<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 11, 2000
REGISTRATION NO.
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM SB-2
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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SUN BANCSHARES, INC.
(Name of Small Business Issuer in its Charter)
<TABLE>
<S> <C> <C>
SOUTH CAROLINA 6021 58-2466380
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
</TABLE>
P.O. BOX 1359, MURRELLS INLET, SOUTH CAROLINA 29576 (843) 357-5214
(Address, and telephone number of principal executive offices)
THE CORNER OF U.S. HIGHWAY 17 AND RIVERWOOD DRIVE,
MURRELLS INLET, SOUTH CAROLINA 29576
(Address of principal place of business or intended principal place of business)
DALTON B. FLOYD, JR., ESQ.
SUN BANCSHARES, INC.
823 SURFSIDE DRIVE
SURFSIDE BEACH, SOUTH CAROLINA 29587
(843) 238-5141
(Name, address, and telephone number, of agent for service)
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COPIES TO:
<TABLE>
<S> <C>
KATHRYN L. KNUDSON, ESQ. BOYD C. CAMPBELL, JR., ESQ.
POWELL, GOLDSTEIN, FRAZER & MURPHY LLP SMITH HELMS MULLISS & MOORE, LLP
191 PEACHTREE STREET, N.E. 16TH FLOOR 201 NORTH TRYON STREET, 30TH FLOOR
ATLANTA, GEORGIA 30303 CHARLOTTE, NORTH CAROLINA 28202
(404) 572-6600 (704) 343-2000
</TABLE>
Approximate date of proposed sale to the public: as soon as practicable
after this Registration Statement has become effective.
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 this Form is a post-effective amendment filed pursuant to Rule 462(d)
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 the 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
<TABLE>
<CAPTION>
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PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO BE PROPOSED MAXIMUM AGGREGATE OFFERING AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED OFFERING PRICE PER UNIT PRICE REGISTRATION FEE
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<S> <C> <C> <C> <C>
Common stock, no par value 1,150,000(1) $10.00 $11,500,000(2) $3,036
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Warrants to purchase common stock...... 210,000(3) $ 0 $ 0 $ 0
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Common stock, no par value, issuable
upon the exercise of the warrants.... 210,000 $10.00(4) $ 2,100,000(5) $ 555
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</TABLE>
(1) Includes 150,000 shares to cover over-allotments, if any, pursuant to the
over-allotment option granted to the underwriter.
(2) Estimated solely for the purpose of calculating the registration fee in
accordance with Rule 457 under the Securities Act of 1933, as amended.
(3) Warrants to purchase an aggregate of 210,000 shares of common stock at an
exercise price of $10 per share will be issued to organizers in connection
with the offering.
(4) Represents the exercise price per share for each warrant.
(5) Calculated in accordance with Rule 457(i) under the Securities Act of 1933,
as amended.
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 OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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The information contained in this prospectus is not complete and may be
changed. We may not sell these securities until the registration statement
filed with the Securities and Exchange Commission is effective. This
prospectus is not an offer to sell these securities and it is not
soliciting an offer to buy these securities in any state where the offer or
sale is not permitted.
PRELIMINARY PROSPECTUS DATED FEBRUARY 11, 2000; SUBJECT TO COMPLETION
1,000,000 SHARES
SUN BANCSHARES, INC.
A PROPOSED BANK HOLDING COMPANY FOR
SUNBANK, N.A. (PROPOSED)
COMMON STOCK
$10.00 PER SHARE
------------------------
We are offering shares of Sun Bancshares, Inc. common stock to raise the
money required to start SunBank, N.A., a proposed national bank. Sun Bancshares
will be the holding company and sole shareholder of SunBank after it is
organized. SunBank will be headquartered in Murrells Inlet, South Carolina, and
we expect to open SunBank in the second quarter of 2000. This is our first
offering of common stock to the public, and currently no public market exists
for our shares. This is a firm commitment underwriting. You may purchase a
minimum of 100 shares and up to a maximum of 50,000 shares, although we may
waive these limits and accept subscriptions for more or less shares. We will
request that quotations for our common stock be reported on the Nasdaq OTC
Bulletin Board under the symbol " ."
Our organizers will receive warrants to purchase one share of common stock
for each share they purchase in the offering. We describe the warrants in more
detail in the "Executive Compensation - Organizers' Warrants" section on page
33.
OUR COMMON STOCK IS NOT A DEPOSIT OR A BANK ACCOUNT AND IS NOT INSURED BY
THE FDIC OR ANY OTHER GOVERNMENTAL AGENCY. AN INVESTMENT IN OUR COMMON STOCK
INVOLVES RISKS. YOU SHOULD NOT INVEST IN THIS OFFERING UNLESS YOU CAN AFFORD TO
LOSE ALL OF YOUR INVESTMENT. WE HAVE DESCRIBED WHAT WE BELIEVE ARE THE MATERIAL
RISKS OF THIS INVESTMENT UNDER THE HEADING "RISK FACTORS" BEGINNING ON PAGE 7.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
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<TABLE>
<CAPTION>
PER SHARE TOTAL
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<S> <C> <C>
Public offering price...................... $10.00 $10,000,000
Underwriting discount...................... $ 0.56 $ 560,000
Proceeds to us, before expenses............ $ 9.44 $ 9,440,000
</TABLE>
We will pay no underwriting discount on up to 200,000 shares sold to our
directors and executive officers and will pay an underwriting discount of $0.35
per share on up to 100,000 shares sold to investors identified in writing to the
underwriters by us. We will pay an underwriting discount of $0.75 on all other
shares sold. The underwriting discount shown in the table above reflects a
blended rate that assumes 200,000 shares are sold to our officers and directors
and 100,000 shares are sold to investors identified by Sun Bancshares. Wachovia
Securities has the right to purchase up to an additional 150,000 shares at the
public offering price, less an underwriting discount of $0.75 per share, within
30 days from the date of this prospectus to cover over-allotments.
THE UNDERWRITER EXPECTS TO DELIVER THE SHARES OF COMMON STOCK ON
, 2000.
------------------------
WACHOVIA SECURITIES, INC.
, 2000.
<PAGE> 3
SUN BANCSHARES, INC.
SUNBANK, N.A. (PROPOSED)
PROPOSED MARKET AREA
[INSERT MAP DEPICTING MARKET AREA - SUN BANCSHARES TO PROVIDE]
<PAGE> 4
SUMMARY
This summary does not contain all the information you should consider
before investing in the common stock. We encourage you to read carefully the
entire prospectus before investing. Unless otherwise stated, all information in
this prospectus assumes the underwriter will not exercise its over-allotment
option.
SUN BANCSHARES AND SUNBANK
Sun Bancshares, Inc. is a South Carolina corporation that was incorporated
on August 3, 1999 to organize and serve as the holding company for SunBank,
N.A., a proposed national bank. Our main office will be located in Murrells
Inlet, South Carolina and we intend to operate a branch office in Georgetown,
South Carolina. As a community bank, we will focus on providing personalized
service and financial products to individuals and small- to medium-sized
businesses located in Murrells Inlet, Georgetown and the surrounding
communities.
On November 17, 1999 we filed an application with the Office of the
Comptroller of the Currency to organize SunBank as a national bank in Murrells
Inlet, with a branch office in Georgetown. In order to receive final approval of
our application to organize SunBank, we anticipate that we will be required to
raise a minimum of $8,000,000 in capital, receive FDIC approval of our
application for deposit insurance, and implement proper banking policies and
procedures. We filed an application with the FDIC for deposit insurance on
November 17, 1999 and will file an application with the Federal Reserve to
become a bank holding company and to acquire all of the capital stock of SunBank
in March 2000. We expect to receive all final regulatory approvals and to begin
our banking operations in the second quarter of 2000.
OUR MARKET AND PRIMARY SERVICE AREA
Our primary service area lies within the coastal region of South
Carolina's Horry and Georgetown Counties. This region, often called the "Grand
Strand," is recognized as one of the fastest growing regions in the country. As
reported by the American Automobile Association, the Grand Strand is the second
busiest vacation destination in the nation, drawing more than 10 million
visitors each year to its beaches, entertainment attractions and more than 100
golf courses. The region has also become a popular spot for retirees. In recent
years, the Grand Strand was mentioned in The Wall Street Journal as one of the
top spots in America for retirement, and Money magazine rated it as one of the
top 20 places to retire in America. The region's tourism, hospitality, retail
and entertainment base is supported by a substantial construction and real
estate development industry, a sizeable manufacturing and industrial base, a
strong healthcare sector and centers for higher education.
According to a 1997 population and economic study performed by the
Waccamaw Regional Planning and Development Council, over the period from 1990 to
1995, the population of Horry County increased 20.5% and the population of
Georgetown County increased 11.2%. Additionally, the population of Horry County
is expected to grow 41.5% over the ten-year period from 2000 to 2010, and the
population of Georgetown County is expected to grow 21.6% over the same period.
Also, the growth rate of median income per family in Georgetown and Horry
Counties from 1990 to 1995 outpaced the growth rate for the State of South
Carolina as well as for the United States.
Our primary service area will include southern Horry County and most of
Georgetown County. This area, commonly referred to as the "South Strand" or
"Waccamaw Neck," encompasses the coastal communities south of Myrtle Beach,
including Socastee, Surfside Beach, Garden City Beach, Murrells Inlet,
Litchfield Beach, Pawleys Island, DeBordieu and Georgetown. We expect initially
to draw a large percentage of our business from the areas immediately
surrounding the communities of Murrells Inlet and Georgetown.
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WHY WE ARE ORGANIZING A NEW BANK
We believe that our chosen communities will benefit greatly from the
continuing growth of the Grand Strand, particularly as available real estate and
development opportunities to the north of Myrtle Beach become more scarce.
Growth in our communities is evidenced not only through the population growth,
but also through increases in new businesses, new golf course communities,
residential building permits, commercial construction and the influx of
additional medical services and other public infrastructure projects.
Currently no financial institution is headquartered in Murrells Inlet or
the City of Georgetown and most of the institutions that have offices in our
primary service area are large national, super-regional or regional banks. We
believe these larger banks often lack the consistency of local leadership and
decision-making authority necessary to provide personalized, efficient service
to individuals and small- to medium-sized business customers. Through our local
ownership and management, we believe we will be uniquely situated to efficiently
provide these customers with loan, deposit and other financial products tailored
to fit their specific needs. We have chosen the motto "Your Community . . . Your
Bank" to reflect this philosophy.
Additionally, Anchor Financial Corporation, a regional bank holding
company headquartered in Myrtle Beach, announced recently that it plans to merge
with Carolina First Corporation, a regional bank holding company headquartered
in Greenville, South Carolina. We believe these types of mergers can diminish
the autonomy and community identity of local institutions, thereby creating more
demand for locally-owned and managed, community-oriented banks in our primary
market. As a community bank headquartered in Murrells Inlet, we will offer
convenient service, local decision-making and competitively priced financial
products. Additionally, by focusing our operations on the communities we serve,
we believe that we will be able to respond to changes in our market more quickly
than large, centralized institutions.
OUR BOARD OF DIRECTORS AND MANAGEMENT
Sun Bancshares was founded by 15 long-time residents of the
Georgetown/Horry County area. Our organizers are business and community leaders
who are active in numerous charitable and service organizations. Our founders
will serve as the initial directors of both Sun Bancshares and SunBank. We
believe our directors' long-standing ties to the community and their significant
business experience will enable Sun Bancshares to effectively assess and address
the banking needs throughout our proposed market area. Our directors include:
<TABLE>
<S> <C>
- - Thomas Bouchette - Judy B. Long
- - Edsel J. ("Coupe") DeVille - Thomas O. Morris, Jr.
- - John S. Divine, III - Joel A. Pellicci
- - Dalton B. Floyd, Jr. - Donald E. Perry
- - Jeanne Louise Fourrier-Eggart - Chandler C. Prosser
- - David E. Grabeman - Larry N. Prosser
- - Richard Edwin Heath - Gary L. Schaal
- - Paul John Hletko
</TABLE>
Additionally, we have retained two experienced individuals to serve on our
senior management team. These individuals bring with them many years of banking
experience and community service within the Georgetown/Horry County area. The
members of our senior management team are as follows:
- Thomas Bouchette will serve as president of Sun Bancshares and
president and chief executive officer of SunBank. Mr. Bouchette has
over 13 years of banking and lending experience including five years in
the Georgetown/Horry County area. Prior to beginning preparations to
open SunBank, he was executive vice president and chief credit officer
of The Citizens Bank in Olanta, South Carolina where he was responsible
for all lending activity and management of
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branch operations. Before joining The Citizens Bank, Mr. Bouchette
served Wachovia Bank as Business Banking Executive responsible for the
Georgetown/Horry County area.
- Randy L. Carmon will serve as chief financial officer of Sun Bancshares
and SunBank. Mr. Carmon has over 21 years bank management experience in
finance and operations. Prior to joining Sun Bancshares and SunBank, he
was vice president of Anderson State Bank in Hemingway, South Carolina.
Mr. Carmon previously served with The National Bank of South Carolina
and Lake City State Bank.
We are still in the process of assembling the remainder of our management
team, including a senior officer with responsibility for loan administration. We
are primarily seeking individuals who reside in the Georgetown/Horry County area
and who have significant local banking experience and a history of community
involvement.
PRODUCTS AND SERVICES
We plan to operate as a full service commercial bank that offers most of
the products and services typically offered by larger banks. As a community
bank, however, we will be able to offer local business owners flexibility in
structuring financing to fit their specific business needs. Additionally, we
will offer competitively priced consumer products to individual customers
seeking a higher level of personal service than that provided by larger regional
and national banks. Our lending services will include consumer loans to
individuals, commercial loans to small- to medium-sized businesses and
professional concerns and real estate-related loans. We will competitively price
our deposit services which will include demand deposits, regular savings
accounts, money market deposits, certificates of deposit and individual
retirement accounts. We will also provide cashier's checks, safe-deposit boxes,
traveler's checks, direct deposit and U.S. Savings Bonds. We intend to offer our
services through a variety of methods including branch offices, ATMs, bank by
mail, telephone banking and, in the future, online banking.
OUR BUSINESS STRATEGY
Our strategy as an independent bank holding company will be carried out
through the operations and growth of SunBank. In an effort to emphasize prompt,
responsive service to our target customers and expand our presence in the
Georgetown/Horry County area, we have outlined our strategies as follows:
- Capitalize on our directors' and officers' diverse community
involvement and business experience.
- Hire and retain highly experienced and qualified banking personnel with
established customer relationships.
- Provide individualized attention with local decision-making authority.
- Establish a unique community identity.
- Implement an aggressive marketing program.
- Open our main office in Murrells Inlet, a branch office in Georgetown
and future additional branches in other strategic locations, as
appropriate.
- Construct a main office building that will support the hiring of
additional lending personnel and the expansion of our operations to
include new products and services.
- Utilize technology and strategic outsourcing to provide a broad array
of products and services.
- In the future, evaluate strategic acquisition opportunities as they
present themselves.
THE OFFERING AND OWNERSHIP BY OUR MANAGEMENT
We are offering 1,000,000 shares of our common stock for $10.00 per share.
Our organizers, directors and executive officers intend to purchase 210,500
shares, which will represent 21.1% of the shares outstanding after the offering.
To compensate our organizers for their financial risk and efforts in organizing
Sun Bancshares and SunBank, they will receive warrants to purchase one share of
common
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stock at $10.00 per share for each share that they purchase in this offering.
For more detailed information see "Executive Compensation - Organizers'
Warrants" on page 33. We hope to sell the remaining shares to individuals and
businesses primarily within the Georgetown/Horry County area who share our
desire to support a new community bank seeking to capitalize on the growth in
our market.
The 1,000,000 shares of common stock offered does not include the
underwriter's option to purchase up to 150,000 additional shares, 210,000 shares
that will be issuable upon the exercise of the warrants issued to our organizers
or 100,000 shares that we may issue under our stock incentive plan.
USE OF PROCEEDS
We will use $8,000,000 raised in this offering to capitalize SunBank. We
expect that this is the minimum amount of capital that our banking regulators
will require that we invest in SunBank prior to its opening. SunBank will use
the funds that it receives from Sun Bancshares to lease the sites for, construct
and furnish its main office and branch office buildings and to provide working
capital to operate SunBank. We will use the remaining net proceeds of this
offering to repay amounts drawn on our line of credit, to provide Sun Bancshares
with working capital to maintain adequate liquidity and for general business
purposes. For more detailed information, see "Use of Proceeds" on page 12.
LOCATION OF OFFICES
The address and phone number of our temporary executive offices are:
911 RIVERWOOD DRIVE
MURRELLS INLET, SOUTH CAROLINA 29576
(843) 357-5214
Our permanent main office and executive offices will be located at:
THE CORNER OF U.S. HIGHWAY 17 AND RIVERWOOD DRIVE
MURRELLS INLET, SOUTH CAROLINA 29576
Our permanent main office will be approximately a 10,000 square foot
building on a 1.5 acre site. We also intend to open an approximately 5,000
square feet permanent branch office building on a 1.1 acre site at the corner of
U.S. Highway 701 and North Street in Georgetown, South Carolina. We plan to
begin our operations in the second quarter of 2000 in temporary facilities near
the permanent sites for our main and branch offices. We anticipate that
construction of our permanent main office and branch office facilities will
begin in June 2000. We expect to complete our main office in the first quarter
of 2001 and our branch office in the fourth quarter of 2000.
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RISK FACTORS
The following describes what we believe are the material risks of an
investment in our common stock. We may face other risks, which we have not
anticipated. An investment in the common stock involves a significant degree of
risk, and you should not invest in the common stock unless you can afford to
lose your entire investment. Please carefully read the entire prospectus
including the cautionary statement following the Risk Factors regarding the use
of forward-looking statements before deciding to invest in the common stock.
PROVISIONS OF SOUTH CAROLINA STATE LAW AND OUR ARTICLES OF INCORPORATION AND
BYLAWS WILL SIGNIFICANTLY LIMIT THE ABILITY OF OTHERS TO ACQUIRE US.
In many cases, shareholders receive a premium for their shares when a
company is purchased by another. Under South Carolina law, however, no other
financial institution may acquire control of Sun Bancshares until we have been
in existence for five years. In addition, state and federal law and our articles
of incorporation and bylaws make it difficult for anyone to purchase Sun
Bancshares without the approval of our board of directors. The provisions in our
articles of incorporation and bylaws include the existence of preferred stock,
staggered terms for the directors, restrictions on the ability to change the
number of directors or to remove a director, supermajority voting requirements
and flexibility in considering acquisition proposals. See "Description of Sun
Bancshares' Capital Stock and Shareholders' Rights" on page 44.
WE HAVE NO OPERATING HISTORY UPON WHICH TO BASE AN ESTIMATE OF OUR EARNINGS
PROSPECTS.
Neither Sun Bancshares nor SunBank has any operating history on which to
base any estimate of their earnings prospects. The operations of new businesses
are always risky because the operating plans and strategies of these businesses
are untested. Because SunBank has not yet opened, you will not have access to
historical financial data and similar information that would be helpful in
deciding whether to invest in Sun Bancshares.
IF WE DO NOT BECOME PROFITABLE, YOU MAY BE UNABLE TO RECOVER ALL OR ANY PART OF
YOUR INVESTMENT.
Typically, most new banks incur substantial start-up expenses, are not
profitable in the first year of operation and, in some cases, are not profitable
for several years or ever. If we are ultimately unsuccessful, you may not
recover all or any part of your investment in the common stock. Our
profitability will depend on our ability to develop a quality loan portfolio and
a core deposit base, both of which may take several years to develop.
Additionally, many of SunBank's loans initially will be new loans to new
borrowers. Accordingly, it will take several years to determine the borrowers'
payment histories, and, as a result, our management will not be able to reliably
evaluate the quality of the loan portfolio until that time. See "Management's
Discussion and Analysis of Financial Condition and Plan of Operations" on page
14.
FAILURE TO IMPLEMENT OUR BUSINESS STRATEGIES MAY ADVERSELY AFFECT OUR FINANCIAL
PERFORMANCE.
If we cannot implement our business strategy, we will be hampered in our
ability to develop business and serve our customers, which could have an adverse
effect on our financial performance. We have developed a business plan that
details the strategy that we intend to implement in our efforts to achieve
profitable operations. Even if these strategies are successfully implemented,
they may not have the favorable impact on operations that we anticipate. See
"Proposed Business - Management Philosophy and Business Strategy" on page 18.
DEPARTURES OF OUR KEY PERSONNEL OR DIRECTORS MAY IMPAIR OUR OPERATIONS.
Thomas Bouchette is important to our success and, without him, our
financial condition and results of operations may be adversely affected. Mr.
Bouchette has been instrumental in our organization and, as president and chief
executive officer of SunBank, will be the key management official in charge of
our daily business operations. We have entered into a three-year employment
agreement with Mr. Bouchette,
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which has a term expiring in 2003, but cannot be assured of his continued
service. Additionally, our directors' community involvement, diverse backgrounds
and extensive local business relationships are important to our success. Our
growth could be adversely affected if the composition of our board of directors
changes materially. See "Management" on page 26.
A DELAY IN BEGINNING SUNBANK'S OPERATIONS WILL RESULT IN ADDITIONAL LOSSES.
Any delay in the opening of SunBank will increase our pre-opening expenses
and postpone our receipt of potential revenues. This could cause our accumulated
losses to increase as a result of continuing operating expenses, such as
salaries and other administrative expenses, coupled with our lack of revenue.
Although we intend to open SunBank in the second quarter of 2000, if we do not
receive the necessary regulatory approvals, SunBank's opening may be delayed or
may not occur at all.
IF REGULATORY CONDITIONS ARE NOT SATISFIED, WE MAY DISSOLVE AND LIQUIDATE, AND
YOU MAY ONLY RECEIVE A PORTION, IF ANY, OF YOUR INVESTMENT.
If we do not receive final regulatory approval to open SunBank, we
anticipate that we will dissolve Sun Bancshares. If we dissolve Sun Bancshares
after the close of the offering, you will receive only a portion, if any, of
your investment because we will have used some or all of the proceeds of the
offering to pay offering, organizational and pre-opening expenses and capital
costs incurred through the time that we dissolve. Although we have applied to
the Office of the Comptroller of the Currency to organize SunBank and we have
applied to the FDIC for deposit insurance, we will not receive final approvals
until we comply with all of the policies and regulations imposed on new banks by
state and federal regulatory agencies. These final approvals may not be granted
in a timely manner, if at all, and the closing of this offering is not
conditioned upon the receipt of final approvals.
STRONG COMPETITION FROM LARGER, MORE ESTABLISHED BANKS MAY CAUSE US TO PAY
HIGHER INTEREST RATES ON OUR DEPOSITS OR CHARGE LOWER RATES ON OUR LOANS TO
ATTRACT CUSTOMERS.
We will encounter strong competition for customers from existing banks and
other types of financial institutions conducting business in the
Georgetown/Horry County area and elsewhere. We may pay higher rates of interest
on our deposits or charge lower rates on our loans than our competitors in order
to attract customers. This may decrease our net interest income. Some of our
competitors have been in business for a long time and have established their
customer base and name recognition. Many of our competitors are larger than we
will be and have greater financial and personnel resources. Some are larger
national, super-regional and regional banks like Bank of America, Wachovia,
BB&T, Carolina First Bank and Coastal Federal. Many of our competitors offer
services, such as extensive and established branch networks and trust services,
that we either do not expect to provide or will not provide for some time. In
addition, competitors that are not depository institutions are generally not
subject to the extensive regulations that will apply to our bank. See "Proposed
Business - Competition" on page 23 and "Supervision and Regulation" on page 37.
CHANGES IN INTEREST RATES MAY DECREASE OUR NET INTEREST INCOME.
Our profitability depends substantially on SunBank's net interest income,
which is the difference between the interest income earned on its loans and
other assets and the interest expense paid on its deposits and other
liabilities. Depending on the terms and maturities of SunBank's assets and
liabilities, a large change in interest rates may significantly decrease our net
interest income and eliminate our profitability. Most of the factors that cause
changes in market interest rates, including economic conditions, are beyond our
control. While we intend to take measures to minimize the effect changes in
interest rates will have on our net interest income and profitability, these
measures may not be effective. See "Management's Discussion and Analysis of
Financial Condition and Plan of Operations - Liquidity and Interest Rate
Sensitivity" on page 15.
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AN ECONOMIC DOWNTURN, ESPECIALLY ONE AFFECTING GEORGETOWN AND HORRY COUNTIES,
MAY REDUCE OUR CUSTOMER AND DEPOSIT BASES AND THE DEMAND FOR OUR LOANS AND OTHER
FINANCIAL PRODUCTS.
As a holding company for a community bank, our success will depend on the
economy of the region in which we operate. The majority of SunBank's borrowers
and depositors will be individuals and businesses located and doing business in
the Georgetown/Horry County area. An economic downturn in the Georgetown/Horry
County area or in the national economy generally could reduce our deposit base
and the demand for our financial products and may decrease our earnings. For
example, an adverse change in the local economy could make it more difficult for
borrowers to repay their loans, which could lead to loan losses for SunBank. See
"Proposed Business" on page 17.
WE MAY NOT BE ABLE TO COMPETE WITH OUR LARGER COMPETITORS FOR LARGER CUSTOMERS
BECAUSE OUR LENDING LIMITS WILL BE LOWER THAN THEIRS.
The amount that SunBank may lend to a single borrower will be limited
based on the amount of SunBank's capital. A national bank's legal lending limit
to a single borrower is equal to 15% of its capital and surplus plus an
additional 10%, if the amount that exceeds 15% is fully secured by readily
marketable collateral. We intend, however, to impose an internal limit of
approximately 13% of our capital. We expect that our initial legal lending limit
following this offering will be approximately $1.1 million, plus up to an
additional $750,000 for loans secured by readily marketable collateral. Until we
are profitable, our capital will continue to decline, and therefore our lending
limit will decline. Our lending limit will be significantly less than the limit
for most of our competitors and may affect our ability to establish
relationships with larger businesses in our market area. We intend to
accommodate larger loans by selling participations in those loans to other
financial institutions, but this strategy may not succeed. See "Proposed
Business - Lending Services - Lending Limits" on page 20.
OUR ABILITY TO PAY DIVIDENDS TO OUR SHAREHOLDERS IS LIMITED AND DEPENDS ON
SUNBANK'S ABILITY TO PAY DIVIDENDS TO US.
