As filed with the Securities and Exchange Commission on August 25, 1998
Registration No. 333-
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-3
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
SUN BANCORP, INC.
(Exact Name of Registrant as Specified in its Charter)
New Jersey 6021 52-1382541
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(State or Other Jurisdiction (Primary Standard Industry (I.R.S. Employer
of Incorporation or Classification Code Number) Identification No.)
Organization)
226 Landis Avenue, Vineland, New Jersey 08360
(609) 691-7700
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(Address, Including Zip Code, and Telephone Number, Including Area Code,
of Registrant's Principal Executive Office)
Mr. Philip W. Koebig, III
Executive Vice President
Sun Bancorp, Inc.
226 Landis Avenue, Vineland, New Jersey 08360
(609) 691-7700
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(Name, Address, Including Zip Code, and Telephone Number,
Including Area Code, of Agent for Service)
Please send copies of all communications to:
John J. Spidi, Esq. Steven L. Kaplan, Esq.
Jean A. Milner, Esq. ARNOLD & PORTER
MALIZIA, SPIDI, SLOANE & FISCH, P.C. 555 Twelfth Street, N.W.
1301 K Street, N.W., Suite 700 East Washington, D.C. 20004
Washington, D.C. 20005
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after this registration statement becomes effective.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. |_|
If any of the securities being registered on this form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with
dividend or interest reinvestment plans, check the following box. |_|
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. |_|
If this form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. |_|
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. |_|
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CALCULATION OF REGISTRATION FEE
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Title of Shares Amount to be Proposed Maximum Aggregate Proposed Maximum Amount of
to be Registered Registered Price Per Unit (1) Aggregate Offering Price Registration Fee
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<S> <C> <C> <C> <C>
Common Stock 886,334 $24.125 $21,382,807 $4,276.57
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(1) Based on the average of the high and low sales price of the Common Shares
as reported by the Nasdaq National Market on August 21, 1998.
The registrant hereby amends this registration statement on such date
or dates as may be necessary to delay its effective date until the registrant
shall file a further amendment which specifically states that this registration
statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act or until the registration statement shall become effective on
such date as the Commission, acting pursuant to said Section 8(a), may
determine.
<PAGE>
PROSPECTUS
SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS DATED __________ ____, 1998
__________ Shares
[LOGO]
Sun Bancorp, Inc.
Common Stock
__________________________
Sun Bancorp, Inc., a New Jersey corporation (the "Company"), is
offering for sale __________ shares of its common stock, $1.00 par value per
share (the "Common Shares"), at a price of $__________ per share (the
"Offering"). The Common Shares are currently quoted on the Nasdaq National
Market under the symbol "SNBC."
Concurrently with the Offering, Sun Capital Trust II, a statutory
business trust created by the Company under the laws of the State of Delaware
(the "Issuer Trust"), will offer _____% Preferred Securities (the "Trust II
Preferred Securities"), in aggregate Liquidation Amount of $18 million (subject
to increase up to $20.7 million if the over-allotment option is exercised),
which will represent preferred undivided beneficial interests in the assets of
the Issuer Trust. The net proceeds of the offering of Preferred Securities will
be invested in __________% Junior Subordinated Deferrable Interest Debentures
(the "Trust II Junior Subordinated Debentures") to be issued by the Company. The
offering of the Trust II Preferred Securities by the Issuer Trust and the
investment of the net proceeds in the Trust II Junior Subordinated Debentures
are collectively referred to as the "Trust Preferred Offering." The Trust
Preferred Offering is being made by a separate prospectus. The Offering is not
contingent upon the closing of the Trust Preferred Offering. The Offering and
the Trust Preferred Offering are being made to support the growth of the Company
through pending acquisitions. See "Prospectus Summary - The Company," "Use of
Proceeds" and "Beneficial Acquisition."
Prospective investors should carefully consider the factors set forth in "Risk
Factors" beginning on page ___ hereof.
__________________________
THE SECURITIES OFFERED HEREBY ARE NOT DEPOSITS OR OTHER OBLIGATIONS OF A BANK
AND ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY
OTHER INSURER OR GOVERNMENTAL AGENCY.
__________________________
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY A CRIMINAL OFFENSE.
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================================================================================================================================
Underwriting Discounts
Price to Public and Commissions (1) Proceeds to Company (2)
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<S> <C> <C> <C>
Per Share.......................... $ $ $
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Total(3)........................... $ $ $
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(1) The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended. The Underwriters will not receive any discounts or commissions on
Common Shares purchased by officers, directors or their associates. See
"Underwriting."
(2) Before deducting estimated expenses of the Offering of approximately
$240,000 payable by the Company.
(3) The Company has granted the Underwriters an option to purchase up to
__________ additional Common Shares at the Price to Public less
Underwriting Discounts and Commissions solely to cover over-allotments, if
any. If the Underwriters exercise such option in full, the total Price to
Public, Underwriting Discount and Commissions and Proceeds to Company will
be $_____, $_____ and $_____, respectively. Advest, Inc. will receive a
financial advisory fee of $75,000 in connection with the Offering.
__________________________
The Common Shares are offered severally by the Underwriters named
herein, subject to prior sale, when, as and if delivered to and accepted by the
Underwriters. The Underwriters reserve the right to reject orders in whole or in
part and to withdraw, cancel or modify the Offering without notice. It is
expected that delivery of certificates representing the Common Shares will be
made to the Underwriters on or about __________ ____, 1998.
__________________________
Advest, Inc. Janney Montgomery Scott Inc.
The date of this Prospectus is __________ ____, 1998.
<PAGE>
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This Prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sales of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of such State.
<PAGE>
MAP
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN
TRANSACTIONS THAT STABILIZE, MAINTAIN, OR OTHERWISE AFFECT THE PRICE OF THE
COMMON SHARES OFFERED HEREBY, INCLUDING STABILIZATION, THE PURCHASE OF COMMON
SHARES TO COVER SYNDICATE SHORT POSITIONS, AND THE IMPOSITION OF PENALTY BIDS.
FOR A DESCRIPTION OF THESE ACTIVITIES, SEE "UNDERWRITING." SUCH STABILIZING
TRANSACTIONS, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
IN CONNECTION WITH THIS OFFERING, CERTAIN UNDERWRITERS (AND SELLING
GROUP MEMBERS) MAY ENGAGE IN PASSIVE MARKET MAKING TRANSACTIONS IN THE COMMON
SHARES ON NASDAQ IN ACCORDANCE WITH RULE 103 OF REGULATION M. SEE
"UNDERWRITING."
2
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PROSPECTUS SUMMARY
The following is a summary of certain information contained elsewhere
in this Prospectus and in the documents incorporated by reference. This summary
is not intended to be a summary of all information relating to the Offering and
the Trust Preferred Offering and should be read in conjunction with, and is
qualified in its entirety by reference to, the more detailed information
contained elsewhere in this Prospectus, including the documents incorporated by
reference in this Prospectus. Unless otherwise indicated, all information in
this Prospectus is based on the assumption that the Underwriters (as defined
herein) will not exercise their over-allotment options with respect to the
Offering or the Trust Preferred Offering.
The Company
The Company, a New Jersey corporation, is a bank holding company
headquartered in Vineland, New Jersey. The Company's principal subsidiary is Sun
National Bank (the "Bank"). At June 30, 1998, the Company had total assets of
$1,154 million, total deposits of $754 million and total shareholders' equity of
$59 million. Substantially all of the Company's deposits are federally insured
by the Bank Insurance Fund ("BIF"), which is administered by the Federal Deposit
Insurance Corporation ("FDIC"). The Company's remaining deposits are federally
insured by the Savings Association Insurance Fund ("SAIF"), administered by the
FDIC. The Company's principal business is to serve as a holding company for the
Bank. As a registered bank holding company, the Company is subject to the
supervision and regulation of the Board of Governors of the Federal Reserve
System (the "Federal Reserve").
The ongoing consolidation of the banking industry, as well as a
regionalization of decision-making authority by larger banking institutions, has
left many businesses and individuals in the Company's market area underserved.
Beginning in 1993, the Company embarked upon a strategy to expand its operations
and retail market in central and southern New Jersey through mergers,
acquisitions and internal growth. More recently, this strategy has broadened to
include contiguous portions of Delaware. The Board of Directors and management
saw opportunities to expand the Company as a result of the lack of competitive
commercial banking services being provided to local businesses and recognized
the need for a locally based and managed community bank. In executing its
expansion strategy, the Company has successfully completed the acquisition of
two commercial banks with a total of $119 million in assets, as well as six
branch purchase transactions in which the Company acquired a total of 27
branches with $404 million in deposits, and has opened five de novo branches
since 1993. An additional acquisition of two branches from Summit Bank
("Summit") with $14.8 million in deposit liabilities is pending.
In July 1998, the Company entered into an agreement that will expand
its banking operations into Delaware through the assumption, by a new national
bank subsidiary to be named "Sun National Bank, Delaware" ("Sun Delaware"), of
approximately $179 million in deposits (including eight branch locations), and
the purchase of $139 million in loans, from Household Bank, fsb., the successor
to Beneficial National Bank, Wilmington, Delaware (the "Beneficial
Acquisition"). The Beneficial Acquisition is expected to be consummated in the
fourth quarter of 1998. In July 1998, the Company also acquired its first
non-bank operating subsidiary, Allegiance Mortgage Company ("Allegiance"), a
retail mortgage banking operation, in exchange for 28,302 shares of common
stock. Allegiance has one office located in Cherry Hill, New Jersey. The
Company intends to offer residential mortgage products and services to its
existing customers through Allegiance.
Through its acquisition and expansion program, the Company has
significantly increased its asset size as well as the Company's retail network.
At December 31, 1993, the Company's total consolidated assets were $112.0
million as compared to $1,154 million at June 30, 1998.
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3
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The Company provides community banking services through 42 branches
located in southern and central New Jersey. Sun Delaware will conduct a similar
business through eight branches in contiguous markets in Delaware. The Company
offers a wide variety of consumer and commercial lending, as well as deposit
services. The loans offered by the Company include commercial and industrial
loans, commercial real estate loans, home equity loans, mortgage loans and
installment loans. The Company's deposit and personal banking services include
checking, regular savings, money market deposits, certificates of deposit and
individual retirement accounts. Through a third party arrangement, the Company
also offers mutual funds, securities brokerage and investment advisory services.
The Company considers its primary market area to be southern and central New
Jersey and intends to expand its primary market area to contiguous markets in
Delaware upon completion of the Beneficial Acquisition. The Company's market
area contains a diverse base of customers, including agricultural,
manufacturing, transportation, hospitality and retail consumer businesses.
In recent years, the Company has experienced a significant level of
loan growth. The Company's loan portfolio increased from $83.4 million at
December 31, 1993, to $486.1 million at June 30, 1998. Much of this loan growth
is attributable to the Company's hiring of a number of experienced loan officers
previously employed by larger banking organizations. In most cases, these loan
officers brought with them established contacts and relationships with
individuals or entities throughout the Company's primary market area and thus
have been able to increase the Company's customer base and the number of loan
originations. The Company also has established a number of regional advisory
boards, comprised of prominent local business and community representatives, who
refer significant business opportunities to the Company. In addition, the
Company has made significant efforts to increase its lending to businesses along
the central and southern New Jersey seashore that are primarily operational
during certain times of each year (i.e. seasonal lending), which has contributed
to the Company's loan growth.
To support and manage the expanded operations of the Company and to
provide adequate management resources to support further expansion and growth,
the Company has recruited and hired, in addition to experienced commercial loan
officers, credit, compliance, loan review, internal audit, operations personnel
and senior level executives. Additionally, the Company has enhanced and expanded
its operational and management information systems and taken steps to enhance
its oversight of third-party vendors. While the Company continues to monitor its
rapid growth, as well as the adequacy of management and resources available to
support such growth, there can be no assurance that the Company will be
successful in managing all elements relating to this rapid growth.
The growth and expansion of operations through mergers and acquisitions
and internal growth has resulted in a significant increase in assets, loans and
deposits since December 31, 1993, and a corresponding increase in net interest
income, non-interest income and non-interest expenses.
The executive office of the Company is located at 226 Landis Avenue,
Vineland, New Jersey 08360 and its telephone number is (609) 691-7700.
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4
<PAGE>
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<TABLE>
<CAPTION>
The Offering
<S> <C>
Common Shares Offered....................................... __________ shares of Common Stock.
Common Shares Outstanding prior to the Offering............. __________ shares.
Common Shares Outstanding after the Offering................ __________ shares. Assumes no exercise of the
Underwriters' over-allotment option to purchase up to __________
Common Shares. See "Underwriting."
Estimated Net Proceeds to the Company....................... $__________. Assumes no exercise of the Underwriters'
over-allotment option to purchase up to __________
Common Shares. See "Underwriting."
Dividends on Common Shares.................................. Historically, the Company has not paid cash dividends on its
Common Shares. The Company paid 5% stock dividends
on October 30, 1996, June 25, 1997 and May 26, 1998. In
September 1997 and March 1998, the Company paid three
for two common stock splits effected by means of 50%
stock dividends. Future declarations of dividends by the
Board of Directors will depend upon a number of factors,
including the Company's, the Bank's and Sun Delaware's
financial condition and results of operations, investment
opportunities available to the Company, the Bank or Sun
Delaware, capital requirements, regulatory limitations, tax
considerations, the amount of net proceeds retained by the
Company and general economic conditions. See "Price
Range of Common Shares; Dividends," and "Risk Factors --
Limitations on Payment of Dividends."
Use of Proceeds............................................. The proceeds received by the Company from the Offering
and the Trust Preferred Offering will be used to contribute
capital to Sun Delaware in connection with the Beneficial
Acquisition. Sun Delaware intends to use the capital for
general corporate purposes, primarily to support the
Beneficial Acquisition. See "Use of Proceeds."
Nasdaq National Market Symbol............................... The Common Shares are quoted on the Nasdaq National
Market under the symbol "SNBC."
Purchases by Directors and Officers of the
Company................................................... The Underwriters have reserved __________ Common
Shares offered in the Offering (16.67% of the Common
Shares to be offered) for sale at the public offering price to
directors, officers and employees of the Company and the
Bank (and their associates). See "Underwriting".
Concurrent Trust Preferred Offering......................... Sun Capital Trust II, a subsidiary of the Company, is
concurrently offering by a separate prospectus ___% Trust
II Preferred Securities, in aggregate liquidation amount of
$18 million (subject to increase up to $20.7 million if the
over-allotment option is exercised in full). The Offering is
not contingent upon the closing of the Trust Preferred
Offering.
Risk Factors
Prospective investors should carefully consider the matters set forth
under "Risk Factors," beginning on page ___.
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</TABLE>
5
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA
The following summary information regarding the Company should be
read in conjunction with the consolidated financial statements of the Company
and notes thereto included in the Company's 1997 Annual Report to Stockholders
which is incorporated herein by reference as part of the Company's Annual Report
on Form 10-K for the fiscal year ended December 31, 1997, and included in the
Company's Quarterly Reports on Form 10-Q for the quarters ended March 31, and
June 30, 1998. See "Incorporation of Certain Documents by Reference" and
"Management's Discussion and Analysis of Financial Condition and Recent Results
of Operations." Consolidated historical financial and other data regarding the
Company at or for the six months ended June 30, 1998 and 1997, have been
prepared by the Company, are unaudited, and may not be indicative of results on
an annualized basis or for any other period. In the opinion of management, all
adjustments (consisting only of normal recurring accruals) that are necessary
for a fair presentation for such periods or dates have been made.
<TABLE>
<CAPTION>
At or For the Six
Months Ended
June 30, At or For the Years Ended December 31,
--------------------- -------------------------------------------------------------
1998 1997 1997 1996 1995 1994 1993
---- ---- ---- ---- ---- ---- ----
(Dollars in thousands, except per share amounts)
<S> <C> <C> <C> <C> <C> <C> <C>
Selected Results of Operations
Interest income .......................... $ 39,222 $ 18,145 $ 47,185 $ 29,270 $ 20,850 $ 12,194 $ 8,164
Net interest income ...................... 18,247 9,454 22,778 16,736 13,163 8,256 5,327
Provision for loan losses ................ 1,010 825 1,665 900 808 383 2
Net interest income after
provision for loan losses ............. 17,237 8,629 21,113 15,836 12,355 7,873 5,325
Other income ............................. 2,705 776 2,236 1,746 1,651 732 472
Other expenses ........................... 14,550 7,332 17,445 13,207 10,047 5,991 4,198
Net income ............................... 3,807 1,482 4,171 3,013 2,819 1,840 1,128
Net income excluding
goodwill amortization................... 5,712 1,951 5,676 3,840 3,162 1,974 1,226
Per Share Data
Net income
Basic ................................. 0.60 0.32 0.86 0.68 0.66 0.57 0.41
Diluted ............................... 0.53 0.30 0.78 0.63 0.61 0.57 0.41
Book value ............................... 9.32 6.33 8.64 5.98 5.74 5.07 4.64
Selected Balance Sheet Data
Assets ................................... 1,153,562 585,219 1,099,973 436,795 369,895 217,351 112,015
Cash and investments ..................... 604,613 188,418 610,339 117,388 164,251 70,809 24,134
Loans receivable (net) ................... 486,059 363,705 427,761 295,501 183,634 134,861 83,387
Deposits ................................. 753,508 467,394 695,388 385,987 335,248 196,019 99,099
Borrowings and securities sold
under agreements to repurchase ......... 307,500 57,426 316,314 21,253 8,000 -- --
Shareholders' equity ..................... 59,124 29,071 54,632 27,415 24,671 20,571 12,306
Performance Ratios(1)
Return on average assets ................. 0.70% 0.62% 0.66% 0.74% 1.03% 1.09% 1.04%
Return on average equity ................. 13.49% 10.69% 12.89% 11.99% 12.42% 11.74% 9.61%
Net yield on interest-earning assets ..... 3.68% 4.33% 3.89% 4.57% 5.30% 5.39% 5.29%
Asset Quality Ratios
Nonperforming loans to total loans ....... 0.50% 0.72% 0.51% 0.81% 1.72% 1.82% 1.84%
Nonperforming assets to total loans
and other real estate owned ............ 0.50% 0.90% 0.57% 1.06% 2.19% 2.56% 2.26%
Net charge-offs to average total loans ... 0.02% 0.02% 0.02% 0.16% 0.23% 0.29% 0.02%
Total allowance for loan losses to
total nonperforming loans .............. 209.73% 127.32% 189.77% 107.26% 64.47% 64.74% 69.10%
Capital Ratios
Equity to assets ......................... 5.13% 4.97% 4.97% 6.28% 6.67% 9.46% 10.99%
Tier 1 risk-based capital ratio .......... 8.60% 7.52% 8.17% 7.44% 8.67% 14.01% 15.59%
Total risk-based capital ratio ........... 10.91% 12.99% 10.75% 8.28% 9.64% 15.22% 16.84%
Leverage ratio ........................... 4.96% 5.68% 6.42% 5.43% 5.74% 8.44% 10.74%
</TABLE>
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(1) Ratios are annualized for the six months ended June 30, 1998 and 1997.
6
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RISK FACTORS
In addition to the other information in this Prospectus, the following
factors which address those risks material to the Offering and the Company
should be considered carefully in evaluating an investment in the Common Shares
offered by this Prospectus. Certain statements in this Prospectus are
forward-looking and are identified by the use of forward-looking words or
phrases such as "intended," "will be positioned," "expects," is or are
"expected," "anticipates," and "anticipated." These forward-looking statements
are based on the Company's current expectations. To the extent any of the
information contained in this Prospectus constitutes a "forward-looking
statement" as defined in Section 27A(i)(1) of the Securities Act of 1933, as
amended (the "Securities Act"), the risk factors set forth below are cautionary
statements identifying important factors that could cause actual results to
differ materially from those in the forward-looking statement.
Restrictions on the Company as a Bank Holding Company
The Company is a legal entity separate and distinct from the Bank,
although the principal source of the Company's cash revenues is dividends from
the Bank.
The right of the Company to participate in the assets of any subsidiary
upon the latter's liquidation, reorganization or otherwise (and thus the ability
of the holders of Common Stock to benefit indirectly from any such distribution)
will be subject to the claims of the subsidiaries' creditors, which will take
priority except to the extent that the Company may itself be a creditor with a
recognized claim.
The Bank is, and Sun Delaware will be, subject to restrictions under
federal law which limit the transfer of funds by the Bank or Sun Delaware to the
Company, whether in the form of loans, extensions of credit, investments, asset
purchases or otherwise. Such transfers by the Bank or Sun Delaware to the
Company or any nonbank subsidiary are limited in amount to 10% of such bank's
capital and surplus and, with respect to the Company and all its nonbank
subsidiaries, to an aggregate of 20% of such bank's capital and surplus.
Furthermore, such loans and extensions of credit are required to be secured in
specified amounts. Federal law also prohibits banks from purchasing "low
quality" assets from affiliates.
Ability of the Company to Maintain and Manage Growth
During the last five years, the Company has experienced rapid and
significant growth. The total assets of the Company have increased from $112.0
million at December 31, 1993, to $1,154 million at June 30, 1998. Although the
Company believes that it has adequately managed its growth in the past, there
can be no assurance that the Company will continue to experience such rapid
growth, or any growth, in the future and, to the extent that it does experience
continued growth, it will be able to adequately and profitably manage such
growth.
The continued growth has led the Company to undertake the present
Offering of Common Shares and the Trust Preferred Offering. The capital to be
raised from the sale of the Common Shares offered hereby and from the Trust
Preferred Offering, is necessary to provide sufficient capital to support the
Beneficial Acquisition. No assurance can be given that this rapid growth will
continue, and, if it does, there is no assurance that the earnings of the
Company, the Bank and Sun Delaware can adequately provide the necessary capital
for the Bank, Sun Delaware and the Company to maintain required regulatory
capital levels commensurate with continued rapid growth. After giving effect to
the sale of the Common Shares, the Trust Preferred Offering and the Beneficial
Acquisition, Sun Delaware will be "well capitalized" and the Company will be
"adequately capitalized" for federal bank regulatory purposes. The Bank will
also continue to be "well capitalized" for federal bank regulatory purposes. The
level of future earnings of the Company also will depend on the ability of the
Company and its subsidiaries to profitably deploy and manage the increased
assets.
7
<PAGE>
The rapid growth of the Company in asset size and the rapid increase in
its volume of total loans during the past five years have increased the possible
risks inherent in an investment in the Company. In addition, the Beneficial
Acquisition will result in the acquisition of a significant amount of deposits.
The deposits to be assumed pursuant to the Beneficial Acquisition are
predominantly core deposits with lower costs. If the Company is unable to
maintain a low cost of funds on such deposits or if the Company is unable to
retain a substantial portion of the deposits to be assumed, the Beneficial
Acquisition may have an adverse impact on the Company's financial condition,
results of operations and cash flows. The Beneficial Acquisition will also
result in the acquisition by the Company of approximately $139 million of loans,
approximately $87 million of which are commercial and industrial loans. The
nature of commercial and industrial loans is such that they may present more
credit risk to the Company than other types of loans such as home equity loans
or residential real estate loans. See "Beneficial Acquisition."
Growth in Loan Portfolio; Concentration of Credit
During the past five years, the Company has experienced significant
growth in its loan portfolio. Net loans increased to $486.1 million at June 30,
1998, from $83.4 million at December 31, 1993. While many components of the loan
portfolio have contributed to this increase over the past five years, much of
this loan growth has occurred in the portfolio of commercial and industrial
loans. Commercial and industrial loans increased by 55.3% or $123.4 million
during 1997 as compared to 1996 and comprised 80.2% of total loans as of
December 31, 1997. As of June 30, 1998, commercial and industrial loans
comprised 81.6% of total loans. As a result of this recent growth, a significant
portion of the Company's total loan portfolio may be considered unseasoned.
Accordingly, specific payment and loss experience for this portion of the
portfolio has not yet been fully established and the potential for additional
loan losses does exist. Furthermore, the nature of commercial and industrial
loans is such that they may present more credit risk to the Company than other
types of loans such as home equity or residential real estate loans. In
addition, a significant portion of the Company's commercial and industrial loans
are concentrated in the hospitality, entertainment and leisure industries. Many
of these industries are dependent upon seasonal business and other factors
beyond the control of such industries, such as weather and beach conditions
along the New Jersey seashore. Any significant or prolonged adverse weather or
beach conditions along the New Jersey seashore could have an adverse impact on
the borrowers' ability to repay such loans. Additionally, because these loans
are concentrated in southern and central New Jersey and so a decline in the
general economic conditions of southern or central New Jersey could have a
material adverse effect on the Company's financial condition, results of
operations and cash flows.
