and certain of their respective subsidiaries are, contemporaneously with the execution of this Agreement, entering into that certain Agreement and Plan of Merger pursuant to which, among other things, FNBI will be merged with and into ABC (the " Merger Agreement" ); and

WHEREAS, it is a condition to FNBI' s willingness to enter into the Merger Agreement that ABC enter into this Agreement.

NOW THEREFORE, in consideration of the premises and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

1. Agreement to Extend Loan . ABC agrees that, at the written request of FNBI following the receipt by FNBI or either of the Target Banks of a Capital Notice (as hereinafter defined), ABC will extend a loan (the " Capital Loan" ) to FNBI pursuant to a Promissory Note in the form attached hereto as Exhibit A , to be secured by the capital stock of Orange Park pursuant to a Stock Pledge Agreement in the form of Exhibit B attached hereto. The principal amount of the Capital Loan shall be the amount of capital necessary to satisfy the requirements of the Capital Notice, but shall in no event exceed $6,000,000. As used herein, the term " Capital Notice" shall mean written notification from a Regulatory Authority requiring that a Target Company take action to increase its capital.


2. Termination . The obligation of ABC to extend the Capital Loan to FNBI shall terminate on the date of the termination of the Merger Agreement in the event the Merger Agreement is terminated (a) pursuant to any of Sections 9.1(d)(ii), 9.1(h) or 9.1(i) thereof or (b) by ABC as a result of a willful breach by FNBI of any of its covenants, agreements, representations or warranties set forth in the Merger Agreement, and shall otherwise terminate on the 60th day following the date of termination of the Merger Agreement.


3. Miscellaneous .

A. Notices . All notices or other communications which are required or permitted hereunder shall be in writing and sufficient if delivered by hand, by facsimile transmission, by registered or certified mail, postage prepaid, or by courier or overnight carrier, as set forth in Section 10.8 of the Merger Agreement.


B. Governing Law . This Agreement shall be governed by and construed in accordance with the Laws of the State of Georgia, without regard to any applicable conflicts of Laws, except to the extent that the federal Laws of the United States may apply to the Mergers.


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C. Counterparts . This Agreement may be executed in counterparts, each of which shall be deemed to be an original, but both of which together shall constitute one and the same instrument. Executed counterparts of this Agreement may be delivered by the Parties via facsimile transmission.

D. Defined Terms . Capitalized terms used in this Agreement that are defined in the Merger Agreement shall have the meanings set forth therein.


[Signatures on following page.]


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IN WITNESS WHEREOF, each of the parties has caused this Agreement to be executed on its behalf as of the day and year first above written.

ABC BANCORP

By: /S/ EDWIN W. HORTMAN

Name: Edwin W. Hortman

Title: Pres. & CEO FIRST NATIONAL BANC, INC.

By: /S/ TIM O' KEEFE

Name: Tim O' Keefe

Title: Pres. & CEO


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Exhibit A


PROMISSORY NOTE

$6,000,000.00 Moultrie, Georgia


FOR VALUE RECEIVED , the undersigned, FIRST NATIONAL BANC, INC. , a corporation organized and existing under the laws of the State of Georgia (hereinafter referred to as " Maker" ), promises to pay to the order of ABC BANCORP , a corporation organized and existing under the laws of the State of Georgia (hereinafter referred to as " Holder" ), at 24 2nd Avenue, S.E., Moultrie, Georgia 31768, or at such other place as Holder may designate to Maker in writing, the principal sum of Six Million and No/100 Dollars ($6,000,000.00) (the " Principal Amount" ), together with interest thereon as hereinafter set forth, in such coin or currency of the United States as at the time of payment shall be legal tender for the payment of public and private debts.


From and after the date hereof, interest shall accrue on the outstanding Principal Amount at a rate per annum equal to the " prime rate" announced or quoted from time to time by (the " Interest Rate" ), which interest shall be computed on the daily outstanding Principal Amount hereunder on a 360-day year interest basis.


All accrued and unpaid interest on the Principal Amount shall be due and payable on the one-year anniversary of the date hereof. The entire Principal Amount hereof, together with all accrued and unpaid interest and all other amounts then outstanding hereunder, shall be due and payable in full on the two-year anniversary of the date hereof (the " Maturity Date" ).


All payments received hereunder shall be applied first to unpaid interest and then to the Principal Amount outstanding. Maker shall be entitled to prepay all or any portion of the Principal Amount hereof prior to maturity without premium or penalty.

This Note is secured by a pledge of an aggregate of 300,000 shares of the common stock of First National Bank, Orange Park, Florida, pursuant to that certain Stock Pledge Agreement between Holder and Maker dated as of the date hereof (the " Pledge Agreement" ).