Sun Bancshares will initially have no significant source of income other
than dividends that it receives from SunBank. Our ability to pay dividends to
you will therefore depend on SunBank's ability to pay dividends to Sun
Bancshares. Bank holding companies and national banks are subject to significant
regulatory restrictions on the payment of cash dividends. In light of these
restrictions and the need for Sun Bancshares and SunBank to retain and build
capital, it will be our policy to reinvest all of our earnings for an
undetermined period of time. As a result, we do not plan to pay dividends until
we become profitable and recover any losses that we may have incurred. Our
future dividend policy will depend on our earnings, capital requirements,
financial condition and other factors that the Boards of Directors of Sun
Bancshares and SunBank consider relevant. See "Dividends" on page 13.
WE DETERMINED THE PUBLIC OFFERING PRICE ARBITRARILY, AND THE FUTURE MARKET PRICE
MAY FLUCTUATE BELOW THE INITIAL PUBLIC OFFERING PRICE ONCE THE SHARES BECOME
FREELY TRADEABLE.
Sun Bancshares and the underwriter arbitrarily set the public offering
price after considering prevailing market conditions and the price of comparable
publicly traded companies. Because we have no operating history, the public
offering price could not be based on historical measures of our financial
performance. Therefore, the public offering price may not indicate the market
price for the common stock after the offering. Several factors will cause the
market price to fluctuate after the offering, and the price may drop below the
initial public offering price. These factors include our results of operations,
financial analysts' estimates of our earning potential, economic conditions in
our market area and trends in the banking industry. See "Underwriting" on page
49.
9
<PAGE> 11
WE WILL NOT HAVE A LARGE NUMBER OF SHAREHOLDERS OR SHARES OUTSTANDING AFTER THE
OFFERING, WHICH MAY LIMIT YOUR ABILITY TO SELL YOUR SHARES OF COMMON STOCK.
Prior to the offering, there has been no public market for Sun Bancshares'
common stock, and an active trading market may not develop. If an active trading
market does not develop or continue after the offering, you may not be able to
sell your shares at or above the public offering price. Although we have applied
to list the common stock on the Nasdaq OTC Bulletin Board, an active trading
market may not develop or continue after the offering because we will have a
relatively small shareholder base and small number of shares outstanding. You
should consider carefully the limited liquidity of your investment before
purchasing any shares of common stock. Additionally, the sale of a large block
of the shares outstanding after the close of the offering could adversely affect
the market price of the common stock. After the close of the offering all of our
outstanding shares will be freely tradeable without restriction except for
210,500 shares that we anticipate the organizers and the executive officers will
purchase in the offering and which will be subject to lock-up agreements.
Beginning 180 days from the date of this prospectus shares held by the
organizers and executive officers will be eligible for sale subject to the
resale limitations of Rule 144 of the Securities Act of 1933. See "Underwriting"
on page 49 and "Shares Eligible for Future Resale" on page 48.
GOVERNMENT REGULATION MAY HAVE AN ADVERSE EFFECT ON OUR PROFITABILITY AND
GROWTH.
We will be subject to extensive government supervision and regulation. Our
ability to achieve profitability and to grow could be adversely affected by
banking laws and regulations that limit the manner in which we make loans,
purchase securities and pay dividends. These regulations are intended primarily
to protect depositors, not shareholders. In addition, the burden imposed by
federal and state regulations may place us at a competitive disadvantage
compared to competitors who are less regulated. Future legislation or government
policy may also adversely affect the banking industry or our operations. In
particular, various provisions of the Gramm-Leach-Bliley Act, which will become
effective on March 11, 2000, will eliminate many of the federal and state law
barriers to affiliations among banks and securities firms, insurance companies
and other financial services providers. We believe the elimination of these
barriers may significantly increase competition across the financial services
industry. See "Supervision and Regulation" on page 37.
EXERCISE OF WARRANTS AND STOCK OPTIONS WILL CAUSE DILUTION TO YOUR OWNERSHIP
INTEREST IN SUN BANCSHARES.
Our organizers, executive officers and employees may exercise warrants or
options to purchase common stock, which would result in the dilution of your
proportionate interests in Sun Bancshares. Upon completion of this offering, we
will issue to the organizers warrants to purchase an aggregate of 210,000 shares
of common stock, and will issue to our executive officers and employees options
to purchase shares of common stock pursuant to an option plan, which permits the
grant of up to an aggregate of 100,000 shares of common stock. The warrants will
vest in one-third annual increments over three years, and options will generally
vest in one-fifth annual increments over five years. Both the warrants and the
options will be exercisable at a price of $10.00 per share. The organizers,
executive officers and employees will have future opportunities to profit from
any rise in the market value of the common stock or any increase in our net
worth. In addition, the exercise of the warrants or options could adversely
affect the terms on which we can obtain additional capital. For instance, the
holders of the warrants or options could exercise the warrants or options at a
time when we could otherwise obtain capital by offering additional securities on
terms more favorable to us than those provided for by the warrants or options.
See "Executive Compensation" on page 32.
WE MAY NOT BE ABLE TO RAISE ADDITIONAL CAPITAL.
In the future, should we need additional capital to support our business,
expand our operations or maintain our minimum capital requirements, we may not
be able to raise additional funds through the issuance of additional shares of
common stock or other securities. If we are able to obtain additional capital
through the issuance of additional shares of common stock or other securities,
the issuance could
10
<PAGE> 12
significantly dilute your ownership interest. Additionally, the sale of any
shares of common stock may be at prices lower than the price at which we are
selling shares in this offering or on terms better than those of the shares we
are selling in this offering.
OUR DIRECTORS AND OFFICERS COULD HAVE THE ABILITY TO INFLUENCE SHAREHOLDER
ACTIONS.
Our directors and executive officers together may be able to significantly
influence the outcome of director elections or block a significant transaction
that might otherwise be approved by the shareholders. We anticipate that after
this offering, our directors and executive officers will directly or indirectly
own 210,500 shares, representing 21.1%, of the outstanding common stock. These
persons may acquire additional shares of common stock after the offering, which
will increase this percentage. Additionally, our board members serve staggered
three-year terms, which means only one-third of those members are elected each
year at our annual meeting. Consequently, it would take at least two years to
replace a majority of our board members. See "Description of Sun Bancshares'
Capital Stock and Shareholders' Rights" on page 44.
WE ARE AUTHORIZED TO ISSUE ADDITIONAL SHARES OF COMMON STOCK AND SHARES OF
PREFERRED STOCK WHICH, IF ISSUED, MAY ADVERSELY AFFECT YOUR VOTING RIGHTS AND
REDUCE THE MARKET PRICE OF OUR COMMON STOCK.
We are authorized by our articles of incorporation to issue additional
shares of common stock and shares of preferred stock without the consent of our
shareholders. Preferred stock, when issued, may rank senior to common stock with
respect to voting rights, payment of dividends, and amounts received by
shareholders upon liquidation, dissolution or winding up. The existence of
rights which are senior to common stock may reduce the price of our shares of
common stock. We do not have any plans to issue any shares of preferred stock at
this time.
CAUTION REGARDING FORWARD-LOOKING STATEMENTS
This prospectus contains forward-looking statements concerning Sun
Bancshares and SunBank and their operations, performance, financial conditions
and likelihood of success. Forward-looking statements are based on many
assumptions and estimates and include statements about the competitiveness of
the banking industry, potential regulatory obligations, our business strategies
and other statements that are not historical facts. When used in this
prospectus, the words "may," "would," "could," "will," "expect," "anticipate,"
"believe," "intend," "plan" and "estimate," and similar expressions generally
identify forward-looking statements. Because forward-looking statements involve
risks and uncertainties that are beyond our control, our actual results may
differ materially from those expressed in the forward-looking statements. The
most significant of these risks, uncertainties and other factors are discussed
under the heading "Risk Factors" beginning on page 7 of this prospectus. We urge
you to carefully consider these factors prior to making an investment in our
common stock.
11
<PAGE> 13
USE OF PROCEEDS
We estimate that the net proceeds of the offering will be $9,295,000,
after deducting the underwriting discount of $560,000 and estimated
organizational and offering expenses of $145,000. If the underwriter exercises
its over-allotment option in full, we estimate net proceeds of the offering will
be $10,682,500, after deducting the underwriting discount of $672,500 and
organizational and offering expenses of $145,000.
We have established a line of credit in the amount of $850,000 to pay
pre-offering organizational and pre-opening expenses of Sun Bancshares and
SunBank and pre-construction costs such as architectural and engineering fees
associated with the construction of our main office and branch office buildings.
We intend to pay off the entire line of credit with proceeds that we receive
from this offering. The following two sections describe our proposed use of the
proceeds based on our current plans and business conditions. The organizational
and pre-opening expenses and construction costs described below include amounts
that were paid prior to the close of the offering with the proceeds of our line
of credit.
USE OF PROCEEDS BY SUN BANCSHARES
The following table shows the anticipated use of the proceeds by Sun
Bancshares. As shown, we will use $8,000,000 to capitalize SunBank. Sun
Bancshares will purchase the capital stock of SunBank after Sun Bancshares
receives approval to become a bank holding company and SunBank receives final
regulatory approval to begin its operations. Until we receive those regulatory
approvals, we plan to invest the $8,000,000 in short-term, investment-grade
securities, certificates of deposit or guaranteed obligations of the United
States government. We will initially invest the remaining proceeds of the
offering in United States governmental securities or deposit them with SunBank.
In the long-term, we will use the remaining proceeds for operational expenses
and other general corporate purposes, including the provision of additional
capital to the bank, if necessary.
<TABLE>
<CAPTION>
AMOUNT
-----------
<S> <C>
Gross proceeds from offering................................ $10,000,000
Underwriter's discount...................................... $ 560,000
Expense of organizing Sun Bancshares........................ $ 10,000
Expense of offering......................................... $ 135,000
Investment in capital stock of SunBank...................... $ 8,000,000
-----------
Remaining proceeds.......................................... $ 1,295,000
===========
</TABLE>
USE OF PROCEEDS BY SUNBANK
SunBank intends to use the $8,000,000 capital it will receive from the
sale of its common stock to Sun Bancshares for the following purposes:
<TABLE>
<CAPTION>
AMOUNT
----------
<S> <C>
Investment by Sun Bancshares in SunBank's capital stock..... $8,000,000
Organizational and pre-opening expenses..................... $ 475,000
Construction of the main and branch office buildings........ $2,100,000
Purchase of temporary modular facility...................... $ 90,000
Furniture, fixtures and equipment for the main and branch
offices................................................... $ 805,000
----------
Remaining proceeds.......................................... $4,530,000
==========
</TABLE>
We will use the remaining proceeds to make loans, purchase securities and
otherwise conduct the business of SunBank. After the completion of the
construction of our permanent main office, we intend to sell our temporary
modular facility. We estimate the resale value to be approximately $75,000.
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<PAGE> 14
CAPITALIZATION
The following table shows Sun Bancshares' capitalization as of December
31, 1999 and its pro forma consolidated capitalization, as adjusted to give
effect to the receipt of the net proceeds from the sale of 1,000,000 shares of
common stock in this offering.
Upon Sun Bancshares' incorporation, Dalton B. Floyd, Jr., chairman of the
board and chief executive officer of Sun Bancshares, purchased one share of
common stock at the price of $10.00. Sun Bancshares will redeem this share for
$10.00 upon the issuance of shares in this offering. The number of shares shown
as outstanding after giving effect to the offering, and the book value of those
shares, do not include shares of common stock issuable upon the exercise of the
warrants or pursuant to options that may be granted under Sun Bancshares' stock
incentive plan. For additional information regarding the number and terms of
these warrants and options, see "Executive Compensation - Organizers' Warrants"
and "- Stock Incentive Plan" on page 33.
The "As Adjusted" column reflects the estimated cost of organizing Sun
Bancshares and organizing and preparing to open SunBank through the expected
opening date, which should be in the second quarter of 2000. See "Use of
Proceeds" on page 12.
<TABLE>
<CAPTION>
DECEMBER 31, 1999
----------------------------
AS ADJUSTED
ACTUAL FOR THE OFFERING
--------- ----------------
<S> <C> <C>
SHAREHOLDERS' EQUITY
Common stock, par value not stated; 10,000,000 shares
authorized; 1 share issued ($10.00) and outstanding;
1,000,000 shares issued ($10.00 each) and
outstanding as adjusted............................. $ 10 $9,305,000
Preferred stock, par value not stated; 2,000,000
shares authorized, no shares issued and
outstanding......................................... 0 0
Deficit accumulated during the pre-opening stage...... (164,796) (485,000)
--------- ----------
Total shareholders' equity............................ $(164,786) $8,820,000
========= ==========
Book value per share.................................. N/A $ 8.82
==========
</TABLE>
DIVIDENDS
Initially, we intend to retain all of our earnings to support our
operations and to expand our business. Additionally, both Sun Bancshares and
SunBank are subject to significant regulatory restrictions on the payment of
cash dividends. In light of these restrictions and the need for Sun Bancshares
and SunBank to retain and build capital, we do not plan to pay dividends until
we become profitable and recover any losses incurred during our initial
operations. Our payment of future dividends and dividend policy will depend on
the earnings, capital requirements and financial condition of Sun Bancshares and
SunBank and on other factors that our board of directors considers relevant. See
"Supervision and Regulation - Payment of Dividends" on page 41.
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<PAGE> 15
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
PLAN OF OPERATIONS
Sun Bancshares' financial statements and related notes, which are included
in this prospectus, provide additional information relating to the following
discussion of its financial condition. See "Index to Financial Statements" on
page F-1.
Sun Bancshares was organized on August 3, 1999 to serve as a holding
company for SunBank, N.A., a proposed national bank. Since it was organized, Sun
Bancshares' main activities have been:
- seeking, interviewing and selecting its officers;
- applying for a national bank charter;
- applying for FDIC deposit insurance;
- applying to become a bank holding company;
- preparing detailed business plans;
- identifying sites for our banking facilities; and
- raising equity capital through this offering.
FINANCIAL RESULTS
From August 3, 1999 to December 31, 1999, the net loss amounted to
$164,796. The estimated net loss for the period from August 3, 1999 through June
2000, the anticipated opening date of SunBank, is $485,000, which is
attributable to the following estimated noninterest expenses:
<TABLE>
<S> <C>
Salaries and benefits....................................... $292,000
Legal and professional fees................................. 75,000
Other pre-opening expenses.................................. 118,000
--------
Total............................................. $485,000
========
</TABLE>
LINE OF CREDIT
We have obtained a line of credit from The Bankers Bank, Atlanta, Georgia
for $850,000 to fund our operations from August 3, 1999 through the close of the
offering and to fund pre-construction costs associated with the construction of
our main office and branch office buildings. At December 31, 1999, $250,000 was
outstanding on the line of credit, and at January 31, 2000 approximately
$320,000 was outstanding and $530,000 was available on the line of credit. The
line of credit has been guaranteed by the organizers, bears interest at the
prime rate as published in the Money Rates section of The Wall Street Journal
minus 1/2%, and is due on September 30, 2000.
OFFICES AND FACILITIES
We intend to lease the land for the sites of our permanent main and branch
offices. On November 12, 1999, we entered into an option agreement that expires
on May 1, 2000 for the lease of our branch office site. Under the terms of the
option we are required to make monthly option payments of $4,583 through the
term of the option. We may exercise the option at any time during the option
term upon ten days written notice to the lessor. Upon exercise of the option,
all option payments that we have paid will be credited to our first year rental
payments. We have also entered into a letter of intent with regards to the lease
of our main office site. Under the terms of the option agreement for the branch
office
14
<PAGE> 16
site and the letter of intent of the main office site, we anticipate that the
significant terms of these leases will be as described in the table below.
<TABLE>
<CAPTION>
INITIAL
LEASE DATE MONTHLY RENTAL INITIAL TERM RENEWAL OPTIONS
---------- -------------- ------------ ---------------
<S> <C> <C> <C> <C>
Main Office Site....... May 2000 $7,500 25 Years Up to 15 Years
Branch Site............ May 2000 $4,583 30 Years Up to 20 Years
</TABLE>
Additionally, each of the leases calls for us to pay taxes, insurance and
repairs on the leased properties.
We intend to begin our banking operations in the second quarter of 2000 in
temporary facilities. We plan to purchase a temporary modular facility to be
used as our main office until our permanent main office is completed. We
estimate that the purchase price of the modular facility will be approximately
$90,000 and that the resale value will be approximately $75,000. The modular
facility will be located approximately one-tenth of a mile from the site for our
permanent main office building. We intend to lease the site for the temporary
main office on a month-to-month basis and estimate that the monthly rental rate
will be approximately $2,100. We plan to lease temporary store front space to be
used as our interim Georgetown branch office. We expect that the temporary
branch location will be in close proximity to the permanent branch site. We
anticipate that we will begin construction of our main and branch office
buildings in June 2000. We plan to complete construction of the main office in
the first quarter of 2001 and the branch office in the fourth quarter of 2000.
SunBank will fund the construction of the main and branch office buildings with
a portion of the capital that it receives from Sun Bancshares after the close of
this offering.
LIQUIDITY AND INTEREST RATE SENSITIVITY
Since Sun Bancshares is in the organizational stage, there are no results
to present at this time. Nevertheless, once SunBank begins operations, net
interest income, Sun Bancshares' primary source of earnings, will fluctuate with
significant interest rate movements. To lessen the impact of these margin
swings, we intend to structure the balance sheet so that repricing opportunities
exist for both assets and liabilities in roughly equal amounts at approximately
the same time intervals. Imbalance in these repricing opportunities at any point
in time creates interest rate sensitivity.
Interest rate sensitivity refers to the responsiveness of interest-bearing
assets and liabilities to change in market interest rates. The rate sensitive
position, or gap, is the difference in the volume of rate sensitive assets and
liabilities at a given time interval. The general objective of gap management is
to actively manage rate sensitive assets and liabilities in order to reduce the
impact of interest rate fluctuations on net interest income. We will generally
attempt to maintain a balance between rate sensitive assets and liabilities as
the exposure period is lengthened to minimize SunBank's overall interest rate
risks.
We will evaluate regularly the balance sheet's asset mix in terms of
several variables: yield, credit quality, appropriate funding sources and
liquidity. To manage effectively the balance sheet's liability mix, we plan to
focus on expanding our deposit base and converting assets to cash as necessary.
As SunBank grows, we will continuously structure its rate sensitivity
position in an effort to hedge against rapidly rising or falling interest rates.
SunBank's Asset and Liability Management Committee will meet on a quarterly
basis to develop a strategy for the upcoming period.
Liquidity represents the ability to provide steady sources of funds for
loan commitments and investment activities, as well as to maintain sufficient
funds to cover deposit withdrawals and payment of debt and operating
obligations. We can obtain these funds by converting assets to cash or by
attracting new deposits. SunBank's ability to maintain and increase deposits
will serve as its primary source of liquidity.
15
<PAGE> 17
We know of no trends, demands, commitments, events or uncertainties that
should result in, or are reasonably likely to result in, Sun Bancshares'
liquidity increasing or decreasing in any material way in the foreseeable
future, other than this offering.
CAPITAL ADEQUACY
Capital adequacy for banks and bank holding companies is regulated by the
Office of the Comptroller of the Currency, the Federal Reserve and the FDIC. The
primary measures of capital adequacy for banks and bank holding companies are
(1) risk-based capital guidelines and (2) the leverage ratio. Changes in these
guidelines or our levels of capital can affect our ability to expand and pay
dividends. See "Supervision and Regulation - Capital Adequacy" on page 41.
16
<PAGE> 18
PROPOSED BUSINESS
BACKGROUND
Sun Bancshares. We incorporated Sun Bancshares as a South Carolina
corporation on August 3, 1999 to serve as a bank holding company that will hold
100% of the capital stock of SunBank, a proposed new national bank. Sun
Bancshares plans to use $8.0 million of the net proceeds of this offering to
purchase the capital stock of SunBank. Initially, we will have no business
operations other than owning and managing SunBank. We will apply to the Federal
Reserve for prior approval to become a bank holding company. We have chosen this
holding company structure because we believe it will provide flexibility that
would not otherwise be available. With a holding company structure, we may
assist SunBank in maintaining its required capital ratios by borrowing money and
contributing the proceeds of that debt to SunBank as primary capital.
SunBank. SunBank is a proposed national bank that plans to engage in
general commercial and consumer banking. On November 17, 1999, we filed an
application with the Office of the Comptroller of the Currency to organize
SunBank in Murrells Inlet, South Carolina with a branch office in Georgetown,
South Carolina. On the same day, we also filed an application with the FDIC to
obtain insurance for SunBank's deposits. Final approval of our application to
the Office of the Comptroller of the Currency will be conditioned upon our
raising the required minimum capital, receipt of FDIC approval, and the
implementation of proper bank regulatory policies and procedures. Subject to
receiving final regulatory approvals from these agencies, we plan to open
SunBank in the second quarter of 2000.
OUR MARKET
The coastal region of South Carolina's Horry and Georgetown Counties,
often called the "Grand Strand," is recognized as one of the fastest growing
regions in the country. The Grand Strand stretches approximately 60 miles from
the North Carolina-South Carolina border at Little River south along the
"Waccamaw Neck" to Georgetown, and is best known for its largest city, Myrtle
Beach. In April 1995, American Demographics ranked Myrtle Beach as the second
fastest growing metropolitan area in both projected annual population growth and
projected employment growth from 1995-2005.
As reported by the American Automobile Association, the Grand Strand is
the second busiest vacation destination in the nation, drawing more than 10
million visitors each year to its beaches, entertainment attractions and more
than 100 golf courses. According to the Myrtle Beach Area Chamber of Commerce,
the direct economic impact of tourism along the Grand Strand was $2.6 billion in
1997, and direct and indirect economic expenditures totaled $5.1 billion, or
more than 35% of South Carolina's total travel and tourism revenue. According to
a recent Waccamaw Regional Council study, for the ten-year period from 2000 to
2010, the annual combined tourist population for Georgetown and Horry Counties
is expected to increase more than 27% from an estimated 10,372,958 to an
estimated 13,227,640.
The region has also become a popular spot for retirees. In recent years,
the Grand Strand was mentioned in The Wall Street Journal as one of the top
spots in America for retirement, and Money magazine rated it as one of the top
20 places to retire in America. The number of persons over the age of 65 living
along the Grand Strand has grown more than 300% from 1970 to 1996, and now
accounts for approximately 13% of the combined resident population of Georgetown
and Horry Counties.
The region's tourism, hospitality, retail and entertainment base is
supported by a substantial construction and real estate development industry.
Georgetown and Horry Counties also have a sizeable manufacturing and industrial
base. Major industrial employers include AVX Corporation, Conbraco Industries,
Inc., International Paper Company, Georgetown Steel Corporation and Superior
Manufacturing. The healthcare sector is represented by Grand Strand Regional
Medical Center, Conway Hospital and Georgetown Memorial Hospital, and centers
for higher education include Coastal Carolina University and Horry-Georgetown
Technical College.
17
<PAGE> 19
According to a 1997 population and economic study performed by the
Waccamaw Regional Planning and Development Council, over the period 1990 to
1995, the population of Horry County increased 20.5% from 145,300 to 175,100.
Over the same period, the population of Georgetown County increased 11.2% from
46,500 to 51,700. Additionally, the population of Horry County is expected to
grow 41.5% from an estimated 209,200 to 296,000 over the ten-year period from
2000 to 2010, and the population of Georgetown County is expected to grow 21.6%
from an estimated 57,000 to 69,300 over the same period. Also, the growth rate
of median income per family in Georgetown and Horry Counties from 1990 to 1995
outpaced the growth rate for the state of South Carolina as well as for the
United States.
OUR PRIMARY SERVICE AREA
Our primary service area for SunBank will include southern Horry County
and most of Georgetown County. This area, commonly referred to as the "South
Strand" or "Waccamaw Neck," encompasses the coastal communities south of Myrtle
Beach, including Socastee, Surfside Beach, Garden City Beach, Murrells Inlet,
Litchfield Beach, Pawleys Island, DeBordieu and Georgetown. We expect initially
to draw a large percentage of our business from the areas immediately
surrounding the communities of Murrells Inlet and Georgetown, the locations of
our planned main office and first branch office.
We believe that our chosen communities will benefit greatly from the
continuing growth of the Grand Strand, particularly as available real estate and
development opportunities to the north of Myrtle Beach become more scarce.
Growth in our communities is evidenced not only through the population growth,
but also through increases in new businesses, new golf course communities,
residential building permits, commercial construction and the influx of
additional medical services and other public infrastructure projects. Some
examples include a new 40-bed hospital in Murrells Inlet, new post offices in
Pawleys Island, Murrells Inlet and Socastee, a new middle school between
Murrells Inlet and Pawleys Island, an expansion of Horry-Georgetown Technical
College and a proposed $250 million, 1,200-acre residential community near
Georgetown.
MANAGEMENT PHILOSOPHY AND BUSINESS STRATEGY
Through our localized management and ownership we believe we will be
uniquely situated to provide responsive service and quality financial products
that are tailored to meet the needs of the individuals and small- to
medium-sized businesses located throughout the Waccamaw Neck. We believe that
local ownership and control will allow SunBank to serve customers more
efficiently and will aid in SunBank's growth and success. Our motto at SunBank
will be "Your Community . . . Your Bank." We believe the community will embrace
and support our concept of community banking. Additionally, we believe that the
expansion and growth of SunBank's operations will be a significant factor in Sun
Bancshares' success.
Although size gives larger banks advantages in competing for business from
large corporations, including higher lending limits and the ability to offer
services in other geographic areas, we believe that there is a void in the
community banking market in the Georgetown/Horry County area and that we can
successfully help fill this void. We will not compete with large institutions
for the primary banking relationships of large corporations, but will compete
for niches in this business and for the consumer business of their employees. We
will also focus on small- to medium-sized businesses and their employees. This
includes retail, service, wholesale distribution, manufacturing and
international businesses. We intend to attract these businesses based on
relationships and contacts which the bank's directors and management have within
and beyond our primary service area. In order to achieve the level of prompt,
responsive service that we believe will be necessary to attract customers and to
develop SunBank's image as a local bank with an individual focus, we will employ
the following strategies:
- Experienced Senior Management. We have assembled a senior management
team that possesses extensive experience in the banking industry as
well as substantial business and banking contacts in our target market.