Adequacy of Allowance for Loan Losses
The risk of loan losses varies with, among other things, general
economic conditions, the type of loan being made, the creditworthiness of the
borrower over the term of the loan and, in the case of a collateralized loan,
the value of the collateral for the loan. Management maintains an allowance for
loan losses based upon, among other things, historical experience, an evaluation
of economic conditions and regular review of delinquencies and loan portfolio
quality. Based upon such factors, management makes various assumptions and
judgments about the ultimate collectibility of the loan portfolio and provides
an allowance for loan losses based upon a percentage of the outstanding balances
and for specific loans when their ultimate collectibility is considered
questionable. If management's assumptions and judgments prove to be incorrect
and the allowance for loan losses is inadequate to absorb future credit losses,
or if the bank regulatory authorities require the Bank and/or Sun Delaware to
increase the allowance for loan losses, the Company's earnings could be
significantly and adversely affected.
As of June 30, 1998, the allowance for loan losses was $5.1 million,
which represented 1.05% of total loans. The allowance for loan losses as a
percentage of nonperforming loans was 209.73% as
8
<PAGE>
of June 30, 1998. The Company actively manages its nonperforming loans in an
effort to minimize credit losses and monitors its asset quality to maintain an
adequate allowance for loan losses. As its loan growth has increased, the
Company has increased its allowance for loan losses. However, future additions
to the allowance in the form of provisions for loan losses may be necessary due
to changes in economic conditions and growth of the Company's loan portfolio.
High Degree of Competition
The banking business is highly competitive. In its primary market
areas, the Company competes, and in Delaware will compete, with other commercial
banks, savings and loan associations, credit unions, finance companies, mutual
funds, insurance companies, and brokerage and investment banking firms operating
locally and elsewhere. Many of the Company's primary competitors have
substantially greater resources and lending limits than the Bank or than Sun
Delaware will have. The profitability of the Company depends upon the ability of
its subsidiaries to compete in the Company's primary market areas.
Potential Impact of Changes in Interest Rates
The Company's profitability is dependent to a large extent on its net
interest income, which is the difference between its interest income on
interest-earning assets and its interest expense on interest-bearing
liabilities. The Company, like most financial institutions, is affected by
changes in general interest rate levels and by other economic factors beyond its
control. Interest rate risk arises from mismatches (i.e., the interest
sensitivity gap) between the dollar amount of repricing or maturing assets and
liabilities, and is measured in terms of the ratio of the interest rate
sensitivity gap to total assets. More assets repricing or maturing than
liabilities over a given time period is considered asset-sensitive and is
reflected as a positive gap, and more liabilities repricing or maturing than
assets over a given time period is considered liability-sensitive and is
reflected as negative gap. An asset-sensitive position (i.e., a positive gap)
will generally enhance earnings in a rising interest rate environment and will
negatively impact earnings in a falling interest rate environment, while a
liability-sensitive position (i.e., a negative gap) will generally enhance
earnings in a falling interest rate environment and negatively impact earnings
in a rising interest rate environment. Fluctuations in interest rates are not
predictable or controllable. The Company has attempted to structure its asset
and liability management strategies to mitigate the impact on net interest
income of changes in market interest rates. However, there can be no assurance
that the Company will be able to manage interest rate risk so as to avoid
significant adverse effects in net interest income. At June 30, 1998, the
Company had a one year cumulative positive gap of 0.56%.
Control by Management
A total of __________Common Shares of the Company will be beneficially
owned by the directors and executive officers of the Company, or __________% of
the Common Shares outstanding following the Offering, assuming directors and
executive officers purchase __________ shares in the Offering and that the
Underwriters do not exercise the over-allotment option. See "Underwriting." As
of August 3, 1998, Bernard A. Brown, Chairman of the Board of the Company,
beneficially owned 2,297,331 shares, or 32.87% of the Company's outstanding
Common Shares. In addition, the Underwriters have reserved __________ Common
Shares offered in the Offering for sale to directors, officers and employees of
the Company. Therefore, to the extent they vote together, the directors and
executive officers of the Company will have the ability to exert significant
influence over the election of the Company's Board of Directors and other
corporate actions requiring stockholder approval.
9
<PAGE>
Limitations Imposed by Industry Regulation
Bank holding companies and banks operate in a highly regulated
environment and are subject to the supervision and examination by several
federal regulatory agencies. The Company is subject to the Bank Holding Company
Act of 1956, as amended ("BHCA"), and to regulation and supervision by the
Federal Reserve, and the Bank is, and Sun Delaware will be, subject to
regulation and supervision by the Office of the Comptroller of the Currency (the
"OCC") and the FDIC. The Bank is, and Sun Delaware will also be, a member of the
Federal Home Loan Bank of New York (the "FHLB") and subject to regulation
thereby. Federal and state banking laws and regulations govern matters ranging
from the regulation of certain debt obligations, changes in the control of bank
holding companies, and the maintenance of adequate capital to the general
business operations and financial condition of the Bank and, in the future, Sun
Delaware, including permissible types, amounts and terms of loans and
investments, the amount of reserves maintained against deposits, restrictions on
dividends, establishment of branch offices, and the maximum rate of interest
that may be charged by law. The Federal Reserve, the FDIC, and the OCC also
possess cease and desist powers over bank holding companies and banks, to
prevent or remedy unsafe or unsound practices or violations of law. These and
other restrictions limit the manner in which the Company and its bank
subsidiaries may conduct their business and obtain financing. Furthermore, the
commercial banking business is affected not only by general economic conditions,
but also by the monetary policies of the Federal Reserve. These monetary
policies have had, and are expected to continue to have, significant effects on
the operating results of commercial banks. Changes in monetary or legislative
policies may affect the ability of the Bank and Sun Delaware to attract deposits
and make loans.
Limitations on Payment of Dividends
Historically, the Company has not paid cash dividends on its Common
Shares. The Bank is, and Sun Delaware will become, a wholly owned subsidiary of
the Company and its principal income-producing entities. Accordingly, dividends
payable by the Company are subject to the financial condition of the Bank, Sun
Delaware and the Company, as well as other business considerations. In addition,
because the Bank is, and Sun Delaware will be, a depository institution insured
by the FDIC, they may not pay dividends or distribute any capital assets if
either bank is in default on any assessment due the FDIC. Payment of dividends
by the Bank and Sun Delaware is restricted by statutory limitations. OCC
regulations also impose certain minimum capital requirements that affect the
amount of cash available for the payment of dividends by the Bank and Sun
Delaware. At June 30, 1998, $11.0 million was available for payment as dividends
from the Bank to the Company without the need for approval from the OCC. Even if
the Bank and Sun Delaware are able to generate sufficient earnings to pay
dividends, there is no assurance that their respective Boards of Directors might
not decide or be required to retain a greater portion of the Bank's or Sun
Delaware's earnings in order to maintain existing capital or achieve additional
capital necessary because of (i) an increase in the capital requirements
established by the OCC, (ii) a significant increase in the total of
risk-weighted assets held by the Bank or Sun Delaware, (iii) a significant
decrease in the Bank's or Sun Delaware's income, (iv) a significant
deterioration of the quality of the Bank's or Sun Delaware's loan portfolio, (v)
a determination by the OCC that the payment of a dividend would (under the
circumstances) constitute an "unsafe or unsound" banking practice, or (vi) new
regulations. The occurrence of any of these events would decrease the amount of
funds potentially available for the payment of dividends by the Company or for
debt service of outstanding indebtedness. In addition, under Federal Reserve
policy, the Company is required to maintain adequate regulatory capital and is
expected to act as a source of financial strength to the Bank and Sun Delaware
and to commit resources to support both the Bank and Sun Delaware in
circumstances where it might not do so absent such a policy. This policy could
have the effect of reducing the amount of dividends declarable by the Company or
finds available for debt service.
10
<PAGE>
Upon consummation of the Trust Preferred Offering, Sun Capital Trust
(the "Original Trust") and the Issuer Trust, each a subsidiary trust of the
Company, will have outstanding an aggregate Liquidation Amount of $49.5 million
(assuming the over-allotment option of the underwriters of the Trust Preferred
Offering is exercised in full) of Preferred Securities. The proceeds from the
sale of such Preferred Securities were utilized by the Original Trust, and will
be utilized by the Issuer Trust, to invest in a like amount of junior
subordinated deferrable interest debentures (collectively, the "Debentures") of
the Company. The Company has the right to defer payment of interest on the
Debentures at any time or from time to time for a period not exceeding 20
consecutive quarterly periods with respect to each deferred period (each, an
"Extension Period"), provided that no Extension Period may extend beyond the
maturity of the applicable Debentures. If interest payments on the Debentures
are so deferred, the Company will be prohibited, subject to certain exceptions,
from declaring or paying cash dividends with respect to its capital stock,
including the Common Shares, or debt securities that rank pari passu with or
junior to the Debentures, until such time as the payment of all amounts due on
the Debentures are paid and the Extension Period is terminated.
Cross Guarantee Liability of the Bank and Sun Delaware
Federal law contains a "cross-guarantee" provision which could result
in an insured depository institution which is owned by the Company, such as the
Bank and Sun Delaware, being liable for losses incurred by the FDIC in
connection with assistance provided to, or the failure of, another depository
institution "commonly controlled" by the Company. Because the Bank and Sun
Delaware will be "commonly controlled" by the Company, losses incurred by the
FDIC in connection with assistance provided to, or failure of, one such bank
could result in an assessment against the other bank and such assessment could
have a material adverse effect on the financial condition of such bank and the
Company.
Anti-Takeover Provisions and Statutory Provisions That Could Discourage Hostile
Acquisitions of Control
Provisions in the Company's amended and restated certificate of
incorporation and amended and restated bylaws, the general corporation code of
New Jersey, and certain federal regulations may make it difficult for someone to
pursue a tender offer, change in control or takeover attempt which is opposed by
the Company's management and board of directors. These provisions include:
certain provisions relating to meetings of stockholders; denial of cumulative
voting to stockholders in the election of directors; the ability to issue
preferred stock and additional shares of common stock without shareholder
approval; and super majority provisions for the approval of certain business
combinations. As a result, stockholders who might desire to participate in such
a transaction may not have an opportunity to do so. The effect of these
provisions could be to limit the trading price potential of the Common Shares.
Impact of Changes in Economic Conditions and Monetary Policies
Conditions beyond the Company's control may have a significant impact
on changes in net interest income from one period to another. Examples of such
conditions could include: (i) the strength of credit demands by customers; (ii)
fiscal and debt management policies of the federal government, including changes
in tax laws; (iii) the Federal Reserve's monetary policy; (iv) the introduction
and growth of new investment instruments and transaction accounts by non-bank
financial competitors; and (v) changes in rules and regulations governing the
payment of interest on deposit accounts.
11
<PAGE>
Year 2000
The Year 2000 issue is created by the potential inability of computer
systems to use more than two digits in the data field for the year, thus making
them unable to identify years after 1999 with accuracy. If a bank does not
resolve problems related to the Year 2000 issue, computer systems may
incorrectly compute payment, interest or delinquency information. In addition,
because payment and other important data systems are linked by computer, if the
banks with which the Company or its subsidiaries conducts ongoing operations do
not resolve this potential problem in time, the Company or its subsidiaries may
experience significant data processing delays, mistakes or failures. These
delays, mistakes or failures may have a significant adverse impact on the
financial condition, results of operations and cash flows of the Company.
The Company processes much of its data processing using licensed
software from a third party including all of its deposit and loan accounting and
general ledger functions. The third party has advised the Company that it has
made all the necessary programming changes to its systems for the Year 2000. The
Company plans to test its systems for Year 2000 compliance in late 1998. The
Company does not expect to incur significant incremental direct expenses related
to the Year 2000. Failure of third party computer systems relative to the Year
2000 would have a material adverse impact on the Company's ability to conduct
its business. Costs associated with the Year 2000 problem are expected to be
expenses as incurred in compliance with generally accepted accounting
principles. In addition, the Company cannot guarantee that the inability of loan
customers to adequately correct the Year 2000 issue will not have an adverse
effect on the Company.
12
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RECENT RESULTS OF OPERATIONS
General
The primary activity of the Company is the oversight of the Bank.
Through the Bank, the Company engages in community banking activities by
accepting deposit accounts from the general public and investing such funds in a
variety of loans. These community banking activities primarily include providing
home equity loans, mortgage loans, a variety of commercial business and
commercial real estate loans and, to a much lesser extent, installment loans.
The Company also maintains an investment securities portfolio. The Company's
lending and investing activities are funded by retail deposits. The largest
component of the Company's net income is net interest income. Consequently, the
Company's earnings are primarily dependent on its net interest income, which is
determined by (i) the difference between rates of interest earned on
interest-earning assets and rates paid on interest-bearing liabilities (interest
rate spread), and (ii) the relative amounts of interest-earning assets and
interest-bearing liabilities. The Company's net income is also affected by its
provision for loan losses, as well as the amount of non-interest income and
non-interest expenses, such as salaries and employee benefits, professional fees
and services, deposit insurance premiums, occupancy and equipment costs and
income taxes. Set forth below is an analysis of the financial condition and
recent operating results of the Company. In July 1998, the Company entered into
an agreement regarding the Beneficial Acquisition. See "- Financial Condition,"
"Beneficial Acquisition" and "Pro Forma Consolidated Statement of Financial
Condition."
Financial Condition
Total assets at June 30, 1998 increased by $53.6 million to $1,154
million as compared to $1,100 million at December 31, 1997. The growth was
primarily due to an increase in net loans of $58.3 million, an increase in
federal funds sold of $9.5 million and offset by a decrease in the investment
securities portfolio of $18.9 million.
Investment securities available for sale decreased $18.9 million, from
$576.3 million at December 31, 1997 to $557.4 million at June 30, 1998. The
decrease was primarily a result of net sales of investment securities, the
proceeds of which funded loan growth and repayment of short-term borrowings.
Net loans at June 30, 1998 amounted to $486.1 million, an increase of
$58.3 million from $427.8 million at December 31, 1997. Of the increase, only
$34,000 was the result of loans purchased from First Savings Bank. The increase
was primarily from increased originations of commercial and industrial loans.
The ratio of non-performing assets to total loans and real estate owned at June
30, 1998 was 0.50% compared to 0.51% at December 31, 1997. The ratio of
allowance for loan losses to total non-performing loans was 209.73% at June 30,
1998 compared to 189.77% at December 31, 1997. The increase in this ratio was
the result of a higher allowance for loan losses at June 30, 1998. The ratio of
allowance for loan losses to total loans was 1.05% at June 30, 1998 compared to
0.97% at December 31, 1997.
Excess of cost over fair value of assets acquired (goodwill) decreased
$1.1 million, from $26.2 million at December 31, 1997 to $25.1 million at June
30, 1998. The decrease was a result of related amortization and a $289,000
refund of the purchase premium from the purchase of The Bank of New York
branches, substantially offset by the addition of a $1.1 million premium paid
for the acquisition of the Eatontown office of First Savings.
Total liabilities at June 30, 1998 amounted to $1,066 million compared
to $1,017 million at December 31, 1997, an increase of $49.1 million.
13
<PAGE>
Total deposits grew to $753.5 million at June 30, 1998, a $58.1 million
increase over December 31, 1997 deposits of $695.4 million. The increase was the
result of approximately $25.1 million in deposits acquired from First Savings
Bank, as well as from internal deposit growth of 4.74%.
There were $35.7 million in advances from the Federal Home Loan Bank
and $15 million in federal funds purchased at June 30, 1998 compared to $75.0
million and $5.5 million, respectively, at December 31, 1997. The combined net
decrease in these liabilities was due to the availability of funds from
increased deposit levels combined with the proceeds from sales of investment
securities.
Total shareholders' equity grew by $4.5 million, from $54.6 million at
December 31, 1997, to $59.1 million at June 30, 1998. The increase was a result
of net earnings of $3.8 million for the six months ended June 30, 1998 augmented
by proceeds received from the issuance of common stock amounting to
approximately $409,000 and an improvement in the net unrealized gains on
securities available for sale, net of income taxes of $283,000.
Beginning in 1997, to more fully leverage its capital, the Company
entered into certain structured transactions in which the Bank borrows funds
from the FHLB at a rate similar to the London Inter-Bank Offered Rate ("LIBOR").
It invests the borrowed funds in mortgage-backed securities that are priced to
yield a spread over LIBOR. The securities are pledged as collateral for FHLB
borrowings. For the six months ended June 30, 1998, net interest income related
to structured transactions amounted to $2.3 million, or a 1.03% weighted average
net spread. Partly as a result of the implementation of this strategy, the net
interest margin of the Company has narrowed to 3.68% for the six months ended
June 30, 1998. Excluding the effect of the structured transactions, the
Company's net interest margin would have been 5.29% for that period.
Additionally, for the six months ended June 30, 1998, the Company
reported a return on average assets, a return on average equity and an
efficiency ratio of 0.70%, 13.49% and 69.44%, respectively. On a cash earnings
basis (computed excluding the amortization of goodwill) the return on average
assets, the return on average equity and the efficiency ratio for the same
period would have been 1.06%, 20.24% and 60.35%, respectively. Amortization of
goodwill resulting from the Beneficial Acquisition is expected to further reduce
the Company's profitability ratios, while the transaction is expected to be
accretive to earnings.
Comparison of Operating Results for the Six Months Ended June 30, 1998 and 1997.
General. Net income increased by $2.3 million for the six months ended
June 30, 1998 to $3.8 million from $1.5 million for the six months ended June
30, 1997. Net interest income increased $8.8 million and the provision for loan
losses increased $185,000 for the six months ended June 30, 1998 compared to the
same period in 1997. Other income increased by $1.9 million to $2.7 million for
the six months ended June 30, 1998 as compared to $776,000 for the six months
ended June 30, 1997. Other expenses increased by $7.2 million to $14.5 million
for the six months ended June 30, 1998 as compared to $7.3 million for the six
months ended June 30, 1997. The return on average assets for the six months
ended June 30, 1998 and 1997 were 0.70% and 0.62%, respectively. The return on
average equity for the six months ended June 30, 1998 and 1997 were 13.49% and
10.69%, respectively.
Net Interest Income. The increase in net interest income was due to a
$21.1 million increase in interest income partially offset by a $12.3 million
increase in interest expense.
Interest Income. Interest income for the six months ended June 30, 1998
increased approximately $21.1 million, or 116.2%, from $18.1 million for the
same period in 1997 to $39.2 million in 1998. The increase was primarily the
result of an increase of $6.7 million in interest and
14
<PAGE>
fees on loans resulting from acquisitions and internal growth and $14.3 million
in interest on investment securities resulting from the deployment of cash
received from financing transactions, branch acquisitions and deposit growth
into the Company's investment portfolio. The Beneficial Acquisition, the
Offering and the Trust Preferred Offering are expected to generate additional
net cash that can be deployed into loan growth and investments that will create
interest income.
Interest Expense. Interest expense for the six months ended June 30,
1998 increased approximately $12.3 million, from $8.7 million for the same
period in 1997 to $21.0 million in 1998. This increase was primarily due to a
$5.3 million increase in interest on deposit accounts resulting from
significantly higher deposit balances due to acquisitions and internal growth, a
$6.3 million increase in interest on short-term borrowed funds resulting from
higher levels of borrowings from correspondent banks and securities sold under
agreements to repurchase and a $615,000 increase in interest on guaranteed
preferred beneficial interest in subordinated debt. The Beneficial Acquisition
and the Trust Preferring Offering will result in increased interest expense in
future periods.
Provision for Loan Losses. For the six months ended June 30, 1998, the
provision for loan losses amounted to $1.0 million, an increase of $185,000,
compared to $825,000 for the same period in 1997. The increase in the provision
for loan losses was due to higher levels of loans outstanding. Management
continually reviews the adequacy of the loan loss reserve based upon internal
review of loans and using guidelines promulgated by the Bank's primary
regulator.
Other Income. Other income increased $1.9 million for the six-month
period ended June 30, 1998 compared to the six-month period ended June 30, 1997.
The increase was a result of approximately $978,000 in fees generated by a
larger base due to deposit acquisitions and internal growth, augmented by
$110,000 in gains from the sale of loans and an increase of $573,000 in gains on
the sale of investment securities and $250,000 in other income.
Other Expenses. Other expenses increased approximately $7.2 million, to
$14.5 million for the six months ended June 30, 1998 as compared to $7.3 million
for the same period in 1997. Of the increase, $3.1 million was in salaries and
employee benefits, $824,000 was in occupancy expense, $525,000 was in equipment
expense, $116,000 was in professional fees and services, $389,000 was in data
processing expense, $174,000 was in postage and supplies, $1.4 million was in
amortization of excess of cost over fair value of assets acquired (amortization
of goodwill) and $644,000 was in Other Expenses. The increase in other expenses
reflects the Company's strategy to support planned expansion. Salaries and
benefits increased due to additional staff positions in financial service
centers, lending, loan review, compliance and audit departments. The increase in
occupancy, equipment, professional fees and services and data processing
expenses were the result of internal growth and the effect of the Company's
acquisitions. The Company has entered into two purchase and assumption
agreements which, when completed, will result in the acquisition of a total of
ten branch locations, including the eight branch locations in connection with
the Beneficial Acquisition. As a result, the Company expects the level of
amortization of excess of cost over fair value of assets acquired to increase in
periods subsequent to the completion of the transactions.
Income Taxes. Applicable income taxes increased $995,000 for the six
months ended June 30, 1998 as compared to the same period in 1997. The increase
resulted from higher pre-tax earnings.
15
<PAGE>
USE OF PROCEEDS
The net proceeds to the Company from the sale of the __________ Common
Shares offered by the Company (after giving effect to the payment of estimated
offering expenses) are estimated to be approximately $__________ ($__________ if
the Underwriters' over-allotment option is exercised in full). The Company also
estimates that the net proceeds of the Trust Preferred Offering will be
approximately $__________ ($__________ if the over-allotment option is exercised
in full), after deducting estimated underwriting discounts and commissions and
estimated offering expenses payable by the Company. The total net proceeds to
the Company from the Offering and the Trust Preferred Offering are estimated to
be $__________ ($__________ if the over-allotment options of the Underwriters as
well as the underwriters of the Trust Preferred Offering are exercised in full).
Such proceeds from the Offering will qualify under the capital adequacy
guidelines of the Federal Reserve as Tier 1 capital for the Company. The
proceeds from the Trust Preferred Offering will qualify under the capital
adequacy guidelines of the Federal Reserve as Tier 2 capital of the Company. The
net proceeds from the Offering and the Trust Preferred Offering will be used by
the Company to provide equity capital to Sun Delaware for the purpose of
providing sufficient capital to Sun Delaware to consummate the Beneficial
Acquisition.
16
<PAGE>
BENEFICIAL ACQUISITION
The Company has entered into an agreement to acquire certain loans, and
assume certain deposits, of Beneficial National Bank ("Beneficial"). As part of
the Beneficial Acquisition, the Company will acquire eight leased branch
offices, all located in New Castle County, Delaware. It is anticipated that the
current senior management of Beneficial, comprised of the president, senior
credit officer and senior business development/operations officer, will continue
in similar positions at Sun Delaware. The State of Delaware is a contiguous
extension of the Company's existing marketplace, with the Company's closest New
Jersey branch being located only a few miles from the closest Beneficial branch.
The agreement with Beneficial includes the purchase by the Company of
performing loans and loans that are not thirty days or more past due in the
payment of principal or interest or not adversely classified. While the Company
did not originate or underwrite such loans, the Company has performed a loan
review on a significant portion of the loans it is acquiring from the Beneficial
Acquisition and will not acquire any loans that are more than 30 days delinquent
in the payment of interest or principal or that are adversely classified at the
time of consummation of the Beneficial Acquisition.