The occurrence and continuation of any one of the following events (each an " Event of Default" ) shall constitute a default hereunder: (i) Maker shall fail to make due and punctual payment of principal of or interest on this Note; (ii) Maker violates any covenant in this Note (other than payment when due of any principal of or interest on this Note), and Maker fails to cure such violation within fifteen (15) days after written notice thereof to Maker from Holder; (iii) Maker makes an assignment for the benefit of creditors, files a petition in bankruptcy, is adjudicated insolvent or bankrupt, petitions a court for the appointment of any receiver or trustee for it or any substantial part of its property, commences any proceeding relating to Maker under any arrangement or debt readjustment law or statute of any jurisdiction whether now or hereafter in effect or there is commenced against Maker any such proceeding which remains undismissed for sixty (60) days, or Maker by any act indicates consent to, approval of or acquiescence in any such proceeding or the appointment of any receiver or trustee for it or any substantial part of its property, or suffers any such receivership or trusteeship to continue undischarged for sixty (60)

days; or (iv) there exists an event of default under the Pledge Agreement and such event of default is not cured within fifteen (15) days after written notice thereof to Maker from Holder.


If an Event of Default occurs and is continuing, then, at the option of Holder, the entire outstanding Principal Amount, plus all accrued and unpaid interest thereon, shall, upon written notice from Holder to Maker, become immediately due and payable. The rights, remedies, powers and privileges provided for herein are cumulative and not exclusive of any rights, remedies, powers and privileges provided by law.

If any principal or interest hereunder shall not be paid when due (whether on the Maturity Date or by acceleration or otherwise), interest shall accrue on such overdue amounts to the extent permitted by law at rate per annum equal to the Interest Rate plus two percent (2%) from the date due to and including the date of actual payment (after as well as before judgment). Maker shall pay such amounts to Holder on demand.


The failure of Holder to exercise said right of accelerating the Maturity Date of the indebtedness evidenced hereby or any indulgence granted by Holder to Maker from time to time shall in no event be considered or otherwise construed as a waiver of such right of acceleration or in any manner prohibit Holder from exercising such right. All remedies conferred on Holder by law or by this Note or by any other instrument or agreement shall be cumulative and nonexclusive. Such remedies may be exercised concurrently or consecutively at Holder' s option.


TIME IS OF THE ESSENCE of this Note and, in the event this Note is collected by law or through an attorney at law or under advice therefrom, Maker agrees to pay all costs of collection, including reasonable attorneys' fees actually incurred at standard hourly rates. It is agreed by the parties hereto that such attorneys' fees are a charge other than interest.


Maker hereby expressly waives presentment, demand for payment, notice of dishonor, protest, notice of protest, diligence in collection and all other notices or demands of every kind and nature whatsoever with respect to this Note or the enforcement of the provisions hereof, and Maker hereby consents that the time of payments or any part thereof due hereunder may be extended by Holder and assents to any substitution, exchange or release of collateral permitted by Holder, all without in any way whatsoever modifying, altering, releasing, discharging, affecting or limiting the liability of Maker hereunder.

The term " Maker" as used in this Note shall mean and have reference to, collectively, all parties primarily or secondarily obligated for the indebtedness evidenced by this Note, whether as principal, maker, endorser, guarantor or otherwise, together with the respective administrators, executors, legal representatives, successors and assigns of each of the foregoing. This Note shall inure to the benefit of Holder and its successors, assigns and legal representatives.


This Note shall be governed as to validity, interpretation, construction, enforcement, effect and in all respects by the laws of the State of Georgia.


It is expressly agreed that if, from any circumstances whatsoever, fulfillment of any provision of this Note at the time performance of such provision shall be due shall be invalid


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under presently applicable usury statute or any other applicable law, with regard to obligations of like character and amount, then the obligation to be fulfilled shall be reduced to the limit of such validity, so that in no event shall any exaction be possible under this Note that is in excess of the current limit of such validity, but such obligation shall be fulfilled to the limit of such validity. In no event shall Maker be bound to pay for the use, forbearance or detention of the money loaned pursuant hereto or interest of more than the current legal limit. The right to demand any such excess is hereby expressly waived by Holder.


This Note may not be changed or terminated orally, but only by an agreement in writing signed by the party against whom enforcement of such change or termination is sought.

IN WITNESS WHEREOF , Maker has executed this Note under seal this day of , 200 .

ATTEST: FIRST NATIONAL BANC, INC.

By: Secretary

Its: [CORPORATE SEAL]


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Exhibit B


STOCK PLEDGE AGREEMENT


THIS STOCK PLEDGE AGREEMENT (this " Agreement" ) is made and entered into as of , 200 , by and between FIRST NATIONAL ...