For example, SunBank's president and chief executive officer, Thomas
Bouchette, has over 13 years of experience and our chief financial
officer,
18
<PAGE> 20
Randy L. Carmon, has over 21 years of finance and bank operations
experience. See "Management" on page 26.
- Quality Employees. We will strive to hire experienced staff who
appreciate our emphasis on professionalism and customer service and who
have established significant customer relationships through prior
banking experience. By hiring employees with established customer
relationships, SunBank may be able to grow more rapidly than it would
if it were to hire employees who would require time to develop a
customer base. We plan to train the staff to answer questions about all
of our products and services so that the first employee the customer
encounters can resolve their questions. We are committed to hiring
experienced and qualified staff, although this may result in higher
initial personnel costs than are typically experienced by similar
financial institutions.
- Community-Oriented Board of Directors. Our board of directors consists
of long-time residents of the Georgetown/Horry County area who
represent SunBank's target markets and will be sensitive and responsive
to the needs of the community. Additionally, our board of directors
represents a wide array of business experience and community
involvement. We expect that the directors will bring substantial
business and banking contacts to SunBank as a result of their
experience, involvement and community standing.
- Community Involvement. SunBank plans to be an active participant in
and supporter of community organizations and activities that promote
economic development and charitable and social causes. Currently, all
of our officers and directors are active in the Georgetown/Horry County
communities, and we intend to encourage other employees to become
involved in the community.
- Highly Visible Locations. SunBank's proposed main office and branch
locations are highly visible and near high concentrations of our
targeted commercial business and residential customers. We believe this
will enhance SunBank's image as a strong competitor in the local
banking community. SunBank will construct a main office building with
sufficient room to allow for future expansion. The size of our proposed
main office will allow for additional loan officers and for expansion
of our operations to include new products and services. We intend to
open additional branches during our third year of operation and will
consider adding additional branches in other strategic locations, as
appropriate. Additional branches will provide us with new channels
through which we can build our deposit and loan base, solicit new
customers and better serve existing customers with more convenient
banking services.
- Individual Customer Focus. SunBank will focus on providing
individualized service and attention to our target customers, which
include individuals and small- to medium-sized businesses. We will
concentrate on establishing and maintaining long-term customer
relationships. As our employees, officers and directors develop
relationships with our customers, we will be able to respond to credit
requests more quickly and be more flexible in approving loans based on
collateral quality and personal knowledge of the customer's banking
needs. To facilitate the development of new customer relationships, we
intend to implement an active officer and director call program. The
purpose of this call program will be to personally visit prospective
customers at their places of business and describe SunBank's products,
services and philosophy.
- Local Decision Making. We want our customers to enjoy a professional
bank environment with access to their specific bank officer. We will
emphasize local decision-making with experienced bankers, a focus on
employee retention, and professional and responsive service. As SunBank
branches into other communities, we intend to maintain our policy of
making decisions locally and to utilize local advisory boards.
- Offer Customer-Focused Products and Services. SunBank's range of
services, pricing strategies, interest rates paid and charged, and
hours of operation will be structured to attract our target customers
and establish and grow our market share. SunBank will strive to offer
small
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<PAGE> 21
businesses, professionals, entrepreneurs and consumers the best loan
services available while charging appropriate fees for these and other
services. We will also use technology and engage third-party service
providers to perform basic operational functions at a lower cost than
we might provide directly.
LENDING SERVICES
Lending Policy. We will offer a full range of lending products, including
commercial, real estate and consumer loans to individuals and small- and
medium-sized businesses and professional concerns. We will compete for these
loans with competitors who are well established in the Georgetown/Horry County
area and have greater resources and lending limits. As a result, we may have to
charge lower interest rates to attract borrowers.
SunBank intends to maintain a balanced loan portfolio. Our target loan mix
will be 35% commercial loans, 25% real estate loans, 20% consumer loans and 20%
residential mortgage loans. Based on our executive officers' past lending
experience, we believe that none of these categories represents a significantly
higher risk than the other. Additionally, SunBank plans to avoid concentrations
of loans to a single industry or based on a single type of collateral, although
we expect to offer a variety of products and services to our region's large
medical community.
Loan Approval and Review. SunBank's loan approval policies will provide
for various levels of officer lending authority. When the amount of total loans
to a single borrower exceeds that individual officer's lending authority, an
officer with a higher lending limit or SunBank's Loan Committee will determine
whether to approve the loan request. SunBank will not make any loans to any of
its directors or executive officers unless its board of directors approves the
loan, and the terms of the loan are no more favorable than would be available to
any other applicant.
Lending Limits. SunBank's lending activities will be subject to a variety
of lending limits imposed by federal law. Differing limits apply in certain
circumstances based on the type of loan or the nature of the borrower, including
the borrower's relationship to the bank. In general, however, SunBank will be
able to loan any one borrower a maximum amount equal to either:
- 15% of SunBank's capital and surplus; or
- 25% of its capital and surplus if the amount that exceeds 15% is fully
secured by readily marketable collateral.
Based on its proposed capitalization and projected pre-opening expenses,
SunBank's initial lending limit will be approximately $1.1 million for loans not
fully secured plus an additional $750,000, or a total of approximately $1.85
million, for loans fully secured by readily marketable collateral. Initially,
however, we intend to impose an internal lending limit of approximately 13% of
SunBank's capital. These limits will increase or decrease as SunBank's capital
increases or decreases as a result of its earnings or losses, among other
reasons. SunBank will need to sell participations in its loans to other
financial institutions in order to meet all of the lending needs of loan
customers requiring extensions of credit above these limits.
Credit Risks. The principal economic risk associated with each category
of loans that SunBank expects to make is the creditworthiness of the borrower.
Borrower creditworthiness is affected by general economic conditions and the
strength of the relevant business market segment. General economic factors
affecting a borrower's ability to repay include interest, inflation and
employment rates, as well as other factors affecting a borrower's customers,
suppliers and employees.
The well established financial institutions in the Georgetown/Horry County
market are likely to make proportionately more loans to medium to large-sized
businesses than SunBank will make. Many of SunBank's anticipated commercial
loans will likely be made to small- to medium-sized businesses that may be less
able to withstand competitive, economic and financial pressures than larger
borrowers.
Commercial Loans. We expect that loans for commercial purposes in various
lines of businesses will be one of the primary components of SunBank's loan
portfolio. The terms of these loans will vary by
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purpose and by type of underlying collateral, if any. SunBank will typically
make equipment loans for a term of five years or less at fixed or variable
rates, with the loan fully amortized over the term. Equipment loans generally
will be secured by the financed equipment, and the ratio of the loan principal
to the value of the financed equipment or other collateral will generally be 80%
or less. Loans to support working capital will typically have terms not
exceeding one year and will usually be secured by personal guarantees of the
principals of the business and accounts receivable and/or inventory. For loans
secured by accounts receivable or inventory, principal will typically be repaid
as the assets securing the loan are converted into cash, and for loans secured
with other types of collateral, principal will typically be due at maturity. The
quality of the commercial borrower's management and its ability both to properly
evaluate changes in the supply and demand characteristics affecting its markets
for products and services and to respond effectively to these changes are
significant factors in a commercial borrower's creditworthiness.
Real Estate Loans. SunBank will make commercial real estate loans,
construction and development loans, and residential real estate loans. These
loans include certain commercial loans where SunBank takes a security interest
in real estate out of an abundance of caution and not as the principal
collateral for the loan, but will exclude home equity loans, which are
classified as consumer loans.
- Commercial Real Estate. Commercial real estate loan terms generally
will be limited to five years or less, although payments may be
structured on a longer amortization basis. Interest rates may be fixed
or adjustable, although rates will generally not be fixed for a period
exceeding 60 months. SunBank will generally charge an origination fee
from 0.5% to 1.0% on these loans. We will attempt to reduce credit risk
on our commercial real estate loans by emphasizing loans on
owner-occupied office and retail buildings where the ratio of the loan
principal to the value of the collateral, as established by independent
appraisal, does not exceed 80%, and net projected cash flow available
for debt service generally equals 120% of the debt service requirement.
In addition, SunBank may require personal guarantees from the principal
owners of the property supported by a review by SunBank's management of
the principal owners' personal financial statements. Risks associated
with commercial real estate loans include fluctuations in the value of
real estate, new job creation trends, tenant vacancy rates and the
quality of the borrower's management. SunBank will limit its risk by
analyzing borrowers' cash flow and collateral value on an ongoing basis.
SunBank will compete for real estate loans with competitors that are
well established in the Georgetown/Horry County market.
- Construction and Development Loans. Construction and development loans
will be made both on a pre-sold and speculative basis. If the borrower
has entered into an agreement to sell the property prior to beginning
construction, then the loan is considered to be on a pre-sold basis. If
the borrower has not entered into an agreement to sell the property
prior to beginning construction, then the loan is considered to be on a
speculative basis. Construction and development loans are generally made
with a term of nine to twelve months and interest is paid quarterly. The
ratio of the loan principal to the value of the collateral as
established by an independent appraisal generally will not exceed 75%.
Speculative loans will be based on the borrower's financial strength and
cash flow position. Normally, loan proceeds will be disbursed based on
the percentage of completion and only after the project has been
inspected by an experienced construction lender or appraiser chosen by
SunBank. Risks associated with construction loans include fluctuations
in the value of real estate and new job creation trends.
- Residential Real Estate. SunBank's residential real estate loans will
consist of residential first and second mortgage loans and residential
construction loans. We will offer fixed and variable rates on our
mortgages with the amortization of first mortgages generally not to
exceed 15 years and the rates not to be fixed for over 60 months. These
loans will be made consistent with SunBank's appraisal policy and with
the ratio of the loan principal to the value of collateral, as
established by independent appraisal, not to exceed 90%. We expect these
loan to value ratios will be sufficient to compensate for fluctuations
in real estate market values and to minimize losses that could result
from a downturn in the residential real estate market. SunBank plans to
open a mortgage department to process home loans within the first 12
months of operation,
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which will allow it to originate long term mortgages to be sold on the
secondary market. SunBank intends to limit interest rate risk and credit
risk on these loans by locking in the interest rate for each loan with
the secondary market investor and receiving the investor's underwriting
approval before originating the loan.
Consumer Loans. SunBank will make a variety of loans to individuals for
personal, family and household purposes, including secured and unsecured
installment and term loans, home equity loans and lines of credit. Consumer loan
repayments depend upon the borrower's financial stability and are more likely to
be adversely affected by divorce, job loss, illness and personal hardships.
Because many consumer loans are secured by depreciable assets such as boats,
cars, and trailers, the loan should be amortized over the useful life of the
asset. To minimize the risk that the borrower cannot afford the monthly
payments, all fixed monthly obligations should not exceed 40% of the borrower's
gross monthly income. The borrower should also be continuously employed for at
least 12 months prior to obtaining the loan and an employee in good standing at
the time of the loan. The loan officer will review the borrower's past credit
history, past income level, debt history and, when applicable, cash flow and
determine the impact of all these factors on the ability of the borrower to make
future payments as agreed. We expect that the principal competitors for consumer
loans will be the established banks in the Georgetown/Horry County market.
Lending Officers. SunBank intends to initially hire at least one
experienced commercial lender, one real estate lender and two consumer lenders
in order to develop its loan portfolios. Each lender will have experience within
the Georgetown/Horry County market and will be expected to bring substantial
contacts to SunBank.
INVESTMENTS
In addition to loans, SunBank will make other investments primarily in
obligations of the United States or obligations guaranteed as to principal and
interest by the United States and other taxable securities. No investment in any
of those instruments will exceed any applicable limitation imposed by law or
regulation. The Asset and Liability Management Committee will review the
investment portfolio on an ongoing basis in order to ensure that the investments
conform to SunBank's policy as set by the board of directors.
ASSET AND LIABILITY MANAGEMENT
The Asset and Liability Management Committee will manage SunBank's assets
and liabilities and will strive to provide a stable, optimized net interest
margin, a profitable after-tax return on assets and return on equity and
adequate liquidity. The committee will conduct these management functions within
the framework of written loan and investment policies that SunBank will adopt.
The committee will attempt to maintain a balanced position between rate
sensitive assets and rate sensitive liabilities. Specifically, it will chart
assets and liabilities on a matrix by maturity, effective duration and interest
adjustment period and attempt to manage any gaps in maturity ranges.
DEPOSIT SERVICES
SunBank will seek to establish a sound base of core deposits, including
checking accounts, money market accounts, savings accounts, a variety of
certificates of deposit and IRA accounts. To attract deposits, SunBank will
employ an aggressive marketing plan in the overall service area and feature a
broad product line and rates and services competitive with those offered in the
Georgetown/Horry County market. The primary sources of deposits will be
residents of, and businesses and their employees located in the Waccamaw Neck
communities. SunBank plans to obtain these deposits through personal
solicitation by its officers and directors, direct mail solicitations and
advertisements published in the local media.
OTHER BANKING SERVICES
Other anticipated bank services include cashier's checks, safe-deposit
boxes, travelers checks, bank by mail, direct deposit and U.S. Saving Bonds.
SunBank plans to associate with a shared network of
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automated teller machines that its customers will be able to use throughout
South Carolina and other regions. We also plan to offer MasterCard(R) and
VISA(R) credit card services through a correspondent bank as an agent for
SunBank. SunBank does not plan to exercise trust powers during its initial years
of operation. SunBank may in the future offer a full-service trust department,
but cannot do so without the prior approval of the Office of the Comptroller of
the Currency.
SunBank will also offer its targeted commercial customers a courier
service that will pick up non-cash deposits from the customer's place of
business and deliver them to the bank. We believe that this will be an important
convenience to our customers because SunBank will initially have only two
locations.
FUTURE SERVICES
We anticipate that, at some time in the future, we will also offer
discount brokerage and insurance services to our customers. We intend to delay
offering these services until both Sun Bancshares and SunBank are operating
profitably. We also plan to offer annuities, mutual funds and other financial
services through a third party that has not yet been chosen.
MARKETING AND ADVERTISING
SunBank's target customers will be the residents and the small- to
medium-sized businesses and their employees located in the Georgetown/Horry
County market.
We intend to develop our image as a community-oriented bank with an
emphasis on quality service and personal contact. We plan to use a targeted
marketing approach through local newspapers, radio advertisements during peak
driving times, direct mail campaigns and television spots, as necessary.
Additionally, we plan to sponsor community activities on an active, ongoing
basis. We have retained Brandon Advertising to coordinate our advertising and
marketing efforts.
Several of our directors and officers have developed business contacts
with numerous professionals within the medical service industry. Although we
intend to avoid concentrations to one industry, we intend to develop a niche in
providing banking services to these and other medical providers.
COMPETITION
The banking business is highly competitive. SunBank will compete with
other commercial banks, savings and loan associations, credit unions, money
market mutual funds and other financial institutions conducting business in the
Georgetown/Horry County market and elsewhere. According to information provided
by the FDIC as of June 30, 1999, the Georgetown/Horry County area was served by
25 banking and savings institutions with 18 offices in Georgetown County and 89
offices in Horry County. In aggregate, these institutions held over $3.2 billion
in local deposits as of June 30, 1999. A number of these competitors are well
established in the Georgetown/Horry County area.
Currently, no financial institution is headquartered in Murrells Inlet or
the City of Georgetown, and most of the institutions that have offices in our
primary service area are large national, super-regional or regional banks.
Additionally, on January 10, 2000, Anchor Financial Corporation, a regional bank
holding company headquartered in Myrtle Beach, South Carolina announced that it
intends to merge with Carolina First Corporation, a regional bank holding
company headquartered in Greenville, South Carolina. We believe these types of
mergers can diminish the autonomy and community identity of local institutions,
thereby creating more demand for locally-owned and managed, community-oriented
banks in our primary market. We believe that larger banks often lack the
consistency of local leadership and decision-making authority necessary to
provide efficient service to individuals and small- to medium-sized business
customers. Through our local ownership and management, we believe we will be
uniquely situated to efficiently provide these customers with loan, deposit and
other financial products tailored to fit their specific needs.
Our competitors will include large national and super-regional banks like
Bank of America, Wachovia and BB&T, large regional banks like Carolina First
Bank, and local banks like Coastal Federal,
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Conway National Bank and Plantation Federal. Many of these competitors are well
established in the Georgetown/Horry County area. Additionally, most of them have
substantially greater resources and lending limits than SunBank will have and
provide other services, such as extensive and established branch networks and
trust services, that we either do not expect to provide or will not provide
initially. As a result of these competitive factors, SunBank may have to offer
more flexible pricing and terms on its loans and deposits to attract borrowers.
INFORMATION SYSTEMS AND THE YEAR 2000
The year 2000 issue common to most corporations concerns the inability of
computer software and databases to recognize the year 2000 and other year
2000-sensitive dates such as February 29, 2000 or January 1, 2001. Since the
millennium change has already occurred and we do not intend to begin our banking
operations until the second quarter of 2000, we will not face the same date
recognition issues as other financial institutions that were in operation at
January 1, 2000. Sun Bancshares, SunBank, or any of their service providers,
correspondents, vendors or customers may, however, experience a disruption of
business resulting from a year 2000 problem occurring after January 1, 2000.
Year 2000 disruptions could cause a delay in beginning our banking operations
and could have an adverse effect on our financial performance.
To date, we have not experienced any disruptions to our organization
resulting from year 2000 problems, nor are we aware of any disruptions to the
business of any of our expected service providers, correspondents or vendors. We
believe most year 2000 issues which could affect our operations will have
surfaced prior to when we begin our banking operations. Consequently, we do not
expect any year 2000 issues to have a material effect on our operations.
EMPLOYEES
When it begins operations, SunBank will have approximately 16 full-time
employees. We do not expect that Sun Bancshares will have any employees who are
not also employees of SunBank.
FACILITIES
Main Office. SunBank's main office will be located at the corner of U.S.
Highway 17 and Riverwood Drive in Murrells Inlet, South Carolina in Georgetown
County. Sun Bancshares will lease approximately 1.5 acres of land at this site
at a monthly lease rate of approximately $7,500. The initial term of the land
lease will be 25 years with renewal options for a total of 15 additional years.
We will begin construction of our permanent main office facility at this site in
June 2000, with the completion set for the first quarter of 2001. The permanent
main office facility will be a two-story, traditional style building. The
building will consist of approximately 10,000 square feet and will include four
drive-up lanes and one ATM. We anticipate that this space will be sufficient to
support our initial operations and some expansion of our operations. The
estimated construction costs of the building total $1.5 million.
SunBank's proposed main office location offers high visibility in an area
with significant traffic, and is located within one-half mile of the main
shopping and retail area in Murrells Inlet. This area is the central location
for business, residential, commuting and shopping in Murrells Inlet and is on a
major highway serving the community.
SunBank will operate initially out of a temporary modular facility until
our permanent main office facility is constructed. We plan to begin our banking
business at the temporary facility in the second quarter of 2000. We plan to
locate the temporary facility approximately one-tenth of a mile from the site
for the permanent main office facility. We intend to purchase the modular
facility for approximately $90,000. We estimate that the resale value of the
modular unit will be approximately $75,000.
Branch Office. We intend to open a branch office located at the corner of
U.S. Highway 701 and North Street in Georgetown, South Carolina. We will lease
approximately 1.1 acres of land at this site at a monthly lease rate of
approximately $4,583. The initial term of the land lease will be 30 years with
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renewal options for a total of 20 additional years. We plan to begin
construction of the branch office in June 2000 and expect the construction to be
complete in the fourth quarter of 2000. The branch office will be a one story,
traditional style building, consisting of approximately 5,000 square feet, three
drive-up windows and one ATM. The estimated construction costs of the building
total $600,000.
During the construction of our permanent branch office, we intend to
provide branch banking services out of a temporary branch office. We plan to
locate the temporary branch in store front office space in close proximity of
the site for the permanent branch office. We intend to provide full banking
services at the temporary branch but it will not have a drive-up window.
SunBank's proposed branch office location is on a corner lot in a planned
unit development. The branch office is in a high growth area in Georgetown. A
new Wal-Mart Super Center recently opened three-tenths of a mile north from the
site and a new approximately 21,000 square feet postal office recently opened
within one-fifth of a mile from the site. Additionally, the Georgetown Hospital
and most of the medical service providers within the area are located within a
two-mile radius of the site.
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MANAGEMENT
GENERAL
The following table sets forth the number and percentage of outstanding
shares of common stock we expect to be beneficially owned by the organizers and
executive officers after the completion of this offering. All of our organizers
will serve as directors. The addresses of our organizers and executive officers
are the same as the address of Sun Bancshares. Prior to the offering, Dalton B.
Floyd, Jr. purchased one share of common stock for $10.00 per share. We will
redeem this share after the offering. The numbers of shares indicated in the
table are based on "beneficial ownership" concepts as defined by the Securities
and Exchange Commission. Beneficial ownership includes shares owned by spouses,
minor children and other relatives residing in the same household, and trusts,
partnerships, corporations or deferred compensation plans which are affiliated
with the principal. This table does not reflect warrants that will be granted to
each organizer to purchase one share of common stock for each share of common
stock purchased by the organizers in this offering because these warrants will
not be exercisable within 60 days of the date of this prospectus.
<TABLE>
<CAPTION>
SHARES ANTICIPATED TO BE OWNED
FOLLOWING THE OFFERING
------------------------------
NAME OF BENEFICIAL OWNER NUMBER PERCENT
------------------------ ------- -------
<S> <C> <C>
DIRECTORS:
Thomas Bouchette 10,000 1.0%
Edsel J. ("Coupe") DeVille 15,000 1.5%
John S. Divine, III 17,500 1.8%
Dalton B. Floyd, Jr. 20,000 2.0%
Jeanne Louise Fourrier-Eggart 10,000 1.0%
David E. Grabeman 15,000 1.5%
Richard Edwin Heath 10,000 1.0%
Paul John Hletko 15,000 1.5%
Judy B. Long 10,000 1.0%
Thomas O. Morris, Jr. 20,000 2.0%
Joel A. Pellicci 10,000 1.0%
Donald E. Perry 10,000 1.0%
Chandler C. Prosser 17,500 1.8%
Larry N. Prosser 20,000 2.0%
Gary L. Schaal 10,000 1.0%
EXECUTIVE OFFICERS WHO ARE
NOT ALSO DIRECTORS:
Randy L. Carmon 500 0.1%
------- ----
All Proposed Directors and Executive Officers as
a
Group (16 persons) 210,500 21.1%
</TABLE>
EXECUTIVE OFFICERS AND DIRECTORS OF SUN BANCSHARES
The following table sets forth the ages as of January 1, 2000 of our
directors and executive officers and the positions that they hold with Sun
Bancshares. Each person listed below as a director has served as a director of
Sun Bancshares since August 30, 1999. Both our president and chief executive
officer have served us in these capacities since August 30, 1999. Thomas
Bouchette will serve as president and chief executive officer of SunBank and
Randy L. Carmon will serve as chief financial officer of Sun Bancshares and
SunBank. The directors of Sun Bancshares will hold these same positions with
SunBank. Sun Bancshares' articles of incorporation provide for a staggered board
of directors so that, as nearly as
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possible, one-third of the directors are elected each year to serve three-year
terms. The terms of office of the classes of directors expire as follows:
- Class I at the first annual meeting of shareholders, which we intend to
hold in the spring of 2001,
- Class II at the second annual meeting of shareholders, and
- Class III at the third annual meeting of shareholders.
Our executive officers serve at the discretion of the board of directors.
See "Description of Sun Bancshares' Capital Stock and Shareholders' Rights" on
page 44.
<TABLE>
<CAPTION>
NAME AGE POSITION WITH SUN BANCSHARES
- ---- --- ----------------------------
<S> <C> <C>
CLASS I DIRECTORS:
Thomas Bouchette 41 President and Director
Edsel J. ("Coupe") DeVille 61 Director
John S. Divine, III 62 Director
Dalton B. Floyd, Jr. 61 Chairman of the Board of Directors and
Chief Executive Officer
Jeanne Louise Fourrier-Eggart 46 Director
CLASS II DIRECTORS:
David E. Grabeman 46 Director
Richard Edwin Heath 52 Director
Paul John Hletko 53 Director
Judy B. Long 48 Director
Thomas O. Morris, Jr. 50 Director
CLASS III DIRECTORS:
Joel A. Pellicci 56 Director
Donald E. Perry 59 Director
Chandler C. Prosser 32 Director
Larry N. Prosser 53 Director
Gary L. Schaal 59 Director
OTHER EXECUTIVE OFFICERS:
Randy L. Carmon 44 Chief Financial Officer
</TABLE>
Each of SunBank's proposed directors will, upon approval of the Office of
the Comptroller of the Currency, serve until SunBank's first shareholders
meeting, which will convene shortly after SunBank receives its charter. Sun
Bancshares, as the sole shareholder of SunBank, will nominate each proposed
director to serve as director of SunBank at that meeting. After the first
shareholders meeting, directors of SunBank will serve for a term of one year and
will be elected by Sun Bancshares each year at SunBank's annual meeting of
shareholders. SunBank's officers will be appointed by its board of directors and
will hold office at the will of its board.
The following is a biographical summary of each of our directors and
executive officers:
Thomas Bouchette. Mr. Bouchette has over thirteen years of banking
experience with five years of experience within the Georgetown/Horry County
area. Prior to when Mr. Bouchette began participating in the efforts to organize
Sun Bancshares and SunBank, from August 1997 until June 1999, he served as chief
credit officer and executive vice president of The Citizens Bank, Olanta, South
Carolina. While in this position, Mr. Bouchette was responsible for all lending
activities and management of the branch operations, including developing new
lending products, fostering the sales culture and implementing a disciplined
approach to underwriting and credit administration. From 1989 until 1997, Mr.
Bouchette served in various lending positions with Wachovia Bank, culminating in
his position as Business Banking Executive for the Myrtle Beach market including
Horry, Georgetown, Dillon and Marion Counties. From
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1987 until 1989, Mr. Bouchette served Pee Dee Farm Credit Banks in various
capacities including lending officer and vice president. Mr. Bouchette is an
active member and has held leadership roles in numerous civic organizations
including chairman of the Membership Committee of the Georgetown County Chamber
of Commerce, treasurer and director of the Pee Dee Chapter of the Bank
Administration Institute, and member of the board of directors of the Pawleys
Island and Litchfield Business Association and the local Robert Morris
Associates chapter and member of the Pawleys Island Rotary Club.