At June 30, 1998, loans covered by the agreement with Beneficial were
as follows:
Weighted
Average
Amount Yield
------ -----
(In thousands)
Commercial and industrial.............. $ 87,158 10.32%
Home equity............................ 21,700 9.96%
Residential real estate................ 11,519 7.91%
Installment............................ 18,674 11.14%
-------
Gross Loans.......................... 139,051 10.18%
Reserve for loan losses................ (1,000)
--------
Net loans............................ $138,051
=======
At June 30, 1998, deposits to be assumed under the agreement with
Beneficial were as follows:
Weighted
Average
Amount Interest Cost
------ -------------
(In thousands)
Demand deposits........................ $ 58,110 1.50%
Savings deposits....................... 43,441 3.01%
Time deposits.......................... 77,062 4.99%
------- -----
Total deposits....................... $178,613 3.38%
=======
17
<PAGE>
PRO FORMA CONSOLIDATED STATEMENT OF FINANCIAL CONDITION
June 30, 1998
The following table sets forth the unaudited pro forma consolidated
statement of financial condition of the Company assuming the branch purchases
are consummated as of June 30, 1998. The pro forma consolidated statement of
financial condition should be read in conjunction with the consolidated
financial statements of the Company and notes thereto included in the Company's
1997 Annual Report to Stockholders which is incorporated herein by reference as
part of the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1997, and included in the Company's Quarterly Reports on Form 10-Q
for the quarters ended March 31, and June 30, 1998. See "Incorporation of
Certain Documents by Reference." The pro forma consolidated statement of
financial condition has been prepared by the Company, is unaudited, and may not
be indicative of results on an annualized basis or for any other period.
<TABLE>
<CAPTION>
Pro Forma
Consolidated Pro Forma
Beneficial Summit Company Consolidated
Branch Branch Before Securities ompany After
Purchase Purchase Securities Offerings Securities
Company Dr. (Cr.) Dr. (Cr.) Offerings Dr. (Cr.) Offerings
------- --------- --------- --------- --------- ---------
(In thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Assets
Cash and amounts due from banks......... $ 37,721 $ 1,400 (1) $ $ 39,121 $ $ 39,121
Federal funds sold...................... 9,500 38,700 (1) 14,596 (1) 36,000 (5)
(4,100) (2) (660)(4) (2,080) (5)
(19,900) (3) 38,136 72,056
Investment securities available-for-
sale.................................. 557,392 557,392 557,392
Loans receivable (net).................. 486,059 138,000 (1)
4,100 (2) 628,159 628,159
Bank properties and equipment, net...... 25,342 500 (1) 178 (1) 26,020 26,020
Real estate owned....................... 396 396 396
Accrued interest receivable............. 8,234 8,234 8,234
Excess of cost over fair value
of net assets acquired................ 25,065 19,900 (3) 660 (4) 45,625 45,625
Deferred taxes.......................... 1,511 1,511 1,511
Other assets............................ 2,342 -- -- 2,342 830 (5) 3,172
---------- -------- ------- ---------- ------- ----------
Total................................ $1,153,562 $178,600 $14,774 $1,346,936 $34,750 $1,381,686
========= ======= ======= ========= ====== =========
Liabilities and Shareholders' Equity
Liabilities:
Deposits................................ $753,507 $178,600 (1) $14,774 (1) $946,981 $ $946,881
Advances from the Federal Home Loan
Bank.................................. 35,700 35,700 35,700
Federal funds purchased................. 15,000 15,000 15,000
Securities sold under agreements
to repurchase......................... 256,800 256,800 256,800
Other liabilities....................... 4,681 -- -- 4,681 -- 4,681
--------- ------- ------- ---------- -------- ---------
Total liabilities..................... 1,065,688 178,600 14,774 1,259,062 -- 1,259,062
--------- ------- ------- --------- -------- ---------
Guaranteed preferred beneficial interest
in subordinated debt.................. 28,750 28,750 18,000 (5) 46,750
Shareholders' equity:
Preferred stock.........................
Common stock............................ 6,341 6,341 666 (5) 7,007
Surplus................................. 38,935 38,935 16,084 (5) 55,019
Retained earnings....................... 13,412 13,412 13,412
Net unrealized gain on securities
available-for-sale, net
of income taxes....................... 436 -- -- 436 -- 436
------ ------- ------- ---------- ------- ---------
Total shareholders' equity............ 59,124 -- -- 59,124 16,750 75,874
--------- ------- ------- --------- ------- ---------
Total................................. $1,153,562 $178,600 $14,774 $1,346,936 $34,750 $1,381,686
========= ======= ====== ========= ====== =========
</TABLE>
- ---------------------
(1) To record branch purchase.
(2) To record premium paid on the purchase of loans ($4.1 million). The premium
will be amortized over a five year period.
(3) To record premium paid on the assumption of the deposit liabilities ($19.9
million). The excess of cost over fair value of assets acquired will be
amortized over a seven year period.
(4) To record premium paid on the assumption of deposit liabilities ($660,000).
The excess of cost over fair value of assets acquired will be amortized
over a seven year period.
(5) To record net proceeds from offering of Common Shares and the Trust
Preferred Offering.
18
<PAGE>
CAPITALIZATION
The following table sets forth (i) the consolidated capitalization of
the Company at June 30, 1998, (ii) the consolidated capitalization of the
Company giving effect to the issuance of the Common Shares and the Trust
Preferred Offering assuming the Underwriters' over-allotment option was not
exercised in either offering, (iii) the pro forma effect of branch purchases,
and (iv) the actual and pro forma capital ratios of the Company.
<TABLE>
<CAPTION>
As Adjusted
---------------------------------------------
Sale of Securities
Sale of and
Actual Securities(2) Branch Purchases(2)
------ ------------- -------------------
(Dollars in thousands)
<S> <C> <C> <C>
Guaranteed preferred beneficial interest in
subordinated debt................................ $ 28,750 $ 46,750 $ 46,750
SHAREHOLDERS' EQUITY:
Preferred stock $1 par value, 1,000,000
shares authorized, none issued................. -- -- --
Common stock $1 par value - 25,000,000(1)
shares authorized; 7,007,748 outstanding........ 6,341 7,007 7,007
Surplus.......................................... 38,935 55,019 55,019
Retained earnings................................ 13,412 13,412 13,412
Net unrealized gain on securities
available-for-sale, net of income taxes........ 436 436 436
------- ------ -------
Total shareholders' equity................... 59,124 75,874 75,874
------- ------- -------
Total capitalization........................... $ 87,874 $122,624 $122,624
======= ======= =======
COMPANY CAPITAL RATIOS(3):
Tier 1 risk-based capital ratio.................. 8.60% 12.06% 7.14%
Total risk-based capital ratio................... 10.91% 14.35% 9.13%
Leverage ratio................................... 4.96% 6.82% 4.11%
</TABLE>
- ----------------------
(1) As adjusted for the increase in authorized Common Shares approved by
shareholders of the Company on August 25, 1998.
(2) Assumes the sale of $18 million of Common Shares in the Offering and $18
million of Trust II's Preferred Securities in the Trust Preferred Offering.
(3) The capital ratios, as adjusted, are computed including the total estimated
net proceeds from the sale of the Common Shares, in a manner consistent
with Federal Reserve guidelines.
At June 30, 1998, the Bank's Tier 1 risk-based capital, total
risk-based capital and leverage capital ratios were 9.77%, 10.60% and 5.63%,
respectively. At June 30, 1998, the pro forma Tier 1 risk-based capital, total
risk-based capital and leverage capital ratios for Sun Delaware were 10.01%,
10.68% and 7.68%, respectively. The Bank is "well capitalized" and Sun Delaware
will be "well capitalized" on a pro forma basis for federal bank regulatory
purposes. The Company will be "adequately capitalized" on a pro forma basis for
federal bank regulatory purposes.
19
<PAGE>
PRICE RANGE OF COMMON SHARES; DIVIDENDS
The Company's Common Shares have been quoted on the Nasdaq National
Market under the symbol "SNBC" since November 1997. From August 29, 1996, until
November 1997, the Company's Common Shares were quoted on the Nasdaq SmallCap
Market, with limited and infrequent trading in the Common Shares during this
period. The following table sets forth the high and low closing sale prices
(adjusted for stock splits and dividends) for the Common Shares for the calendar
quarters indicated, as published by the Nasdaq SmallCap and National Markets.
High Low
---- ---
1996
Third quarter (from August 29, 1996).............. $8.64 $8.06
Fourth quarter.................................... 8.97 8.06
1997
First quarter..................................... $9.37 $8.26
Second quarter.................................... 9.95 8.67
Third quarter..................................... 13.97 9.42
Fourth quarter.................................... 21.59 13.65
1998
First quarter..................................... $30.71 $19.68
Second quarter.................................... 30.63 25.25
Third quarter (through August 13, 1998)........... 29.50 24.50
The last reported sale price of the Common Shares on the Nasdaq
National Market as of __________ ____, 1998, was $__________. There were
__________ holders of record of the Company's Common Shares as of
________________ __, 1998.
Historically, the Company has not paid cash dividends on its Common
Shares. The Company's Board of Directors does not currently intend to pay cash
dividends, but may consider such a policy in the future. No decision, however,
has been made as to the amount or timing of such cash dividends. The Company
paid 5% stock dividends on October 30, 1996, June 25, 1997 and May 26, 1998. The
Company declared three for two Common Share stock splits effected by means of
50% stock dividends paid in September 1997 and March 1998. Future declarations
of dividends by the Board of Directors will depend upon a number of factors,
including the Company's, the Bank's and Sun Delaware's financial condition and
results of operations, investment opportunities available to the Company, the
Bank or Sun Delaware, capital requirements, regulatory limitations, tax
considerations, the amount of net proceeds retained by the Company and general
economic conditions. No assurances can be given, however, that any dividends
will be paid or, if payment is made, will continue to be paid.
The ability of the Company to pay dividends is dependent upon the
ability of the Bank and Sun Delaware to pay dividends to the Company. Because
the Bank is, and Sun Delaware will be, a depository institution insured by the
FDIC, they may not pay dividends or distribute capital assets if either one is
in default on any assessment due the FDIC. In addition, OCC regulations also
impose certain minimum capital requirements that affect the amount of cash
available for the payment of dividends by the Bank and Sun Delaware. Under
Federal Reserve policy, the Company is required to maintain adequate regulatory
capital and is expected to act as a source of financial strength to both the
Bank and Sun Delaware and to commit resources to support the Bank and Sun
Delaware in circumstances
20
<PAGE>
where it might not do so absent such a policy. This policy could have the effect
of reducing the amount of dividends declarable by the Company.
UNDERWRITING
Subject to the terms and conditions of the Underwriting Agreement (the
"Underwriting Agreement") dated __________ ____, 1998, among the Company and
Advest, Inc. and Janney Montgomery Scott Inc., as the Representatives of the
several underwriters named therein ("Underwriters"), the Company has agreed to
sell to the Underwriters, and the Underwriters have severally agreed to purchase
from the Company, the following amounts of Common Shares at the public offering
price less the underwriting discounts and commissions set forth on the cover
page of this Prospectus:
Underwriter: Number of Shares:
- ------------ -----------------
Advest, Inc...............................................
Janney Montgomery Scott Inc...............................
----------
Total.....................................................
==========
The Underwriting Agreement provides that the obligations of the
Underwriters are subject to certain conditions precedent and that the
Underwriters will purchase all of the Common Shares offered hereby if any of
such Common Shares are purchased.
The Company has been advised by the Representatives that the
Underwriters propose to offer the Common Shares (including the shares to be
purchased by directors, officers and employees, and their associates, of the
Company and the Bank) to the public at the public offering price set forth on
the cover page of this Prospectus and to certain dealers at such price less a
concession not in excess of $__________ per Common Share. The Underwriters may
allow, and such dealers may reallow, a concession not in excess of $__________
per Common Share to certain other dealers. After the Offering, the public
offering price, concession and reallowance to dealers may be changed by the
Representatives. No such change shall affect the amount of proceeds to be
received by the Company as set forth on the cover page of this Prospectus. In
addition, the Company has agreed to pay a financial advisory fee to Advest, Inc.
of $75,000 in connection with the Offering and $25,000 in connection with the
Trust Preferred Offering.
The Company has granted to the Underwriters an option, exercisable not
later than 30 days after the date of the Underwriting Agreement, to purchase up
to an additional __________ Common Shares at the public offering price. To the
extent that the Underwriters exercise such option, the Company will be
obligated, pursuant to the option, to sell such Common Shares to the
Underwriters. The Underwriters may exercise such option only to cover
over-allotments made in connection with the sale of the Common Shares offered
hereby. If purchased, the Underwriters will offer such additional Common Shares
on the same terms as those on which the __________ Common Shares are being
offered.
The Underwriters have reserved __________ Common Shares offered in the
Offering for sale at the public offering price to directors, officers and
employees (and their affiliates) of the Company. The Underwriters will not
receive any discounts or commissions on Common Shares purchased by such
officers, directors or employees (and their affiliates) of the Company. The
number of Common Shares available for sale to the general public will be reduced
to the extent such persons purchase such reserved
21
<PAGE>
shares. Any reserved shares which are not so purchased will be offered by the
Underwriters to the general public on the same basis as the other Common Shares
offered hereby.
The Underwriters and dealers may engage in passive market making
transactions in the Common Shares in accordance with Rule 103 of Regulation M
promulgated by the Securities and Exchange Commission (the "Commission"). In
general, a passive market maker may not bid for or purchase Common Shares at a
price that exceeds the highest independent bid. In addition, the net daily
purchases made by any passive market maker generally may not exceed 30% of its
average daily trading volume in the Common Shares during a specified two-month
prior period, or 200 shares, whichever is greater. A passive market maker must
identify passive market making bids as such on the Nasdaq electronic
inter-dealer reporting system. Passive market making may stabilize or maintain
the market price of the Common Shares above independent market levels.
In connection with the Offering, certain Underwriters may engage in
transactions that stabilize, maintain or otherwise affect the price of the
Common Shares. Specifically, the Underwriters may over-allot the Offering,
creating a syndicate short position. In addition, the Underwriters may bid for
and purchase Common Shares in the open market to cover syndicate short positions
or to stabilize the price of Common Shares. Finally, the underwriting syndicate
may reclaim selling concessions from syndicate members if the syndicate
repurchases previously distributed Common Shares in syndicate covering
transactions, in stabilization transactions or otherwise. Any of these
activities may stabilize or maintain the market price of the Common Shares above
independent market levels. The Underwriters are not required to engage in these
activities and may end any of these activities at any time.
The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act.
The Representatives and certain of the other Underwriters have in the
past, and may in the future, perform various services for the Company, including
investment banking services, for which they have or may receive customary fees.
Advest, Inc. also served as managing underwriter in the Company's public
offerings of Common Shares and trust preferred securities in 1997, and advised
the Company in certain of its branch purchases. The Representatives are also
serving as underwriters of the Trust Preferred Offering.
VALIDITY OF SECURITIES
The validity of the Common Shares offered hereby will be passed upon
for the Company by Malizia, Spidi, Sloane & Fisch, P.C., Washington, D.C.,
counsel to the Company. Certain legal matters will be passed upon for the
Underwriters by Arnold & Porter, Washington, D.C. and New York, New York.
EXPERTS
The consolidated financial statements incorporated in this Prospectus
by reference from the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1997, have been audited by Deloitte & Touche LLP, independent
auditors, as stated in their report, which is incorporated herein by reference,
and have been so incorporated in reliance upon the report of such firm given
upon their authority as experts in accounting and auditing.
22
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith, files reports, proxy statements and other information with
the Commission. Such reports, proxy statements and other information can be
inspected and copied at the public reference facilities of the Commission at
Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549 and at the regional
offices of the Commission located at 7 World Trade Center, 13th Floor, Suite
1300, New York, New York 10048 and Suite 1400, Citicorp Center, 14th Floor, 500
West Madison Street, Chicago, Illinois 60661. Copies of such material can also
be obtained at prescribed rates by writing to the Public Reference Section of
the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549. Additionally,
such material may be accessed electronically by means of the Commission's home
page on the Internet at http://www.sec.gov.
The Company has filed a Registration Statement on Form S-3 (together
with all amendments and exhibits thereto, the "Registration Statement") with the
Commission under the Securities Act in connection with the Offering. This
Prospectus does not contain all of the information set forth in the Registration
Statement, certain parts of which are omitted in accordance with the rules and
regulations of the Commission. The Registration Statement, including any
amendments, schedules and exhibits thereto, is available for inspection and
copying as set forth above. Statements contained in this Prospectus as to the
contents of any contract or other document referred to herein include all
material terms of such contracts or other documents but are not necessarily
complete, and in each instance reference is made to the copy of any such
contract or other document which may have been filed as an exhibit to the
Registration Statement, each such statement being qualified in all respects by
such reference.
The Common Shares are traded on the Nasdaq National Market under the
symbol "SNBC." Documents filed by the Company with the Commission also can be
inspected at the offices of the National Association of Securities Dealers,
Inc., 1735 K Street, N.W., Washington, D.C. 20006.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents previously filed by the Company with the
Commission are hereby incorporated into this Prospectus by reference:
(a) The Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1997;
(b) The Company's Quarterly Reports on Form 10-Q for the quarters
ended March 31, 1998 and June 30, 1998;
(c) The Company's Current Reports on Form 8-K filed with the
Commission on July 27, 1998, March 6, 1998, and February 26,
1998; and
(d) The Company's Registration Statement on Form 10 declared
effective by the Commission in August 1996 and any amendment or
report filed for the purpose of updating such description.
In addition, all subsequent documents filed with the Commission by the
Company pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act after
the date of this Prospectus shall be deemed to be incorporated by reference into
this Prospectus and to be a part hereof from the date of filing such
23
<PAGE>
documents. Any statement contained in this Prospectus or in a document
incorporated or deemed to be incorporated by reference herein or therein shall
be deemed to be modified or superseded for purposes of this Prospectus to the
extent that a statement contained herein or therein or in any subsequently filed
document which also is or is deemed to be incorporated by reference herein
modified or supersedes such statement. Any statement so modified or superseded
shall not be deemed, except as so modified or superseded, to constitute a part
of this Prospectus.
This Prospectus incorporates documents by reference which are not
presented herein or delivered herewith. These documents (excluding exhibits
unless specifically incorporated therein) are available without charge upon
written or oral request from the Secretary, Sun Bancorp, Inc., 226 Landis
Avenue, Vineland, New Jersey 08360, telephone (609) 691-7700.
CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING INFORMATION
This Prospectus (including information included or incorporated by
reference herein) contains or may contain forward-looking statements with
respect to the financial condition, results of operations, plans, objectives,
future performance and business of the Company, including statements preceded
by, followed by or that include the words, "believes," "expects," "anticipates"
or similar expressions. These forward-looking statements involve certain risks
and uncertainties and may relate to future operating results of the Company.
Factors that may cause actual results to differ materially from those
contemplated by such forward-looking statements include, among others, the
following possibilities: (1) expected cost savings from the acquisitions not
being fully realized or realized within the expected time frame; (2) earnings
following the acquisitions being lower than expected; (3) a significant increase
in competitive pressures among depository and other financial institutions; (4)
costs or difficulties related to the integration of the acquired business being
greater than expected; (5) changes in the interest rate environment resulting in
reduced margins; (6) general economic or business conditions, either nationally
or in the states in which the Company will be doing business, being less
favorable than expected, resulting in, among other things, a deterioration in
credit quality or a reduced demand for credit; (7) legislative or regulatory
changes adversely affecting the businesses in which the Company will be engaged;
(8) changes in the securities markets; and (9) changes in the banking industry
including the effects of consolidation resulting from possible mergers of
financial institutions.
24
<PAGE>
<TABLE>
<CAPTION>
=========================================================== ====================================================
<S> <C>
No dealer, salesperson or other individual has
been authorized to give any information or to
make any representation not contained in this Shares
Prospectus inconnection with the offering --------------
covered by this Prospectus. If given or made,
such information or representation must not be
relied upon as having been authorized by the
Company or the Underwriters. This Prospectus
does not constitute an offer to sell or a [Logo]
solicitation of any offer to buy, the Common
Shares in any jurisdiction where, or to any
person to whom it is unlawful to make such
offer or solicitation. Neither the delivery of this SUN BANCORP, INC.
Prospectus nor any sale made hereunder shall,
under any circumstances, create an implication
that there has not been any change in the affairs COMMON STOCK
of the Company since the date hereof.
TABLE OF CONTENTS
Page
----
---------------------
Prospectus Summary...............................
Selected Consolidated Financial Data............. PROSPECTUS
Risk Factors.....................................
Management's Discussion and Analysis of ---------------------
Financial Condition and Recent Results of
Operations......................................
Use of Proceeds..................................
Beneficial Acquisition...........................
Pro Forma Consolidated Statement of
Financial Condition.............................
Capitalization................................... Advest, Inc.
Price Range of Common Shares;
Dividends......................................
Underwriting..................................... Janney Montgomery Scott, Inc.
Validity of Securities...........................
Experts..........................................
Available Information............................
Incorporation of Certain Documents by 1998
Reference...................................... ---------------- -----,
Cautionary Statement Concerning
Forward-Looking Information....................
=========================================================== ====================================================
</TABLE>
<PAGE>
PROSPECTUS
28,302 Shares
Sun Bancorp, Inc.
Common Stock
Sun Bancorp, Inc. ("the Company") hereby registers up to 28,302 shares
(the "Shares") of its Common Shares, $1.00 par value (the "Common Shares"), for
the account of certain selling shareholders (the "Selling Shareholders") in
connection with the proposed resale by the Selling Shareholders of 28,302 Shares
recently acquired by the Selling Shareholders in connection with the acquisition
by the Company of Allegiance Mortgage Company.
The Company will not receive any of the proceeds from the sale of the
Shares by the Selling Shareholders.
The Company will pay all of the expenses of this offering, except that
the Selling Shareholders will bear the cost of any brokerage commissions or
discounts incurred in connection with the sale of the Shares and related legal
expenses. The Shares may be sold by the Selling Shareholders directly or through
underwriters, dealers or agents in market transactions or in privately
negotiated transactions. See "Plan of Distribution."
The Common Shares are included for trading on the Nasdaq National
Market under the symbol "SNBC." On August ____, 1998, the last reported sales
price of the Common Shares on the Nasdaq National Market was $____ per share.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE. THE SECURITIES OFFERED HEREBY ARE NOT DEPOSITS,
SAVINGS ACCOUNTS, OR OTHER OBLIGATIONS OF A DEPOSITORY INSTITUTION AND ARE NOT
INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENTAL
AGENCY OR INSTRUMENTALITY. THE SECURITIES ARE NOT OBLIGATIONS OF NOR ARE THE
SECURITIES GUARANTEED BY SUN NATIONAL BANK.
---------------------
No dealer, salesperson or other person is authorized to give any
information or to make any representation not contained or incorporated by
reference into this Prospectus and, if given or made, such information or
representation should not be relied upon as having been authorized by the
Company or any other person. This Prospectus does not constitute an offer to
sell or a solicitation of an offer to buy any securities in any jurisdiction to
any person to whom it is not lawful to make any such offer or solicitation in
such jurisdiction. Neither the delivery of this Prospectus shall, under any
circumstances, create an implication that there has been no change in the
affairs of the Company since the date of this Prospectus.
The date of this Prospectus is August ____, 1998.
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith, files reports, proxy statements and other information with
the Commission. Such reports, proxy statements and other information can be
inspected and copied at the public reference facilities of the Commission at
Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549 and at the regional
offices of the Commission located at 7 World Trade Center, 13th Floor, Suite
1300, New York, New York 10048 and Suite 1400, Citicorp Center, 14th Floor, 500
West Madison Street, Chicago, Illinois 60661. Copies of such material can also
be obtained at prescribed rates by writing to the Public Reference Section of
the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549. Additionally,
such material may be accessed electronically by means of the Commission's home
page on the Internet at http://www.sec.gov. This Prospectus does not contain all
the information set forth in the Registration Statement and exhibits thereto,
which the Company has filed with the Commission under the Securities Act and to
which reference is hereby made.
The Company has filed a Registration Statement on Form S-3 together
with all amendments and exhibits thereto with the Commission under the
Securities Act of 1933, as amended (the "Securities Act"). This Prospectus does
not contain all of the information set forth in the Registration Statement,
certain parts of which are omitted in accordance with the rules and regulations
of the Commission. The Registration Statement, including any amendments,
schedules and exhibits thereto, is available for inspection and copying as set
forth above. Statements contained in this Prospectus as to the contents of any
contract or other document referred to herein include all material terms of such
contracts or other documents but are not necessarily complete, and in each
instance reference is made to the copy of any such contract or other document
which may have been filed as an exhibit to the Registration Statement, each such
statement being qualified in all respects by such reference.
The Common Shares are traded on the Nasdaq National Market under the
symbol "SNBC." Documents filed by the Company with the Commission also can be
inspected at the offices of the National Association of Securities Dealers,
Inc., 1735 K Street, N.W., Washington, D.C. 20006.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents previously filed by the Company with the
Commission are hereby incorporated into this Prospectus by reference:
(a) The Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1997;
(b) The Company's Quarterly Reports on Form 10-Q for the quarters
ended March 31, 1998 and June 30, 1998;
(c) The Company's Current Reports on Form 8-K filed with the
Commission on July 27, 1998, March 6, 1998, and February 26,
1998; and
(d) The Company's Registration Statement on Form 10 declared
effective by the Commission in August 1996 and any amendment or
report filed for the purpose of updating such description.
In addition, all subsequent documents filed with the Commission by the
Company pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act after
the date of this Prospectus shall be deemed to be incorporated by reference into
this Prospectus and to be a part hereof from the date of filing such documents.
Any statement contained in this Prospectus or in a document incorporated or
deemed to be
<PAGE>
incorporated by reference herein or therein shall be deemed to be modified or
superseded for purposes of this Prospectus to the extent that a statement
contained herein or therein or in any subsequently filed document which also is
or is deemed to be incorporated by reference herein modified or supersedes such
statement. Any statement so modified or superseded shall not be deemed, except
as so modified or superseded, to constitute a part of this Prospectus.
This Prospectus incorporates documents by reference which are not
presented herein or delivered herewith. These documents (excluding exhibits
unless specifically incorporated therein) are available without charge upon
written or oral request from the Secretary, Sun Bancorp, Inc., 226 Landis
Avenue, Vineland, New Jersey 08360, telephone (609) 691-7700.
CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING INFORMATION
This Prospectus (including information included or incorporated by
reference herein) contains or may contain forward-looking statements with
respect to the financial condition, results of operations, plans, objectives,
future performance and business of the Company, including statements preceded
by, followed by or that include the words, "believes," "expects," "anticipates"
or similar expressions. These forward-looking statements involve certain risks
and uncertainties and may relate to future operating results of the Company.
Factors that may cause actual results to differ materially from those
contemplated by such forward-looking statements include, among others, the
following possibilities: (1) expected cost savings from the acquisitions not
being fully realized or realized within the expected time frame; (2) earnings
following the acquisitions being lower than expected; (3) a significant increase
in competitive pressures among depository and other financial institutions; (4)
costs or difficulties related to the integration of the acquired business being
greater than expected; (5) changes in the interest rate environment resulting in
reduced margins; (6) general economic or business conditions, either nationally
or in the states in which the Company will be doing business, being less
favorable than expected, resulting in, among other things, a deterioration in
credit quality or a reduced demand for credit; (7) legislative or regulatory
changes adversely affecting the businesses in which the Company will be engaged;
(8) changes in the securities markets; and (9) changes in the banking industry
including the effects of consolidation resulting from possible mergers of
financial institutions.
THE COMPANY
The Company, a New Jersey corporation, is a bank holding company
headquartered in Vineland, New Jersey. The Company's principal subsidiary is Sun
National Bank (the "Bank"). At June 30, 1998, the Company had total assets of
$1,154 million, total deposits of $754 million and total shareholders' equity of
$59 million. Substantially all of the Company's deposits are federally insured
by the Bank Insurance Fund ("BIF"), which is administered by the Federal Deposit
Insurance Corporation ("FDIC"). The Company's remaining deposits are federally
insured by the Savings Association Insurance Fund ("SAIF"), administered by the
FDIC. The Company's principal business is to serve as a holding company for the
Bank. As a registered bank holding company, the Company is subject to the
supervision and regulation of the Board of Governors of the Federal Reserve
System (the "Federal Reserve").
The ongoing consolidation of the banking industry, as well as a
regionalization of decision-making authority by larger banking institutions, has
left many businesses and individuals in the Company's market area underserved.
Beginning in 1993, the Company embarked upon a strategy to expand its operations
and retail market in central and southern New Jersey through mergers,
acquisitions and internal growth. More recently, this strategy has broadened to
include contiguous portions of Delaware. The Board of Directors and management
saw opportunities to expand the Company as a result of the lack of competitive
commercial banking services being provided to local businesses and recognized
the need for a locally
2
<PAGE>
based and managed community bank. In executing its expansion strategy, the
Company has successfully completed the acquisition of two commercial banks with
a total of $119 million in assets, as well as six branch purchase transactions
in which the Company acquired a total of 27 branches with $404 million in
deposits, and has opened five de novo branches since 1993. An additional
acquisition of two branches from Summit Bank ("Summit") with $14.8 million in
deposit liabilities is pending.
In July 1998, the Company entered into an agreement that will expand
its banking operations into Delaware through the assumption, by a new national
bank subsidiary to be named "Sun National Bank, Delaware" ("Sun Delaware"), of
approximately $179 million in deposits (including eight branch locations), and
the purchase of $139 million in loans, from Household Bank, fsb., the successor
to Beneficial National Bank, Wilmington, Delaware (the "Beneficial
Acquisition"). The Beneficial Acquisition is expected to be consummated in the
fourth quarter of 1998. In July 1998, the Company also acquired its first
non-bank operating subsidiary, Allegiance Mortgage Company ("Allegiance"), a
retail mortgage banking operation, in exchange for 28,302 Common Shares.
Allegiance has one office located in Cherry Hill, New Jersey. The Company
intends to offer residential mortgage products and services to its existing
customers through Allegiance.
Through its acquisition and expansion program, the Company has
significantly increased its asset size as well as the Company's retail network.
At December 31, 1993, the Company's total consolidated assets were $112.0
million as compared to $1,154 million at June 30, 1998.
The Company provides community banking services through 42 branches
located in southern and central New Jersey. Sun Delaware will conduct a similar
business through eight branches in contiguous markets in Delaware. The Company
offers a wide variety of consumer and commercial lending, as well as deposit
services. The loans offered by the Company include commercial and industrial
loans, commercial real estate loans, home equity loans, mortgage loans and
installment loans. The Company's deposit and personal banking services include
checking, regular savings, money market deposits, certificates of deposit and
individual retirement accounts. Through a third party arrangement, the Company
also offers mutual funds, securities brokerage and investment advisory services.
The Company considers its primary market area to be southern and central New
Jersey and intends to expand its primary market area to contiguous markets in
Delaware upon completion of the Beneficial Acquisition. The Company's market
area contains a diverse base of customers, including agricultural,
manufacturing, transportation, hospitality and retail consumer businesses.
In recent years, the Company has experienced a significant level of
loan growth. The Company's loan portfolio increased from $83.4 million at
December 31, 1993, to $486.1 million at June 30, 1998. Much of this loan growth
is attributable to the Company's hiring of a number of experienced loan officers
previously employed by larger banking organizations. In most cases, these loan
officers brought with them established contacts and relationships with
individuals or entities throughout the Company's primary market area and thus
have been able to increase the Company's customer base and the number of loan
originations. The Company also has established a number of regional advisory
boards, comprised of prominent local business and community representatives, who
refer significant business opportunities to the Company. In addition, the
Company has made significant efforts to increase its lending to businesses along
the central and southern New Jersey seashore that are primarily operational
during certain times of each year (i.e. seasonal lending), which has contributed
to the Company's loan growth.
To support and manage the expanded operations of the Company and to
provide adequate management resources to support further expansion and growth,
the Company has recruited and hired, in addition to experienced commercial loan
officers, credit, compliance, loan review, internal audit, operations personnel
and senior level executives. Additionally, the Company has enhanced and expanded
3
<PAGE>
its operational and management information systems and taken steps to enhance
its oversight of third-party vendors. While the Company continues to monitor its
rapid growth, as well as the adequacy of management and resources available to
support such growth, there can be no assurance that the Company will be
successful in managing all elements relating to this rapid growth.
The growth and expansion of operations through mergers and acquisitions
and internal growth has resulted in a significant increase in assets, loans and
deposits since December 31, 1993, and a corresponding increase in net interest
income, non-interest income and non-interest expenses.
The executive office of the Company is located at 226 Landis Avenue,
Vineland, New Jersey 08360 and its telephone number is (609) 691-7700.
USE OF PROCEEDS
The Company will not receive any of the proceeds from the sale of the
Shares being offered by the Selling Shareholders. The Company will pay all
expenses incurred in connection with the public offering of the Shares. The
Selling Shareholders will pay all transaction costs associated with effecting
any sales of the Shares that occur.
SELLING SHAREHOLDERS
The following table sets forth the number of Common Shares owned by the
Selling Shareholders and being registered under the Registration Statement (of
which this Prospectus is a part) on behalf of the Selling Shareholders and
certain information regarding the Selling Shareholders.
Name Number of shares owned and being registered
---- -------------------------------------------
Francis J. Pontillo 5,850
Jerome C. Pontillo 4,000
James S. Feigenbaum 4,000
Martin Feigenbaum 4,000
Sam Feigenbaum 4,000
Fred Scott Berlinsky 4,000
Kevin B. O'Donnell 2,452
------
Total 28,302
======
PLAN OF DISTRIBUTION
The Selling Shareholders have advised the Company that they may from
time to time sell all or a portion of the Shares offered hereby in one or more
transactions in the over-the-counter market, on the Nasdaq National Market, on
any exchange on which the Common Shares may then be listed, in negotiated
transactions or otherwise, or a combination of such methods of sale, at market
prices prevailing at the time of sale or prices related to such prevailing
market prices, or at negotiated prices. The Selling Shareholders may effect such
transactions by selling the Shares to or through broker-dealers, and such
broker-dealers may receive compensation in the form of underwriting discounts,
concessions or commissions from the Selling Shareholders and/or purchasers of
the Shares for whom they may act as agent (which compensation may be in excess
of customary commissions). In connection with such sales, the Selling
Shareholders and any broker-dealers or agents participating in such sales may be
deemed
4
<PAGE>
to be underwriters as that term is defined under the Securities Act and any
discount or commission received by them and any profit on the resale of shares
as principals would be deemed to be underwriting discounts or commissions under
the Securities Act. Neither the Company nor the Selling Shareholders can
estimate at the present time the amount of commissions or discounts, if any,
that will be paid by the Selling Shareholders on account of their sales of the
Shares from time to time.
The Company will pay certain expenses in connection with this offering,
estimated to be approximately $5,000, but will not pay for any underwriting
commissions and discounts, if any, or counsel fees or other expenses of the
Selling Shareholders.
EXPERTS
The consolidated financial statements incorporated in this Prospectus
by reference from the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1997, have been audited by Deloitte & Touche LLP, independent
auditors, as stated in their report, which is incorporated herein by reference,
and have been so incorporated in reliance upon the report of such firm given
upon their authority as experts in accounting and auditing.
5
<PAGE>
PART II: INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
* Registration Fees.................................. $ 4,277
* Legal Services..................................... 100,000
* Printing Costs..................................... 25,000
* Nasdaq Listing Fees ............................... 17,500
* Accounting Fees.................................... 75,000
* Miscellaneous...................................... 15,000
-------
* TOTAL.............................................. $236,777
=======
Item 15. Indemnification of Directors and Officers.
Section 14A:3-5 of the New Jersey Business Corporation Law ("BCL")
provides that an officer, director, employee or agent may be indemnified by the
Company against expenses and liabilities actually and reasonably incurred in
connection with any threatened, pending or completed "proceeding" (including
civil, criminal, administrative or investigative proceedings or arbitrative
action) in which such person is involved by reason of such person's position
with the Company, provided that a determination has been made (by the Board of
Directors or a committee thereof, acting by a majority vote of a quorum
consisting of directors who were not parties to such proceeding, or by
independent legal counsel in a written opinion, or by the shareholders) that
such person acted in good faith and in a manner that such person reasonably
believes to be in, or not opposed to, the best interests of the Company. Such
person may not be indemnified if the person has been adjudged to be in breach of
his duty of loyalty to the corporation or its shareholders, or if his/her
conduct were determined not to be in good faith or to have involved a knowing
violation of law, or to have resulted in receipt by the officer, director,
employee or agent of an improper personal benefit.
Provisions regarding indemnification of directors, officers, employees
or agents of the Company are contained in Article VI of the Company's Amended
and Restated Bylaws.
Under a directors' and officers' liability insurance policy, directors
and officers of the Company are insured against certain liabilities, including
certain liabilities under the Securities Act, as amended.
II-1
<PAGE>
Item 16. Exhibits and Financial Statement Schedules:
<TABLE>
<CAPTION>
The financial statements and exhibits filed as part of this
Registration Statement are as follows:
<S> <C>
(a) List of Exhibits:
1 Form of Underwriting Agreement
3.1 Amended and Restated Certificate of Incorporation
3.2 Amended and Restated Bylaws*
4 Common Stock Specimen**
5 Opinion of Malizia, Spidi, Sloane, & Fisch, P.C.
23.1 Consent of Deloitte & Touche LLP
23.2 Consent of Malizia, Spidi, Sloane & Fisch, P.C. (included in Exhibit 5)
(b) Financial Statements Schedules***
</TABLE>
- ---------------------
* Incorporated by reference to the registrant's Current Report on Form 8-K
dated March 3, 1998.
** Incorporated by reference to the registrant's Registration Statement on
Form S-1, file no. 333- 21903.
*** All schedules are omitted because they are not required or applicable or
the required information is shown in the financial statements or the notes
thereto incorporated in this Registration Statement by reference to the
registrant's Annual Report on Form 10-K for the fiscal year ended December
31, 1997.
II-2
<PAGE>
Item 17. Undertakings
The undersigned registrant hereby undertakes:
(1) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in the registration statement shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(2) The undersigned registrant hereby undertakes to deliver or cause to
be delivered with the prospectus, to each person to whom the prospectus is sent
or given, the latest annual report to security holders that is incorporated by
reference in the prospectus and furnished pursuant to and meeting the
requirements of Rule 14a-3 or Rule 14c-3 under the Securities Exchange Act of
1934; and, where interim financial information required to be presented by
Article 3 of Regulation S-X is not set forth in the prospectus, to deliver, or
cause to be delivered to each person to whom the prospectus is sent or given,
the latest quarterly report that is specifically incorporated by reference in
the prospectus to provide such interim financial information.
(3) That, for purposes of determining any liability under the
Securities Act, as amended, the information omitted from the form of prospectus
filed as part of this registration statement in reliance upon Rule 430A and
contained in a form of prospectus filed by the registrant pursuant to Rule
424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part
of this registration statement as of the time it was declared effective.
(4) That, for the purpose of determining any liability under the
Securities Act, as amended, each post-effective amendment that contains a form
of prospectus shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(5) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act, and is therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in Vineland, New Jersey, on August 25, 1998.
SUN BANCORP, INC.
By: /s/Philip W. Koebig, III
------------------------------------
Philip W. Koebig, III
Executive Vice President
(Duly Authorized Representative)
We, the undersigned directors and officers of Sun Bancorp, Inc., do
hereby severally constitute and appoint Philip W. Koebig, III and Robert F. Mack
our true and lawful attorneys and agents, to do any and all things and acts in
our names in the capacities indicated below and to execute all instruments for
us and in our names in the capacities indicated below which said Philip W.
Koebig, III and Robert F. Mack may deem necessary or advisable to enable Sun
Bancorp, Inc. to comply with the Securities Act of 1933, as amended, and any
rules, regulations and requirements of the Securities and Exchange Commission,
in connection with this Registration Statement on Form S-3, including
specifically, but not limited to, power and authority to sign for us or any of
us, in our names in the capacities indicated below, the Registration Statement
and any and all amendments (including post-effective amendments) thereto; and we
hereby ratify and confirm all that Philip W. Koebig, III and Robert F. Mack do
or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this registration statement has been signed below by the following persons in
the capacities indicated on August 25, 1998.
<TABLE>
<CAPTION>
<S> <C>
/s/Adolph F. Calovi /s/Bernard A. Brown
- ---------------------------------------------------- -------------------------------------
Adolph F. Calovi Bernard A. Brown
President, Chief Executive Officer and Director Chairman of the Board
(Principal Executive Officer)
/s/Sidney R. Brown /s/Philip W. Koebig, III
- ---------------------------------------------------- -------------------------------------
Sidney R. Brown Philip W. Koebig, III
Vice Chairman, Treasurer and Secretary Executive Vice President and Director
/s/Peter Galetto, Jr. /s/Anne E. Koons
- ---------------------------------------------------- -------------------------------------
Peter Galetto, Jr. Anne E. Koons
Director Director
/s/Robert F. Mack /s/Ike Brown
- ---------------------------------------------------- -------------------------------------
Robert F. Mack Ike Brown
Executive Vice President and Chief Financial Officer Director
(Principal Financial and Accounting Officer)
</TABLE>
II-4
EXHIBIT NO. 1
<PAGE>
Shares
--------
(plus Shares to cover over-allotments, if any)
----------
SUN BANCORP, INC.
COMMON STOCK, PAR VALUE $1.00 PER SHARE
UNDERWRITING AGREEMENT
----------------------
, 1998
------------
ADVEST, INC.
JANNEY MONTGOMERY SCOTT INC.
As Representatives (the "Representatives")
of the Several Underwriters
Named in Schedule I hereto
c/o Advest, Inc.
One Rockefeller Plaza, 20th Floor
New York, New York 10020
Ladies and Gentlemen:
Sun Bancorp, Inc., a New Jersey corporation (the "Company"), proposes,
subject to the terms and conditions stated herein, to sell to the several
Underwriters named in Schedule I hereto (the "Underwriters"), an aggregate of
________ shares (the "Firm Shares") of the Company's common stock, par value
$1.00 per share (the "Common Stock").
In addition, in order to cover over-allotments in the sale of the Firm
Shares, the Underwriters may, at the Underwriters' election and subject to the
terms and conditions stated herein, purchase ratably in proportion to the
amounts set forth opposite their respective names in Schedule I hereto, up to
_______ additional shares of Common Stock from the Company (such additional
shares of Common Stock, the "Optional Shares"). The Firm Shares and the Optional
Shares are referred to collectively as the "Shares."
As part of the offering of _____________ Firm Shares contemplated by
this Agreement, the Underwriters have agreed to reserve out of the Firm Shares
up to an aggregate amount of ________ Shares, for sale to the Company's
employees, officers and directors (collectively, the "Participants"), as set
forth in the Prospectus in the section entitled "Underwriting" (the "Directed
Share Program"). The Shares to be sold by Advest pursuant to the Directed Share
Program (the "Directed Shares") will be sold by Advest pursuant to this
Agreement at the public offering price specified in the Prospectus. Any Directed
Shares not orally confirmed for purchase by any Participants by the end of the
first business day after the date on which this Agreement is executed will be
offered to the public by the Underwriters as set forth in the Prospectus.
<PAGE>
The Company and the Underwriters, intending to be legally bound, hereby
confirm their agreement as follows:
1. Representations and Warranties of the Company. The
Company represents and warrants to, and agrees with, each of the Underwriters
that:
(a) The Company meets the requirements for the use of
Form S-3 under the Securities Act of 1933, as amended (the "Act"). A
registration statement on Form S-3 (File No. 333-_______) with respect to the
Shares, including a prospectus subject to completion, has been filed by the
Company with the Securities and Exchange Commission (the "Commission") under the
Act, and one or more amendments to such registration statement may have been so
filed. After the execution of this Agreement, the Company will file with the
Commission either (i) if such registration statement, as it may have been
amended, has become effective under the Act and information has been omitted
therefrom in accordance with Rule 430A under the Act, a prospectus in the form
most recently included in an amendment to such registration statement (or, if no
such amendment shall have been filed, in such registration statement) with such
changes or insertions as are required by Rule 430A or permitted by Rule 424(b)
under the Act and as have been provided to and approved by the Representatives,
or (ii) if such registration statement, as it may have been amended, has not
become effective under the Act, an amendment to such registration statement,
including a form of prospectus, a copy of which amendment has been provided to
and approved by the Representatives prior to the execution of this Agreement. As
used in this Agreement, the term "Registration Statement" means such
registration statement, as amended at the time when it was or is declared
effective, including (A) all financial statements, schedules and exhibits
thereto, (B) all documents (or portions thereof) incorporated by reference
therein, and (C) any information omitted therefrom pursuant to Rule 430A under
the Act and included in the Prospectus (as hereinafter defined); the term
"Preliminary Prospectus" means each prospectus subject to completion included in
such registration statement or any amendment or post-effective amendment thereto
(including the prospectus subject to completion, if any, included in the
Registration Statement at the time it was or is declared effective), including
all documents (or portions thereof) incorporated by reference therein; and the
term "Prospectus" means the prospectus first filed with the Commission pursuant
to Rule 424(b) under the Act or, if no prospectus is required to be so filed,
such term means the prospectus included in the Registration Statement, in either
case, including all documents (or portions thereof) incorporated by reference
therein. As used herein, any reference to any statement or information as being
"made," "included," "contained," "disclosed" or "set forth" in any Preliminary
Prospectus, a Prospectus or any amendment or supplement thereto, or the
Registration Statement or any amendment thereto (or other similar references)
shall refer both to information and statements actually appearing in such
document as well as information and statements incorporated by reference
therein.
(b) No order preventing or suspending the use of any
Preliminary Prospectus has been issued and no proceeding for that purpose has
been instituted or, to the knowledge of the Company, threatened, by the
Commission or the securities authority of any state or other jurisdiction. If
the Registration Statement has become effective under the Act,
2
<PAGE>
no stop order suspending the effectiveness of the Registration Statement or any
part thereof has been issued and no proceeding for that purpose has been
instituted or, to the knowledge of the Company, threatened or contemplated by
the Commission or the securities authority of any state or other jurisdiction.
(c) When any Preliminary Prospectus was filed with the
Commission it contained all material statements required to be stated therein in
accordance with, and complied in all material respects with the requirements of,
the Act and the rules and regulations of the Commission thereunder. When the
Registration Statement or any amendment thereto was or is declared effective,
and at each Time of Delivery (as hereinafter defined), it (i) contained and will
contain all material statements required to be stated therein in accordance
with, and complied or will comply in all material respects with the requirements
of, the Act and the rules and regulations of the Commission thereunder and (ii)
did not and will not include any untrue statement of a material fact or omit to
state any material fact necessary to make the statements therein not misleading.
When the Prospectus or any amendment or supplement thereto is filed with the
Commission pursuant to Rule 424(b) (or, if the Prospectus or such amendment or
supplement is not required to be so filed, when the Registration Statement or
the amendment thereto containing such amendment or supplement to the Prospectus
was or is declared effective) and at each Time of Delivery, the Prospectus, as
amended or supplemented at any such time, (i) contained and will contain all
material statements required to be stated therein in accordance with, and
complied or will comply in all material respects with the requirements of, the
Act and the rules and regulations of the Commission thereunder and (ii) did not
and will not include any untrue statement of a material fact or omit to state
any material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading. The
foregoing provisions of this paragraph (c) do not apply to statements or
omissions made in the Registration Statement or any amendment thereto or the
Prospectus or any amendment or supplement thereto in reliance upon and in
conformity with written information furnished to the Company by any Underwriter
through you specifically for use therein. It is understood that the statements
set forth in the Registration Statement or any amendment thereto or the
Prospectus or any amendment or supplement thereto (W) in the last paragraph of
the cover page of the Prospectus, (X) on the inside cover page with respect to
stabilization and passive market making, and (Y) in the third, sixth, and
seventh paragraphs and the list of Underwriters under the section entitled
"Underwriting," constitute the only written information furnished to the Company
by or on behalf of any Underwriter through you specifically for use in the
Registration Statement or any amendment thereto or the Prospectus and any
amendment or supplement thereto, as the case may be.
(d) There are no legal or governmental proceedings
pending or, to the knowledge of the Company, threatened to which the Company or
any of its subsidiaries is a party or to which any of the properties of the
Company or any subsidiary are subject that are required to be described in the
Registration Statement or the Prospectus and are not so described or any
statutes, regulations, contracts or other documents that are required to be
described in the Registration Statement or the Prospectus or to be filed as
exhibits to the Registration Statement that are not described or filed as
required.
3
<PAGE>
(e) Each of the Company and its subsidiaries has been
duly incorporated, is validly existing as a corporation or banking association
in good standing under the laws of its jurisdiction of incorporation and has
full power and authority (corporate and other) to own or lease its properties
and conduct its business as described in the Prospectus. The Company is duly
registered under the Bank Holding Company Act of 1956, as amended. The Company
has full power and authority (corporate and other) to enter into this Agreement
and to perform its obligations hereunder. Each of the Company and its
subsidiaries is duly qualified to transact business as a foreign corporation and
is in good standing under the laws of each other jurisdiction in which it owns
or leases properties, or conducts any business, so as to require such
qualification, except where the failure to so qualify would not have a material
adverse effect on the financial position, results of operations or business of
the Company and its subsidiaries taken as a whole.