Edsel J. ("Coupe") Deville. Currently, Mr. DeVille is the director of
community development for Commercial Landtec, Corp., which is a commercial real
estate firm. From 1995 until 1997, Mr. DeVille served on the Myrtle Beach
advisory board of First National South Bank, which was acquired during 1999 by
Anchor Bank. He served as a sales associate for Chicora Real Estate from 1994
until 1996 and has held a real estate license since 1994. Mr. DeVille served as
a fighter pilot in the United States Air Force from 1961 until 1989. When Mr.
DeVille retired from the Air Force in 1989 he was the base commander of the
Myrtle Beach Air Force Base with responsibility for over 7,500 enlisted, officer
and civilian personnel. He received a Masters of Science in administration
degree from Georgia College in 1976 and a Bachelor of Science in Industrial
Technology degree from Louisiana State University in 1961. Mr. DeVille currently
holds a commercial pilot license. Currently, Mr. DeVille represents Horry County
on the Partners Economic Development Commission. Mr. DeVille has also been
active in or held a leadership role in the Horry County March of Dimes Walk
America, Horry County Crime Stoppers, the South Carolina Commission on Aging,
the Surfside Area Business and Professional Organization, the Surfside Area
Rotary Club and the Myrtle Beach Area Chamber of Commerce. He has also served on
the South Carolina Aeronautics Commission, the South Carolina Defense Base
Development Commission and the Horry County Director of Airports Advisory
Committee.
John S. Divine, III. Since 1986, Mr. Divine has been a co-owner of Divine
Holdings, LLC, which invests in rental properties, secured mortgages and stocks.
Since 1971, he has been a co-owner of Divine Restaurant, Inc., which owns and
operates 15 restaurants in the Grand Strand area including Longhorn, Bovines and
Divine Fish House. Currently, Mr. Divine holds a 66.2% ownership interest in
Divine Holdings, LLC and a 75% ownership interest in Divine Restaurants, Inc.
Dalton B. Floyd, Jr. Mr. Floyd has been an attorney in South Carolina
since 1963 and has been the sole owner of the Floyd Law Firm PC since 1974. Mr.
Floyd received a Bachelor of Science in Business Administration from the
University of South Carolina in 1960 and a Juris Doctorate, cum laude, from the
University of South Carolina School of Law in 1963. Mr. Floyd served as an
officer and director of, and general counsel to Waccamaw State Bank in Surfside
Beach from 1980 to 1987 and Patriot Federal Savings & Loan Association in Lake
City from 1978 to 1982. Additionally, he served on the Myrtle Beach advisory
boards of First National South Bank from 1996 to 1998 and the Lake City advisory
board of Palmetto State Bank from 1982 to 1984. Mr. Floyd is also an owner or
partner in several other businesses which primarily invest in or develop
commercial real estate. Mr. Floyd is currently vice chairman of the South
Carolina Higher Education Commission. Mr. Floyd has held leadership roles in the
South Carolina Bar Association and the American Bar Association and has served
as a director of the Wachesaw Plantation Club, the Lake City Country Club, Inc.,
the Lake City Rotary Club, the Surfside Rotary Club and the Horry County
Business Coalition.
Jeanne Louise Fourrier-Eggart. Dr. Fourrier-Eggart has practiced as a
periodontist since 1980. She began private practice in Louisiana in 1982 and
moved her practice to the Georgetown County area in 1984. Dr. Fourrier-Eggart
received a Bachelors of Science in Dental Hygiene in 1976 and a Doctorate of
Dentistry in 1980 from the Louisiana State University School of Dentistry. In
1982, she received a Masters in Health Sciences and Certificate of Periodontics
from the Medical University of South Carolina. Dr. Fourrier-Eggart served on the
Myrtle Beach advisory board of First National South Bank from 1996 until 1998.
Dr. Fourrier-Eggart has been involved in numerous community programs which focus
on promoting dental hygiene and providing dental care for underprivileged
children and adults of the community. Additionally, she has been on three
medical and dental mission trips to Haiti where she has participated in
organizing a permanent mission outreach for dental care on the Island of
LaGanove, Haiti
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and training other dental healthcare providers for work in the mission outreach.
Dr. Fourrier-Eggart has also served as a "Just Say No" program leader in several
schools throughout the community.
David E. Grabeman. Dr. Grabeman has practiced general dentistry in
Georgetown, South Carolina since 1979, and he has been the sole owner of a
private dentistry practice in Georgetown since 1983. Dr. Grabeman received a
Bachelor of Science from Furman University in 1975, a Doctorate of Dentistry
from the Ohio State University in 1978 and completed a year General Practice
Residency at the Medical College of Ohio in 1979. He is an active participant in
the community and currently serves on the advisory board of the Georgetown
County Citizens for Life and is the president of the board of directors at the
Low Country Day School. In the past, Dr. Grabeman has been a member of the
Georgetown Jaycees, the Downtown Georgetown Revitalization Association and the
Andrews Rotary Club.
Richard Edwin Heath. Mr. Heath is a Certified Public Accountant and a
certified valuation analyst. Since 1991, Mr. Heath has been the sole proprietor
of a public accounting practice in Surfside Beach, South Carolina. Mr. Heath has
been a Certified Public Accountant since 1974 and has been a valuation analyst
since 1995. He received a Bachelor of Science in Accounting degree in 1969 and a
Masters of Accounting degree in 1974 from Florida State University. Mr. Heath is
also a one-third owner of RAR Exchange, LLC, which provides qualified
intermediary services. Mr. Heath has been a past member and chairman of the
Horry County School Board and has served on the board of directors of the South
Strand Chamber of Commerce and Long Bay Symphony. Currently Mr. Heath is a
member of the Surfside Rotary Club.
Paul John Hletko, M.D., F.A.A.P. Dr. Hletko has practiced medicine as a
pediatrician since 1972, and he has been the sole owner of a pediatric practice
in Georgetown, South Carolina since 1991. Dr. Hletko received a Bachelor of
Science in 1968 from the University of Illinois and received his Doctorate of
Medicine from Stritch School of Medicine, Loyola University in 1971. Dr. Hletko
has been involved in promoting child transportation safety concerns since 1977.
He has served on the board of the Association for the Advancement of Automotive
Medicine since 1986. He has also served on numerous hospital committees and as
the hospital chief of staff and chief of the department of pediatrics at
Georgetown Memorial Hospital. He has been involved in the United Way Physician's
Drive and on the board of directors of Parents of Children with Cancer, the
Association of Prepared Child Birth and Hospitality House.
Judy B. Long. Ms. Long is the sole or part owner of several retail,
restaurant and printing businesses located throughout the Georgetown/Horry
County area in South Carolina. These businesses include Four Seasons Screen
Printing, Sports Spectacular, Inc., Super Sports Spectacular, Carol, Inc., and
Fins, Inc.
Thomas Ostavus Morris, Jr., R.Ph. Mr. Morris received his pharmacy
license in 1972, and has been the owner of Hemingway Pharmacy, Inc.
headquartered in Andrews, South Carolina since 1977. Mr. Morris received a
Bachelor of Science from Clemson University in 1975 and received a Bachelor of
Science in Pharmacy from the Medical University of South Carolina in 1972. Mr.
Morris is also the sole owner of Home Medical Care, which provides durable home
medical equipment, and is a part owner of Myrtle Road Park, Inc. Mr. Morris is a
member of the Georgetown County Chamber of Commerce and serves on the advisory
board of the Medical University of South Carolina.
Joel A. Pellicci. Mr. Pellicci is the owner and president of Jo-Lin
Enterprises, a McDonald's franchisee, since 1985. He was a naval aviator during
his years of service in the Navy. He received a Bachelor of Art and Education
from the University of Florida in 1965. Mr. Pellicci has served on the board of
directors of the Louisburg Chamber of Commerce and on the board of directors of
Ronald McDonald Children's Charities and several Ronald McDonald House boards of
directors.
Donald E. Perry. Since 1961, Mr. Perry has been the president and
co-owner of Lakewood Camping Resort which provides camp ground facilities in
Myrtle Beach, South Carolina. Mr. Perry is also a co-owner of Beachwood at the
Heritage, a retirement community, Perry Issue Company, a land lease company, and
Myrtle Beach National Golf Course. Mr. Perry has also been the sole owner of
Beechwood
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<PAGE> 31
Estates, a mobile home park since 1963. From 1997 until 1998, Mr. Perry served
on the Myrtle Beach advisory board of First National South Bank. Mr. Perry has
been active in or held a leadership role in Rotary International, Myrtle Beach
Campground Association and the Advisory Boards of Santee Electric Cooperative
and the Jaycees.
Chandler C. Prosser. Since 1993, Mr. Prosser has been the sole owner and
president of several real estate development and management companies, including
Prosser Realty Company, Inc. Mr. Prosser is a co-owner of Grove Development,
LLC, a real estate development company and is managing partner of Wachesaw Golf,
LLC, which owns and operates Wachesaw Plantation East Golf Resort. Mr. Prosser
received a Bachelor of Business of Arts degree cum laude from Rhodes College in
Memphis, Tennessee in 1989 and a Master of Arts from the John Hopkins University
Paul H. Nitze School of Advanced International Studies in Washington, D.C. in
1991. In 1998, Mr. Prosser was elected to serve a four-year term as the Chairman
of the Horry County Council. Prior to this position, Mr. Prosser served for four
years as the district representative for the South Strand area on the Horry
County Council. Mr. Prosser was the founder and is a board member of the City of
Hope Myrtle Beach Classic LPGA Tournament, which is held each spring in Myrtle
Beach. He is also actively involved in a number of local charities and
previously served on the Myrtle Beach Advisory Board for First National South
Bank. Mr. Chandler C. Prosser is the son of Mr. Larry N. Prosser.
Larry N. Prosser. Mr. Prosser has been the president and sole owner of
Glenn's Bay, Inc., a real estate development company since 1983. Mr. Prosser is
also the owner of numerous other real estate development and construction
companies. Mr. Prosser received an Associate of Science in Civil Engineering
degree from Florence-Darlington Technical College in Florence, South Carolina in
1967. Mr. Prosser currently holds a general contractor's license in South
Carolina. Mr. Prosser served on the Myrtle Beach advisory board of United
Carolina Bank from 1994 until 1996 and on the Myrtle Beach advisory board of
BB&T from 1996 until 1999. Mr. Prosser is currently a member of the Association
of Homebuilders. Mr. Larry N. Prosser is the father of Mr. Chandler C. Prosser.
Gary L. Schaal. Mr. Schaal has been a co-owner and vice-president of TSC
Golf, Inc., a golf course management company, since 1993 and has been the
president and sole owner of G.L. Sports, a golf management company, since 1981.
Mr. Schaal received a Bachelor of Business Administration from Ohio Wesleyan
University in Delaware, Ohio in 1963 and received a Masters of Business
Administration from East Carolina University in Greenville, North Carolina in
1972. Mr. Schaal has been a board member of the Myrtle Beach Convention Bureau
and has served as the Bureau's president. Additionally Mr. Schaal has served on
the board of directors of the Myrtle Beach Chamber of Commerce, the Carolinas
Professional Golf Association and the Myrtle Beach Golf Holiday. He has also
served as the chairman of the Tournament Player's Club Project and has served on
the Surfside Beach Planning and Advisory Commission. He served on the
Professional Golf Association Tours' Policy Board from 1988 to 1996 and served
as the Professional Golf Association president in 1993 and 1994.
Randy L. Carmon. Mr. Carmon has over 21 years banking experience with
both community and regional banks. Prior to Mr. Carmon joining Sun Bancshares
and SunBank, he served as a vice president at Anderson State Bank with
responsibility for various financial and operational functions. While in this
position, Mr. Carmon was responsible for the design and installation of their
in-house ATM network, the development of an ATM and VISA CheckCard program, the
management of the year 2000 readiness project, and the design, analysis,
implementation and marketing of additional deposit products. From 1989 until
1996, Mr. Carmon was a vice president with The National Bank of South Carolina
with responsibilities in the deposit operations area that included transaction
and time deposit accounts, distribution item processing, data control, research,
electronic funds transfer and automated clearing house transactions and
corporate services. From 1978 to 1988, Mr. Carmon was responsible for
operational and financial functions at Lake City State Bank. Mr. Carmon's past
and present civic leadership roles include chairman of the Pee Dee Chapter of
the Bank Administration Institute, board member of the Operations Committee of
the South Carolina Bankers Association, president of the Lake City Lions Club,
director and founder of the Pee Dee Regional EMS Council and board member of
Circle Park Associates.
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COMMITTEES OF THE BOARDS OF DIRECTORS
The boards of directors of Sun Bancshares and SunBank each has established
or will establish compensation, executive and audit and compliance committees.
The members of these committees will be the same for SunBank as they are for Sun
Bancshares. SunBank's board of directors will also establish a loan and an asset
and liability management committee. These committees are described below.
Compensation Committee. The Compensation Committee establishes
compensation levels for officers of Sun Bancshares and SunBank, reviews
management organization and development, reviews significant employee benefit
programs and establishes and administers executive compensation programs,
including the Stock Incentive Plan as described below.
Executive Committee. The Executive Committee meets as needed and, with
some exceptions, has the same powers as the board of directors in the management
of the business affairs of Sun Bancshares and SunBank between meetings of their
boards. This committee makes recommendations to the board of directors regarding
matters important to the overall management and strategic operation of Sun
Bancshares and SunBank.
Audit and Compliance Committee. The Audit and Compliance Committee is
responsible for oversight of all audit functions including monitoring compliance
with the Community Reinvestment Act, follow-up on loan reviews, responding to
financial and operational audits and correcting matters raised in regulatory
examinations and audit reports for Sun Bancshares and SunBank. This committee
recommends to the board of directors the independent public accountants to audit
Sun Bancshares and SunBank's annual financial statements, ensures that audits
and examinations are performed fully, properly and timely. This committee also
is responsible for reviewing the reports of the independent auditors, regulatory
examination reports, and all of our financial statements, and evaluates internal
accounting controls.
Loan Committee. The Loan Committee will be responsible for establishing
and approving all major policies and procedures pertaining to loan policy and
transactions with affiliates, directors or officers. This committee reviews the
actions of loan officers, past due and problem loans, the asset quality of the
loan portfolio and the adequacy of the loan loss reserve. This committee
approves all loans over any loan officers' pre-approved lending limit.
Asset and Liability Management Committee. The Asset and Liability
Management Committee will provide guidance to Sun Bancshares and SunBank in
balancing the yields and maturities of SunBank's loans and investments to its
deposits. This committee also reviews the investment portfolio on an ongoing
basis to assure investments are prudent and in accordance with SunBank's
investment policy.
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EXECUTIVE COMPENSATION
1999 COMPENSATION
The following table shows information for 1999 with regard to compensation
for services rendered in all capacities to Sun Bancshares and SunBank by their
president. No executive officer earned more than $100,000 in salary and bonus in
1999.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
--------------------------------
OTHER ANNUAL
SALARY BONUS COMPENSATION
YEAR ($) ($) ($)
---- ------- ------- ------------
<S> <C> <C> <C> <C>
Thomas Bouchette........................... 1999 42,000 -- --
President
</TABLE>
EMPLOYMENT AGREEMENT
We have entered into an employment agreement with Thomas Bouchette, under
which Mr. Bouchette's will serve as president of Sun Bancshares and president
and chief executive officer of SunBank. Under the terms of the agreement, Mr.
Bouchette's compensation will include:
- A base salary of $7,000 per month until the opening of SunBank, at
which time his salary will increase to $8,000 per month;
- A cash bonus of $10,000 upon the opening of SunBank;
- An annual incentive bonus equal to 5% of Sun Bancshares consolidated
pre-tax earnings up to the amount of Mr. Bouchette's base salary, if
the directors of Sun Bancshares determines, according to reasonable
safety and soundness standards, that the overall financial condition of
SunBank is satisfactory and will not be adversely affected by payment
of the bonus and that SunBank has received satisfactory regulatory
ratings;
- Incentive stock options, which vest in one-fifth annual increments and
have a term of ten years, to purchase 5% of the number of shares of
common stock sold in this offering at an exercise price of $10.00 per
share; and
- Other customary benefits such as health and life insurance and
automobile allowance and membership to business and social
organizations.
The initial term of the employment agreement is three years. At the end of
the initial three-year term and at the end of any extension of the initial term,
the agreement will be automatically extended for a term of 12 months unless Mr.
Bouchette, Sun Bancshares or SunBank notifies the other parties that he or it
does not intend to extend the agreement. Mr. Bouchette will be entitled to
severance compensation of an amount up to six months of his base salary if,
during the term of the agreement, his employment is terminated for any of the
following reasons:
- SunBank does not receive regulatory approval to begin its banking
operations;
- We terminate Mr. Bouchette's employment without cause;
- Mr. Bouchette becomes disabled; or
- Mr. Bouchette terminates his employment with cause.
Additionally, upon a change of control of Sun Bancshares, Mr. Bouchette will be
entitled to severance compensation in an amount equal to 12 months of his base
salary if he terminates his employment for cause or if Sun Bancshares or its
successor terminates his employment without cause. Cause for terminating
employment is defined in the agreement.
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The agreement also generally provides that, for a period of 12 months
following the termination of Mr. Bouchette's employment, he will not compete
with SunBank in the banking business nor solicit SunBank's customers or
employees. The non-competition and non-solicitation provisions of the agreement
only apply if Mr. Bouchette terminates his employment without cause or in
connection with a change of control, or if we terminate his employment with
cause.
DIRECTOR COMPENSATION
We do not plan to compensate the directors of Sun Bancshares and SunBank
separately for their services as directors until net profits of Sun Bancshares
and SunBank exceed their net losses since inception on a cumulative basis.
Thereafter, Sun Bancshares and SunBank will adopt compensatory policies for
their directors that conform to applicable law.
ORGANIZERS' WARRANTS
The organizers intend to purchase a total of 210,000 shares of common
stock in this offering at a price of $10.00 per share. This represents 21.0% of
the shares that will be outstanding after the offering, or 18.3% if the
underwriter's over-allotment option is exercised in full. Each of our organizers
has guaranteed a portion of our $850,000 line of credit from The Bankers Bank
for up to $85,000 each.
In recognition of the efforts made and financial risks undertaken by the
organizers in organizing Sun Bancshares and SunBank, Sun Bancshares will issue
to the organizers warrants to purchase additional shares of its common stock.
Sun Bancshares will issue to each organizer a warrant to purchase one share of
common stock for each share the organizer purchases in this offering. The
organizers may purchase up to 210,000 shares through the exercise of these
warrants. The warrants will become exercisable in one-third annual increments
beginning on the one-year anniversary of the date of this prospectus so long as
the holder remains on Sun Bancshares' board of directors. Exercisable warrants
will remain exercisable for the ten-year period following the date of this
prospectus or for 90 days after a warrant holder ceases to be a director,
whichever is shorter. Each warrant will be exercisable at a price of $10.00 per
share subject to adjustment for stock splits, recapitalizations or other similar
events. Additionally, if SunBank's capital falls below the minimum level as
determined by the Office of the Comptroller of the Currency, Sun Bancshares may
be directed to require the organizers to exercise or forfeit their warrants.
STOCK INCENTIVE PLAN
General. Sun Bancshares' 2000 Stock Incentive Plan provides Sun
Bancshares with the flexibility to grant incentive stock options and
non-qualified stock options to key employees, officers, directors and organizers
of Sun Bancshares or its affiliates for the purpose of giving them a proprietary
interest in, and encouraging them to remain in the employ of, Sun Bancshares or
its affiliates. The board of directors has reserved 100,000 shares of common
stock, an amount equal to 10.0% of the shares of common stock sold in this
offering, or 8.7% if the underwriter's over-allotment option is exercised in
full, for issuance under the plan. The number of shares reserved for issuance
may be adjusted in the event of a stock split, stock dividend, recapitalization
or similar event as described in the plan.
Administration. The plan is administered by a committee appointed by the
board of directors. The board of directors will consider the standards contained
in both Section 162(m) of the Internal Revenue Code of 1986, as currently in
effect, and Rule 16(b)(3) under the Securities Exchange Act of 1934, as
currently in effect, when appointing members to the committee. The committee
will have the authority to grant awards under the plan, to determine the terms
of each award, to interpret the provisions of the plan and to make all other
determinations that it may deem necessary or advisable to administer the plan.
Sun Bancshares' Compensation Committee, which is comprised of at least two
directors appointed by its board of directors, will administer the plan.
The plan permits the committee to grant stock options to eligible persons.
The committee may grant these options on an individual basis or design a program
providing for grants to a group of eligible persons. The committee determines,
within the limits of the plan, the number of shares of common stock
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<PAGE> 35
subject to an option, to whom an option is granted and the exercise price and
forfeiture or termination provisions of each option. Unless otherwise permitted
by the committee, a holder of a stock option generally may not transfer the
option during his or her lifetime.
Option Terms. The plan provides for incentive stock options and
non-qualified stock options. The committee will determine whether an option is
an incentive stock option or a non-qualified stock option when it grants the
option, and the option will be evidenced by an agreement describing the material
terms of the option. The maximum number of shares of common stock with respect
to which options may be granted during any one year period to any employee may
not exceed 75,000.
The committee determines the exercise price of an option. The exercise
price of an incentive stock option may not be less than the fair market value of
the common stock on the date of the grant, or less than 110% of the fair market
value if the participant owns more than 10% of the outstanding common stock of
Sun Bancshares or its affiliates. When the incentive stock option is exercised,
Sun Bancshares will be entitled to place a legend on the certificates
representing the shares of common stock purchased upon exercise of the option to
identify them as shares of common stock purchased upon the exercise of an
incentive stock option. The exercise price of non-qualified stock options may
not be less than 85% of the fair market value of the common stock on the date
that the option is awarded, based upon any reasonable measure of fair market
value. The committee may permit the exercise price to be paid in cash, by the
delivery of previously owned shares of common stock, through a cashless exercise
executed through a broker or by having a number of shares of common stock
otherwise issuable at the time of exercise withheld. The committee may make cash
awards designed to cover tax obligations of participants that result from the
receipt or exercise of a stock option.
The committee will also determine the term of an option, subject to the
terms of the plan which provide that no option may exceed ten years in length.
Any incentive stock option granted to a participant who owns more than 10% of
the outstanding common stock of Sun Bancshares or its affiliates will not be
exercisable more than five years after the date the option is granted. Subject
to any further limitations in the applicable agreement, if a participant's
employment terminated, an incentive stock option will expire and become
unexercisable no later than three months after the date of termination of
employment. If, however, termination of employment is due to death or
disability, one year may be substituted for the three-month period.
Incentive stock options are also subject to the further restriction that
the aggregate fair market value, determined as of the date of the grant, of
common stock as to which any incentive stock option first becomes exercisable in
any calendar year is limited to $100,000 per recipient. If incentive stock
options covering common stock with a value in excess of $100,000 first become
exercisable in any one calendar year, the excess will be non-qualified options.
For purposes of determining which options, if any, have been granted in excess
of the $100,000 limit, options will be considered in the order they were
granted.
Termination of Options. The terms of particular options may provide that
they terminate, among other reasons, upon the holder's termination of employment
or other status with Sun Bancshares or any affiliate, upon a specified date,
upon the holder's death or disability, or upon the occurrence of a change in
control of Sun Bancshares or SunBank. An agreement may provide that if the
holder dies or becomes disabled, the holder's estate or personal representative
may exercise the option. The committee may, within the terms of the plan and the
applicable agreement, cancel, accelerate, pay or continue an option that would
otherwise terminate for the reasons discussed above.
Stock Splits, Reorganizations and other Capital Changes. The plan
provides for appropriate adjustment, as determined by the committee, in the
number and kind of shares subject to and the exercise price of unexercised
options in the event of any change in the outstanding shares of common stock by
reason of any subdivision or combination of shares, payment of a stock dividend
or other increase or decrease in the number of outstanding shares without the
receipt of consideration. In the event of certain corporate reorganizations, the
committee may, within the terms of the plan and the applicable agreement,
substitute, cancel (with or without consideration), accelerate, remove
restrictions or otherwise adjust the terms of an option.
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<PAGE> 36
Amendment and Termination of the Plan. The board of directors has the
authority to amend or terminate the plan. The board of directors is not required
to obtain shareholder approval to amend or terminate the plan, but may condition
any amendment or termination of the plan upon shareholder approval if it
determines that shareholder approval is necessary or appropriate under tax,
securities or other laws. The board's action may not adversely affect the rights
of a holder of a stock option without the holder's consent.
Federal Income Tax Consequences. The following discussion generally
outlines the federal income tax consequences of participation in the plan.
Individual circumstances may vary and each participant should rely on his or her
own tax counsel for advice regarding federal income tax treatment under the
plan.
- Incentive Stock Options. A participant who exercises an incentive stock
option will not be taxed when he or she exercises the option or a
portion of the option. Instead, the participant will be taxed when he or
she sells the shares of common stock purchased upon exercise of the
incentive stock option. The participant will be taxed on the difference
between the price he or she paid for the common stock and the amount for
which he or she sells the common stock. If the participant does not sell
the shares of common stock prior to two years from the date of grant of
the incentive stock option and one year from the date the common stock
is transferred to him or her, any gain will be a capital gain and Sun
Bancshares will not be entitled to a corresponding deduction. If the
participant sells the shares of common stock at a gain before that time,
the difference between the amount the participant paid for the common
stock and the lesser of its fair market value on the date of exercise or
the amount for which the stock is sold will be taxed as ordinary income
and Sun Bancshares will be entitled to a corresponding deduction. If the
participant sells the shares of common stock for less than the amount he
or she paid for the stock prior to the one- or two-year period
indicated, no amount will be taxed as ordinary income and the loss will
be taxed as a capital loss. Exercise of an incentive stock option may
subject a participant to, or increase a participant's liability for, the
alternative minimum tax.
- Non-Qualified Options. A participant will not recognize income upon the
grant of a non-qualified option or at any time before the exercise of
the option or a portion of the option. When the participant exercises a
non-qualified option or portion of the option, he or she will recognize
compensation taxable as ordinary income in an amount equal to the excess
of the fair market value of the common stock on the date the option is
exercised over the price paid for the common stock, and Sun Bancshares
will then be entitled to a corresponding deduction.
Depending upon the time period for which shares of common stock are held
after exercise of a non-qualified option, the sale or other taxable disposition
of shares acquired through the exercise of a non-qualified option generally will
result in a short- or long-term capital gain or loss equal to the difference
between the amount realized on the disposition and the fair market value of such
shares when the non-qualified option was exercised.