(f) The Company's authorized, issued and outstanding
capital stock is as disclosed in the Prospectus. All of the issued shares of
capital stock of the Company, have been duly authorized and validly issued, are
fully paid and nonassessable and conform to the descriptions of the Common Stock
contained in the Prospectus. None of the issued shares of capital stock of the
Company or any of its subsidiaries has been issued or is owned or held in
violation of any statutory (or to the knowledge of the Company, any other)
preemptive rights of shareholders, and no person or entity (including any holder
of outstanding shares of capital stock of the Company or its subsidiares) has
any statutory (or to the knowledge of the Company, any other) preemptive or
other rights to subscribe for any of the Shares. None of the capital stock of
the Company has been issued in violation of applicable federal or state
securities laws.
(g) All of the issued shares of capital stock of each
subsidiary have been duly authorized and validly issued, are fully paid and
nonassessable, except to the extent such shares may be deemed assessable under
12 U.S.C. Section 55, and are owned beneficially by the Company or one of its
subsidiaries, free and clear of all liens, security interests, pledges, charges,
encumbrances, defects, shareholders' agreements, voting agreements, proxies,
voting trusts, equities or claims of any nature whatsoever. Other than the
outstanding capital stock of Sun National Bank, the outstanding common
securities of Sun Capital Trust and Sun Capital Trust II, the outstanding common
stock of Med-Vine, Inc., the outstanding common stock of Allegiance Mortgage
Company ("Allegiance"), [the outstanding common stock of Sun Mortgage Corp.,]
and the equity securities held in the investment portfolios of the Company and
such subsidiaries (the composition of which is not materially different from the
disclosures in the Prospectus as of specific dates), the Company does not own,
directly or indirectly, any capital stock or other equity securities of any
other corporation or any ownership interest in any partnership, joint venture or
other association.
(h) Except as disclosed in the Prospectus, there are no
outstanding (i) securities or obligations of the Company or any of its
subsidiaries convertible into or exchangeable for any capital stock of the
Company or any of its subsidiaries, (ii) warrants, rights or options to
subscribe for or purchase from the Company or any of its subsidiaries any such
capital stock or any such convertible or exchangeable securities or obligations
or
4
<PAGE>
(iii) obligations of the Company or any of its subsidiaries to issue any shares
of capital stock, any such convertible or exchangeable securities or
obligations, or any such warrants, rights or options.
(i) Since the respective dates as of which information
is given in the Registration Statement and the Prospectus, and prior to the
Closing Date and Option Closing Date (as such terms are hereinafter defined),
(i) neither the Company nor any of its subsidiaries has incurred any liabilities
or obligations, direct or contingent, or entered into any transactions, not in
the ordinary course of business, that are material to the Company and its
subsidiaries, (ii) the Company not purchased any of its outstanding capital
stock or declared, paid or otherwise made any dividend or distribution of any
kind on its capital stock, (iii) there has not been any change in the capital
stock, long-term debt or short-term debt of the Company or any of its
subsidiaries, and (iv) there has not been any material adverse change, or any
development involving a prospective material adverse change, in or affecting the
financial position, results of operations or business of the Company and its
subsidiaries, in each case other than as disclosed in or contemplated by the
Prospectus.
(j) There are no contracts, agreements or
understandings between the Company and any person granting such person the right
to require the Company to file a registration statement under the Act with
respect to any securities of the Company owned or to be owned by such person or,
requiring the Company to include such securities in the securities registered
pursuant to the Registration Statement (or any such right has been effectively
waived) or requiring the registration of any securities pursuant to any other
registration statement filed by the Company under the Act. Neither the filing of
the Registration Statement nor the offering or sale of Shares as contemplated by
this Agreement gives any security holder of the Company any rights for or
relating to the registration of any shares of Common Stock or any other capital
stock of the Company, except such that have been satisfied or waived.
(k) Neither the Company nor any of its subsidiaries is,
or with the giving of notice or passage of time or both would be, in violation
of its Articles of Incorporation or Bylaws or in default under any indenture,
mortgage, deed of trust, loan agreement, lease or other agreement or instrument
to which the Company or any of its subsidiaries is a party or to which any of
their respective properties or assets are subject.
(l) The Company and its subsidiaries have good and
marketable title in fee simple to all real property, if any, and good title to
all personal property owned by them, in each case free and clear of all liens,
security interests, pledges, charges, encumbrances, mortgages and defects,
except such as are disclosed in the Prospectus or such as would not have a
material adverse effect on the financial position, results of operations or
business of the Company and its subsidiaries taken as a whole and do not
interfere with the use made or proposed to be made of such property by the
Company and its subsidiaries; and any real property and buildings held under
lease by the Company or any of its subsidiaries are held under valid, subsisting
and enforceable leases, with such exceptions as are disclosed in the Prospectus
or are not material and do not interfere with the use made or proposed to be
made of such property and buildings by the Company or any subsidiary.
5
<PAGE>
(m) The Company does not require any consent, approval,
authorization, order or declaration of or from, or registration, qualification
or filing with, any court or governmental agency or body in connection with the
sale of the Shares or the consummation of the transactions contemplated by this
Agreement, except the registration of the Shares under the Act (which, if the
Registration Statement is not effective as of the time of execution hereof,
shall be obtained as provided in this Agreement) and such as may be required by
the National Association of Securities Dealers, Inc. (the "NASD") or under state
securities or blue sky laws in connection with the offer, sale and distribution
of the Shares by the Underwriters.
(n) Other than as disclosed in the Prospectus, there is
no litigation, arbitration, claim, proceeding (formal or informal) or
investigation (including without limitation, any bank regulatory proceeding)
pending or, to the Company's knowledge, threatened in which the Company or any
of its subsidiaries is a party or of which any of their respective properties or
assets are the subject which, if determined adversely to the Company or any
subsidiary, would individually or in the aggregate have a material adverse
effect on the financial position, results of operations or business of the
Company and its subsidiaries taken as a whole. Neither the Company nor any
subsidiary is in violation of, or in default with respect to, any law, statute,
rule, regulation, order, judgment or decree, except as described in the
Prospectus or such as do not and will not individually or in the aggregate have
a material adverse effect on the financial position, results of operations or
business of the Company and its subsidiaries taken as a whole, and neither the
Company nor any subsidiary is required to take any action in order to avoid any
such violation or default.
(o) Deloitte & Touche LLP, which has certified certain
financial statements of the Company and its consolidated subsidiaries included
in the Registration Statement and the Prospectus, are independent public
accountants as required by the Act, the Exchange Act and the respective rules
and regulations of the Commission thereunder.
(p) The consolidated financial statements and schedules
(including the related notes) of the Company and its consolidated subsidiaries
included or incorporated by reference in the Registration Statement, the
Prospectus and/or any Preliminary Prospectus were prepared in accordance with
generally accepted accounting principles consistently applied throughout the
periods involved and fairly present the financial position and results of
operations of the Company and its subsidiaries, on a consolidated basis, at the
dates and for the periods presented. The selected financial data and operating
and statistical information set forth under the captions "Prospectus Summary,"
"Selected Consolidated Financial Data," "Use of Proceeds" and "Capitalization,"
in the Prospectus fairly present, on the basis stated in the Prospectus, the
information included therein, and have been compiled on a basis consistent with
that of the audited financial statements included in the Registration Statement.
The supporting notes and schedules included in the Registration Statement, the
Prospectus and/or any Preliminary Prospectus fairly state in all material
respects the information required to be stated therein in relation to the
financial statements taken as a whole. The unaudited interim consolidated
financial statements included or incorporated by reference in the Registration
Statement comply as to form in all material respects with the applicable
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accounting requirements of Rule 10-01 of the Regulation S-X under the Act.
(q) This Agreement has been duly authorized, executed
and delivered by the Company and, assuming due execution by the Representatives
of the Underwriters, constitutes the valid and binding agreement of the Company,
enforceable against the Company in accordance with its terms, subject, as to
enforcement, to applicable bankruptcy, insolvency, reorganization and moratorium
laws and other laws relating to or affecting the enforcement of creditors'
rights generally and to general equitable principles and except as the
enforceability of rights to indemnity and contribution under this Agreement may
be limited under applicable securities laws or the public policy underlying such
laws.
(r) The sale of the Shares and the performance of this
Agreement and the consummation of the transactions herein contemplated will not
(with or without the giving of notice or the passage of time or both) (i)
conflict with or violate any term or provision of the Articles of Incorporation
or Bylaws or other organizational documents of the Company or any subsidiary,
(ii) result in a breach or violation of any of the terms or provisions of, or
constitute a default under, any indenture, mortgage, deed of trust, loan
agreement, lease or other agreement or instrument to which the Company or any
subsidiary is a party or to which any of their respective properties or assets
is subject, (iii) conflict with or violate any law, statute, rule or regulation
or any order, judgment or decree of any court or governmental agency or body
having jurisdiction over the Company or any subsidiary or any of their
respective properties or assets or (iv) result in a breach, termination or lapse
of the corporate power and authority of the Company or any subsidiary to own or
lease and operate their respective assets and properties and conduct their
respective business as described in the Prospectus.
(s) When the Shares to be sold by the Company hereunder
have been duly delivered against payment therefor as contemplated by this
Agreement, the Shares will be validly issued, fully paid and nonassessable, and
the holders thereof will not be subject to personal liability solely by reason
of being such holders. The certificates representing the Shares are in proper
legal form under, and conform in all respects to the requirements of, the New
Jersey Business Corporation Act and the requirements of the NASD.
(t) The Company has not distributed and will not
distribute any offering material in connection with the offering and sale of the
Shares other than the Registration Statement, a Preliminary Prospectus, the
Prospectus and other material, if any, permitted by the Act.
(u) Neither the Company nor any of its officers,
directors or affiliates has (i) taken, directly or indirectly, any action
designed to cause or result in, or that has constituted or might reasonably be
expected to constitute, the stabilization or manipulation of the price of any
security of the Company to facilitate the sale or resale of the Shares or (ii)
since the filing of the Registration Statement (A) sold, bid for, purchased or
paid anyone any compensation for soliciting purchases of, the Shares or (B) paid
or agreed to pay to any person any compensation for soliciting another to
purchase any other securities of the Company.
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(v) The operations of the Company and its subsidiaries
with respect to any real property currently leased or owned or by any means
controlled by the Company or any subsidiary (the "Real Property") are in
compliance in all material respects with all federal, state, and local laws,
ordinances, rules, and regulations relating to occupational health and safety
and the environment (collectively, "Laws"), and the Company and its subsidiaries
have not violated any Laws in a way which would have a material adverse effect
on the financial position, results of operations or business of the Company and
its subsidiaries taken as a whole. Except as disclosed in the Prospectus, there
is no pending or, to the Company's knowledge, threatened material claim,
litigation or any administrative agency proceeding, nor has the Company or any
subsidiary received any written or oral notice from any governmental entity or
third party, that: (i) alleges a violation of any Laws by the Company or any
subsidiary or (ii) alleges the Company or any subsidiary is a liable party under
the Comprehensive Environmental Response, Compensation, and Liability Act, 42
U.S.C. ss. 9601 et seq. or any state superfund law.
(w) Neither the Company nor any subsidiary owns or has
the right to use patents, patent applications, trademarks, trademark
applications, trade names, service marks, copyrights, franchises, trade secrets,
proprietary or other confidential information and intangible properties and
assets (collectively, "Intangibles"), the loss of any of which would have a
material adverse effect on the financial position, results of operations or
business of the Company and its subsidiaries taken as a whole; and, to the best
knowledge of the Company, neither the Company nor any subsidiary has infringed
or is infringing, and neither the Company nor any subsidiary has received notice
of infringement with respect to, asserted Intangibles of others.
(x) Each of the Company and its subsidiaries makes and
keeps accurate books and records reflecting its assets and maintains internal
accounting controls which provide reasonable assurance that (i) transactions are
executed in accordance with management's authorization, (ii) transactions are
recorded as necessary to permit preparation of the Company's consolidated
financial statements in accordance with generally accepted accounting principles
and to maintain accountability for the assets of the Company, (iii) access to
the assets of the Company and each of its subsidiaries is permitted only in
accordance with management's authorization, and (iv) the recorded accountability
for assets of the Company and each of its subsidiaries is compared with existing
assets at reasonable intervals and appropriate action is taken with respect to
any differences.
(y) The Company and its subsidiaries have filed all
foreign, federal, state and local tax returns that are required to be filed by
them and have paid all taxes shown as due on such returns as well as all other
taxes, assessments and governmental charges that are due and payable; and no
material deficiency with respect to any such return has been assessed or
proposed.
(z) Except for such plans that are expressly disclosed
in the Prospectus, the Company and its subsidiaries do not maintain, contribute
to or have any material liability with respect to any employee benefit plan,
profit sharing plan, employee pension benefit plan, employee welfare benefit
plan, equity-based plan or deferred
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<PAGE>
compensation plan or arrangement ("Plans") that are subject to the provisions of
the Employee Retirement Income Security Act of 1974, as amended, or the rules
and regulations thereunder ("ERISA"). All Plans are in compliance in all
material respects with all applicable laws, including but not limited to ERISA
and the Internal Revenue Code of 1986, as amended (the "Code"), and have been
operated and administered in all material respects in accordance with their
terms. No Plan is a defined benefit plan or multi-employer plan. The Company
does not provide retiree life and/or retiree health benefits or coverage for any
employee or any beneficiary of any employee after such employee's termination of
employment, except as required by Section 4980B of the Code or under a Plan
which is intended to be "qualified" under Section 401(a) of the Code. No
material liability has been, or could reasonably be expected to be, incurred
under Title IV of ERISA or Section 412 of the Code by any entity required to be
aggregated with the Company or any of the subsidiaries pursuant to Section
4001(b) of ERISA and/or Section 414(b) or (c) of the Code (and the regulations
promulgated thereunder) with respect to any "employee pension benefit plan"
which is not a Plan. As used in this subsection, the terms "defined benefit
plan," "employee benefit plan," "employee pension benefit plan," "employee
welfare benefit plan" and "multi-employer plan" shall have the respective
meanings assigned to such terms in Section 3 of ERISA.
(aa) No material labor dispute exists with the
Company's or any subsidiary's employees, and no such labor dispute is
threatened. The Company has no knowledge of any existing or threatened labor
disturbance by the employees of any of its principal agents, suppliers,
contractors or customers that would have a material adverse effect on the
financial position, results of operations or business of the Company and its
subsidiaries taken as a whole.
(bb) The Company and its subsidiaries have received all
permits, licenses, franchises, authorizations, registrations, qualifications and
approvals (collectively, "Permits") of governmental or regulatory authorities
(including, without limitation, state or federal bank regulatory authorities) as
may be required of them to own their properties and conduct their businesses in
the manner described in the Prospectus, subject to such qualifications as may be
set forth in the Prospectus; and the Company and its subsidiaries have fulfilled
and performed all of their material obligations with respect to such Permits,
and no event has occurred which allows or, after notice or lapse of time or
both, would allow revocation or termination thereof or result in any other
mateiral impairment of the rights of the holder of any such Permit, subject in
each case to such qualification as may be set forth in the Prospectus; and,
except as described in the Prospectus, such Permits contain no restrictions that
materially affect the ability of the Company and its subsidiaries to conduct
their businesses and no state or federal bank regulatory agency or body has
issued any order or decree impairing, restricting or prohibiting the payment of
dividends by any of its subsidiaries to the Company.
(cc) The Company and each of its subsidiaries has
filed, or has had filed on its behalf, on a timely basis, all materials,
reports, documents and information, including but not limited to annual reports,
call reports and reports of examination with each applicable bank regulatory
authority, board or agency, which are required to be filed by it,
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<PAGE>
except where the failure to have timely filed such materials, reports, documents
and information would not have a material adverse effect on the financial
position, results of operations or business of the Company and its subsidiaries
taken as a whole.
(dd) Neither the Company, nor any subsidiary is an
"investment company" or a company "controlled" by an investment company as such
terms are defined in Sections 3(a) and 2(a)(9), respectively, of the Investment
Company Act of 1940, as amended (the "Investment Company Act"), and, if the
Company or any subsidiary conducts its business as set forth in the Registration
Statement and the Prospectus, will not become an "investment company" and will
not be required to register under the Investment Company Act.
(ee) The Company has not offered, or caused the
Underwriters to offer, Shares to any person pursuant to the Directed Share
Program with the specific intent to unlawfully influence (i) a customer or
supplier of the Company to alter the customer's or supplier's level or type of
business with the Company, or (ii) a trade journalist or publication to write or
publish favorable information about the Company or its products.
(ff) Sun National Bank is a member in good standing of
the Federal Reserve System and its deposits are insured by the Federal Deposit
Insurance Corporation up to the legal limits.
(gg) The Company and each subsidiary have in place and
effective such policies of insurance, with limits of liability in such amounts,
as are normal and prudent in the ordinary scope of business similar to that of
the Company and such subsidiary in the respective jurisdiction in which they
conduct business.
2. Purchase and Sale of Shares.
(a) Subject to the terms and conditions herein set
forth, the Company agrees to sell to each of the Underwriters, and each of the
Underwriters agrees, severally and not jointly, to purchase from the Company, at
a purchase price of ___________ dollars and _________ cents ($______) per share
(the "Per Share Price"), the number of Firm Shares (to be adjusted by the
Representatives so as to eliminate fractional shares) determined by multiplying
the aggregate number of Firm Shares to be sold by the Company as set forth in
the first paragraph of this Agreement by a fraction, the numerator of which is
the aggregate number of Firm Shares to be purchased by such Underwriter as set
forth opposite the name of such Underwriter in Schedule I hereto, and the
denominator of which is the aggregate number of Firm Shares to be purchased by
the several Underwriters hereunder.
(b) The Company hereby grants to the Underwriters the
right to purchase at their election in whole or in part from time to time up to
______ Optional Shares, at the Per Share Price, for the sole purpose of covering
over-allotments in the sale of the Firm Shares. Any such election to purchase
Optional Shares may be exercised by written notice from the Representatives to
the Company, given at any time (but not more than once) within a period of 30
calendar days after the date of this Agreement and setting forth the aggregate
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<PAGE>
number of Optional Shares to be purchased and the date on which such Optional
Shares are to be delivered, as determined by the Representatives but in no event
earlier than the First Time of Delivery (as hereinafter defined) or, unless the
Representatives otherwise agree in writing, earlier than two or later than ten
business days after the date of such notice. In the event the Underwriters elect
to purchase all or a portion of the Optional Shares, the Company agrees to
furnish or cause to be furnished to the Representatives the certificates,
letters and opinions, and to satisfy all conditions, set forth in Section 7
hereof at the Subsequent Time of Delivery (as hereinafter defined).
(c) In making this Agreement, each Underwriter is
contracting severally, and not jointly, and except as provided in Sections 2(b)
and 9 hereof, the agreement of each Underwriter is to purchase only that number
of shares specified with respect to that Underwriter in Schedule I hereto. No
Underwriter shall be under any obligation to purchase any Optional Shares prior
to an exercise of the option with respect to such Shares granted pursuant to
Section 2(b) hereof.
3. Offering by the Underwriters. Upon the authorization
by the Representatives of the release of the Shares, the several Underwriters
propose to offer the Shares for sale upon the terms and conditions disclosed in
the Prospectus.
4. Delivery of Shares; Closing. Certificates in definitive
form for the Shares to be purchased by each Underwriter hereunder, and in such
denominations and registered in such names as the Representatives may request
upon at least 48 hours' prior notice to the Company, shall be delivered by or on
behalf of the Company to the Representatives for the account of such
Underwriter, against payment by such Underwriter on its behalf of the purchase
price therefor by wire transfer of immediately available funds to such accounts
as the Company shall designate in writing. The closing of the sale and purchase
of the Shares shall be held at the offices of Arnold & Porter, 555 12th Street,
N.W., Washington, D.C. 20004, except that physical delivery of such certificates
shall be made at the office of The Depository Trust Company, 55 North Water
Street, New York, New York 10041. The time and date of such delivery and payment
shall be, with respect to the Firm Shares, at 9:00 a.m., New York, New York
time, on the third (3rd) full business day after this Agreement is executed or
at such other time and date as the Representatives and the Company may agree
upon in writing, and, with respect to the Optional Shares, at 9:00 a.m., New
York, New York time, on the date specified by the Representatives in the written
notice given by the Representatives of the Underwriters' election to purchase
all or part of such Optional Shares, or at such other time and date as the
Representatives and the Company may agree upon in writing. Such time and date
for delivery of the Firm Shares is herein called the "First Time of Delivery,"
such time and date for delivery of any Optional Shares, if not the First Time of
Delivery, is herein called a "Subsequent Time of Delivery," and each such time
and date for delivery is herein called a "Time of Delivery." The Company will
make such certificates available for checking and packaging at least 24 hours
prior to each Time of Delivery at the office of The Depository Trust Company, 55
North Water Street, New York, New York 10041 or at such other location specified
by the Representatives in writing at least 48 hours prior to such Time of
Delivery.
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5. Covenants of the Company. The Company covenants and agrees
with each of the Underwriters that:
(a) The Company will use its best efforts to cause the
Registration Statement, if not effective prior to the execution and delivery of
this Agreement, to become effective. If the Registration Statement has been
declared effective prior to the execution and delivery of this Agreement, the
Company will file the Prospectus with the Commission pursuant to and in
accordance with subparagraph (1) (or, if applicable and if consented to by the
Representatives, subparagraph (4)) of Rule 424(b) within the time period
required under Rule 424(b) under the Act. The Company will advise the
Representatives promptly of any such filing pursuant to Rule 424(b).
(b) The Company will not file with the Commission the
Prospectus or the amendment referred to in Section 1(a) hereof, any amendment or
supplement to the Prospectus or any amendment to the Registration Statement
unless the Representatives have received a reasonable period of time to review
any such proposed amendment or supplement and consented to the filing thereof
and will use its best efforts to cause any such amendment to the Registration
Statement to be declared effective as promptly as possible. Upon the reasonable
request of the Representatives or counsel for the Underwriters, the Company will
promptly prepare and file with the Commission, in accordance with the rules and
regulations of the Commission, any amendments to the Registration Statement or
amendments or supplements to the Prospectus that may be necessary or advisable
in connection with the distribution of the Shares by the several Underwriters
and will use its best efforts to cause any such amendment to the Registration
Statement to be declared effective as promptly as possible. If required, the
Company will file any amendment or supplement to the Prospectus with the
Commission in the manner and within the time period required by Rule 424(b)
under the Act. The Company will advise the Representatives, promptly after
receiving notice thereof, of the time when the Registration Statement or any
amendment thereto has been filed or declared effective or the Prospectus or any
amendment or supplement thereto has been filed and will provide evidence to the
Representatives of each such filing or effectiveness.
(c) The Company will advise the Representatives
promptly after receiving notice or obtaining knowledge of (i) when any
post-effective amendment to the Registration Statement is filed with the
Commission, (ii) the receipt of any comments from the Commission concerning the
Registration Statement, (iii) when any post-effective amendment to the
Registration Statement becomes effective, or when any supplement to the
Prospectus or any amended Prospectus has been filed, (iv) the issuance by the
Commission of any stop order suspending the effectiveness of the Registration
Statement or any part thereof or any order preventing or suspending the use of
any Preliminary Prospectus or the Prospectus or any amendment or supplement
thereto, (v) the suspension of the qualification of the Shares for offer or sale
in any jurisdiction or of the initiation or threatening of any proceeding for
any such purpose, or (vi) any request made by the Commission or any securities
authority of any other jurisdiction for amending the Registration Statement, for
amending or supplementing the Prospectus or for additional information. The
Company will use its best efforts to prevent the issuance of any such stop order
or suspension and, if any
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<PAGE>
such stop order or suspension is issued, to obtain the withdrawal thereof as
promptly as possible.
(d) If the delivery of a prospectus relating to the
Shares is required under the Act at any time prior to the expiration of nine
months after the date of the Prospectus and if at such time any events have
occurred as a result of which the Prospectus as then amended or supplemented
would include an untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, or if for any reason
it is necessary during such same period to amend or supplement the Prospectus,
the Company will promptly notify the Representatives and upon its request (but
at the Company's expense) prepare and file with the Commission an amendment or
supplement to the Prospectus that corrects such statement or omission or effects
such compliance and will furnish without charge to each Underwriter and to any
dealer in securities as many copies of such amended or supplemented Prospectus
as the Representatives may from time to time reasonably request.