Special rules apply to a participant who exercises a non-qualified option
by paying the exercise price, in whole or in part, by the transfer of shares of
common stock to Sun Bancshares and to a participant who is subject to the
reporting requirements of Section 16 of the Securities Exchange Act of 1934.
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RELATED PARTY TRANSACTIONS
We expect to enter into banking and other business transactions in the
ordinary course of business with our directors and officers, including members
of their families and corporations, partnerships or other organizations in which
they have a controlling interest. If these transactions occur, each transaction
will:
- In the case of banking transactions, be on substantially the same terms,
including price or interest rate and collateral, as those prevailing at
the time for comparable transactions with unrelated parties, and any
banking transactions will not be expected to involve more than the
normal risk of collectibility or present other unfavorable features to
SunBank;
- In the case of business transactions, be on terms no less favorable than
could be obtained from an unrelated third party; and
- In the case of all related party transactions, be approved by a majority
of the directors, including a majority of the directors who do not have
an interest in the transaction.
In addition to transactions in the ordinary course of our business, we
have entered into the following business transactions with the directors
indicated:
- Lease of Main Office Site. We have signed a letter of intent with
Prosser & Floyd, a partnership, for the lease of the 1.5 acre site for
our permanent main office building. Mr. Dalton B. Floyd, Jr., the
chairman of our board of directors and chief executive officer of Sun
Bancshares, and Mr. Larry N. Prosser, one of our directors, are both
one-third partners in this partnership. We anticipate that a final lease
agreement with Prosser & Floyd will be signed in the second quarter of
2000. Under the letter of intent, it is our understanding that the
annual rental payments will equal 12% of the appraised value of the
land, or approximately $7,500 per month, for the first year of the
lease, with annual adjustments based on the consumer price index
thereafter. The initial term of the lease will be 25 years with renewal
options for a total of 15 additional years. The lease will call for us
to pay taxes, insurance and repairs on the leased property. Based on our
review of an independent appraisal, we believe the terms of the lease
will be no less favorable that those that could be obtained from an
unrelated third party.
- Lease of Site for Temporary Main Office. During the construction of our
main office, we will operate out of a temporary modular facility, which
will be located on a temporary site approximately one-tenth of a mile
from the permanent main office site. We plan to lease this temporary
site from Wachesaw Development, LLC. Mr. Larry N. Prosser, one of our
directors, is the sole owner of Wachesaw Development, LLC. We expect
that the lease will be on a month to month basis and will begin in March
2000 and end in January 2001. We estimate that the monthly rental rate
will be approximately $2,100. We will obtain an independent appraisal
before we enter into this lease to ensure the lease complies with the
standards described above.
- Loan Guarantee. Each of our directors has guaranteed a portion of our
$850,000 line of credit from The Bankers Bank for up to $85,000 each.
Each of these transactions have been approved by a majority of our
directors, including a majority of the directors who do not have an interest in
the transaction.
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SUPERVISION AND REGULATION
Both Sun Bancshares and SunBank will be subject to extensive state and
federal banking regulations that impose restrictions on and provide for general
regulatory oversight of our operations. These laws are generally intended to
protect depositors and not shareholders. The following discussion describes the
material elements of the regulatory framework that will apply.
SUN BANCSHARES
Since Sun Bancshares will own all of the capital stock of SunBank, it will
be a bank holding company under the federal Bank Holding Company Act of 1956 and
the South Carolina Banking and Branching Efficiency Act. As a result, Sun
Bancshares will primarily be subject to the supervision, examination, and
reporting requirements of the Bank Holding Company Act and the regulations of
the Federal Reserve.
Acquisitions of Banks. The Bank Holding Company Act requires every bank
holding company to obtain the Federal Reserve's prior approval before:
- Acquiring direct or indirect ownership or control of any voting shares
of any bank if, after the acquisition, the bank holding company will
directly or indirectly own or control more than 5% of the bank's voting
shares;
- Acquiring all or substantially all of the assets of any bank; or
- Merging or consolidating with any other bank holding company.
Under the Bank Holding Company Act, an adequately capitalized and
adequately managed bank holding company located in South Carolina may purchase a
bank located outside of South Carolina. Conversely, an adequately capitalized
and adequately managed bank holding company located outside of South Carolina
may purchase a bank located inside South Carolina. In each case, however,
restrictions may be placed on the acquisition of a bank which has only been
existence for a limited amount of time or an acquisition which may result in
specified concentrations of deposits.
In addition, under the South Carolina Banking and Branching Efficiency
Act, no company or person may acquire Sun Bancshares or SunBank until SunBank
has been in existence and continuous operations for five years.
Change in Bank Control. Subject to various exceptions, the Bank Holding
Company Act and the Change in Bank Control Act, together with related
regulations, require Federal Reserve approval prior to any person or company
acquiring "control" of a bank holding company. Control is conclusively presumed
to exist if an individual or company acquires 25% or more of any class of voting
securities of the bank holding company. Control is rebuttably presumed to exist
if a person or a company acquires 10% or more, but less than 25%, of any class
of voting securities and either the bank holding company has registered
securities under Section 12 of the Securities Act of 1934, or no other person
owns a greater percentage of that class of voting securities immediately after
the transaction. We intend to register our common stock under the Securities
Exchange Act of 1934.
Permitted Activities. On November 12, 1999 President Clinton signed the
Gramm-Leach-Bliley Act, which amends the Bank Holding Company Act and greatly
expand the activities in which bank holding companies and affiliates of banks
are permitted to engage. The Gramm-Leach-Bliley Act eliminates many federal and
state law barriers to affiliations among banks and securities firms, insurance
companies, and other financial service providers. The provisions of the
Gramm-Leach-Bliley Act relating to permitted activities of bank holding
companies and affiliates of banks will become effective on March 11, 2000. Since
we do not intend to begin our operations until the second quarter of 2000, the
following discussion describes the activities that Sun Bancshares will be
permitted to engage under the Bank Holding Company Act as amended by the
Gramm-Leach-Bliley Act.
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Generally, if Sun Bancshares qualifies and elects to become a financial
holding company, it may engage in activities that are financial in nature or
incidental or complementary to a financial activity. Activities that the
Gramm-Leach-Bliley Act expressly lists as financial in nature include insurance
activities, providing financial, investment and advisory services, underwriting
securities and limited merchant banking activities.
To qualify to become a financial holding company, SunBank and any other
depository institution subsidiary of Sun Bancshares must be well capitalized and
well managed and must have a Community Reinvestment Act rating of at least
satisfactory. Additionally, Sun Bancshares must file an election with the
Federal Reserve to become a financial holding company and must provide the
Federal Reserve with 30 days written notice prior to engaging in a permitted
financial activity. We have no plans to elect to become a financial holding
company.
Under the Bank Holding Company Act, a bank holding company, which has not
qualified or elected to become a financial holding company is generally
prohibited from engaging in or acquiring direct or indirect control of more than
5% of the voting shares of any company engaged in nonbanking activities unless
prior to the enactment of the Gramm-Leach-Bliley Act the Federal Reserve found
those activities to be so closely related to banking as to be a proper incident
to the business of a banking. Activities that the Federal Reserve has found to
be so closely related to banking to be a proper incident to the business of
banking include:
- factoring accounts receivable,
- acquiring or servicing loans,
- leasing personal property,
- conducting discount securities brokerage activities,
- performing selected data processing services,
- acting as agent or broker in selling credit life insurance and other
types of insurance in connection with credit transactions, and
- performing selected insurance underwriting activities.
Despite prior approval, the Federal Reserve may order a bank holding company or
its subsidiaries to terminate any of these activities or to terminate its
ownership or control of any subsidiary when it has reasonable cause to believe
that the bank holding company's continued ownership, activity or control
constitutes a serious risk to the financial safety, soundness, or stability of
any of its bank subsidiaries.
Support of Subsidiary Institutions. Under Federal Reserve policy, bank
holding companies are expected to act as a source of financial strength for, and
to commit resources to support, their depository institution subsidiaries. This
support may be required at times when, without this Federal Reserve policy, the
bank holding company might not be inclined to provide it. In addition, any
capital loans by a bank holding company to a bank will be repaid only after its
deposits and other indebtedness are repaid in full. In the event of a bank
holding company's bankruptcy, any commitment by the bank holding company to a
federal bank regulatory agency to maintain the capital of a banking subsidiary
will be assumed by the bankruptcy trustee and entitled to a priority of payment.
South Carolina State Regulation. As a bank holding company registered
under the South Carolina Banking and Branching Efficiency Act, we are subject to
limitations on sale or merger and to regulation by the South Carolina Board of
Financial Institutions. Prior to acquiring the capital stock of a national bank,
we are not required to obtain the approval of the Board, but we must notify them
at least 15 days prior to doing so. Prior to engaging in the acquisition of
nonbanking institutions or state chartered banks, we must receive the Board's
approval, and we must file periodic reports with respect to our financial
condition and operations, management and intercompany relationships between Sun
Bancshares and its subsidiaries.
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SUNBANK
SunBank will be subject to numerous state and federal statutes and
regulations that will affect its business, activities and operations, and it may
be supervised and examined by one or more state or federal bank regulatory
agencies. Since SunBank will be charted as a national bank, it will primarily be
subject to the supervision, examination and reporting requirements of the
National Bank Act and the regulations of the Office of the Comptroller of the
Currency. The Office of the Comptroller of the Currency will regularly examine
SunBank's operations and has the authority to approve or disapprove mergers, the
establishment of branches and similar corporate actions. The Office of the
Comptroller of the Currency also has the power to prevent the continuance or
development of unsafe or unsound banking practices or other violations of law.
Additionally, SunBank's deposits will be insured by the FDIC to the maximum
extent provided by law.
Branching. National banks are required by the National Bank Act to adhere
to branch office banking laws applicable to state banks in the states in which
they are located. Under current South Carolina law, SunBank may open branch
offices throughout South Carolina with the prior approval of the Office of the
Comptroller of the Currency. In addition, with prior regulatory approval,
SunBank will be able to acquire existing banking operations in South Carolina.
SunBank and any other national or state-chartered bank generally may branch
across state lines by merging with banks in other states if allowed by the
applicable states' laws. South Carolina law, with limited exceptions, currently
permits branching across state lines through interstate mergers.
Under the Federal Deposit Insurance Act, states may "opt-in" and allow
out-of-state national banks to branch into their state by establishing a new
start-up branch in the state. Currently, South Carolina has not opted-in to this
provision. Therefore, interstate merger is the only method through which a bank
located outside of South Carolina may branch into South Carolina. This provides
a barrier of entry into the South Carolina banking market.
Prompt Corrective Action. The Federal Deposit Insurance Corporation
Improvement Act of 1991 establishes a system of prompt corrective action to
resolve the problems of undercapitalized financial institutions. Under this
system, federal banking regulators have established five capital categories,
well capitalized, adequately capitalized, undercapitalized, significantly
undercapitalized and critically undercapitalized, in which all institutions are
placed. To qualify as well capitalized, a bank must have a leverage ratio of no
less than 5%, a Tier 1 risk-based capital ratio of no less than 6%, and a total
risk-based capital ratio of no less than 10%. These ratios are described below
under "Capital Adequacy." Additionally, the bank must not be under any order or
directive from the appropriate regulatory agency to meet and maintain a specific
capital level. Initially, we will qualify as well capitalized. The federal
banking agencies have also specified by regulation the relevant capital levels
for each of the other categories.
Federal banking regulators are required to take some mandatory supervisory
actions and are authorized to take other discretionary actions with respect to
institutions in the three undercapitalized categories. The severity of the
action depends upon the capital category in which the institution is placed.
Generally, subject to a narrow exception, the banking regulator must appoint a
receiver or conservator for an institution that is critically undercapitalized.
An institution in any of the undercapitalized categories is required to submit
an acceptable capital restoration plan to its appropriate federal banking
agency. A bank holding company must guarantee that a subsidiary depository
institution meets its capital restoration plan up to the lesser of 5% of an
undercapitalized subsidiary's assets or the amount required to meet regulatory
capital requirements. An undercapitalized institution is also generally
prohibited from increasing its average total assets, making acquisitions,
establishing any branches or engaging in any new line of business, except under
an accepted capital restoration plan or with FDIC approval. The Federal Reserve
regulations also establish procedures for downgrading an institution to a lower
capital category based on supervisory factors other than capital.
FDIC Insurance Assessments. The FDIC has adopted a risk-based assessment
system for determining an insured depository institutions' insurance assessment
rate. The system that takes into account the risks attributable to different
categories and concentrations of assets and liabilities. An
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institution is placed into one of three capital categories: (1) well
capitalized; (2) adequately capitalized; and (3) undercapitalized. These three
categories are substantially similar to the prompt corrective action categories
described above, with the "undercapitalized" category including institutions
that are undercapitalized, significantly undercapitalized and critically
undercapitalized. The FDIC also assigns an institution to one of three
supervisory subgroups based on a supervisory evaluation that the institution's
primary federal regulator provides to the FDIC and information that the FDIC
determines to be relevant to the institution's financial condition and the risk
posed to the deposit insurance funds. Assessments range from 0 to 27 cents per
$100 of deposits, depending on the institution's capital group and supervisory
subgroup. In addition, the FDIC imposes assessments of 3.7 cents per $100 of
deposits to help pay off the $780 million in annual interest payments on the $8
billion Financing Corporation bonds issued in the late 1980s as part of the
government rescue of the thrift industry.
The FDIC may terminate its insurance of deposits if it finds that the
institution has engaged in unsafe and unsound practices, is in an unsafe or
unsound condition to continue operations or has violated any applicable law,
regulation, rule, order, or condition imposed by the FDIC.
Community Reinvestment Act. The Community Reinvestment Act requires that,
in connection with examinations of financial institutions within their
respective jurisdictions, the Federal Reserve, the FDIC, or the Office of the
Comptroller of the Currency, shall evaluate the record of each financial
institution in meeting the credit needs of its local community, including low
and moderate income neighborhoods. These factors are also considered in
evaluating mergers, acquisitions, and applications to open a branch or facility.
Failure to adequately meet these criteria could impose additional requirements
and limitations on SunBank. Under the Gramm-Leach-Bliley Act, banks with
aggregate assets of not more than $250 million will be subject to a Community
Reinvestment Act examination only once every 60 months if the bank receives an
outstanding rating, once every 48 months if it receives a satisfactory rating
and as needed if the rating is less than satisfactory. Additionally, under the
Gramm-Leach-Bliley Act, banks will be required to publicly disclose the terms of
various Community Reinvestment Act-related agreements.
Other Regulations. Interest and other charges collected or contracted for
by SunBank are subject to state usury laws and federal laws concerning interest
rates. SunBank's loan operations are also subject to federal laws applicable to
credit transactions, such as:
- The federal Truth-In-Lending Act, governing disclosures of credit terms
to consumer borrowers;
- The Home Mortgage Disclosure Act of 1975, requiring financial
institutions to provide information to enable the public and public
officials to determine whether a financial institution is fulfilling
its obligation to help meet the housing needs of the community it
serves;
- The Equal Credit Opportunity Act, prohibiting discrimination on the
basis of race, creed or other prohibited factors in extending credit;
- The Fair Credit Reporting Act of 1978, governing the use and provision
of information to credit reporting agencies;
- The Fair Debt Collection Act, governing the manner in which consumer
debts may be collected by collection agencies; and
- The rules and regulations of the various federal agencies charged with
the responsibility of implementing these federal laws.
The deposit operations of SunBank are subject to:
- The Right to Financial Privacy Act, which imposes a duty to maintain
confidentiality of consumer financial records and prescribes procedures
for complying with administrative subpoenas of financial records; and
- The Electronic Funds Transfer Act and Regulation E issued by the
Federal Reserve to implement that act, which governs automatic deposits
to and withdrawals from deposit accounts
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and customers' rights and liabilities arising from the use of automated
teller machines and other electronic banking services.
CAPITAL ADEQUACY
Sun Bancshares and SunBank will be required to comply with the capital
adequacy standards established by the Federal Reserve, in the case of Sun
Bancshares, and the Office of the Comptroller of the Currency, in the case of
SunBank. The Federal Reserve has established a risk-based and a leverage measure
of capital adequacy for bank holding companies that is substantially similar to
that adopted by the Office of the Comptroller of the Currency for banks.
The risk-based capital standards are designed to make regulatory capital
requirements more sensitive to differences in risk profiles among banks and bank
holding companies, to account for off-balance-sheet exposure, and to minimize
disincentives for holding liquid assets. Assets and off-balance-sheet items,
such as letters of credit and unfunded loan commitments, are assigned to broad
risk categories, each with appropriate risk weights. The resulting capital
ratios represent capital as a percentage of total risk-weighted assets and
off-balance-sheet items.
The minimum guideline for the ratio of total capital to risk-weighted
assets is 8%. Total capital consists of two components, Tier 1 Capital and Tier
2 Capital. Tier 1 Capital generally consist of common shareholders' equity,
minority interests in the equity accounts of consolidated subsidiaries,
qualifying noncumulative perpetual preferred stock, and a limited amount of
qualifying cumulative perpetual preferred stock, less goodwill and other
specified intangible assets. Tier 1 Capital must equal at least 4% of
risk-weighted assets. Tier 2 Capital generally consist of subordinated debt,
other preferred stock and hybrid capital and a limited amount of loan loss
reserves. The total amount of Tier 2 Capital is limited to 100% of Tier 1
Capital.
In addition, the Federal Reserve has established minimum leverage ratio
guidelines for bank holding companies. These guidelines provide for a minimum
ratio of Tier 1 Capital to average assets, less goodwill and other specified
intangible assets, of 3% for bank holding companies that meet certain specified
criteria, including having the highest regulatory rating and implementing the
Federal Reserve's risk-based capital measure for market risk. All other bank
holding companies generally are required to maintain a leverage ratio of at
least 4%. The guidelines also provide that bank holding companies experiencing
internal growth, as will be the case for Sun Bancshares, or making acquisitions
will be expected to maintain strong capital positions substantially above the
minimum supervisory levels without significant reliance on intangible assets.
The Federal Reserve considers the leverage ratio and other indicators of capital
strength in evaluating proposals for expansion or new activities.
SunBank and Sun Bancshares are also both subject to other capital
guidelines issued by the Office of the Comptroller of the Currency and the
Federal Reserve, respectively, which provide for minimum ratios of total capital
to total assets.
Failure to meet capital guidelines could subject a bank or bank holding
company to a variety of enforcement remedies, including issuance of a capital
directive, the termination of deposit insurance by the FDIC, a prohibition on
the taking of brokered deposits, and certain other restrictions on its business.
As described below, substantial additional restrictions can be imposed on
FDIC-insured depository institutions that fail to meet applicable capital
requirements. See "- Prompt Corrective Action" on page 39.
PAYMENT OF DIVIDENDS
Sun Bancshares is a legal entity separate and distinct from SunBank. The
principal sources of Sun Bancshares' cash flow, including cash flow to pay
dividends to its shareholders, are dividends that SunBank pays to its sole
shareholder, Sun Bancshares. Statutory and regulatory limitations apply to
SunBank's payment of dividends to Sun Bancshares as well as to Sun Bancshares'
payment of dividends to its shareholders.
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SunBank is required by federal law to obtain the prior approval of the
Office of the Comptroller of the Currency for payments of dividends if the total
of all dividends declared by its Board of Directors in any year will exceed (1)
the total of SunBank's net profits for that year, plus (2) SunBank's retained
net profits of the preceding two years, less any required transfers to surplus.
The payment of dividends by Sun Bancshares and SunBank may also be
affected by other factors, such as the requirement to maintain adequate capital
above regulatory guidelines. If, in the opinion of the Office of the Comptroller
of the Currency, SunBank were engaged in or about to engage in an unsafe or
unsound practice, the Office of the Comptroller of the Currency could require,
after notice and a hearing, SunBank to cease and desist from the practice. The
federal banking agencies have indicated that paying dividends that deplete a
depository institution's capital base to an inadequate level would be an unsafe
and unsound banking practice. Under the Federal Deposit Insurance Corporation
Improvement Act of 1991, a depository institution may not pay any dividend if
payment would cause it to become undercapitalized or if it already is
undercapitalized. Moreover, the federal agencies have issued policy statements
that provide that bank holding companies and insured banks should generally only
pay dividends out of current operating earnings. See "- Prompt Corrective
Action" on page 39.
RESTRICTIONS ON TRANSACTIONS WITH AFFILIATES
Sun Bancshares and SunBank are subject to the provisions of Section 23A of
the Federal Reserve Act. Section 23A places limits on the amount of:
- loans or extensions of credit to affiliates;
- investment in affiliates;
- the purchase of assets from affiliates, except for real and personal
property exempted by the Federal Reserve;
- loans or extensions of credit to third parties collateralized by the
securities or obligations of affiliates; and
- any guarantee, acceptance or letter of credit issued on behalf of an
affiliate.
The aggregate of all of the above transactions is limited in amount, as to
any one affiliate, to 10% of a bank's capital and surplus and, as to all
affiliates combined, to 20% of a bank's capital and surplus. In addition to the
limitation on the amount of these transactions, each of the above transactions
must also meet specified collateral requirements. Sun Bancshares must also
comply with certain provisions designed to avoid the taking of low-quality
assets.
Sun Bancshares and SunBank are also subject to the provisions of Section
23B of the Federal Reserve Act which, among other things, prohibits an
institution from engaging in the above transactions with affiliates unless the
transactions are on terms substantially the same, or at least as favorable to
the institution or its subsidiaries, as those prevailing at the time for
comparable transactions with nonaffiliated companies.
SunBank is also subject to restrictions on extensions of credit to its
executive officers, directors, certain principal shareholders and their related
interests. These extensions of credit (1) must be made on substantially the same
terms, including interest rates and collateral, as those prevailing at the time
for comparable transactions with third parties, and (2) must not involve more
than the normal risk of repayment or present other unfavorable features.
PRIVACY
The Gramm-Leach-Bliley Act also contains provisions regarding consumer
privacy. These provisions require financial institutions to disclose their
policy for collecting and protecting confidential information. Customers
generally may prevent financial institutions from sharing personal financial
information with nonaffiliated third parties except for third parties that
market the institutions' own products and services. Additionally, financial
institutions generally may not disclose consumer account
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numbers to any nonaffiliated third party for use in telemarketing, direct mail
marketing or other marketing through electronic mail to the consumer.
PROPOSED LEGISLATION AND REGULATORY ACTION
New regulations and statutes are regularly proposed that contain
wide-ranging proposals for altering the structures, regulations and competitive
relationships of the nation's financial institutions. We cannot predict whether
or in what form any proposed regulation or statute will be adopted or the extent
to which our business may be affected by any new regulation or statute.
EFFECT OF GOVERNMENTAL MONETARY POLICES
Our earnings are affected by domestic economic conditions and the monetary
and fiscal policies of the United States government and its agencies. The
Federal Reserve Bank's monetary policies have had, and are likely to continue to
have, an important impact on the operating results of commercial banks through
its power to implement national monetary policy in order, among other things, to
curb inflation or combat a recession. The monetary policies of the Federal
Reserve Board have major effects upon the levels of bank loans, investments and
deposits through its open market operating in United States government
securities and through its regulation of the discount rate on borrowings of
member banks and the reserve requirements against member bank deposits. It is
not possible to predict the nature or impact of future changes in monetary and
fiscal policies.
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DESCRIPTION OF SUN BANCSHARES' CAPITAL STOCK
AND SHAREHOLDERS' RIGHTS
COMMON STOCK
Sun Bancshares' articles of incorporation authorize it to issue up to
10,000,000 shares of common stock, par value not stated, of which at least
1,000,000 shares will be issued in this offering. As of the date of this
prospectus, 100,000 shares of common stock, or an amount equal to 10.0% of the
shares of common stock offered in this prospectus, were reserved for issuance
upon the exercise of stock options to be issued under our stock incentive plan
and 210,000 shares of common stock were reserved for issuance upon the exercise
of the warrants to be issued to the organizers.
All shares of common stock will be entitled to share equally in dividends
from legally available funds, when, as and if declared by the board of
directors. We do not anticipate, however, that Sun Bancshares will pay any cash
dividends on the common stock in the near future. Upon Sun Bancshares' voluntary
or involuntary liquidation or dissolution, all shares of common stock will be
entitled to share equally in all of Sun Bancshares' assets that are available
for distribution to the shareholders. Each holder of common stock will be
entitled to one vote for each share on all matters submitted to the
shareholders. Holders of common stock will not have any right to acquire
authorized but unissued capital stock of Sun Bancshares whenever it issues new
shares of capital stock. No cumulative voting, redemption, sinking fund or
conversion rights or provisions apply to the common stock. All shares of the
common stock issued in the offering as described in this prospectus will be
fully paid and non-assessable.
PREFERRED STOCK
Sun Bancshares' articles of incorporation also authorize its board of
directors to issue up to 2,000,000 shares of preferred stock, par value not
stated, without any further action by the holders of the common stock. The board
of directors may determine the terms of the preferred stock including, but not
limited to, dividend rates and voting, conversion, redemption or sinking fund
rights. Preferred stock may have voting rights, subject to applicable law and as
determined by the board of directors. Any preferred stock that we issue may rank
senior to our common stock with respect to the payment of dividends and/or the
distribution of assets upon liquidation or dissolution of Sun Bancshares. Sun
Bancshares has not issued any preferred stock and will not issue preferred stock
to the organizers except on the same terms as it is offered to all other
existing shareholders or to new shareholders. Although Sun Bancshares has no
present plans to issue any preferred stock, the ownership and control of Sun
Bancshares by the holders of the common stock would be diluted if Sun Bancshares
were to issue preferred stock that had voting or conversion rights.
TRANSFER AGENT
The transfer agent and registrar for the common stock is .
PROTECTIVE PROVISIONS
General. Sun Bancshares' shareholders' rights and related matters are
governed by the South Carolina Business Corporation Act of 1988 and Sun
Bancshares' articles of incorporation and bylaws. Sun Bancshares' articles of
incorporation and bylaws contain protective provisions that could have the
effect of delaying or impeding an attempt to change or remove Sun Bancshares'
management or to gain control of Sun Bancshares in a transaction not supported
by its board of directors. These provisions are discussed in more detail below.
In general, one purpose of these provisions is to assist our board of directors
in playing a role in connection with attempts to acquire control of Sun
Bancshares. They allow the board of directors to further and protect Sun
Bancshares' interests and those of its shareholders, as appropriate, under the
circumstances.
Although we believe the protective provisions are beneficial to our
shareholders, they also may tend to discourage some takeover bids. As a result,
our shareholders may be deprived of opportunities to sell
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some or all of their shares at prices that represent a premium over prevailing
market prices. On the other hand, defeating undesirable acquisition offers can
be a very expensive and time-consuming process. To the extent that the
protective provisions discourage undesirable proposals, Sun Bancshares may be
able to avoid those expenditures of time and money.
The protective provisions also may discourage open market purchases by a
potential acquirer. These purchases could increase the market price of the
common stock temporarily, enabling shareholders to sell their shares at a price
higher than that which otherwise would prevail. In addition, the provisions
could decrease the market price of the common stock by making the stock less
attractive to persons who invest in securities in anticipation of price
increases from potential acquisition attempts. The provisions also could make it
more difficult and time consuming for a potential acquirer to obtain control of
Sun Bancshares by replacing its board of directors and management. Furthermore,
the provisions could make it more difficult for our shareholders to replace the
board of directors or management, even if a majority of the shareholders
believes that replacing them would be in Sun Bancshares' best interests. As a
result, the protective provisions could tend to keep the incumbent board of
directors and management in place.
Restriction on Acquisitions. Under the South Carolina Banking and
Branching Efficiency Act of 1996, no company or person may acquire Sun
Bancshares or SunBank until SunBank has been in existence and continuous
operation for five years.
Control Share Act. Sun Bancshares has specifically elected to opt out of
a provision of the South Carolina Business Corporation Act which may deter or
frustrate unsolicited attempts to acquire certain South Carolina corporations.
This statute, commonly referred to as the "Control Share Act," applies to public
corporations organized in South Carolina unless the corporation specifically
elects to opt out. The Control Share Act generally provides that shares of a
public corporation acquired in excess of specific thresholds will not possess
any voting rights unless the voting rights are approved by a majority vote of
the corporation's disinterested shareholders.
Authorized but Unissued Stock. Sun Bancshares' authorized but unissued
shares of common stock and preferred stock will be available for future issuance
without shareholder approval. These additional shares may be used for a variety
of corporate purposes, including future public offerings to raise additional
capital, corporate acquisitions, and employee benefit plans. The existence of
authorized but unissued and unreserved shares of common stock and preferred
stock may enable the board of directors to issue shares to persons friendly to
current management, which could render more difficult or discourage any attempt
to obtain control of Sun Bancshares by means of a proxy contest, tender offer,
merger or otherwise, and as a result protect the continuity of our management.
In addition, the issuance of shares of common stock or preferred stock with
voting rights may adversely affect the rights of the existing holders of common
stock and, in certain circumstances, could decrease the market price of the
common stock.
Staggered Terms for Board of Directors. Sun Bancshares' articles of
incorporation and bylaws provide that Sun Bancshares' board of directors will be
divided into three classes. Directors serve staggered terms, which means that
one-third of the directors will be elected each year at our annual meeting of
shareholders. As a result, unless the existing directors were to resign, it
would take at least two annual meetings of shareholders to replace a majority of
our directors.
Change in Number of Directors. Sun Bancshares' articles of incorporation
provide that any change in the number of directors, as set forth in its bylaws,
would have to be made by the affirmative vote of two-thirds of the entire board
of directors or by the affirmative vote of the holders of at least two-thirds of
the outstanding shares of common stock entitled to vote in an election of
directors.
Removal of Directors. Sun Bancshares' articles of incorporation provide
that one or more directors may be removed for cause during their terms only if
the number of votes cast to remove the director exceeds the number of votes cast
against removing the director. Sun Bancshares articles of incorporation also
provide that directors may be removed during their terms without cause only by
the affirmative vote of the holders of two-thirds of the issued and outstanding
shares of common stock entitled to vote in an election of directors.
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Supermajority Voting. Under Sun Bancshares' articles of incorporation,
with some exceptions, any merger or consolidation involving Sun Bancshares or
any sale or other disposition of all or substantially all of its assets will
require the affirmative vote of a majority of Sun Bancshares' directors then in
office and the affirmative vote of the holders of at least two-thirds of the
outstanding shares of common stock. However, if Sun Bancshares' board of
directors has approved the particular transaction by the affirmative vote of
two-thirds of the entire Board, then shareholder approval of the transaction
would require the affirmative vote of the holders of only a majority of the
outstanding shares of common stock entitled to vote on the transaction.
Advance Notice Requirements for Shareholder Nominations of Director. Sun
Bancshares' bylaws establish advance notice procedures with regard to
shareholder nominations, other than by or at the direction of the board of
directors or a committee of the board, of candidates for election as directors.
Shareholder nominations for the election of directors must be made in writing
and delivered to the secretary of the company no later than 30 days prior to the
date of meeting at which directors will be elected, or in the case a meeting for
the election of directors for which shareholders are given less than 40 days
notice, the close of business on the tenth day following the date on which
notice of the meeting is first given to shareholders. We may reject a
shareholder nomination that is not made in accordance with these procedures.
Nomination Requirement. Sun Bancshares' bylaws establish nomination
requirements for an individual to be elected as a director, including that the
nominating party provide (1) notice that the party intends to nominate the
proposed director; (2) the name of and biographical information on the nominee;
and (3) a statement that the nominee has consented to the nomination. The
chairman of any shareholders' meeting may, for good cause shown, waive the
operation of these provisions. These provisions could reduce the likelihood that
a third party would nominate and elect individuals to serve on the board of
directors.
Consideration of Sun Bancshares' Constituencies. Sun Bancshares' articles
of incorporation provide that in determining what is in the best interest of Sun
Bancshares and its shareholders the board of directors, in addition to
considering the effect of any action on Sun Bancshares and its shareholders, may
also consider the (1) interest of Sun Bancshares' employees, customers,
suppliers, creditors, and other constituencies; (2) the communities in which Sun
Bancshares operates; and (3) other factors the directors consider pertinent.
INDEMNIFICATION
Sun Bancshares' articles of incorporation and bylaws contain provisions
which provide that Sun Bancshares shall indemnify directors to the maximum
extent provided by South Carolina law. This protection is broader than the
protection expressly mandated in Sections 33-8-510 and 33-8-520 of the South
Carolina Business Corporation Act. These statutory sections provide that a
company shall indemnify a director or an officer only to the extent that he has
been wholly successful, on the merits or otherwise, in the defense of any action
or proceeding brought by reason of the fact that the person was a director or
officer. This requirement would include indemnifying directors against expenses,
including attorney's fees, actually and reasonably incurred in connection with
the matter. In addition to this mandatory indemnification right, Sun Bancshares'
bylaws provide additional protections that include, but are not limited to,
situations where:
- The director conducted him or herself in good faith;
- The director reasonably believed that conduct in his or her official
capacity with the corporation was in the corporation's best interest or
was not opposed to the best interest of the corporation; and
- In the case of a criminal proceeding, the director had no reasonable
cause to believe his or her conduct was unlawful.
46
<PAGE> 48
No director will, however, be indemnified if he or she is found liable to Sun
Bancshares in a proceeding brought on Sun Bancshares' behalf or he or she is
found liable on the basis that he or she received an improper personal benefit.
Sun Bancshares' board of directors also has the authority to extend to
officers, employees, and agents the same indemnification rights held by
directors, subject to all of the conditions and obligations described above. The
board of directors intends to extend indemnification rights to all of its
executive officers.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
Sun Bancshares pursuant to these provisions, or otherwise, Sun Bancshares has
been informed that in the opinion of the Securities and Exchange Commission this
indemnification is against public policy as expressed in the Securities Act of
1933 and is, therefore, unenforceable.
LIMITATION OF LIABILITY
Sun Bancshares' articles of incorporation contain a provision which,
subject to the following exceptions, limits the liability of a director for any
breach of duty as a director. There is no limitation of liability for:
- A breach of the director's duty of loyalty to Sun Bancshares or its
shareholders;
- An act or omission not in good faith or which involves gross negligence,
intentional misconduct or a knowing violation of law;
- Any payment of a dividend or any other type of distribution that is
illegal under Section 33-8-330 of the South Carolina Business
Corporation Act;
- Any transaction from which the director derives an improper personal
material tangible benefit.
In addition, if the South Carolina Business Corporation Act is amended to
authorize further elimination or limitation of the liability of director, then
the liability of each director shall be eliminated or limited to the fullest
extent permitted by the provisions of the Act, as then in effect without further
action by the shareholders, unless the law requires shareholder action. The
provision does not limit the right of Sun Bancshares or its shareholders to seek
injunctive or other equitable relief not involving payments in the nature of
monetary damages.
47
<PAGE> 49
SHARES ELIGIBLE FOR FUTURE SALE
Upon completion of the offering, Sun Bancshares will have 1,000,000 shares
of common stock outstanding, or 1,150,000 shares of common stock outstanding if
the underwriter exercises its over-allotment option in full. These shares of
common stock will be freely tradable without restriction, except that
"affiliates" of Sun Bancshares must comply with the resale limitations of Rule
144 under the Securities Act of 1933. Rule 144 defines an "affiliate" of a
company as a person who directly, or indirectly through one or more
intermediaries, controls, or is controlled by, or is under common control with,
the company. Affiliates of a company generally include its directors, officers
and principal shareholders. A total of 210,500 shares owned directly or
indirectly by affiliates of Sun Bancshares will be eligible for public sale
under Rule 144, subject to the contractual and volume restrictions discussed
below, beginning 180 days after the date of this prospectus.
In general, under Rule 144 affiliates are entitled to sell within any
three-month period a number of shares that does not exceed the greater of:
- 1% of the outstanding shares of common stock; or
- The average weekly trading volume during the four calendar weeks
preceding his or her sale.
Sales under Rule 144 are also subject to manner of sale provisions, notice
requirements and the availability of current public information about Sun
Bancshares. Affiliates will no longer be subject to the volume restrictions and
other limitations under Rule 144 beginning 90 days after their status as an
affiliate terminates.
Even though Rule 144 would otherwise permit the sale of shares held by
affiliates beginning 90 days after the date of this prospectus, the directors
and executive officers have each agreed with the underwriter that they will not
sell, contract to sell, or otherwise dispose of any shares of common stock or
any securities convertible into or exchangeable for any shares of common stock
for a period of 180 days from the date of this prospectus without the
underwriter's prior written consent except in limited circumstances.
Sun Bancshares intends to issue warrants to purchase up to a total of
210,000 shares of common stock, representing an amount equal to 21.0% of the
common stock sold in the offering. Sun Bancshares may also grant options, under
its stock incentive plan, to purchase up to a total of 100,000 shares of common
stock, representing an amount equal to 10.0% of the common stock sold in the
offering. Sun Bancshares intends to register the shares issuable upon exercise
of warrants and options granted under the plan. Upon registration, these shares
will be eligible for resale in the public market without restriction by persons
who are not affiliates of Sun Bancshares, and to the extent they are held by
affiliates, under Rule 144 without a holding period.
Prior to the offering, there has been no public market for the common
stock, and we cannot predict the effect, if any, that the sale of shares or the
availability of shares for sale will have on the market price prevailing from
time to time. Nevertheless, sales of substantial amounts of common stock in the
public market could adversely affect prevailing market prices and our ability to
raise equity capital in the future.
48
<PAGE> 50
UNDERWRITING
Subject to the terms and conditions of the underwriting agreement among
Sun Bancshares and the underwriter named below, the underwriter has agreed to
purchase from us, and we have agreed to sell to the underwriter, the number of
shares of common stock listed opposite the underwriter's name below.
<TABLE>
<CAPTION>
NUMBER OF
NUMBER OF OVER-ALLOTMENT
UNDERWRITER FIRM SHARES SHARES
----------- ----------- --------------
<S> <C> <C>
Wachovia Securities, Inc.................................... 1,000,000 150,000
</TABLE>
The underwriting agreement provides that the underwriter's obligations are
subject to approval of certain legal matters by counsel and to various other
conditions customary in a firm commitment underwritten public offering. The
underwriter is required to purchase and pay for the shares offered by this
prospectus other than those covered by the over-allotment option described
below.
The underwriter will not charge an underwriting discount on up to 200,000
shares purchased in this offering by Sun Bancshares' directors and executive
officers. The underwriter will charge an underwriting discount equal to 3.5% of
the public offering price, or $0.35 per share, on up to 100,000 shares purchased
by investors who are identified in writing to the underwriter by Sun Bancshares.
The underwriter will charge an underwriting discount equal to 7.5% of the public
offering price, or $0.75 per share, on all other shares sold in this offering.
The underwriter proposes to offer the common stock directly to the public
at the public offering price listed on the cover page of this prospectus and to
selected securities dealers at that price less a concession not in excess of
$ per share. The underwriter may allow, and the selected dealers may
reallow, a concession not in excess of $ per share to other brokers and
dealers. We expect that the shares of common stock will be ready for delivery on
or about , 2000. After the offering, the offering price and other
selling terms may change.
The public offering price was determined arbitrarily by Sun Bancshares and
the underwriter after considering several factors. These factors include
prevailing market conditions and the price of comparable publicly traded
companies.
Sun Bancshares has granted the underwriter an option, exercisable within
30 days after the date of this prospectus, to purchase up to 150,000 additional
shares of common stock to cover over-allotments, if any, at the public offering
price listed on the cover page of this prospectus, less the 7.5% underwriting
discount. The underwriter may purchase these shares only to cover
over-allotments made in connection with this offering.
In addition, Sun Bancshares has granted to the underwriter a right of
first refusal to serve as exclusive or lead advisor on all corporate finance
transactions undertaken or considered by Sun Bancshares for a period of three
years after the date of this prospectus.
The underwriter does not intend to sell shares of common stock to any
account over which it exercises discretionary authority.
Each of our directors and executive officers has agreed with the
underwriter not to sell, contract to sell, or otherwise dispose of any shares of
common stock or any securities that can be converted into or exchanged for
shares of common stock for a period of 180 days from the date of this prospectus
without the underwriter's prior written consent, except in limited
circumstances. The underwriter and its affiliates may on occasion be a customer
of, engage in transactions with, and perform services for Sun Bancshares or
SunBank in the ordinary course of business.
We have agreed to indemnify the underwriter against certain liabilities,
including liabilities under the Securities Act of 1933, as currently in effect,
or to contribute to payments that the underwriter may be required to make in
connection with these liabilities.
49
<PAGE> 51
In connection with this offering, the underwriter may purchase and sell
common stock in the open market. These transactions may include over-allotment
and stabilizing transactions, and purchases to cover syndicate short positions
created in connection with this offering. Stabilizing transactions consist of
bids or purchases for the purpose of preventing or retarding a decline in the
market price of the common stock, and syndicate short positions involve the
underwriter's sale of a greater number of shares of common stock than it is
required to purchase from Sun Bancshares in the offering. These activities may
stabilize, maintain or otherwise affect the market price of the common stock,
which may be higher than the price that might otherwise prevail in the open
market. The underwriter may effect these transactions on the Nasdaq OTC Bulletin
Board or otherwise and may discontinue them at any time.
LEGAL MATTERS
Powell, Goldstein, Frazer & Murphy LLP, Atlanta, Georgia will pass upon
the validity of the shares of common stock offered by this prospectus for Sun
Bancshares. Smith Helms Mulliss & Moore, L.L.P., Charlotte, North Carolina is
acting as counsel for the underwriter in connection with legal matters relating
to the shares of common stock offered by this prospectus.
EXPERTS
Sun Bancshares' audited financial statements at December 31, 1999 and for
the period from August 3, 1999 through December 31, 1999, included in this
prospectus have been included in reliance on the report of Tourville, Simpson &
Caskey, L.L.P., Columbia, South Carolina independent certified public
accountants, given on the authority of that firm as experts in accounting and
auditing.
REPORTS TO SHAREHOLDERS
Upon the effective date of the Registration Statement on Form SB-2 that
registers the shares of common stock offered by this prospectus with the
Securities and Exchange Commission, Sun Bancshares will be subject to the
reporting requirements of the Securities Exchange Act of 1934, as currently in
effect, which include requirements to file annual reports on Form 10-KSB and
quarterly reports on Form 10-QSB with the Securities and Exchange Commission.
This reporting obligation will exist for at least one year and will continue for
successive fiscal years, except that these reporting obligations may be
suspended for any subsequent fiscal year if at the beginning of the year the
common stock is held of record by less than 300 persons.
At any time that Sun Bancshares is not a reporting company, it will
furnish its shareholders with annual reports containing audited financial
information for each fiscal year on or before the date of the annual meeting of
shareholders. Sun Bancshares' fiscal year ends on December 31. Additionally, Sun
Bancshares will also furnish such other reports as it may determine to be
appropriate or as otherwise may be required by law.
ADDITIONAL INFORMATION
Sun Bancshares has filed with the Securities and Exchange Commission a
Registration Statement on Form SB-2 under the Securities Act of 1933, as
currently in effect, with respect to the shares of common stock offered by this
prospectus. This prospectus does not contain all of the information contained in
the Registration Statement. For further information with respect to Sun
Bancshares and the common stock, we refer you to the Registration Statement and
the exhibits to it. The Registration Statement may be examined and copied at the
public reference facilities maintained by the Securities and Exchange Commission
at Room 1024, 450 Fifth Street, N.W., Judiciary Plaza, Washington, D.C. 20549
and at the regional offices of the Securities and Exchange Commission located at
Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois
60661-2511 and Seven World Trade Center, 13th Floor, New York, New York 10048.
Copies of the Registration Statement are available at prescribed rates from the
Public
50
<PAGE> 52
Reference Section of the Securities and Exchange Commission, Room 1024, 450
Fifth Street, N.W., Judiciary Plaza, Washington, DC 20549. You may obtain
information on the operation of the Public Reference Room by calling the
Securities and Exchange Commission at 1-800-SEC-0330. The Securities and
Exchange Commission also maintains a Web site (http://www.sec.gov) that contains
registration statements, reports, proxy and information statements and other
information regarding registrants, such as Sun Bancshares, that file
electronically with the Securities and Exchange Commission.
Sun Bancshares and the organizers have filed or will file various
applications with the Office of the Comptroller of the Currency, the FDIC and
the Federal Reserve. These applications and the information they contain are not
incorporated into this prospectus. You should rely only on information contained
in this prospectus and in the related Registration Statement in making an
investment decision. To the extent that other available information not
presented in this prospectus, including information available from Sun
Bancshares and information in public files and records maintained by the Office
of the Comptroller of the Currency, FDIC and the Federal Reserve, is
inconsistent with information presented in this prospectus or provides
additional information, that information is superseded by the information
presented in this prospectus and should not be relied on. Projections appearing
in the applications are based on assumptions that the organizers believe are
reasonable, but as to which they can make no assurances Sun Bancshares
specifically disaffirms those projections for purposes of this prospectus and
cautions you against relying on them for purposes of making an investment
decision.
51
<PAGE> 53
- --------------------------------------------------------------------------------
SUN BANCSHARES, INC.
(A COMPANY IN THE DEVELOPMENT STAGE)
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
INDEPENDENT ACCOUNTANTS' REPORT F-2
FINANCIAL STATEMENTS:
Balance Sheet as of December 31, 1999 F-3
Statement of Operations and Accumulated Deficit For the
Period August 3, 1999 to December 31, 1999 F-4
Statement of Changes in Stockholders' Equity (deficit) For
the Period August 3, 1999 to December 31, 1999 F-5
Statement of Cash Flows For the Period August 3, 1999 to
December 31, 1999 F-6
NOTES TO FINANCIAL STATEMENTS F-7
</TABLE>
F-1
<PAGE> 54
- --------------------------------------------------------------------------------
INDEPENDENT ACCOUNTANTS' REPORT
To the Organizers
SUN BANCSHARES, INC.
We have audited the accompanying balance sheet of Sun Bancshares, Inc., (a
Company in the development stage) as of December 31, 1999 and related statements
of operations and accumulated deficit, stockholders' equity and cash flows for
the period from inception August 3, 1999 to December 31, 1999. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of SUN BANCSHARES, INC., (a
Company in the development stage) as of December 31, 1999, and the results of
its operations and its cash flows for the period from inception August 3, 1999
to December 31, 1999 in conformity with generally accepted accounting
principles.
Tourville, Simpson & Caskey, L.L.P.
Columbia, South Carolina
January 26, 2000
F-2
<PAGE> 55
- --------------------------------------------------------------------------------
SUN BANCSHARES, INC.
(A COMPANY IN THE DEVELOPMENT STAGE)
BALANCE SHEET
DECEMBER 31, 1999
<TABLE>
<S> <C>
ASSETS
Cash $ 10,750
Premises and equipment 30,740
Deferred stock offering costs 34,557
Lease deposits 9,167
----------------
Total assets $ 85,214
================
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Borrowings $ 250,000
----------------
STOCKHOLDERS' EQUITY
Common stock, par value not stated; 10,000,000 shares
authorized; 1 shares issued and outstanding 10
Preferred stock, par value not stated; 2,000,000 shares
authorized, no shares issued and outstanding --
Deficit accumulated in the development stage (164,796)
----------------
Total stockholders' equity (deficit) (164,786)
----------------
Total liabilities and stockholders' equity $ 85,214
================
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-3
<PAGE> 56
- --------------------------------------------------------------------------------
SUN BANCSHARES, INC.
(A COMPANY IN THE DEVELOPMENT STAGE)
STATEMENT OF OPERATIONS AND ACCUMULATED DEFICIT
FOR THE PERIOD AUGUST 3, 1999 (INCEPTION) TO DECEMBER 31, 1999
<TABLE>
<S> <C>
Income - interest $ 237
----------------
Expenses:
Interest 1,146
Salaries and employee benefits 50,423
Consultant fees 80,470
Application fee 15,350
Other 17,644
----------------
Total expenses 165,033
----------------
Net loss and accumulated deficit $ (164,796)
================
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-4
<PAGE> 57
- --------------------------------------------------------------------------------
SUN BANCSHARES, INC.
(A COMPANY IN THE DEVELOPMENT STAGE)
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE PERIOD AUGUST 3, 1999 (INCEPTION) TO DECEMBER 31, 1999
<TABLE>
<CAPTION>
DEFICIT
ACCUMULATED
COMMON STOCK IN
--------------- THE DEVELOP-
SHARES AMOUNT MENT STAGE TOTAL
------ ------ ---------------- ----------------
<S> <C> <C> <C> <C>
Issuance of common stock 1 $10 $ $ 10
Net loss for the period August 3, 1999 to
December 31, 1999 (164,796) (164,796)
-- --- ---------------- ----------------
Balance, December 31, 1999 1 $10 $ (164,796) $ (164,786)
== === ================ ================
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-5
<PAGE> 58
- --------------------------------------------------------------------------------
SUN BANCSHARES, INC.
(A COMPANY IN THE DEVELOPMENT STAGE)
STATEMENT OF CASH FLOWS
FOR THE PERIOD AUGUST 3, 1999 (INCEPTION) TO DECEMBER 31, 1999
<TABLE>
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss and accumulated deficit $ (164,796)
----------------
CASH FLOWS FROM INVESTING ACTIVITIES
Deposit on lease (9,167)
Purchases of premises and equipment (30,740)
----------------
Cash used by investing activities (39,907)
----------------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from borrowings 250,000
Proceeds from issuance of common stock 10
Deferred stock offering costs (34,557)
----------------
Cash provided by investing activities 215,453
----------------
CASH BALANCE AT END OF PERIOD $ 10,750
================
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-6
<PAGE> 59
- --------------------------------------------------------------------------------
SUN BANCSHARES, INC.
(A COMPANY IN THE DEVELOPMENT STAGE)
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
ORGANIZATION
Sun Bancshares, Inc. (the Company) was formed to organize and own all of
the capital stock of SunBank, N.A. (the Bank), a proposed national bank to be
located in Murrells Inlet, South Carolina, by a group of fifteen individuals
(the Organizers). Upon receipt of required regulatory approvals, the proposed
bank will engage in general banking. The Organizers have filed applications with
the Office of The Comptroller of the Currency to obtain a national bank charter
and with the Federal Deposit Insurance Corporation (FDIC) for deposit insurance.
Provided the necessary capital is raised and the necessary regulatory approvals
are received, it is expected that operations will commence in the second quarter
of 2000. All of the Organizers will serve on the initial board of directors.
The Company plans to raise a minimum of $10,000,000 by offering for sale
1,000,000 shares of its common stock. The Company will use $8,000,000 of the
proceeds to capitalize the proposed Bank. The organizers, directors, executive
officers, and members of their immediate families expect to purchase a total of
210,500 shares at an aggregate purchase price of approximately $2,105,000.
ORGANIZATIONAL AND PRE-OPENING COSTS
Activities since inception have consisted of organizational activities
necessary to obtain regulatory approvals and preparation activities to commence
business as a commercial bank. Organizational costs are primarily legal fees,
consulting fees, and application fees related to the incorporation of the
Company and initial organization of the Bank. Pre-opening costs are primarily
employees' salaries and benefits, temporary occupancy expense and other
operational expenses related to the preparation for the Bank's opening. The
organizational and pre-opening costs will be charged against the initial
period's operating results.
It is estimated the Company will incur approximately $485,000 in
organizational and pre-opening costs.
OFFERING EXPENSES
Offering expenses, consisting principally of direct incremental costs of
the public stock offering, will be deducted from the proceeds of the offering.
These expenses are estimated to be approximately $135,000.
NOTE 2 - PREMISES AND EQUIPMENT
The Company has entered into a tentative agreement to lease a lot from two
of the organizers. The lot is located in Murrells Inlet, South Carolina and will
be the site of the Bank's main office facility. This agreement is contingent
upon it being approved by the Office of the Comptroller of the Currency. The
lease will be a triple-net lease for a twenty-five year term with three five
year renewals. The proposed rent for year one is estimated to range from $90,000
to $96,000. From years two through twenty five, the proposed rent is the amount
computed for year one plus the increase in the consumer price index.
The Company has an option that expires May 1, 2000 to lease a lot located
in Georgetown, South Carolina, for the purpose of constructing a branch bank
facility. The option agreement requires the Company to pay the lessor
non-refundable monthly installments of $4,583 beginning December 1, 1999 and
continuing monthly thereafter for the term of this agreement. The amount paid
during the option term
F-7
<PAGE> 60
- --------------------------------------------------------------------------------
NOTE 2 - PREMISES AND EQUIPMENT, CONTINUED
will be applied to the first year's rent. The proposed lease will be a triple
net lease for an initial thirty year term, with four five year renewal options.