(e) The Company promptly from time to time will take
such action as the Representatives may reasonably request to qualify the Shares
for offering and sale under the securities or blue sky laws of such
jurisdictions as the Representatives may request and will continue such
qualifications in effect for as long as may be necessary to complete the
distribution of the Shares, provided that in connection therewith the Company
shall not be required to qualify as a foreign corporation or as a dealer in
securities or to file a general consent to service of process in any
jurisdiction. The Company will file such statements and reports as may be
required by the laws of each jurisdiction in which the Shares have been
qualified as above provided.
(f) The Company will promptly provide each of the
Representatives, without charge, (i) two manually executed copies of the
Registration Statement as originally filed with the Commission and of each
amendment thereto, including all exhibits and all documents or information
incorporated by reference therein, (ii) for each other Underwriter, a conformed
copy of the Registration Statement as originally filed and of each amendment
thereto, without exhibits but including all documents or information
incorporated by reference therein and (iii) so long as a prospectus relating to
the Shares is required to be delivered under the Act, as many copies of each
Preliminary Prospectus or the Prospectus or any amendment or supplement thereto
as the Representatives may reasonably request.
(g) As soon as practicable, but not later than the
Availability Date (as defined below), the Company will make generally available
to its security holders an earnings statement of the Company and its
subsidiaries, if any, covering a period of at least 12 months beginning after
the effective date of the Registration Statement (which need not be audited)
complying with Section 11(a) of the Act and the rules and regulations
thereunder. "Availability Date" means the forty-fift (45th) day after the end of
the fourth fiscal quarter following the fiscal quarter in which the Registration
Statement went effective, except that if such fourth fiscal quarter is the last
quarter of the Company's fiscal year, "Availability Date" means the ninetieth
(90th) day after the end of such fourth fiscal quarter.
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(h) During the period beginning from the date hereof
and continuing to and including the date 180 days after the date of the
Prospectus, the Company will not, and will cause its officers and directors not
to, without the prior written consent of the Representatives, directly or
indirectly (i) offer, sell, contract to sell or otherwise dispose of, any shares
of Common Stock or securities convertible into or exercisable or exchangeable
for shares of Common Stock or (ii) enter into any swap or other agreement or any
transaction that transfers, in whole or in part, the economic consequences of
ownership of shares of Common Stock whether any such swap or other agreement is
to be settled by delivery of shares of Common Stock, other securities, cash or
otherwise; except for the sale of the Shares hereunder and except for the
issuance of Common Stock upon the exercise of stock options or warrants or the
conversion of convertible securities outstanding on the date of this Agreement
or to the extent that such stock options, warrants and convertible securities
are disclosed in the Prospectus or except for the grant to employees of stock
options to purchase Common Stock which are not exercisable within such 180 days.
(i) During the period of three years after the
effective date of the Registration Statement, the Company will furnish to the
Representatives and, upon request, to each of the other Underwriters, without
charge, (i) copies of all reports or other communications (financial or other)
furnished to shareholders and (ii) as soon as they are available, copies of any
reports and financial statements furnished to or filed with the Commission, the
NASD or any national securities exchange.
(j) Prior to the termination of the underwriting
syndicate contemplated by this Agreement, neither the Company nor any of its
officers, directors or affiliates will (i) take, directly or indirectly, any
action designed to cause or to result in, or that might reasonably be expected
to cause or result in, the stabilization or manipulation of the price of any
security of the Company or (ii) sell, bid for, purchase or pay anyone any
compensation for soliciting purchases of, the Shares.
(k) In case of any event, at any time within the period
during which a prospectus is required to be delivered under the Act, as a result
of which any Preliminary Prospectus or the Prospectus, as then amended or
supplemented, would contain an untrue statement of a material fact, or omit to
state any material fact necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading, or, if it
is necessary at any time to amend any Preliminary Prospectus or the Prospectus
to comply with the Act or any applicable securities or blue sky laws, the
Company promptly will prepare and file with the Commission, and any applicable
state securities commission, an amendment, supplement or document that will
correct such statement or omission or effect such compliance and will furnish to
the several Underwriters such number of copies of such amendment(s),
supplement(s) or document(s) as the Representatives may reasonably request. For
purposes of this subsection (k), the Company will provide such information to
the Representatives, the Underwriters' counsel and counsel to the Company as
shall be necessary to enable such persons to consult with the Company with
respect to the need to amend or supplement the Registration Statement, any
Preliminary Prospectus or the Prospectus or file any document, and shall furnish
to the Representatives and the Underwriters' counsel such
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further information as each may from time to time reasonably request.
(l) The Company will use its best efforts to obtain, and
thereafter maintain, the qualification or listing of the shares of Common Stock
(including, without limitation, the Shares) on the Nasdaq National Market
System.
6. Expenses and Fees.
(a) The Company will pay all costs and expenses incident to
the performance of the obligations of the Company under this Agreement, whether
or not the transactions contemplated hereby are consummated or this Agreement is
terminated pursuant to Section 10 hereof, including, without limitation, all
costs and expenses incident to (i) the printing of and mailing expenses
associated with the Registration Statement, the Preliminary Prospectus and the
Prospectus and any amendments or supplements thereto, this Agreement, the
Agreement among Underwriters, the Underwriters' Questionnaire submitted to each
of the Underwriters by the Representatives in connection herewith, the power of
attorney executed by each of the Underwriters in favor of Advest, Inc. in
connection herewith, the Dealer Agreement and related documents (collectively,
the "Underwriting Documents") and the preliminary Blue Sky memorandum relating
to the offering prepared by Arnold & Porter, counsel to the Underwriters
(collectively with any supplement thereto, the "Preliminary Blue Sky
Memorandum"); (ii) the fees, disbursements and expenses of the Company's counsel
and accountants in connection with the registration of the Shares under the Act
and all other expenses in connection with the preparation and, if applicable,
filing of the Registration Statement (including all amendments thereto), any
Preliminary Prospectus, the Prospectus and any amendments and supplements
thereto, the Underwriting Documents and the Preliminary Blue Sky Memorandum;
(iii) the delivery of copies of the foregoing documents to the Underwriters;
(iv) the filing fees of the Commission and the NASD relating to the Shares; (v)
the preparation, issuance and delivery to the Underwriters of any certificates
evidencing the Shares, including transfer agent's and registrar's fees; (vi) the
qualification of the Shares for offering and sale under state securities and
blue sky laws, including filing fees and fees and disbursements of counsel for
the Underwriters (and local counsel therefor) relating thereto; (vii) any
listing of the Shares on the Nasdaq National Market System; (viii) any expenses
for travel, lodging and meals incurred by the Company and any of its officers,
directors and employees in connection with any meetings with prospective
investors in the Shares; and (ix) all other costs and expenses reasonably
incident to the performance of the Company's obligations hereunder that are not
otherwise specifically provided for in this Section 6.
(b) The Representatives and the Underwriters will pay their
own expenses, including the fees of their counsel (except as provided in Section
6(a)(vi) hereof), public advertisement of the offering and their own marketing
and due diligence expenses.
(c) At the First Time of Delivery, the Company shall pay to
each of the Representatives the sum of ________________ Dollars ($_______) as a
financial advisory fee.
7. Conditions of the Underwriters' Obligations. The
obligations of the
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Underwriters hereunder to purchase and pay for the Shares to be delivered at
each Time of Delivery shall be subject, in their discretion, to the accuracy of
the representations and warranties of the Company contained herein as of the
date hereof and as of such Time of Delivery, to the accuracy of the statements
of the Company's officers made pursuant to the provisions hereof, to the
performance by the Company of its covenants and agreements hereunder, and to the
following additional conditions precedent:
(a) If the registration statement as amended to date has not
become effective prior to the execution of this Agreement, such registration
statement shall have been declared effective not later than 11:00 a.m., New York
City time, on the date of this Agreement or such later date and/or time as shall
have been consented to by the Representatives in writing. If required, the
Prospectus and any amendment or supplement thereto shall have been filed with
the Commission pursuant to Rule 424(b) within the applicable time period
prescribed for such filing and in accordance with Section 5(a) of this
Agreement; no stop order suspending the effectiveness of the Registration
Statement or any part thereof shall have been issued and no proceedings for that
purpose shall have been instituted, threatened or, to the knowledge of the
Company and the Representatives, contemplated by the Commission; and all
requests for additional information on the part of the Commission shall have
been complied with to the Representatives' reasonable satisfaction.
(b) The Representatives shall each have received a copy of
an executed lock-up agreement from the Company and each of the Company's
executive officers and directors and certain shareholders of Common Stock, in
the form attached hereto as Exhibit A. ---------
(c) The Representatives shall each have received an opinion,
dated such Time of Delivery, of Malizia, Spidi, Sloane & Fisch, P.C., special
counsel for the Company, in form and substance satisfactory to the
Representatives and their respective counsel, to the effect that:
(i) The Company is validly existing as a
corporation in good standing under the laws of the State of New Jersey and has
the corporate power and authority to own or lease its properties and conduct its
business as described in the Registration Statement and the Prospectus and to
enter into this Agreement and perform its obligations hereunder. The Company is
duly qualified to transact business as a foreign corporation in each
jurisdiction in which it owns or leases property, or conducts any business, so
as to require such qualification, except where the failure to so qualify would
not have a material adverse effect on the financial position, results of
operations or business of the Company and its subsidiaries taken as a whole. The
Company is a registered bank holding company under the Bank Holding Company Act
of 1956, as amended.
(ii) Each of the Company's subsidiaries is
validly existing as a corporation in good standing under the laws of its
jurisdiction of incorporation and has the corporate power and authority to own
or lease its properties and conduct its business as described in the
Registration Statement and the Prospectus. Each subsidiary is duly qualified to
transact business as a foreign corporation in each jurisdiction in which it owns
or leases
16
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property, or conducts any business, so as to require such qualification, except
where the failure to so qualify would not have a material adverse effect on the
financial position, results of operations or business of the Company and its
subsidiaries taken as a whole.
(iii) All of the issued shares of
capital stock of the Company, including the Shares to be sold by the Company
pursuant hereto when delivered against payment therefor as contemplated hereby,
have been duly authorized and validly issued, are fully paid and nonassessable
and conform to the description of the Common Stock contained in the Prospectus.
None of the issued shares of Common Stock of the Company or capital stock of Sun
National Bank has been issued or is owned or held in violation of any statutory
(or, to the knowledge of such counsel, any other) preemptive rights of
shareholders, and no person or entity (including any holder of outstanding
shares of Common Stock of the Company or capital stock of its subsidiaries) has
any statutory (or, to the knowledge of such counsel, any other) preemptive or
other rights to subscribe for any of the Shares.
(iv) All of the issued shares of capital
stock of Sun National Bank have been duly authorized and validly issued, are
fully paid and nonassessable, except to the extent such shares may be deemed
assessable under 12 U.S.C. Section 55, and, to such counsel's knowledge, are
owned beneficially by the Company or its subsidiaries, free and clear of all
liens, security interests, pledges, charges, encumbrances, shareholders'
agreements, voting agreements, proxies, voting trusts, defects, equities or
claims of any nature whatsoever (collectively, "Encumbrances"), including,
without limitation, any Encumbrance arising or resulting from any indenture,
mortgage, deed of trust, loan agreement, lease or other agreement of or entered
into by the Company or Sun National Bank.
(v) Except as disclosed in the Prospectus,
there are, to such counsel's knowledge, no outstanding (A) securities or
obligations of the Company or any of its subsidiaries convertible into or
exchangeable for any capital stock of the Company or any subsidiary, (B)
warrants, rights or options to subscribe for or purchase from the Company or any
of its subsidiaries any such capital stock or any such convertible or
exchangeable securities or obligations or (C) obligations of the Company or any
of its subsidiaries to issue any shares of capital stock, any such convertible
or exchangeable securities or obligations, or any such warrants, rights or
options.
(vi) There are no contracts, agreements or
understandings known to such counsel between the Company and any person granting
such person the right to require the Company to file a registration statement
under the Act with respect to any securities of the Company owned or to be owned
by such person or, requiring the Company to include such securities in the
securities registered pursuant to the Registration Statement (or any such right
has been effectively waived) or requiring the registration of any securities
pursuant to any other registration statement filed by the Company under the Act.
(vii) The sale of the Shares being
sold at such Time of Delivery and the performance of this Agreement and the
consummation of the transactions herein contemplated will not conflict with or
violate any provision of the articles of incorporation or bylaws of the Company
or any of its subsidiaries, in each case as amended
17
<PAGE>
to date, or to such counsel's knowledge, any existing law, statute, rule or
regulation, or in any material respect, conflict with, or (with or without the
giving of notice or the passage of time or both) result in a breach or violation
of any of the terms or provisions of, or constitute a default under, any
indenture, mortgage, deed of trust, loan agreement, lease or other agreement or
instrument known to such counsel to which the Company or any of its subsidiaries
is a party or to which any of their respective properties or assets is subject,
or, conflict with or violate any order, judgment or decree known to such
counsel, of any court or governmental agency or body having jurisdiction over
the Company or any of its subsidiaries or any of their respective properties or
assets.
(viii) To such counsel's knowledge,
no consent, approval, authorization, order or declaration of or from, or
registration, qualification or filing with, any court or governmental agency or
body is required for the sale of the Shares or the consummation of the
transactions contemplated by this Agreement, except such as have been or will
have been obtained and are or will be in effect, and except the registration of
the Shares under the Act, and such as may be required by the NASD or under state
securities or blue sky laws in connection with the offer, sale and distribution
of the Shares by the Underwriters.
(ix) To such counsel's knowledge and other
than as disclosed in or contemplated by the Prospectus, there is no litigation,
arbitration, claim, proceeding (formal or informal) or investigation pending or
threatened, in which the Company or any of its subsidiaries is a party or of
which any of their respective properties or assets is the subject which, if
determined adversely to the Company or any of its subsidiaries, would
individually or in the aggregate have a material adverse effect on the financial
position, results of operations or business of the Company and its subsidiaries
taken as a whole.
(x)This Agreement has been duly authorized,
executed and delivered by the Company and, assuming due execution by the
Representatives of the Underwriters, constitutes the valid and binding agreement
of the Company, enforceable against the Company, in accordance with its terms,
subject, as to enforcement, to applicable bankruptcy, insolvency, reorganization
and moratorium laws and other laws relating to or affecting the enforcement of
creditors' rights generally and to general equitable principles and except as
the enforceability of rights to indemnity and contribution under this Agreement
may be limited under applicable securities laws or the public policy underlying
such laws.
(xi) Neither the Company nor any of its
subsidiaries is an "investment company" or a company "controlled" by an
investment company as such terms are defined in Sections 3(a) and 2(a)(9),
respectively, of the Investment Company Act.
(xii) The Registration Statement and the
Prospectus and each amendment or supplement thereto (other than the financial
statements, the notes and schedules thereto and other financial data included
therein, to which such counsel need express no opinion), as of their respective
effective or issue dates, complied as to form in all material respects with the
requirements of the Act and the respective rules and regulations thereunder.
Such counsel do not know of any contracts or other documents of a character
18
<PAGE>
required to be filed as an exhibit to the Registration Statement or required to
be described in the Registration Statement or the Prospectus which are not so
filed or described as required.
(xiii) The Registration Statement was
declared effective under the Act as of the date and time specified in such
opinion and, to such counsel's knowledge, no stop order suspending the
effectiveness of the Registration Statement has been issued under the Act and no
proceedings therefor have been initiated or threatened by the Commission.
Such counsel shall also state that they have participated in the
preparation of the Registration Statement and the Prospectus and in conferences
with officers and other representatives of the Company, representatives of the
independent public accountants for the Company, and representatives of and
counsel to the Underwriters at which the contents of the Registration Statement,
the Prospectus and related matters were discussed and, although such counsel has
not passed upon or assumed any responsibility for the accuracy, completeness or
fairness of the statements contained in the Registration Statement or the
Prospectus, and although such counsel has not undertaken to verify independently
the accuracy or completeness of the statements in the Registration Statement or
the Prospectus, nothing has come to such counsel's attention to lead them to
believe that the Registration Statement, or any further amendment thereto made
prior to such Time of Delivery, on its effective date and as of such Time of
Delivery, contained or contains any untrue statement of a material fact or
omitted or omits to state any material fact required to be stated therein or
necessary to make the statements therein, not misleading, or that the
Prospectus, or any amendment or supplement thereto made prior to such Time of
Delivery, as of its issue date and as of such Time of Delivery, contained or
contains any untrue statement of a material fact or omitted or omits to state a
material fact necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading (provided that such
counsel need express no belief regarding the financial statements, the notes and
schedules thereto and other financial data contained in the Registration
Statement, any amendment thereto, or the Prospectus, or any amendment or
supplement thereto).
In rendering any such opinion, such counsel may rely, as to matters of
fact, to the extent such counsel deem proper, on certificates of officers of the
Company, public officials and letters from officials of the NASD. Copies of such
certificates of officers of the Company and other opinions shall be addressed
and furnished to the Underwriters and furnished to counsel for the Underwriters.
(d) Arnold & Porter, counsel for the Underwriters, shall
have furnished to each of the Representatives such opinion or opinions, dated
such Time of Delivery, with respect to such matters as the Representatives may
reasonably request, and the Company shall have furnished to such counsel such
documents as they request for the purpose of enabling them to pass upon such
matters.
(e) The Representatives shall each have received from
Deloitte & Touche LLP, independent public accountants, in form and substance
satisfactory to the Representatives, letters dated as of the date hereof, the
date of delivery of the Firm Securities
19
<PAGE>
and the date(s) of delivery of any Option Securities, containing statements and
information of the type ordinarily included in accountants' "comfort letters" to
Underwriters with respect to the financial statements and certain financial
information contained in the Registration Statement and Prospectus; provided
that the letter dated as of the date of delivery of the Firm Securities shall
use a "cut-off date" not earlier than the date hereof.
(f) Since the date of the latest audited financial
statements included in the Prospectus, neither the Company nor any of the
subsidiaries shall have sustained any material adverse change, or any
development involving a prospective material adverse change (including, without
limitation, a change in management or control of the Company), in or affecting
the position (financial or otherwise), results of operations, net worth or
business prospects of the Company and its subsidiaries, otherwise than as
disclosed in or contemplated by the Prospectus, the effect of which, in either
such case, in the Representatives' reasonable judgment makes it impracticable or
inadvisable to proceed with the purchase, sale and delivery of the Shares being
delivered at such Time of Delivery as contemplated by the Registration
Statement, as amended as of the date hereof.
(g) Subsequent to the date hereof, there shall not have
occurred any of the following: (i) any suspension or limitation in trading in
securities generally on the New York Stock Exchange, and/or the American Stock
Exchange or any setting of minimum prices for trading on such exchange, or in
the Common Stock of the Company by the Commission or the NASD; (ii) a moratorium
on commercial banking activities in New York and New Jersey declared by either
federal or state authorities; or (iii) any outbreak or escalation of hostilities
involving the United States, declaration by the United States of a national
emergency or war or any other national or international calamity or emergency if
the effect of any such event specified in this clause (iii) in the
Representatives' reasonable judgment makes it impracticable or inadvisable to
proceed with the purchase, sale and delivery of the Shares being delivered at
such Time of Delivery as contemplated by the Registration Statement, as amended
as of the date hereof.
(h) The Company shall have furnished to the Representatives
at such Time of Delivery certificates of the chief executive officer or an
executive vice president and chief financial officer of the Company satisfactory
to the Representatives, as to the accuracy of the representations and warranties
of the Company herein at and as of such Time of Delivery with the same effect as
if made at such Time of Delivery, as to the performance by the Company of all of
its respective obligations hereunder to be performed at or prior to such Time of
Delivery, and as to such other matters as the Representatives may reasonably
request, and the Company shall have furnished or caused to be furnished
certificates of such officers as to such matters as the Representatives may
reasonably request.
(i) The representations and warranties of the Company in
this Agreement and in the certificates delivered by the Company pursuant to this
Agreement shall be true and correct in all material respects when made and on
and as of each Time of Delivery as if made at such time, and the Company shall
have performed all covenants and agreements and satisfied all conditions
contained in this Agreement required to be performed or satisfied by the Company
at or before such Time of Delivery.
20
<PAGE>
(j) The Shares shall have been approved for quotation in the
Nasdaq National Market System.
(k) Each person purchasing Shares pursuant to the Directed
Share Program shall have executed and delivered to each of the Representatives a
subscription agreement in form and substance acceptable to the Representative.
8. Indemnification and Contribution.
(a) The Company agrees to indemnify and hold harmless each
Underwriter against any losses, claims, damages or liabilities, joint or
several, to which such Underwriter may become subject, under the Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon: (i) any untrue statement or
alleged untrue statement made by the Company in Section 1 of this Agreement;
(ii) any untrue statement or alleged untrue statement of any material fact
contained in (A) the Registration Statement or any amendment thereto, any
Preliminary Prospectus or the Prospectus or any amendment or supplement thereto,
or (B) any application or other document, or amendment or supplement thereto,
executed by the Company or based upon written information furnished by or on
behalf of the Company filed in any jurisdiction in order to qualify the Shares
under the securities or blue sky laws thereof or filed with the Commission or
any securities association or securities exchange (each an "Application"); or
(iii) the omission of or alleged omission to state in the Registration Statement
or any amendment thereto, any Preliminary Prospectus, the Prospectus or any
amendment or supplement thereto, or any Application of a material fact required
to be stated therein or necessary to make the statements therein not misleading;
and will reimburse each Underwriter for any legal or other expenses reasonably
incurred by such Underwriter in connection with investigating, defending against
or appearing as a third-party witness in connection with any such loss, claim,
damage, liability or action; provided, however, that the Company shall not be
liable in any such case to the extent that any such loss, claim, damage,
liability or action arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission made in the
Registration Statement or any amendment thereto, any Preliminary Prospectus, the
Prospectus or any amendment or supplement thereto or any Application in reliance
upon and in conformity with written information furnished to the Company by any
Underwriter through the Representatives expressly for use therein (which
information is solely as set forth in Section 1(c) hereof). The Company will
not, without the prior written consent of the Representatives of the
Underwriters, which shall not be unreasonably withheld, settle or compromise or
consent to the entry of any judgment in any pending or threatened claim, action,
suit or proceeding (or related cause of action or portion thereof) in respect of
which indemnification may be sought hereunder (whether or not any Underwriter is
a party to such claim, action, suit or proceeding), unless such settlement,
compromise or consent includes an unconditional release of each Underwriter from
all liability arising out of such claim, action, suit or proceeding (or related
cause of action or portion thereof).
(b) The Company agrees to indemnify and hold harmless the
Underwriters and each person, if any, who controls the Underwriters within the
meaning of
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<PAGE>
either Section 15 of the Securities Act or Section 20 of the Exchange Act
("Underwriter Entities"), against any and all losses, claims, damages or
liabilities (including, without limitation, any legal or other expenses
reasonably incurred in connection with defending or investigating any such
action or claim): (i) caused by the failure of any Participant to pay for and
accept delivery of the Shares which, immediately following the effectiveness of
the Registration Statement, were subject to a properly confirmed agreement to
purchase; or (ii) related to, arising out of, or in connection with the Directed
Share Program, provided that the Company shall not be responsible under this
subsection 8(b) for any losses, claims, damages or liabilities (or expenses
relating thereto) that are finally judicially determined to have resulted from
the bad faith or gross negligence of the Underwriter Entities.
(c) Each Underwriter, severally but not jointly, agrees to
indemnify and hold harmless the Company against any losses, claims, damages or
liabilities to which the Company may become subject under the Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in the Registration Statement or any
amendment thereto, any Preliminary Prospectus, the Prospectus or any amendment
or supplement thereto, or any Application or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, in
each case to the extent, but only to the extent, that such untrue statement or
alleged untrue statement or omission or alleged omission was made in reliance
upon and in conformity with written information furnished to the Company by such
Underwriter through the Representatives expressly for use therein (which
information is solely as set forth in Section 1(c) hereof); and will reimburse
the Company for any legal or other expenses reasonably incurred by the Company
in connection with investigating or defending any such loss, claim, damage,
liability or action.
(d) Promptly after receipt by an indemnified party under
subsection (a), (b) or (c) above of notice of the commencement of any action,
such indemnified party shall, if a claim in respect thereof is to be made
against the indemnifying party under such subsection, notify the indemnifying
party in writing of the commencement thereof; but the omission so to notify the
indemnifying party shall not relieve the indemnifying party from any liability
which it may have to any indemnified party otherwise than under such subsection
(a), (b) or (c). In case any such action shall be brought against any
indemnified party and it shall notify the indemnifying party of the commencement
thereof, the indemnifying party shall be entitled to participate therein and, to
the extent that it shall wish, jointly with any other indemnifying party
similarly notified, to assume the defense thereof, with counsel satisfactory to
such indemnified party (who shall not, except with the consent of the
indemnified party, be counsel to the indemnifying party); provided, however,
that if the defendants in any such action include both the indemnified party and
the indemnifying party and the indemnified party shall have reasonably concluded
that there may be one or more legal defenses available to it or other
indemnified parties which are different from or additional to those available to
the indemnifying party, the indemnifying party shall not have the right to
assume the defense of such action on behalf of such indemnified party and such
indemnified party shall have the right to select separate counsel to defend such
action on behalf of such
22
<PAGE>
indemnified party. After such notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof and approval
by such indemnified party of counsel appointed to defend such action, the
indemnifying party will not be liable to such indemnified party under this
Section 8 for any legal or other expenses, other than reasonable costs of
investigation, subsequently incurred by such indemnified party in connection
with the defense thereof. Nothing in this Section 8(d) shall preclude an
indemnified party from participating at its own expense in the defense of any
such action so assumed by the indemnifying party. Notwithstanding anything
contained herein to the contrary, if indemnity may be sought pursuant to Section
8(b) hereof in respect of such action or proceeding, then in addition to such
separate firm for the indemnified parties, the indemnifying party shall be
liable for the reasonable fees and expenses of respective counsel for the
Underwriters for the defense of any losses, claims, damages and liabilities
arising out of the Directed Share Program, and all persons, if any, who control
the Underwriters within the meaning of either Section 15 of the Act or Section
20 of the Exchange Act.
(e) If the indemnification provided for in this
Section 8 is unavailable to or insufficient to hold harmless an indemnified
party under subsection (a) or (c) above in respect of any losses, claims,
damages or liabilities (or actions in respect thereof) referred to therein, then
each indemnifying party shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages or liabilities (or
actions in respect thereof) in such proportion as is appropriate to reflect the
relative benefits received by the Company on the one hand and the Underwriters
on the other hand from the offering of the Shares. If, however, the allocation
provided by the immediately preceding sentence is not permitted by applicable
law or if the indemnified party failed to give the notice required under
subsection (d) above, then each indemnifying party shall contribute to such
amount paid or payable by such indemnified party in such proportion as is
appropriate to reflect not only such relative benefits but also the relative
fault of the Company on the one hand and the Underwriters on the other hand in
connection with the statements or omissions that resulted in such losses,
claims, damages or liabilities (or actions in respect thereof), as well as any
other relevant equitable considerations. The relative benefits received by the
Company on the one hand and the Underwriters on the other hand shall be deemed
to be in the same proportion as the total net proceeds from the offering (before
deducting expenses) received by the Company bear to the total underwriting
discounts and commissions received by the Underwriters. The relative fault shall
be determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Company on the one hand
or the Underwriters on the other hand and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The Company and the Underwriters agree that it would not
be just and equitable if contributions pursuant to this subsection (e) were
determined by pro rata allocation (even if the Underwriters were treated as one
entity for such purpose) or by any other method of allocation which does not
take account of the equitable considerations referred to above in this
subsection (e). The amount paid or payable by an indemnified party as a result
of the losses, claims, damages or liabilities (or actions in respect thereof)
referred to above in this subsection (e) shall be deemed to include any legal or
other expenses reasonably incurred by
23
<PAGE>
such indemnified party in connection with investigating or defending any such
action or claim. Notwithstanding the provisions of this subsection (e), no
Underwriter shall be required to contribute any amount in excess of the amount
by which the total price at which the Shares underwritten by it and distributed
to the public were offered to the public exceeds the amount of any damages which
such Underwriter has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The Underwriters' obligations in this subsection
(e) to contribute are several in proportion to their respective underwriting
obligations and not joint.
(f) The obligations of the Company under this Section 8
shall be in addition to any liability which the Company may otherwise have and
shall extend, upon the same terms and conditions, to each officer, director and
employee of the Underwriters and to each person, if any, who controls any
Underwriter within the meaning of the Act or the Exchange Act; and the
obligations of the Underwriters under this Section 8 shall be in addition to any
liability which the respective Underwriters may otherwise have and shall extend,
upon the same terms and conditions, to each officer, trustee and director of the
Company and to each person, if any, who controls the Company within the meaning
of the Act or the Exchange Act.
9. Default of Underwriters.
(a) If any Underwriter defaults in its obligation to
purchase Shares at a Time of Delivery, the Representatives may in their
discretion arrange for the Representatives or another party or other parties to
purchase such Shares on the terms contained herein within thirty-six (36) hours
after such default by any Underwriter. In the event that, within the respective
prescribed period, the Representatives notify the Company that they have so
arranged for the purchase of such Shares, the Representatives shall have the
right to postpone a Time of Delivery for a period of not more than seven (7)
days in order to effect whatever changes may thereby be made necessary in the
Registration Statement or the Prospectus, or in any other documents or
arrangements, and the Company agrees to file promptly any amendments to the
Registration Statement or the Prospectus that in the Representatives' opinion
may thereby be made necessary. The cost of preparing, printing and filing any
such amendments shall be paid for by the Underwriters. The term "Underwriter" as
used in this Agreement shall include any person substituted under this Section
with like effect as if such person had originally been a party to this Agreement
with respect to such Shares.
(b) If, after giving effect to any arrangements for the
purchase of the Shares of a defaulting Underwriter or Underwriters by the
Representatives as provided in subsection (a) above, if any, the aggregate
number of such Shares which remains unpurchased does not exceed one-eleventh
(1/11) of the aggregate number of Shares to be purchased at such Time of
Delivery, then the Company shall have the right to require each non-defaulting
Underwriter to purchase the number of Shares which such Underwriter agreed to
purchase hereunder at such Time of Delivery and, in addition, to require each
24
<PAGE>
non-defaulting Underwriter to purchase its pro rata share (based on the number
of Shares which such Underwriter agreed to purchase hereunder) of the Shares of
such defaulting Underwriter or Underwriters for which such arrangements have not
been made.
10. Termination.
(a) This Agreement may be terminated in the sole discretion
of the Representatives by notice to the Company given prior to the First Time of
Delivery or any Subsequent Time of Delivery, respectively, in the event that (i)
any condition to the obligations of the Underwriters set forth in Section 7
hereof has not been satisfied, or (ii) the Company shall have failed, refused or
been unable to deliver Certificates in definitive form for the Shares or the
Company shall have failed, refused or been unable to perform all obligations and
satisfy all conditions on its part to be performed or satisfied hereunder at or
prior to such Time of Delivery, in either case other than by reason of a default
by any of the Underwriters. If this Agreement is terminated pursuant to this
Section 10(a), the Company will reimburse the Underwriters severally upon demand
for all reasonable out-of-pocket expenses (including counsel fees and
disbursements) that shall have been incurred by them in connection with the
proposed purchase and sale of the Shares. Any termination pursuant to this
Section 10(a) shall be without liability on the part of any Underwriter to the
Company or on the part of the Company to any Underwriter (except for expenses to
be paid by the Company pursuant to Section 6 hereof or reimbursed by the Company
pursuant to this Section 10(a) and except as to indemnification and contribution
to the extent provided in Section 8 hereof.
(b) If, after giving effect to any arrangements for the
purchase of the Shares of a defaulting Underwriter or Underwriters by the
Representatives as provided in Section 9(a), the aggregate number of such Shares
which remains unpurchased exceeds one-eleventh (1/11) of the aggregate number of
Shares to be purchased at such Time of Delivery, then this Agreement (or, with
respect to a Subsequent Time of Delivery, the obligations of the Underwriters to
purchase and of the Company to sell the Optional Shares) shall thereupon
terminate, without liability on the part of any non-defaulting Underwriter or
the Company, except for the expenses to be borne by the Company and the
Underwriters as provided in Section 6 hereof and the indemnity and contribution
agreements in Section 8 hereof; but nothing herein shall relieve a defaulting
Underwriter from liability for its default.
11. Survival. The respective indemnities, agreements,
representations, warranties and other statements of the Company, its officers
and the several Underwriters, as set forth in this Agreement or made by or on
behalf of them, respectively, pursuant to this Agreement, shall remain in full
force and effect, regardless of any investigation (or any statement as to the
results thereof) made by or on behalf of any Underwriter or any controlling
person referred to in Section 8(f) or the Company, or any officer, trustee or
director or controlling person of the Company referred to in Section 8(f), and
shall survive delivery of and payment for the Shares. The respective agreements,
covenants, indemnities and other statements set forth in Sections 6 and 8 hereof
shall remain in full force and effect, regardless of any termination or
cancellation of this Agreement.
12. Notices. All communications hereunder shall be in
writing and, if sent
25
<PAGE>
to any of the Underwriters, shall be mailed, delivered or telegraphed and
confirmed in writing to the Representatives c/o Advest, Inc., One Rockefeller
Plaza, 20th Floor, New York, New York 10020, Attention: Michael T. Mayes (with a
copy to Arnold & Porter, 555 12th Street, N.W., Washington, D.C. 20004,
Attention: Steven Kaplan); if to the Company shall be sufficient in all respects
if mailed, delivered telegraphed and confirmed in writing to Sun Bancorp, Inc.,
226 Landis Avenue, Vineland, New Jersey 08360, Attention: Philip W. Koebig, III
(with a copy to Malizia, Spidi, Sloane & Fisch, P.C., One Franklin Square, 1301
K Street, N.W., Suite 700 East, Washington, D.C. 20005, Attention: John J.
Spidi).
13. Binding Effect. This Agreement shall be binding upon, and
inure solely to the benefit of, the Underwriters, the Company and, to the extent
provided in Sections 8 and 10 hereof, the officers, trustees, directors and
employees and controlling persons referred to therein and their respective
heirs, executors, administrators, successors and assigns, and no other person
shall acquire or have any right under or by virtue of this Agreement. No
purchaser of any of the Shares from any Underwriter shall be deemed a successor
or assign by reason merely of such purchase.
14. Governing Law. This Agreement shall be governed by
and construed in accordance with the laws of the State of New York without
giving effect to any provisions regarding conflicts of laws.
15. Counterparts. This Agreement may be executed by any
one or more of the parties hereto in any number of counterparts, each of which
shall be deemed to be an original, but all such counterparts shall together
constitute one and the same instrument.
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<PAGE>
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to us one of the counterparts hereof, and upon
the acceptance hereof by the Representatives, on behalf of each of the
Underwriters, this letter will constitute a binding agreement among the
Underwriters and the Company. It is understood that your acceptance of this
letter on behalf of each of the Underwriters is pursuant to the authority set
forth in the Agreement among Underwriters, a copy of which shall be submitted to
the Company for examination, upon request, but without warranty on your part as
to the authority of the signers thereof.
Very truly yours,
SUN BANCORP, INC.
By:
-----------------------------------
Name: Robert F. Mack
Title: Executive Vice President
The foregoing Agreement is hereby
confirmed and accepted as of the
date first written above at New York,
New York.
ADVEST, INC. JANNEY MONTGOMERY
SCOTT INC.
By: ADVEST, INC.
By: JANNEY MONTGOMERY
SCOTT INC.
By: By:
------------------------------ -------------------------
Name: Stephen J. Gilhooly Name:
Title: Director Title:
On behalf of each of the Underwriters On behalf of each of the
Underwriters
27
<PAGE>
SCHEDULE I
Number of Optional
Total Number Shares to be Purchased
of Firm Shares if Maximum
Underwriter to be Purchased Option Exercised
- ----------- --------------- ----------------
Advest, Inc.
Janney Montgomery Scott Inc.
<PAGE>
EXHIBIT A
FORM OF LOCK-UP AGREEMENT
<PAGE>
SUN BANCORP, INC.
LOCK-UP AGREEMENT
_______, 1998
Advest, Inc.
Janney Montgomery Scott Inc.
As Representatives of the Several Underwriters
c/o Advest, Inc.
One Rockefeller Plaza, 20th Floor
New York, New York 10020
Ladies and Gentlemen:
The undersigned understands that you, as Representatives of the several
underwriters (the "Underwriters"), propose to enter into an underwriting
agreement (the "Underwriting Agreement") with Sun Bancorp, Inc. (the "Company")
providing for the public offering (the "Public Offering") by the Underwriters,
including yourself, of common stock of the Company (the "Common Stock") pursuant
to the Company's Registration Statement on Form S-3 (the "Registration
Statement").
In consideration of the Underwriters' agreement to purchase and make the
Public Offering of the Common Stock, and for other good and valuable
consideration, receipt of which is hereby acknowledged, the undersigned hereby
agrees, for a period of 180 days after the effective date of the Registration
Statement (the "Lock-Up Period"), not to sell, offer to sell, solicit an offer
to buy, contract to sell, encumber, distribute, pledge, grant any option for the
sale of, or otherwise transfer or dispose of, directly or indirectly, in one or
a series of transactions (collectively, a "Disposition"), any shares of Common
Stock or any securities convertible or exercisable into or exchangeable for
shares of Common Stock (collectively, "Securities"), now owned or hereafter
acquired by the undersigned or with respect to which the undersigned has
acquired or hereafter acquires the power of disposition, without the prior
written consent of Advest, Inc. Prior to the expiration of the Lock-Up Period,
the undersigned agrees that it will not announce or disclose any intention to do
anything after the expiration of such period which the undersigned is
prohibited, as provided in the preceding sentence, from doing during the Lock-Up
Period. In addition, for the benefit of the Company and the Underwriters, the
undersigned hereby (i) waives any right it may have to cause the Company to
register pursuant to the Securities Act of 1933, as amended, shares of Common
Stock now owned or hereafter acquired or received by the undersigned as a result
of the Public Offering and (ii) during the Lock-Up Period, agrees not to
exercise any such registration rights and further agrees that the Company shall
not be obligated to register any shares in violation of the Underwriting
Agreement.
<PAGE>
The undersigned acknowledges and agrees that the restrictions above are
expressly agreed to preclude the holder of the Securities from engaging in any
hedging or other transaction which is designed to or reasonably expected to lead
to or result in a Disposition of Securities (or the economic equivalent thereof)
during the Lock-Up Period even if such Securities would be disposed of by
someone other than the undersigned. Such prohibited hedging or other
transactions would include, without limitation, any short sale (whether or not
against the box) or any purchase, sale or grant of any right (including, without
limitation, any put or call option) with respect to any Securities or with
respect to any security (other than a broad-based marked basket or index) that
includes, relates to or derives any significant part of its value from the
Securities.
The undersigned hereby also agrees and consents to the entry of stop
transfer instructions with the Company's transfer agent against the transfer of
the Securities held by the undersigned except in compliance with the Lock-Up
Agreement.
It is understood that, if the Underwriting Agreement is not executed, or if
the Underwriting Agreement shall terminate or be terminated prior to payment for
and delivery of the Common Stock the subject thereof, this Lock-Up Agreement
shall automatically terminate and be of no further force or effect.
This Lock-Up Agreement shall be governed by and construed in accordance
with the laws of the State of New York (without giving effect to its conflict of
laws provisions).
Very truly yours,
Name:
2
EXHIBIT NO. 3.1
<PAGE>
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
SUN BANCORP, INC.
(Originally incorporated on January 21, 1985 under the name of
Citizens Investments, Inc.)
ARTICLE I
Name
----
The name of the corporation is Sun Bancorp, Inc. (herein the "Corporation").
ARTICLE II
Registered Office
-----------------
The address of the Corporation's registered office in the State of New
Jersey is 226 Landis Avenue in the City of Vineland in the County of Cumberland.
The name of the Corporation's registered agent at such address is Bernard A.
Brown.
ARTICLE III
Powers
------
The purpose of the Corporation is to engage in any activity within the
purposes for which corporations may be organized under the New Jersey Business
Corporation Act.
ARTICLE IV
Term
----
The term for which the Corporation is to exist is perpetual.
ARTICLE V
Capital Stock
-------------
The aggregate number of shares of all classes of capital stock which
the Corporation has authority to issue is 11,000,000 of which 10,000,000 are to
be shares of common stock, $1.00 par value per share, and of which 1,000,000 are
to be shares of serial preferred stock, $1.00 par value per share. The shares
may be issued by the Corporation without the approval of stockholders except as
otherwise provided in this Article V or the rules of a national securities
exchange, if applicable. The consideration for the issuance of the shares shall
be paid to or received by the Corporation in full before their issuance and
shall not be less than the par value per share. The consideration for the
issuance of the shares shall be cash, services rendered, personal property
(tangible or intangible), real property, leases of real property or any
combination of the foregoing. In the absence of actual fraud in the transaction,
the judgment of the board of directors as to the value of such consideration,
shall be conclusive. Upon payment of such
<PAGE>
consideration, such shares shall be deemed to be fully paid and nonassessable.
In the case of a stock dividend, the part of the surplus of the Corporation
which is transferred to stated capital upon the issuance of shares as a stock
dividend shall be deemed to be the consideration for their issuance.
A description of the different classes and series (if any) of the
Corporation's capital stock, and a statement of the relative powers,
designations, preferences and rights of the shares of each class and series (if
any) of capital stock, and the qualifications, limitations or restrictions
thereof, are as follows:
A. Common Stock. Except as provided in this Restated Certificate, the
holders of the common stock shall exclusively possess all voting power. Each
holder of shares of common stock shall be entitled to one vote for each share
held by such holders.
Whenever there shall have been paid, or declared and set aside for
payment, to the holders of the outstanding shares of any class of stock having
preference over the common stock as to the payment of dividends, the full amount
of dividends and sinking fund or retirement fund or other retirement payments,
if any, to which such holders are respectively entitled in preference to the
common stock, then dividends may be paid on the common stock, and on any class
or series of stock entitled to participate therewith as to dividends, out of any
assets legally available for the payment of dividends, but only when as declared
by the board of directors of the Corporation.
In the event of any liquidation, dissolution or winding up of the
Corporation, after there shall have been paid, or declared and set aside for
payment, to the holders of the outstanding shares of any class having preference
over the common stock, the full preferential amounts to which they are
respectively entitled, the holders of the common stock and of any class or
series of stock entitled to participate therewith, in whole or in part, as to
distribution of assets shall be entitled, after payment or provision for payment
of all debts and liabilities of the Corporation, to receive the remaining assets
of the Corporation available for distribution, in cash or in kind.
Each share of common stock shall have the same relative powers,
preferences and rights as, and shall be identical in all respects with, all the
other shares of common stock of the Corporation.
B. Serial Preferred Stock. Except as provided in this Restated
Certificate, the board of directors of the Corporation is authorized, by
resolution or resolutions from time to time adopted, to provide for the issuance
of serial preferred stock in series and to fix and state the powers,
designations, preferences and relative, participating, optional or other special
rights of the shares of such series, and the qualifications, limitations or
restrictions thereof, including, but not limited to determination of any of the
following:
1. the distinctive serial designation and the number of shares
constituting such series; and
2. the dividend rates or the amount of dividends to be paid on the
shares of such series, whether dividends shall be cumulative and, if so, from
which date or dates, the payment date or dates for dividends, and the
participating or other special rights, if any, with respect to dividends; and
3. the voting powers, full or limited, if any, of the shares of such
series; and
4. whether the shares of such series shall be redeemable and, if so,
the price or prices at which, and the terms and conditions upon which, such
shares may be redeemed; and
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<PAGE>
5. the amount or amounts payable upon the shares of such series in the
event of voluntary or involuntary liquidation, dissolution or winding up of the
Corporation; and
6. whether the shares of such series shall be entitled to the benefits
of a sinking or retirement fund to be applied to the purchase or redemption of
such shares, and, if so entitled, the amount of such fund and the manner of its
application, including the price or prices at which such shares may be redeemed
or purchased through the application of such funds; and
7. whether the shares of such series shall be convertible into, or
exchangeable for, shares of any other class or classes or any other series of
the same or any other class or classes of stock of the Corporation and, if so
convertible or exchangeable, the conversion price or prices, or the rate or
rates of exchange, and the adjustments thereof, if any, at which such conversion
or exchange may be made, and any other terms and conditions of such conversion
or exchange; and
8. the subscription or purchase price and form of consideration for
which the shares of such series shall be issued; and
9. whether the shares of such series which are redeemed or converted
shall have the status of authorized but unissued shares of serial preferred
stock and whether such shares may be reissued as shares of the same or any other
series of serial preferred stock.
Each share of each series of serial preferred stock shall have the same
relative powers, preferences and rights as, and shall be identical in all
respects with, all the other shares of the Corporation of the same series.
ARTICLE VI
Elimination of Directors' and Officers' Liability
-------------------------------------------------
A director or officer of the Corporation shall not, to the fullest
extent permitted by law, be personally liable to the Corporation or to the
shareholders of the Corporation for damages for breach of any duty owed to the
Corporation or to the shareholders of the Corporation, except that this Article
VI shall not relieve a director or officer of the Corporation from personal
liability to the Corporation and to the shareholders of the Corporation for
damages for any breach of duty based upon an act or omission:
(a) in breach of such director's or officer's duty of loyalty to the
Corporation or to the shareholders of the Corporation, or
(b) not in good faith or involving a knowing violation of law, or
(c) resulting in the receipt by such director or officer of an improper
personal benefit.
Any repeal or modification of the foregoing Article VI by the
shareholders of the Corporation shall not adversely affect any right or
protection of a director or officer of the Corporation hereunder or otherwise
with respect to any act or omission occurring before such repeal or modification
is effective. If the New Jersey Business Corporation Act is amended to authorize
corporate action further eliminating or limiting the personal liability of
directors and officers, then such liability will be limited to the fullest
extent permitted under the law.
3
<PAGE>
ARTICLE VII
Preemptive Rights
-----------------
No holder of any of the shares of any class or series of capital stock
or of options, warrants or other rights to purchase shares of any class or
series of stock or of other securities of the Corporation shall have any
preemptive right to purchase or subscribe for any unissued stock of any class or
series, or any unissued bonds, certificates of indebtedness, debentures of other
securities convertible into or exchangeable for stock of any class or series or
carrying any right to purchase stock of any class or series; but any such
unissued stock, bonds, certificates or indebtedness, debentures or other
securities convertible into or exchangeable for stock or carrying any right to
purchase stock may be issued pursuant to resolution of the board of directors of
the Corporation to such persons, firms, corporations or associations, whether or
not holders thereof, and upon such terms as may be deemed advisable by the board
of directors in the exercise of its sole discretion.
ARTICLE VIII
Repurchase of Shares
--------------------
The Corporation may from time to time, pursuant to authorization by the
board of directors of the Corporation and without action by the shareholders,
purchase or otherwise acquire shares of capital stock of any class, bonds,
debentures, notes, script, warrants, obligations, evidences of indebtedness, or
other securities of the Corporation in such manner, upon such terms, and in such
amounts as the board of directors shall determine; subject, however, to such
limitations or restrictions, if any, as are contained in the express terms of
any class of shares of the Corporation outstanding at the time of the purchase
or acquisition or as are imposed by law or regulation.
ARTICLE IX
Meetings of Shareholders; Proxies; Cumulative Voting; Quorum
------------------------------------------------------------
A. Notwithstanding any other provision of this Certificate or the
Bylaws of the Corporation, any action required to be taken or which may be taken
at any annual or special meeting of shareholders of the Corporation may be taken
without a meeting, if all shareholders entitled to vote thereon consent thereto
in writing. In the case of a merger, consolidation, acquisition of all capital
shares of the Corporation or sale of assets, such action may be taken without a
meeting only if all shareholders consent in writing, or if all shareholders
entitled to vote consent in writing and all other shareholders are provided the
advance notification required by Section 14A: 5-6(2)(b) of the New Jersey
Business Corporation Act. Except as provided in this Article IX.A, the power of
shareholders to take action without a meeting is specifically denied.
B. Unless otherwise required by law, special meetings of the
shareholders of the Corporation for any purpose or purposes may be called at any
time by the board of directors of the Corporation.
C. Each shareholder entitled to vote at a meeting of stockholders or to
express consent or dissent to corporate action in writing without a meeting may
authorize another person or persons to act for him or her by proxy, but no such
proxy shall be voted or acted upon after eleven months from its
4
<PAGE>
date, unless the proxy provides for a longer period. To be valid, a proxy must
be executed and authorized as required or permitted by law.