The proposed rent will be $55,000 per year for years one through three.
The rent for subsequent years will be adjusted by the corresponding changes in
the consumer price index.
NOTE 3 - BORROWINGS
As of December 31, 1999, borrowings consist of $250,000 drawn on an
$850,000 unsecured line of credit obtained from The Bankers Bank, Atlanta,
Georgia. The Organizers have individually guaranteed the line of credit.
Interest is payable monthly, at the prime rate minus 1/2 percent, with the
principal being due on July 30, 2000.
The line of credit is being used to fund the Bank's organizational and
pre-opening costs.
NOTE 4 - STOCKHOLDERS' EQUITY
COMMON STOCK
Sun Bancshares, Inc. has the authority to issue up to 10,000,000 shares of
voting common stock, par value not stated.
PREFERRED STOCK
Sun Bancshares, Inc. has the authority to issue up to 2,000,000 shares of
preferred stock, par value not stated. Also, Sun Bancshares, Inc. has the right
to establish and designate from time to time any part or all of the shares by
filing an amendment to Sun Bancshares, Inc.'s Articles of Incorporation, which
is effective without shareholder action, in such series and with such
preferences, limitations, and relative rights as may be determined by the Board
of Directors. The number of authorized shares of preferred stock may be
increased or decreased by the affirmative vote of the holders of the majority of
the shares of common stock, without a vote of the holders of the shares of
preferred stock.
CUMULATIVE VOTING RIGHTS
Sun Bancshares, Inc. has elected not to have cumulative voting, and no
shares issued by Sun Bancshares, Inc. may be cumulatively voted.
PREEMPTIVE RIGHTS
The stockholders of Sun Bancshares, Inc. shall not have any preemptive
rights regarding any issuance of Sun Bancshares, Inc.'s capital stock.
STOCK OFFERING
Upon receiving preliminary regulatory approvals, the Company, through its
underwriter, Wachovia Securities, Inc., plans to offer for sale to the general
public 1,000,000 shares of no stated par value common stock at an offering price
of $10.00 per share. Wachovia Securities has the right to exercise its
over-allotment option to purchase up to an additional 150,000 shares of common
stock at $10.00 per share, less a 7.5% underwriting discount. The Organizers and
executive officers intend to purchase an aggregate of 210,500 shares of common
stock to be sold in the offering which represent approximately 21% of the
offering. The Organizers will receive a warrant to purchase one share of common
stock for each share of common stock purchased in the offering. The exercise
price for the warrants will be $10.00 per share and
F-8
<PAGE> 61
- --------------------------------------------------------------------------------
NOTE 4 - STOCKHOLDERS' EQUITY, CONTINUED
may be exercised over a ten (10) year period. The warrants will be subject to
certain conditions and limitations.
NOTE 5 - INCOME TAXES
As of December 31, 1999, Sun Bancshares, Inc. had a net operating loss
carryforward of $164,796.
There was no provision (benefit) for income taxes for the period from
August 3, 1999 to December 31, 1999, since a 100% valuation reserve is being
maintained for the net operating loss carryforward.
NOTE 6 - EMPLOYMENT CONTRACT
Sun Bancshares, Inc. intends to enter into a three-year employment
contract with its President. Subject to certain conditions, at the end of the
initial period of the contract, the contract shall be extended for an additional
year so that the remaining term of the contract shall continue to be three
years. The contract provides that the President will receive an initial annual
salary of $96,000.
The contract provides that the President shall receive a $10,000 cash
bonus on the date the Bank opens for business and shall be eligible to receive
an annual cash bonus not to exceed 5% of the Bank's pretax income if the Bank
achieves certain performance levels established by the board of directors.
Additionally, the President will receive other benefits including being
eligible for the grant of stock options. Upon the adoption of a stock option
plan the President will be granted the option to purchase 5% of the Company's
common stock sold in the stock offering.
F-9
<PAGE> 62
- ------------------------------------------------------
- ------------------------------------------------------
PROSPECTIVE INVESTORS MAY RELY ONLY ON THE INFORMATION CONTAINED IN THIS
PROSPECTUS. NO ONE HAS AUTHORIZED ANYONE TO PROVIDE PROSPECTIVE INVESTORS WITH
INFORMATION DIFFERENT FROM THAT CONTAINED IN THIS PROSPECTUS. THIS PROSPECTUS IS
NOT AN OFFER TO SELL NOR IS IT SEEKING AN OFFER TO BUY THESE SECURITIES IN ANY
JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED. THE INFORMATION CONTAINED
IN THIS PROSPECTUS IS CORRECT ONLY AS OF THE DATE OF THIS PROSPECTUS, REGARDLESS
OF THE TIME OF THE DELIVERY OF THIS PROSPECTUS OR ANY SALE OF THESE SECURITIES.
---------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Summary...............................
Risk Factors..........................
Caution Regarding Forward-Looking
Statements..........................
Use of Proceeds.......................
Capitalization........................
Dividends.............................
Management's Discussion and Analysis
of Financial Condition and Plan of
Operations..........................
Proposed Business.....................
Management............................
Executive Compensation................
Related Party Transactions............
Supervision and Regulation............
Description of Sun Bancshares' Capital
Stock and Shareholders' Rights......
Shares Eligible for Future Sale.......
Underwriting..........................
Legal Matters.........................
Experts...............................
Reports to Shareholders...............
Additional Information................
Index to Financial Statements.........
</TABLE>
UNTIL 2000 (40 DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL
DEALERS THAT BUY, SELL OR TRADE THE COMMON STOCK, WHETHER OR NOT PARTICIPATING
IN THIS OFFERING, MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS IS IN ADDITION
TO THE DEALERS' OBLIGATION TO DELIVER A PROSPECTUS WHEN ACTING AS UNDERWRITERS
AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
1,000,000 SHARES
SUN
BANCSHARES, INC.
A PROPOSED BANK HOLDING COMPANY FOR
SUNBANK, N.A.
(PROPOSED)
COMMON STOCK
----------
PROSPECTUS
----------
WACHOVIA SECURITIES, INC.
, 2000
- ------------------------------------------------------
- ------------------------------------------------------
<PAGE> 63
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Consistent with the applicable provisions of the laws of South Carolina,
the Registrant's Bylaws provide that the Registrant shall indemnify its
directors, officers, employees and agents against expenses (including attorneys'
fees) and liabilities arising from actual or threatened actions, suits or
proceedings, whether or not settled, to which they become subject by reason of
having served in such role if such director, officer, employee or agent acted in
good faith and in a manner he or she reasonably believed to be in or not opposed
to the best interests of the Registrant and, with respect to a criminal action
or proceeding, had no reasonable cause to believe his or her conduct was
unlawful. Advances against expenses shall be made so long as the person seeking
indemnification agrees to refund the advances if it is ultimately determined
that he or she is not entitled to indemnification. A determination of whether
indemnification of a director, officer, employee or agent is proper because he
or she met the applicable standard of conduct shall be made (1) by the board of
directors of the Registrant, (2) in certain circumstances, by independent legal
counsel in a written opinion or (3) by the affirmative vote of a majority of the
shares entitled to vote.
In addition, Article 5.6 of the Registrant's Articles of Incorporation,
subject to certain exceptions, eliminates the potential personal liability of a
director for monetary damages to the Registrant and to the shareholders of the
Registrant for breach of a duty as a director. There is no elimination of
liability for (1) a breach of the director's duty of loyalty to the Registrant
or its shareholders, (2) an act or omission, not in good faith which involves
gross negligence intentional misconduct or a knowing violation of law, (3) a
transaction from which the director derives an improper personal material
tangible benefit or (4) as to any payment of a dividend or any other type of
distribution that is illegal under the South Carolina Business Corporation Act.
The Articles of Incorporation do not eliminate or limit the right of the
Registrant or its shareholders to seek injunctive or other equitable relief not
involving monetary damages.
ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
Estimated expenses, other than underwriting discounts and commissions, of
the sale of the Registrant's Common Stock, no par value, are as follows:
<TABLE>
<S> <C>
Securities and Exchange Commission Registration Fee......... 3,591
National Association of Securities Dealers, Inc. Filing
Fee....................................................... 1,860
Blue Sky Fees and Expenses.................................. 10,000
Legal Fees and Expenses..................................... 68,000
Accounting Fees and Expenses................................ 9,000
Printing and Engraving Expenses............................. 40,000
Miscellaneous............................................... $ 2,549
--------
Total............................................. $135,000
========
</TABLE>
ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES.
On August 30, 1999, the Registrant issued to Dalton B. Floyd, Jr., in a
private placement, one share of the Registrant's Common Stock, no par value per
share, for an aggregate price of $10.00 in connection with the organization of
the Company. The sale to Mr. Floyd was exempt from registration under the
Securities Act pursuant to Section 4(2) of the Act because it was a transaction
by an issuer that did not involve a public offering.
II-1
<PAGE> 64
ITEM 27. EXHIBITS.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<S> <C> <C>
1.1 -- Underwriting Agreement*
3.1(a ) -- Articles of Incorporation
3.1(b ) -- Articles of Amendment
3.2 -- Bylaws
4.1 -- Specimen Common Stock Certificate*
4.2 -- See Exhibits 3.1 and 3.2 for provisions of the articles of
incorporation and bylaws defining rights of holders of the
Common Stock
5.1 -- Legal Opinion of Powell, Goldstein, Frazer & Murphy LLP*
10.1 -- Letter of Intent for Lease dated October 20, 1999 (Murrells
Inlet main office site)
10.2 -- Option Agreement (For Lease) dated November 12, 1999
(Georgetown branch office site)
10.3 -- Employment Agreement dated February 2, 2000, among SunBank,
N.A. (Proposed), Sun Bancshares, Inc. and Thomas Bouchette*
10.4 -- Form of Sun Bancshares, Inc. Organizers' Warrant Agreement
10.5 -- Sun Bancshares, Inc. 2000 Stock Incentive Plan*
10.6 -- Form of Sun Bancshares, Inc. Incentive Stock Option Award*
10.7 -- Promissory Note dated January 26, 2000 between Sun
Bancshares, Inc. and The Bankers Bank
10.8 -- Form of Commercial Guaranty
23.1 -- Consent of Tourville, Simpson & Caskey, L.L.P.
23.2 -- Consent of Powell, Goldstein, Frazer & Murphy LLP (contained
in Exhibit 5.1)*
24.1 -- Power of Attorney (Reference is made to page II-4)
27.1 -- Financial Data Schedule (for SEC use only)
</TABLE>
- ---------------
* To be filed by amendment.
ITEM 28. UNDERTAKINGS.
The Registrant hereby undertakes to provide to the underwriter at the
closing specified in the underwriting agreement certificates in such
denominations and registered in such names as required by the underwriter to
permit prompt delivery to each purchaser.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Registrant pursuant to 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-2
<PAGE> 65
The undersigned Registrant hereby undertakes as follows:
(a)(1) To file, during any period in which it offers or sells
securities, a post-effective amendment to this Registration Statement to:
(i) Include any prospectus required by Section 10(a)(3) of the
Securities Act;
(ii) Reflect in the prospectus any facts or events which,
individually or together, represent a fundamental change in the
information set forth in the Registration Statement. Notwithstanding the
foregoing, any increase or decrease in volume of securities offered (if
the total dollar value of securities offered would not exceed that which
was registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) if, in the
aggregate, the changes in volume and price represent no more than a 20%
change in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective Registration
Statement;
(iii) Include any additional or changed material information on the
plan of distribution.
(2) For determining liability under the Securities Act, treat each
post-effective amendment as a new registration statement of the securities
offered, and the offering of the securities at that time to be the initial
bona fide offering.
(3) File a post-effective amendment to remove from registration any of
the securities being registered that remain unsold at the end of the
offering.
The Registrant hereby undertakes as follows:
(b)(1) For determining any liability under the Securities Act, to
treat 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 under Rule 424(b)(1), or (4) or
497(h) under the Securities Act as part of this Registration Statement as
of the time the Commission declared it effective.
(2) For determining any liability under the Securities Act, to treat
each post-effective amendment that contains a form of prospectus as a new
registration statement for the securities offered in the Registration
Statement, and that offering of the securities at that time as the initial
bona fide offering of those securities.
II-3
<PAGE> 66
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, as
amended the Registrant certifies that it has reasonable grounds to believe that
it meets all of the requirements for filing on Form SB-2 and authorized this
Registration Statement to be signed on its behalf by the undersigned in the city
of Murrells Inlet, State of South Carolina, on February 7, 2000.
SUN BANCSHARES, INC.
By: /s/ THOMAS BOUCHETTE
------------------------------------
Thomas Bouchette
President
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints jointly and severally, Dalton B. Floyd,
Jr. and Thomas Bouchette, and each of them, their respective attorney-in-fact,
each with the power of substitution, for him or her in any and all capacities,
to sign any and all amendments to this Registration Statement (including
post-effective amendments) and any Registration Statement filed pursuant to Rule
462(b) of the Securities Act of 1933, as amended, and to file the same, with
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, hereby ratifying and confirming all that
each of said attorneys-in-fact, or their respective substitute or substitutes,
may do or cause to be done by virtue hereof.
In accordance with the requirements of the Securities Act of 1933, as
amended, this Registration Statement has been signed by the following persons in
the capacities and on the dates stated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ THOMAS BOUCHETTE President and Director* February 7, 2000
- -----------------------------------------------------
Thomas Bouchette
/s/ EDSEL J. DEVILLE Director February 7, 2000
- -----------------------------------------------------
Edsel J. DeVille
/s/ JOHN S. DIVINE, III Director February 7, 2000
- -----------------------------------------------------
John S. Divine, III
/s/ DALTON B. FLOYD, JR. Chairman and Chief Executive February 7, 2000
- ----------------------------------------------------- Officer
Dalton B. Floyd, Jr.
/s/ JEANNE LOUISE FOURRIER-EGGART Director February 7, 2000
- -----------------------------------------------------
Jeanne Louise Fourrier-Eggart
/s/ DAVID E. GRABEMAN Director February 7, 2000
- -----------------------------------------------------
David E. Grabeman
/s/ RICHARD EDWIN HEATH Director February 7, 2000
- -----------------------------------------------------
Richard Edwin Heath
/s/ PAUL JOHN HLETKO Director February 7, 2000
- -----------------------------------------------------
Paul John Hletko
</TABLE>
II-4
<PAGE> 67
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ JUDY LONG Director February 7, 2000
- -----------------------------------------------------
Judy Long
/s/ THOMAS MORRIS Director February 7, 2000
- -----------------------------------------------------
Thomas Morris
/s/ JOEL A. PELLICCI Director February 7, 2000
- -----------------------------------------------------
Joel A. Pellicci
/s/ DONALD PERRY Director February 7, 2000
- -----------------------------------------------------
Donald Perry
/s/ CHANDLER C. PROSSER Director February 7, 2000
- -----------------------------------------------------
Chandler C. Prosser
/s/ LARRY N. PROSSER Director February 7, 2000
- -----------------------------------------------------
Larry N. Prosser
/s/ GARY SCHAAL Director February 7, 2000
- -----------------------------------------------------
Gary Schaal
</TABLE>
- ---------------
* Principal executive, financial and accounting officer.
II-5
<PAGE> 68
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<C> <C> <S>
1.1 -- Underwriting Agreement*
3.1(a) -- Articles of Incorporation
3.1(b) -- Articles of Amendment
3.2 -- Bylaws
4.1 -- Specimen Common Stock Certificate*
4.2 -- See Exhibits 3.1 and 3.2 for provisions of the articles of
incorporation and bylaws defining rights of holders of the
Common Stock
5.1 -- Legal Opinion of Powell, Goldstein, Frazer & Murphy LLP*
10.1 -- Letter of Intent for Lease dated October 20, 1999 (Murrells
Inlet main office site)
10.2 -- Option Agreement (For Lease) dated November 12, 1999
(Georgetown branch office site)
10.3 -- Employment Agreement dated February 2, 2000, among SunBank,
N.A. (Proposed), Sun Bancshares, Inc. and Thomas Bouchette*
10.4 -- Form of Sun Bancshares, Inc. Organizers' Warrant Agreement
10.5 -- Sun Bancshares, Inc. 2000 Stock Incentive Plan*
10.6 -- Form of Sun Bancshares, Inc. Incentive Stock Option Award*
10.7 -- Promissory Note dated January 26, 2000 between Sun
Bancshares, Inc. and The Bankers Bank
10.8 -- Form of Commercial Guaranty
23.1 -- Consent of Tourville, Simpson & Caskey, L.L.P.
23.2 -- Consent of Powell, Goldstein, Frazer & Murphy LLP (contained
in Exhibit 5.1)*
24.1 -- Power of Attorney (Reference is made to page II-4 of the
Registration Statement)
27.1 -- Financial Data Schedule (for SEC use only)
</TABLE>
- ---------------
* To be filed by amendment.
<PAGE> 1
EXHIBIT 3.1(a)
STATE OF SOUTH CAROLINA
SECRETARY OF STATE
ARTICLES OF INCORPORATION OF
1. The name of the proposed corporation is SUN BANCSHARES, INC.
2. The initial registered office of the corporation is 823 SURFSIDE DRIVE,
SURFSIDE BEACH, SC 29579 and the initial registered agent at such
address is: DALTON B. FLOYD, JR.
3. The corporation is authorized to issue shares of stock as follows.
Complete a or b, whichever is applicable:
a. [ ] If the corporation is authorized to issue a single
class of shares, the total number of shares
authorized is: ______________________.
b. [x] If the corporation is authorized to issue more than
one class of shares:
<TABLE>
<CAPTION>
Class of Shares Authorized No. of Each Class
<S> <C>
PREFERRED STOCK 2,000,000
VOTING COMMON STOCK 10,000,000
</TABLE>
The relative rights, preferences, and limitations of the shares of each
class, and of each series within a class, are as follows:
SEE ARTICLE 3.1 ATTACHED HERETO AS EXHIBIT "A".
4. The existence of the corporation shall begin when these articles are
filed with the Secretary of State unless a delayed date is indicated
(See, Section 33-1-230(b)): _______________
5. The optional provisions which the corporation elects to include in the
articles of incorporation are as follows (See ss.33-2-102 and the
applicable comments thereto; and 35-2-105 and 35-2-221 of the 1976
South Carolina Code): SEE ARTICLE 5.1 THROUGH 5.11 ATTACHED HERETO AS
EXHIBIT "B".
6. The name and address and signature of each incorporator is as follows
(only one is required):
<PAGE> 2
<TABLE>
<CAPTION>
Name Address Signature
---- ------- ---------
<S> <C> <C>
Dalton B. Floyd, Jr. 823 Surfside Drive /s/Dalton B. Floyd, Jr.
----------------------------------------------------------------------
Surfside Beach, SC 29575
----------------------------------------------------------------------
</TABLE>
7. I, DALTON B. FLOYD, an attorney licensed to practice in the State of
South Carolina, certify that the corporation, to whose articles of
incorporation this certificate is attached, has complied with the
requirements of Chapter 2, Title 33 of the 1976 South Carolina Code
relating to the articles of incorporation.
Date: July 29, 1999. /s/Dalton B. Floyd, Jr.
-------------------------------------------
(Attorney's Signature)
DALTON B. FLOYD, JR.
-------------------------------------------
(Type or Print Attorney's Name)
Address: THE FLOYD LAW FIRM PC
P.O. DRAWER 14607
SURFSIDE BEACH, SC 29587-4607
2
<PAGE> 3
EXHIBIT A
Article 3.1 - Relative Rights, Preferences, and Limitations
of the Classes of Shares or Series within a Class
(a) The total number of shares of capital stock which the
Corporation is authorized to issue is twelve million (12,000,000) shares,
divided into ten million (10,000,000) shares of voting common stock, no par
value (the "Common Stock"), and two million (2,000,000) shares of preferred
stock, no par value (the "Preferred Stock").
(b) The Board of Directors of the Corporation is authorized,
subject to limitations prescribed by law and the provisions of this Article, to
provide for the issuance of the shares of Preferred Stock in series, and by
filing an amendment to these Articles of Incorporation (a "Preferred Stock
Designation"), which is effective without shareholder action, in accordance with
the appropriate provisions of the South Carolina Business Corporation Act of
1988 (the "Act") to establish from time to time the number of shares to be
included in each such series, and to fix the designation, powers, preferences,
limitations and relative rights of the shares of each such series and the
qualifications, or restrictions thereof. The authority of the Board of Directors
with respect to each series shall include, but not be limited to, determination
of the following:
(i) The number of shares constituting that series and the
distinctive designation of that series;
(ii) The dividend rate on the shares of that series, whether
dividends shall be cumulative, and, if so, from which date or
dates, and the relative rights of priority, if any, of
payments of dividends on shares of that series;
(iii) Whether that series shall have voting rights, in addition to
the voting rights provided by law, and, if so, the terms of
such voting rights;
(iv) Whether that series shall have conversion privileges, and, if
so, the terms and conditions of such conversion, including
provisions for adjustment of the conversion rate in such
events as the Board of Directors shall determine;
(v) Whether or not the shares of that series shall be redeemable,
and, if so, the terms and conditions of such redemption,
including the date or dates upon or after which they shall be
redeemable, and the amount per share payable in case of
redemption, which amount may vary under different conditions
and at different redemption rates;
(vi) Whether that series shall have a sinking fund for the
redemption or purchase of shares of that series, and, if so,
the terms and amount of such sinking fund;
<PAGE> 4
(vii) The rights of the shares of that series in the event of
voluntary or involuntary liquidation, dissolution or
winding-up of the Corporation, and the relative rights of
priority, if any, of payment of shares of that series; and
(viii) Any other relative rights, preferences and limitations of that
series.
-2-
<PAGE> 5
EXHIBIT B
OPTIONAL PROVISIONS WHICH THE CORPORATION ELECTS
TO INCLUDE IN THE ARTICLES OF INCORPORATION
Article 5.1 - Preemptive Rights
The shareholders shall not have any preemptive rights to acquire
additional stock in the corporation.
Article 5.2 - No Cumulative Voting Rights
The Corporation elects not to have cumulative voting and no shares
issued by this Corporation may be cumulatively voted for the directors of the
Corporation or for any other decision.
Article 5.3 - Board of Directors
(a) At any time that the Board of Directors has six or more
members, the terms of office of directors will be staggered by dividing the
total number of directors into three classes, with each class accounting for
one-third, as near as may be, of the total. The terms of directors in the first
class expire at the first annual shareholders' meeting after their election, the
terms of the second class expire at the second annual shareholders' meeting
after their election, and the terms of the third class expire at the third
annual shareholders' meeting after their election. At each annual shareholders'
meeting held thereafter, directors shall be chosen for a term of three years to
succeed those whose terms expire. If the number of directors is changed, any
increase or decrease shall be so apportioned among the classes as to make all
classes as nearly equal in number as possible, and when the number of directors
is increased and any newly created directorships are filled by the Board, the
terms of the additional directors shall expire at the next election of directors
by the shareholders. Each director, except in the case of his earlier death,
written resignation, retirement, disqualification or removal, shall serve for
the duration of his term, as staggered, and thereafter until his or her
successor shall have been elected and qualified.
(b) If at least two-thirds (2/3) of the directors then in office
shall approve the proposed change, this Article 5.3 may be amended or rescinded
by the affirmative vote of the holders of a majority of the issued and
outstanding shares of the Corporation entitled to vote in an election of
directors, at any regular or special meeting of the shareholders, and notice of
the proposed change must be contained in the notice of the meeting.
<PAGE> 6
Article 5.4 - Bylaws; Number of Directors
(a) Except as provided in paragraph (b) of this Article 5.4, the
Board of Directors shall have the right to adopt, amend or repeal the bylaws of
the Corporation by the affirmative vote of a majority of all directors then in
office, and the shareholders shall have such right by the affirmative vote of a
majority of the issued and outstanding shares of the Corporation entitled to
vote in an election of directors.
(b) Notwithstanding paragraph (a) of this Article 5.4, any
amendment of the bylaws of the Corporation establishing or changing the number
of directors shall require the affirmative vote of two-thirds (2/3) of all
directors then in office or the affirmative vote of the holders of two-thirds
(2/3) of the issued and outstanding shares of the Corporation entitled to vote
in an election of directors, at any regular or special meeting of the
shareholders, and notice of the proposed change must be contained in the notice
of the meeting.
Article 5.5 - Removal of Directors
(a) At any shareholders' meeting with respect to which notice of
such purpose has been given, the entire Board of Directors or any individual
director may be removed without cause only by the affirmative vote of the
holders of at least two-thirds (2/3) of the issued and outstanding shares of the
Corporation entitled to vote in an election of directors.
(b) At any shareholders' meeting with respect to which notice of
such purpose has been given, the entire Board of Directors or any individual
director may be removed with cause if the number of votes cast to remove the
director exceeds the number of votes cast against removing the director.
(c) For purposes of this Article 5.5, cause shall mean fraudulent
or dishonest acts, or gross abuse of authority in the discharge of duties to the
corporation, and shall be established after written notice of specific charges
and opportunity to meet and refute such charges.
(d) If at least two-thirds (2/3) of the directors then in office
shall approve the proposed change, this Article 5.5 may be amended or rescinded
by the affirmative vote of the holders of a majority of the issued and
outstanding shares of the Corporation entitled to vote in an election of
directors, at any regular or special meeting of the shareholders, and notice of
the proposed change must be contained in the notice of the meeting.
-2-
<PAGE> 7
Article 5.6 - Liability of Directors
(a) A director of the Corporation shall not be personally liable
to the Corporation or its shareholders for monetary damages, for breach of any
duty as a director, except for liability for:
(i) any breach of the director's duty of loyalty to the
Corporation or its shareholders;
(ii) acts or omissions not in good faith or which involve
gross negligence, intentional misconduct or a knowing
violation of law;
(iii) imposed under Section 33-8-330 of the Act dealing
with unlawful distributions of corporate assets to
shareholders; or
(iv) any transaction from which the director derived an
improper personal material tangible benefit.
(b) If at any time the Act shall have been amended to authorize
the further elimination or limitation of the liability of a director, then the
liability of each director of the Corporation shall be eliminated or limited to
the fullest extent permitted by the Act, as so amended, without further action
by the shareholders, unless the provisions of the Act, as amended, require
further action by the shareholders.