D. There shall be no cumulative voting by shareholders of any class or
series in the election of directors of the Corporation.
E. Meetings of shareholders may be held within or outside the State of
New Jersey, as the Bylaws may provide.
F. The holders of shares of a majority of the outstanding shares of
voting stock shall constitute a quorum at a meeting of shareholders.
ARTICLE X
Notice for Nominations and Proposals
------------------------------------
Advance notice of shareholder nominations for the election of directors
and of business to be brought by shareholders before any meeting of the
shareholders of the Corporation shall be given in the manner provided in the
Bylaws of the Corporation.
ARTICLE XI
Directors
---------
A. Number; Vacancies. The number of directors of the Corporation shall
be such number as shall be provided from time to time in or in accordance with
the Bylaws, provided that a decrease in the number of directors shall not have
the effect of shortening the term of any incumbent director. Vacancies in the
board of directors of the Corporation, however caused, and newly-created
directorships shall be filled by the affirmative vote of a majority of the
directors then in office, whether or not a quorum, or by a sole remaining
director, and any director so chosen shall hold office for a term expiring at
the next annual meeting of shareholders.
B. Terms. At each annual meeting, shareholders shall elect directors to
hold office until the next succeeding annual meeting. Each director shall hold
office for the term for which he or she is elected and until his or her
successor shall have been elected and qualified.
Whenever the holders of any one or more series of preferred stock of
the Corporation shall have the right, voting separately as a class, to elect one
or more directors of the Corporation, the board of directors shall consist of
said directors so elected in addition to the number of directors fixed as
provided above in this Article XI. Notwithstanding the foregoing, and except as
otherwise may be required by law, whenever the holders of any one or more series
of preferred stock of the Corporation shall have the right, voting separately as
a class, to elect one or more directors of the Corporation, the terms of the
director or directors elected by such holders shall expire at the next
succeeding annual meeting of shareholders.
C. The address for all the Corporation's directors: Bernard A. Brown,
Ike Brown, Sidney R. Brown, Adolph F. Calovi, Peter Galetto, Jr., Philip W.
Koebig III and Anne E. Koons, is c/o Sun Bancorp, Inc., 226 Landis Avenue,
Vineland, New Jersey 08360.
5
<PAGE>
ARTICLE XII
Removal of Directors
--------------------
Notwithstanding any other provision of this Restated Certificate or the
Bylaws of the Corporation, any director or the entire board of directors of the
Corporation may be removed for cause or without cause, at any time, by the
affirmative vote of the holders of at least a majority of the outstanding shares
of capital stock of the Corporation entitled to vote generally in the election
of directors (considered for this purpose as one class). In addition, the board
of directors shall have the power to remove directors for cause and to suspend
directors pending a final determination that cause exists for removal.
ARTICLE XIII
Approval of Business Combinations
---------------------------------
A. Definitions and Related Matters. For the purposes of this Article
XIII and as otherwise expressly referenced hereto in this Certificate of
Incorporation:
1. "Affiliate" means a person that directly, or indirectly
through one or more intermediaries, controls, or is controlled by, or is under
common control with, a specified person.
2. "Announcement date," when used in reference to any business
combination, means the date of the first public announcement of the final,
definitive proposal for that business combination.
3. "Associate," when used to indicate a relationship with any
person, means (1) any corporation or organization of which that person is an
officer or partner or is, directly or indirectly, the beneficial owner of 10% or
more of any class of voting stock, (2) any trust or other estate in which that
person has a substantial beneficial interest or as to which that person serves
as trustee or in a similar fiduciary capacity, or (3) any relative or spouse of
that person, or any relative of that spouse, who has the same home as that
person.
4. "Beneficial owner," when used with respect to any stock,
means a person:
(1) that, individually or with or through any of
its affiliates or associates, beneficially owns that stock, directly or
indirectly;
(2) that, individually or with or through any of
its affiliates or associates, has (a) the right to acquire that stock (whether
that right is exercisable immediately or only after the passage of time),
pursuant to any agreement, arrangement or understanding (whether or not in
writing), or upon the exercise of conversion rights, exchange rights, warrants
or options, or otherwise; provided, however, that a person shall not be deemed
the beneficial owner of stock tendered pursuant to a tender or exchange offer
made by that person or any of that person's affiliates or associates until that
tendered stock is accepted for purchase or exchange; or (b) the right to vote
that stock pursuant to any agreement, arrangement or understanding (whether or
not in writing); provided, however, that a person shall not be deemed the
beneficial owner of any stock under this subparagraph if the agreement,
arrangement or understanding to vote that stock (i) arises solely from a
revocable proxy or consent given in response to a proxy or consent solicitation
made in accordance with the applicable rules and regulations under the
6
<PAGE>
Exchange Act, and (ii) is not then reportable on a Schedule 13D under the
Exchange Act (or any comparable or successor report); or
(3) that has any agreement, arrangement or
understanding (whether or not in writing), for the purpose of acquiring,
holding, voting (except voting pursuant to a revocable proxy or consent as
described in subparagraph (b) of paragraph (2) of this subsection, or disposing
of that stock with any other person that beneficially owns, or whose affiliates
or associates beneficially own, directly or indirectly, that stock.
5. "Business combination," when used in reference to the
Corporation and any interested shareholder of the Corporation, means:
(1) any merger or consolidation of the Corporation or
any subsidiary of the Corporation with (a) that interested shareholder or (b)
any other corporation (whether or not it is an interested shareholder of the
Corporation) which is, or after a merger or consolidation would be, an affiliate
or associate of that interested shareholder;
(2) any sale, lease, exchange, mortgage, pledge,
transfer or other disposition (in one transaction or a series of transactions)
to or with that interested shareholder or any affiliate or associate of that
interested shareholder of assets of the Corporation or any subsidiary of the
Corporation (a) having an aggregate market value equal to 10% or more of the
aggregate market value of all the assets, determined on a consolidated basis, of
the Corporation, (b) having an aggregate market value equal to 10% or more of
the aggregate market value of all the outstanding stock of the Corporation, or
(c) representing 10% or more of the earnings power or income, determined on a
consolidated basis, of the Corporation;
(3) the issuance or transfer by the Corporation
or any subsidiary of the Corporation (in one transaction or a series of
transactions) of any stock of the Corporation or any subsidiary of the
Corporation which has an aggregate market value equal to 5% or more of the
aggregate market value of all the outstanding stock of the Corporation to that
interested shareholder or any affiliate or associate of that interested
shareholder, except pursuant to the exercise of warrants or rights to purchase
stock offered, or a dividend or distribution paid or made, pro rata to all
shareholders of the Corporation;
(4) the adoption of any plan or proposal for the
liquidation or dissolution of the Corporation proposed by, on behalf of or
pursuant to any agreement, arrangement or understanding (whether or not in
writing) with that interested shareholder or any affiliate or associate of that
interested shareholder;
(5) any reclassification of securities (including,
without limitation, any stock split, stock dividend, or other distribution of
stock in respect of stock, or any reverse stock split), or recapitalization of
the Corporation, or any merger or consolidation of the Corporation with any
subsidiary of the Corporation, or any other transaction (whether or not with, or
into, or otherwise involving that interested shareholder), proposed by, on
behalf of or pursuant to any agreement, arrangement or understanding (whether or
not in writing) with that interested shareholder or any affiliate or associate
of that interested shareholder, which has the effect, directly or indirectly, of
increasing the proportionate share of the outstanding shares of any class or
series of stock or securities convertible into voting stock of the Corporation
or any subsidiary of the Corporation which is directly or indirectly owned by
that
7
<PAGE>
interested shareholder or any affiliate or associate of that interested
shareholder, except as a result of immaterial changes due to fractional share
adjustments; or
(6) any receipt by that interested shareholder or
any affiliate or associate of that interested shareholder of the benefit,
directly or indirectly (except proportionately as a shareholder of the
Corporation), of any loans, advances, guarantees, pledges or other financial
assistance or any tax credits or other tax advantages provided by or through the
Corporation; provided, however, that the term "business combination" shall not
be deemed to include the receipt of any of the foregoing benefits by the
Corporation or any of the Corporation's affiliates arising from transactions
(such as intercompany loans or tax sharing arrangements) between the Corporation
and its affiliates in the ordinary course of business.
6. "Common stock" means any stock other than preferred stock.
7. "Consummation date," with respect to any business
combination, means the date of consummation of that business combination.
8. "Control," including terms "controlling" "controlled by"
and "under common control with," means the possession, directly or indirectly,
of the power to direct or cause the direction of the management and policies of
a person, whether through the ownership of voting stock, by contract, or
otherwise. A person's beneficial ownership of 10% or more of the voting power of
the Corporation's voting stock shall create a presumption that person has
control of the Corporation. Notwithstanding the foregoing in this subsection, a
person shall not be deemed to have control of a corporation if that person holds
voting power, in good faith and not for the purpose of circumventing this
section, as an agent, bank, broker, nominee, custodian or trustee for one or
more beneficial owners who do not individually or as a group have control of the
Corporation.
9. "Exchange Act" means the "Securities Exchange Act of 1934,"
48 Stat. 881 (15 U.S.C. ss.78a et seq.) as the same has been or hereafter may be
amended from time to time.
10. "Interested shareholder," when used in reference to the
Corporation, means any person (other than the Corporation or any subsidiary of
the Corporation) that:
(1) is the beneficial owner, directly or indirectly,
of 10% or more of the voting power of the outstanding voting stock of the
Corporation; or
(2) is an affiliate or associate of the Corporation
and at any time within the five-year period immediately prior to the date in
question was the beneficial owner, directly or indirectly, of 10% or more of the
voting power of the then outstanding stock of the Corporation. For the purpose
of determining whether a person is an interested shareholder pursuant to this
subsection, the number of shares of voting stock of the Corporation deemed to be
outstanding shall include shares deemed to be beneficially owned by the person
through application of subsection A.4 of this Article but shall not include any
other unissued shares of voting stock of the Corporation which may be issuable
pursuant to any agreement, arrangement or understanding, or upon exercise of
conversion rights, warrants or options, or otherwise.
(3) is an assignee of or has otherwise succeeded to
any shares of voting stock which were at any time within the two-year period
immediately prior to the date in question beneficially
8
<PAGE>
owned by any Interested Shareholder, if such assignment or succession shall have
occurred in the course of a transaction or series of transactions not involving
a public offering within the meaning of the Securities Act of 1933.
11. "Market value," when used in reference to property of the
Corporation, means:
(1) in the case of stock, the highest closing sales
price of the stock during the 30 day period immediately preceding the date in
question, on the principal United States securities exchange registered under
the Exchange Act on which that stock is listed, or, if that stock is not listed
on any such exchange, the highest closing bid quotation with respect to a share
of that stock during the 30 day period preceding the date in question on the
National Association of Securities Dealers, Inc. Automated Quotation System, or
any system then in use, or if no such quotations are available, the fair market
value on the date in question of a share of the Corporation's stock as
determined by the board of directors of the Corporation in good faith; and
(2) in the case of property other than cash or stock,
the fair market value of that property on the date in question as determined by
the board of directors of the Corporation in good faith.
12. "Stock" means:
(1) any stock or similar security, any certificate
of interest, any participation in any profit sharing agreement, any voting trust
certificate, or any certificate of deposit for stock; and
(2) any security convertible, with or without
consideration, into stock, or any warrant, call or other option or privilege of
buying stock without being bound to do so, or any other security carrying any
right to acquire, subscribe to or purchase stock.
13. "Stock acquisition date," with respect to any person and
the Corporation, means the date that that person first becomes an interested
shareholder of the Corporation.
14. "Subsidiary" of the Corporation means any other
corporation of which voting stock having a majority of the votes entitled to be
cast is owned, directly or indirectly, by the Corporation.
15. "Voting stock" means shares of capital stock of the
Corporation entitled to vote generally in the election of directors.
B. Approval of Business Combinations.
The Corporation shall not engage in a business combination with any
interested shareholder for a period of five years following that interested
shareholder's stock acquisition date unless the business combination is approved
by the board of directors prior to the interested shareholder's stock
acquisition date.
In addition, the Corporation shall not engage in any business
combination with any interested shareholder of the Corporation at any time
unless one of the following three conditions are met:
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<PAGE>
1. the business combination is approved by the board of directors of
the Corporation prior to that interested shareholder's stock acquisition date
and thereafter approved by shareholders in accordance with applicable law.
2. the business combination is approved by the affirmative vote of the
holders of at least 80% of the voting stock not beneficially owned by that
interested shareholder at a meeting called for such purpose.
3. the business combination meets all of the following conditions:
(1) the aggregate amount of the cash and the market value, as
of the consummation date, of consideration other than cash to be received per
share by holders of outstanding shares of common stock of the Corporation in
that business combination is at least equal to the higher of the following:
(a) the highest per share price (including any
brokerage commissions, transfer taxes and soliciting dealers' fees) paid by that
interested shareholder for any shares of common stock of the same class or
series acquired by it (i) within the five-year period immediately prior to the
announcement date with respect to that business combination, or (ii) within the
five-year period immediately prior to, or in, the transaction in which that
interested shareholder became an interested shareholder, whichever is higher;
plus, in either case, interest compounded annually from the earliest date on
which that highest per share acquisition price was paid through the consummation
date at the rate for one-year United States Treasury obligations from time to
time in effect; less the aggregate amount of any cash dividends paid, and the
market value of any dividends paid other than in cash, per share of common stock
since that earliest date, up to the amount of that interest; and
(b) the market value per share of common stock on
the announcement date with respect to that business combination or on that
interested shareholder's stock acquisition date, whichever is higher; plus
interest compounded annually from that date through the consummation date at the
rate for one-year United States Treasury obligations from time to time in
effect; less the aggregate amount of any cash dividends paid, and the market
value of any dividends paid other than in cash, per share of common stock since
that date, up to the amount of that interest;
(2) the aggregate amount of the cash and the market value as
of the consummation date of consideration other than cash to be received per
share by holders of outstanding shares of any class or series of stock, other
than common stock, of the Corporation is at least equal to the highest of the
following (whether or not that interested shareholder has previously acquired
any shares of that class or series of stock):
(a) the highest per share price (including any
brokerage commissions, transfer taxes and soliciting dealers' fees) paid by that
interested shareholder for any shares of that class or series of stock acquired
by it (i) within the five-year period immediately prior to the announcement date
with respect to that business combination, or (ii) within the five-year period
immediately prior to, or in, the transaction in which that interested
shareholder became an interested shareholder, whichever is higher; plus, in
either case, interest compounded annually from the earliest date on which the
highest per share acquisition price was paid through the consummation date at
the rate for one-year United States Treasury obligations from time to time in
effect; less the aggregate amount of any cash dividends paid, and the
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market value of any dividends paid other than in cash, per share of that class
or series of stock since that earliest date, up to the amount of that interest;
(b) the highest preferential amount per share to
which the holders of shares of that class or series of stock are entitled in the
event of any liquidation, dissolution or winding up of the Corporation, plus the
aggregate amount of any dividends declared or due at to which those holders are
entitled prior to payment of dividends on some other class or series of stock
(unless the aggregate amount of those dividends is included in that preferential
amount); and
(c) the market value per share of that class or
series of stock on the announcement date with respect to that business
combination or on that interested shareholder's stock acquisition date,
whichever is higher; plus interest compounded annually from that date through
the consummation date at the rate for one-year United States Treasury
obligations from time to time in effect; less the aggregate amount of any cash
dividends paid, and the market value of any dividends paid other than in cash,
per share of that class or series of stock since that date, up to the amount of
that interest;
(3) the consideration to be received by holders of a
particular class or series of outstanding stock (including common stock) of the
Corporation in that business combination is in cash or in the same form as the
interested shareholder has used to acquire the largest number of shares of that
class or series of stock previously acquired by it;
(4) the holders of all outstanding shares of stock of the
Corporation not beneficially owned by that interested shareholder immediately
prior to the consummation of that business combination are entitled to receive
in that business combination cash or other consideration for those shares in
compliance with paragraphs (1), (2) and (3) of this subsection; and
(5) after that interested shareholder's stock acquisition date
and prior to the consummation date with respect to that business combination,
that interested shareholder has not become the beneficial owner of any
additional shares of stock of the Corporation, except:
(a) as part of the transaction which resulted in
that interested shareholder becoming an interested shareholder;
(b) by virtue of proportionate stock splits, stock
dividends or other distributions of stock in respect of stock not constituting a
business combination as defined in Section A.5(5) of this Article;
(c) through a business combination meeting all of
the conditions of paragraph (3) and this paragraph; or
(d) through the purchase by that interested
shareholder at any price which, if that price had been paid in an otherwise
permissible business combination, the announcement date and consummation date of
which was the date of that purchase, would have satisfied the requirements of
paragraphs (1), (2) and (3) of this subsection.
(6) Exceptions. The provisions of this Article XIII shall not
apply to (i) any business combination of the Corporation with an interested
shareholder of the Corporation which became an interested shareholder
inadvertently, if such interested shareholder (A) as soon as practicable divests
itself,
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himself or herself of a sufficient amount of the voting stock of the Corporation
so that it, he or she no longer is the beneficial owner, directly or indirectly,
of 10% or more of the voting power of the outstanding voting stock of the
Corporation or a subsidiary corporation, and (B) would not at any time within
the five-year period preceding the announcement date with respect to that
business combination have been an interested shareholder but for that
inadvertent acquisition or (ii) any business combination with an interested
shareholder if the Corporation's common stock was not registered pursuant to
Section 12 of the Exchange Act on that interested shareholder's stock
acquisition date provided such interested shareholder has continued to be an
interested shareholder of the Corporation since such stock acquisition date.
Nothing contained in this Article XIII shall be construed to relieve any
interested shareholder from any fiduciary obligation imposed by law.
ARTICLE XIV
Evaluation of Business Combinations
-----------------------------------
In connection with the exercise of its judgment in determining what is
in the best interests of the Corporation and of the shareholders, when
evaluating a business combination or a tender or exchange offer, the board of
directors of the Corporation shall, in addition to considering the adequacy of
the amount to be paid in connection with any such transaction, consider all of
the following factors and any other factors which it deems relevant: (i) the
long-term as well as short-term interests of the Corporation and its
shareholders; (ii) the social and economic effects of entering into the
transaction on the Corporation and its subsidiaries, and its present and future
employees, depositors, loan and other customers, creditors and other elements of
the communities in which the Corporation and its subsidiaries operate or are
located; (iii) the business and financial condition and earnings prospects of
the acquiring person or entity, including, but not limited to, debt service and
other existing financial obligations, financial obligations to be incurred in
connection with the acquisition, and other likely financial obligations of the
acquiring person or entity, and the possible effect of such conditions upon the
Corporation and its subsidiaries and the other elements of the communities in
which the Corporation and its subsidiaries operate or are located; and (iv) the
competence, experience, and integrity of the acquiring person or entity and its
or their management.
ARTICLE XV
Response to Abusive Takeovers
-----------------------------
In furtherance and not in limitation of the powers conferred by law or
in this Restated Certificate, the Board of Directors (and any committee of the
Board of Directors) is expressly authorized, to the extent permitted by law, to
take such action or actions as the Board or such committee may determine to be
reasonably necessary or desirable to (A) encourage any person to enter into
negotiations with the Board of Directors and management of the Corporation with
respect to any transaction which may result in a change in control of the
Corporation which is proposed or initiated by such person or (B) contest or
oppose any such transaction which the Board of Directors or such committee
determines to be unfair, abusive or otherwise undesirable with respect to the
Corporation and its business, assets or properties or the shareholders of the
Corporation, including, without limitation, the adoption of such plans or the
issuance of such rights, options, capital stock, notes, debentures or other
evidences of indebtedness or other securities of the Corporation, which rights,
options, capital stock, notes, evidences of indebtedness and other securities
(i) may be exchangeable for or convertible into cash or other securities on such
terms and conditions as may be determined by the Board or such committee and
(ii) may provide for the
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treatment of any holder or class of holders thereof designated by the Board of
Directors or any such committee in respect of the terms, conditions, provisions
and rights of such securities which is different from, and unequal to, the
terms, conditions, provisions and rights applicable to all other holders
thereof.
ARTICLE XVI
Amendment of Bylaws
-------------------
In furtherance and not in limitation of the powers conferred by
statute, the board of directors of the Corporation is expressly authorized to
make, repeal, alter, amend and rescind the Bylaws of the Corporation by a
majority vote of members of the board of directors present at a legal meeting
held in accordance with the provisions of the Bylaws. Notwithstanding any other
provision of this Certificate or the Bylaws of the Corporation (and
notwithstanding the fact that some lesser percentage may be specified by law),
the Bylaws shall not be made, repealed, altered, amended or rescinded by the
shareholders of the Corporation except by the vote of the holders of not less
than 80% of the outstanding shares of the capital stock of the Corporation
entitled to vote generally in the election of directors (considered for this
purpose as one class) cast at a meeting of the shareholders called for that
purpose (provided that notice of such proposed adoption, repeal, alteration,
amendment or rescission is included in the notice of such meeting), or, as set
forth above, by the board of directors.
ARTICLE XVII
Amendment of Certificate of Incorporation
-----------------------------------------
The Corporation reserves the right to repeal, alter, amend or rescind
any provision contained in this Certificate in the manner now or hereafter
prescribed by law, and all rights conferred on shareholders herein are granted
subject to this reservation. Notwithstanding the foregoing, the provisions set
forth in Articles VI, VII, VIII, IX.A, IX.B, IX.D, IX.F, X, XIII, XIV, XV, XVI
and this Article XVII of this Certificate may not be repealed, altered, amended
or rescinded in any respect unless such action is approved by the affirmative
vote of the holders of not less than 80% of the outstanding shares of capital
stock of the Corporation entitled to vote generally in the election of directors
(considered for this purpose as a single class) cast at a meeting of the
shareholders called for that purpose (provided that notice of such proposed
adoption, repeal, alteration, amendment or rescission is properly included in
the notice of such meeting).
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EXHIBIT NO. 5
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MALIZIA, SPIDI, SLOANE & FISCH, P.C.
ATTORNEYS AT LAW
1301 K STREET, N.W.
SUITE 700 EAST
WASHINGTON, D.C. 20005
(202) 434-4660
FACSIMILE: (202) 434-4661
WRITER'S DIRECT DIAL NUMBER
August 25, 1998
Board of Directors
Sun Bancorp, Inc.
226 Landis Avenue
Vineland, New Jersey 08360
Re: Registration Statement Under the Securities Act of 1933
-------------------------------------------------------
Ladies and Gentlemen:
This opinion is rendered in connection with the Registration Statement on
Form S-3 filed with the Securities and Exchange Commission under the Securities
Act of 1933, as amended, (the "Act") relating to the offer and sale (the
"Offering") of up to 886,334 shares of common stock, par value $1.00 per share
(the "Common Stock"), of Sun Bancorp, Inc. (the "Company"). As special counsel
to the Company, we have reviewed such legal matters as we have deemed
appropriate for the purpose of rendering this opinion.
Based on the foregoing, we are of the opinion that the shares of Common
Stock of the Company covered by the aforesaid Registration Statement will, when
issued in accordance with the terms of the Offering against full payment
therefor, be validly issued, fully paid, and non-assessable shares of Common
Stock of the Company.
We hereby consent to the use of this opinion and to the reference to our
firm appearing in the Company's Prospectus under the heading "Validity of
Securities." In giving this consent, we do not admit that we come within the
category of persons whose consent is required under Section 7 of the Act or the
rules and regulations of the Securities and Exchange Commission adopted under
the Act.
This opinion is given as of the effective date of the Registration
Statement and we assume no obligation to advise you of changes that may
hereafter be brought to our attention.
Very truly yours,
/s/Malizia, Spidi, Sloane & Fisch, P.C.
---------------------------------------
MALIZIA, SPIDI, SLOANE & FISCH, P.C.
EXHIBIT NO. 23.1
<PAGE>
Independent Auditors' Consent
We consent to the incorporation by reference in this Registration Statement
of Sun Bancorp, Inc. on Form S-3 of our report dated February 9, 1998,
appearing in the Annual Report on Form 10-K of Sun Bancorp, Inc. for the
year ended December 31, 1997 and to the reference to us under the heading
"Experts" in the Prospectus, which is part of this Registration Statement.
/s/Deloitte & Touche LLP
--------------------------
Deloitte & Touche LLP
Philadelphia, Pennsylvania
August 24, 1998