(c) Any repeal or modification of this Article by the shareholders
of the Corporation shall be prospective only and shall not adversely affect any
right or protection of a director of the Corporation existing at the time of
such repeal or modification.
(d) If at least two-thirds (2/3) of the directors then in office
shall approve the proposed change, this Article 5.6 may be amended or rescinded
by the affirmative vote of the holders of a majority of the issued and
outstanding shares of the Corporation entitled to vote thereon, at any regular
or special meeting of the shareholders, and notice of the proposed change must
be contained in the notice of the meeting.
Article 5.7 - Indemnification
The Corporation shall, to the fullest extent permitted by the
provisions of the Act, as the same may be amended and supplemented, indemnify
any and all persons whom it shall have power to indemnify under the Act from and
against any and all of the expenses, liabilities, or other matters referred to
in or covered by the Act. Any indemnification effected under this provision
shall not be deemed exclusive of rights to which those indemnified may be
entitled under any Bylaw, vote of shareholders or disinterested directors, or
otherwise, both as to action in their official capacity and as to action in
another capacity while holding such office, and shall
-3-
<PAGE> 8
continue as to a person who has ceased to be a director, officer, employee, or
agent and shall inure to the benefit of the heirs, executors, and administrators
of such a person.
Article 5.8 - Control Share Acquisitions
The provisions of Title 35, Chapter 2, Article 1 of the Code of Laws of
South Carolina shall not apply to control share acquisitions of shares of the
Corporation.
Article 5.9 - Certain Business Transactions
(a) Approval of any merger or share exchange of the Corporation
with and into any other corporation, or any sale, lease, exchange or other
disposition of substantially all of the assets of the Corporation to any other
corporation, person or other entity, shall require either:
(i) the affirmative vote of at least two-thirds (2/3) of the
directors of the Corporation then in office and the
affirmative vote of at least a majority of the issued and
outstanding shares of the corporation entitled to vote; or
(ii) the affirmative vote of at least a majority of the directors
of the Corporation then in office and the affirmative vote of
the holders of at least two-thirds (2/3) of the issued and
outstanding shares of the Corporation entitled to vote.
(b) The Board of Directors shall have the power to determine for
the purposes of this Article 5.9, on the basis of information known to the
Corporation, whether any sale, lease or exchange or other disposition of part of
the assets of the Corporation involves substantially all of the assets of the
Corporation.
(c) If at least two-thirds (2/3) of the directors then in office
shall approve the proposed change, this Article 5.9 may be amended or rescinded
by the affirmative vote of the holders of a majority of the issued and
outstanding shares of the Corporation entitled to vote thereon, at any regular
or special meeting of the shareholders, and notice of the proposed change must
be contained in the notice of the meeting.
Article 5.10 - Consideration of Other Constituencies
(a) In discharging the duties of their respective positions and in
determining what is in the best interests of the Corporation, the Board of
Directors, committees of the Board of Directors, and individual directors, in
addition to considering the effects of any actions on the Corporation and its
shareholders, may consider the interests of the employees, customers, suppliers,
creditors, and other constituencies of the Corporation and its subsidiaries, the
communities and geographical areas in which the Corporation and its subsidiaries
operate or are located, and all other factors such directors consider pertinent.
This provision solely grants discretionary authority to the directors and shall
not be deemed to provide to any other constituency any right to be considered.
-4-
<PAGE> 9
(b) If at least two-thirds (2/3) of the directors then in office
shall approve the proposed change, this Article 5.10 may be amended or rescinded
by the affirmative vote of the holders of a majority of the issued and
outstanding shares of the Corporation entitled to vote thereon, at any regular
or special meeting of the shareholders, and notice of the proposed change must
be contained in the notice of the meeting.
Article 5.11 - Savings Clause
Should any provision of these Articles of Incorporation, or any clause
hereof, be held to be invalid, illegal or unenforceable, in whole or in part,
the remaining provisions and clauses of these Articles of Incorporation shall
remain valid and fully enforceable.
-5-
<PAGE> 1
EXHIBIT 3.1(B)
STATE OF SOUTH CAROLINA
SECRETARY OF STATE
ARTICLES OF AMENDMENT
Pursuant to ss.33-10-106 of the 1976 South Carolina Code, as amended,
the undersigned corporation adopts following Articles of Amendment to its
Articles of Incorporation:
1. The name of the corporation is Sun Bancshares, Inc.
2. On February 7, 2000, the corporation adopted the following Amendment(s)
of its Articles of Incorporation:
Items (a) (i) and (ii) in Article 5.9 - Certain Business Transactions
in Exhibit "B" of the Articles of Incorporation are to be deleted from
said Articles of Incorporation and replaced with the following item:
Article 5.9 - Certain Business Transactions
(a) In any case in which the South Carolina Business
Corporation Act of 1988 or other applicable law
requires shareholder approval of any merger or share
exchange of the Corporation with and into any other
corporation, or any sale, lease, exchange or other
disposition of substantially all of the assets of the
Corporation to any other corporation, person or other
entity, such approval shall require either:
(i) the affirmative vote of at least two-thirds
(2/3) of the directors of the Corporation
then in office and the affirmative vote of
at least a majority of the issued and
outstanding shares of the corporation
entitled to vote; or
(ii) the affirmative vote of at least a majority
of the directors of the Corporation then in
office and the affirmative vote of the
holders of at least two-thirds (2/3) of the
issued and outstanding shares of the
Corporation entitled to vote.
<PAGE> 2
3. The manner, if not set forth in the Amendment, in which any exchange,
reclassification, or cancellation of issued shares provided for in the
Amendment shall be effect, is as follows: (if not applicable, insert
"not applicable" or "NA").
N/A
4. Complete either a or b, whichever is applicable.
a. [X] Amendment(s) adopted by shareholder action.
At the date of adoption of the Amendment, the number of outstanding shares
of each voting group entitled to vote separately on the Amendment, and the vote
of such shares was:
<TABLE>
<CAPTION>
Number of Number of Number of Votes Number of
Voting Outstanding Votes Enti- Represented at Undisputed*
Group Shares titled to the Meeting Shares Voted
For Against
- -----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Dalton B. One (1) One (1) One (1) For
Floyd, Jr.
</TABLE>
*NOTE: Pursuant to Section 33-10-106(6)(1), the corporation can
alternatively state the total number of undisputed shares cast
for the amendment by each voting group either with a statement
that the number cast for the amendment by each voting group
was sufficient for approval by that voting group.
b. _____ The Amendment(s) was duly adopted by the incorporators
or Board of Directors without shareholder approval pursuant to
ss.ss.33-6-102(d), 33-10-102 and 33-10-105 of the 1976 South
Carolina Code, as amended, and shareholder action was not
required.
<PAGE> 3
5. Unless a delayed date is specified, the effective date of these
Articles of Amendment shall be the date of acceptance for filing by the
Secretary of State (See ss.33-1-230(b)):
______________________.
Date: FEBRUARY 7, 2000. SUN BANCSHARES, INC.
---------------- -------------------
/s/ Dalton B. Floyd, Jr.
-------------------------------
(Signature)
DALTON B. FLOYD, JR.,
-------------------------------
CHIEF EXECUTIVE OFFICER
-------------------------------
(Type or Print Name and Office)
FILING INSTRUCTIONS
1. Two copies of this form, one of which can either be a duplicate
original or a conformed copy, must be filed.
2. If the space in this form is insufficient, please attach additional
sheets containing a reference to the appropriate paragraph in this
form.
3. Filing fees and taxes payable to the Secretary of State at the time of
filing application.
<TABLE>
<CAPTION>
<S> <C>
Filing Fee $ 10.00
Filing Tax 100.00
Total $110.00
</TABLE>
<PAGE> 1
EXHIBIT 3.2
SUN BANCSHARES, INC.
BYLAWS
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C> <C>
ARTICLE I. OFFICES..............................................................................1
1.1 Business Office........................................................................1
1.2. Registered Office......................................................................1
ARTICLE II. SHAREHOLDERS.........................................................................1
2.1. Annual Meeting.........................................................................1
2.2 Special Meetings.......................................................................1
2.3 Place of Meeting.......................................................................2
2.4 Notice of Meeting......................................................................2
(a) Required Notice...............................................................2
(b) Adjourned Meeting.............................................................2
(c) Waiver of Notice..............................................................2
(d) Contents of Notice............................................................3
2.5 Fixing of Record Date..................................................................3
2.6 Shareholder List.......................................................................4
2.7 Quorum and Voting Requirements.........................................................5
2.8 Increasing Either Quorum or Voting Requirements........................................5
2.9 Proxies................................................................................6
2.10 Voting of Shares.......................................................................6
2.11 Corporation's Acceptance of Votes......................................................6
2.12 Informal Action by Shareholders........................................................7
2.13 Nomination and Voting for Directors....................................................8
(a) Nominations...................................................................8
(b) Regulatory Approval...........................................................8
(c) General Provision.............................................................9
(d) Plurality Requirement.........................................................9
2.14 Shareholder's Rights to Inspect Corporate Records......................................9
(a) Minutes and Accounting Records................................................9
(b) Absolute Inspection Rights of Records Required at Principal Office............9
(c) Conditional Inspection Right.................................................10
(d) Copy costs...................................................................10
2.15 Financial Statements Shall be Furnished to the Shareholders...........................11
2.16 Dissenter's Rights....................................................................11
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C> <C>
ARTICLE III. BOARD OF DIRECTORS..................................................................11
3.1 General Powers........................................................................11
3.2 Number, Tenure and Qualifications of Directors........................................12
3.3 Regular Meetings......................................................................13
3.4 Special Meetings......................................................................13
3.5 Notice of Special Meeting.............................................................13
3.6 Director Quorum.......................................................................14
3.7 Manner of Acting......................................................................14
(a) Required Vote................................................................14
(b) Telephone Meeting............................................................14
(c) Failure To Object To Action..................................................14
3.8 Establishing a "Supermajority" Quorum or Voting Requirement...........................14
3.9 Action Without a Meeting..............................................................15
3.10 Removal of a Director.................................................................15
3.11 Vacancies.............................................................................16
3.12 Compensation..........................................................................16
3.13 Committees............................................................................16
(a) Creation of Committees.......................................................16
(b) Selection of Members.........................................................17
(c) Required Procedures..........................................................17
(d) Authority....................................................................17
ARTICLE IV. OFFICERS............................................................................18
4.1 Number................................................................................18
4.2 Appointment and Term of Office........................................................18
4.3 Removal...............................................................................18
4.4 Chairman of the Board.................................................................18
4.5 Chief Executive Officer...............................................................18
4.6 President.............................................................................19
4.7 The Vice-Presidents...................................................................19
4.8 The Secretary.........................................................................20
4.9 The Treasurer.........................................................................20
4.10 Assistant Secretaries and Assistant Treasurers........................................20
4.11 Salaries..............................................................................21
ARTICLE V. INDEMNIFICATION OF DIRECTORS, OFFICERS, AGENTS, AND EMPLOYEES.......................21
5.1 Indemnification of Directors..........................................................21
(a) Determination and Authorization..............................................21
(b) Standard of Conduct..........................................................21
(c) Indemnification in Derivative Actions Limited................................22
5.2 Advance Expenses for Directors........................................................22
5.3 Indemnification of Officers, Agents, and Employees Who Are Not Directors..............23
</TABLE>
ii
<PAGE> 4
<TABLE>
<S> <C> <C>
5.4 Insurance.............................................................................23
5.5 Nonexclusivity of Rights; Agreements..................................................23
5.6 Continuing Benefits; Successors.......................................................23
5.7 Interpretation; Construction..........................................................24
5.8 Amendment.............................................................................24
5.8 Severability..........................................................................24
ARTICLE VI. CERTIFICATES FOR SHARES AND THEIR TRANSFER..........................................25
6.1 Certificates for Shares...............................................................25
(a) Content......................................................................25
(b) Legend as to Class or Series.................................................25
(c) Shareholder List.............................................................25
(d) Transferring Shares..........................................................26
6.2 [Reserved]............................................................................26
6.3 Registration of the Transfer of Shares................................................26
6.4 Restrictions on Transfer of Shares Permitted..........................................26
6.5 Acquisition of Shares.................................................................27
ARTICLE VII. DISTRIBUTIONS.......................................................................27
7.1 Distributions.........................................................................27
ARTICLE VIII. CORPORATE SEAL......................................................................28
8.1 Corporate Seal........................................................................28
ARTICLE IX. EMERGENCY BYLAWS....................................................................28
9.1 Emergency Bylaws......................................................................28
(a) Notice of Board Meetings.....................................................28
(b) Temporary Directors and Quorum...............................................28
(c) Actions Permitted to be taken................................................28
ARTICLE X. AMENDMENTS..........................................................................29
10.1 Amendments............................................................................29
</TABLE>
iii
<PAGE> 5
SUN BANCSHARES, INC.
BYLAWS
ARTICLE I. OFFICES
1.1 BUSINESS OFFICE.
The principal office of the corporation shall be within in the State of
South Carolina and shall be located in the City of Murrells Inlet,
County of Georgetown. The board of directors may change the location of
the principal office. The corporation shall maintain at its principal
office a copy of certain records, as specified in Section 2.14 of
Article II. The corporation may have such other offices, either within
or without the State of South Carolina, as the board of directors may
designate or as the business of the corporation may require from time
to time.
1.2 REGISTERED OFFICE.
The registered office of the corporation, required by ss.33-5-01 of the
South Carolina Business Corporation Act of 1988 (the "Act") may be, but
need not be, identical with the principal office in the state of South
Carolina, and the address of the registered office may be changed from
time to time.
ARTICLE II. SHAREHOLDERS
2.1 ANNUAL MEETING.
A meeting of shareholders of the corporation shall be held annually,
within six (6) months after the end of each fiscal year of the
corporation. The annual meeting shall be held at such time and on such
date, as the directors shall determine from time to time and as shall
be specified in the notice of the meeting.
If the election of directors shall not be held on the day designated
herein for any annual meeting of the shareholders, or at any subsequent
continuation after adjournment thereof, the board of directors shall
cause the election to be held at a special meeting of the shareholders
as soon thereafter as convenient.
2.2 SPECIAL MEETINGS.
Special meetings of the shareholders, for any purpose or purposes,
described in the meeting notice, may be called by the chief executive
officer, the president or the board of directors, and shall be called
by the corporation at the request of the holders of not less than
one-tenth of all outstanding votes of the corporation entitled to be
cast on any issue at the meeting.
<PAGE> 6
2.3 PLACE OF MEETING.
The board of directors may designate any place within or without the
State of South Carolina as the place of meeting for any annual or
special meeting of the shareholders, stated in the notice of meeting or
in a waiver of notice. If no designation is made, the place of meeting
shall be the principal office of the corporation in the state of South
Carolina.
2.4 NOTICE OF MEETING.
(a) Required Notice.
Written notice stating the place, day and hour of any annual
or special shareholder meeting shall be delivered not less
than ten nor more than sixty days before the date of the
meeting, either personally or by mail, by or at the direction
of the chief executive officer, the president, the board of
directors or other persons calling the meeting, to each
shareholder of record entitled to vote at such meeting and to
any other shareholder entitled by the Act or the articles of
incorporation to receive notice of the meeting. Notice shall
be deemed to be effective at the earlier of: (1) when
deposited in the United States mail, addressed to the
shareholder at his or her address as it appears on the stock
transfer books of the corporation, with postage thereon
prepaid, (2) on the date shown on the return receipt if sent
by registered or certified mail, return receipt requested, and
the receipt is signed by or on behalf of the addressee, (3)
when received, or (4) five days after deposit in the United
States mail, if mailed postpaid and correctly addressed to an
address other than that shown in the corporation's current
record of shareholders.
(b) Adjourned Meeting.
If any shareholder meeting is adjourned to a different date,
time, or place, notice need not be given of the new date, time
or place, if the new date, time and place is announced at the
meeting before adjournment. If a new record date for the
adjourned meeting is, or must be, fixed (see Section 2.5 of
this Article II) then notice must be given pursuant to the
requirements of paragraph (a) of this Section 2.4, to those
persons who are shareholders as of the new record date.
(c) Waiver of Notice.
The shareholder may waive notice of the meeting (or any notice
required by the Act, articles of incorporation, or bylaws), by
a writing signed by the shareholder entitled to the notice,
which is delivered to the corporation (either before or after
the date and time stated in the notice) for inclusion in the
minutes or filing with the corporate records.
A shareholder's attendance at a meeting:
2
<PAGE> 7
(1) waives objection to lack of notice or defective
notice of the meeting, unless the shareholder at the
beginning of the meeting objects to holding the
meeting or transacting business at the meeting;
(2) waives objection to consideration of a particular
matter at the meeting that is not within the purpose
or purposes described in the meeting notice, unless
the shareholder objects to considering the matter
when it is presented.
(d) Contents of Notice.
The notice of each special shareholder meeting shall include a
description of the purpose or purposes for which the meeting
is called. Except as provided in this Section 2.4 (d) or as
provided in the articles of incorporation, or otherwise in the
Act, the notice of an annual shareholder meeting need not
include a description of the purpose or purposes for which the
meeting is called.
If a purpose of any shareholder meeting is to consider either:
(1) a proposed amendment to the articles of incorporation
(including any restated articles requiring shareholder
approval) (2) a plan of merger or share exchange; (3) the
sale, lease, exchange or other disposition of all, or
substantially all of the corporation' s property; (4) the
adoption, amendment or repeal of a bylaw; (5) dissolution of
the corporation; or, (6) removal of a director, the notice
must so state and be accompanied by respectively a copy or
summary of the: (1) articles of amendment; (2) plan of merger
or share exchange; (3) transaction for disposition of all the
corporation's property; or (4) bylaw proposal. If the proposed
corporation action creates dissenter's rights, the notice must
state that shareholders are, or may be entitled to assert
dissenter' s rights, and must be accompanied by a copy of
Chapter 13 of the Act. If the corporation issues, or
authorizes the issuance of shares for promissory notes or for
promises to render services in the future, the corporation
shall report in writing to all the shareholders the number of
shares authorized or issued, and the consideration received
with or before the notice of the next shareholder meeting.
Likewise, if the corporation indemnifies or advances expenses
to a director (as defined in ss.33-16-210 of the Act), this
shall be reported to all the shareholders with or before
notice of the next shareholder's meeting.
2.5 FIXING OF RECORD DATE.
For the purpose of determining shareholders of any voting group
entitled to notice of or to vote at any meeting of shareholders, or
shareholders entitled to receive payment of any distribution or
dividend, or in order to make a determination of shareholders for any
other proper purpose, the board of directors may fix in advance a date
as the record date. Such record date shall not be more than seventy
days prior to the date on which the particular action, requiring such
determination of shareholders, is to be taken. If no record date is so
fixed by the board for the determination of shareholders entitled to
notice of, or to vote
3
<PAGE> 8
at a meeting of shareholders, or shareholders entitled to receive a
share dividend or distribution, the record date for determination of
such shareholders shall be at the close of business on:
(a) With respect to an annual shareholder meeting or any special
shareholder meeting called by the board or any person
specifically authorized by the board or these bylaws to call a
meeting, the day before the first notice is delivered to
shareholders;
(b) With respect to a special shareholder's meeting demanded by
the shareholders, the date the first shareholder signs the
demand;
(c) With respect to the payment of a share dividend, the date the
board authorizes the share dividend;
(d) With respect to actions taken in writing without a meeting
(pursuant to Article II, Section 2.12), the date the first
shareholder signs a consent;
(e) And with respect to a distribution to shareholders, (other
than one involving a repurchase or reacquisition of shares),
the date the board authorizes the distribution.
When a determination of shareholders entitled to vote at any meeting of
shareholders has been made as provided in this section, such
determination shall apply to any adjournment thereof unless the board
of directors fixes a new record date which it must do if the meeting is
adjourned to a date more than 120 days after the date fixed for the
original meeting.
2.6 SHAREHOLDER LIST.
The officer or agent having charge of the stock transfer books for
shares of the corporation shall make a complete record of the
shareholders entitled to vote at each meeting of shareholders thereof,
arranged in alphabetical order, with the address of and the number of
shares held by each. The list must be arranged by voting group (if such
exists, see Article II, Section 2.7) and within each voting group by
class or series of shares. The shareholder's list must be available for
inspection by any shareholder, beginning on the date on which notice of
the meeting is given for which the list was prepared and continuing
through the meeting. The list shall be available at the corporation's
principal office or at a place identified in the meeting notice in the
city where the meeting is to be held. A shareholder, his or her agent
or attorney is entitled on written demand to inspect, and subject to
the requirements of Section 2.14 of this Article II, to copy the list
at his or her expense during regular business hours, and during the
period it is available for inspection. The corporation shall maintain
the shareholder list in written form or in another form capable of
conversion into written form within a reasonable time.
4
<PAGE> 9
2.7 QUORUM AND VOTING REQUIREMENTS.
If the articles of incorporation or the Act provides for voting by a
single voting group on a matter, action on that matter is taken when
voted upon by that voting group.
Shares entitled to vote as a separate voting group may take action on a
matter at a meeting only if a quorum of those shares exists with
respect to that matter. Unless the articles of incorporation, a bylaw
adopted pursuant to Section 2.8 of this Article II, or the Act provide
otherwise, a majority of the votes entitled to be cast on the matter by
the voting group constitutes a quorum of that voting group for action
on that matter.
If the articles of incorporation or the Act provide for voting by two
or more voting groups on a matter, action on that matter is taken only
when voted upon by each of those voting groups counted separately.
Action may be taken by one voting group on a matter even though no
action is taken by another voting group entitled to vote on the matter.
Once a share is represented for any purpose at a meeting, it is deemed
present for quorum purposes. If a quorum exists, action on a matter
(other than the election of directors) by a voting group is approved if
the votes cast within the voting group favoring the action exceed the
votes cast opposing the action, unless the articles of incorporation, a
bylaw adopted pursuant to Section 2.8 of this Article II, or the Act
require a greater number of affirmative votes.
2.8 INCREASING EITHER QUORUM OR VOTING REQUIREMENTS.
For purposes of this Section 2.8 a "supermajority" quorum is a
requirement that more than a majority of the votes of the voting group
be present to constitute a quorum; and a "supermajority" voting
requirement is any requirement that requires the vote of more than a
majority of the affirmative votes of a voting group at a meeting.
The shareholders, but only if specifically authorized to do so by the
articles of incorporation, may adopt, amend or delete a bylaw which
fixes a "supermajority" quorum or "supermajority" voting requirement.
The adoption or amendment of a bylaw that adds, changes, or deletes a
"supermajority" quorum or voting requirement for shareholders must meet
the same quorum requirement and be adopted by the same vote and voting
groups required to take action under the quorum and voting requirement
then in effect or proposed to be adopted, whichever is greater.
A bylaw that fixes a supermajority quorum or voting requirement for
shareholders may not be adopted, amended, or repealed by the board of
directors.
5
<PAGE> 10
2.9 PROXIES.
At all meetings of shareholders, a shareholder may vote in person, or
vote by proxy which is executed in writing by the shareholder or which
is executed by his or her duly authorized attorney-in-fact. Such proxy
shall be dated and filed with the secretary of the corporation or other
person authorized to tabulate votes before or at the time of the
meeting. Unless a time of expiration is otherwise specified, a proxy is
valid for eleven months. A proxy is revocable unless executed in
compliance with ss.33-7-220(d) of the Act, or any succeeding statute of
like tenor and effect.
2.10 VOTING OF SHARES.
Unless otherwise provided in the articles of incorporation, each
outstanding share of common stock entitled to vote shall be entitled to
one vote upon each matter submitted to a vote at a meeting of
shareholders. Each outstanding share of other classes of stock, if any,
shall have such voting rights as may be prescribed by the board of
directors.
Except as provided by specific court order, no shares held by another
corporation, if a majority of the shares entitled to vote for the
election of directors of such other corporation are held by the
corporation, shall be voted at any meeting or counted in determining
the total number of outstanding shares at any given time for purposes
of any meeting. Provided, however, the prior sentence shall not limit
the power of the corporation to vote any shares, including its own
shares, held by it in a fiduciary capacity.
Redeemable shares are not entitled to vote after notice of redemption
is mailed to the holders and a sum sufficient to redeem the shares has
been deposited with a bank, trust company, or other financial
institution under an irrevocable obligation to pay the holders the
redemption price on surrender of the shares.
2.11 CORPORATION'S ACCEPTANCE OF VOTES.
(a) If the name signed on a vote, consent, waiver, or proxy
appointment corresponds to the name of a shareholder, the
corporation if acting in good faith is entitled to accept the
vote, consent, waiver, or proxy appointment and give it effect
as the act of the shareholders.
(b) If the name signed on a vote, consent, waiver, or proxy
appointment does not correspond to the name of its
shareholder, the corporation if acting in good faith is
nevertheless entitled to accept the vote, consent, waiver, or
proxy appointment and give it effect as the act of the
shareholder if:
(1) the shareholder is an entity as defined in the Act
and the name signed purports to be that of an officer
or agent of the entity;
(2) the name signed purports to be that of an
administrator, executor, guardian, or conservator
representing the shareholder and, if the
6
<PAGE> 11
corporation requests, evidence of fiduciary status
acceptable to the corporation has been presented with
respect to the vote, consent, waiver, or proxy
appointment;
(3) the name signed purports to be that of a receiver or
trustee in bankruptcy of the shareholder and, if the
corporation requests, evidence of this status
acceptable to the corporation has been presented with
respect to the vote, consent, waiver, or proxy
appointment;
(4) the name signed purports to be that of a pledgee,
beneficial owner, or attorney-in-fact of the
shareholder and, if the corporation requests,
evidence acceptable to the corporation of the
signatory's authority to sign for the shareholder has
been presented with respect to the vote, consent,
waiver, or proxy appointment;
(5) two or more persons are the shareholder as co-tenants
or fiduciaries and the name signed purports to be the
name of at least one of the co-owners and the person
signing appears to be acting on behalf of all the
co-owners.
(c) The corporation is entitled to reject a vote, consent, waiver,
or proxy appointment if the secretary or other officer or
agent authorized to tabulate votes, acting in good faith, has
reasonable basis for doubt about the validity of the signature
on it or about the signatory's authority to sign for the
shareholder.
(d) The corporation and its officer or agent who accepts or
rejects a vote, consent, waiver, or proxy appointment in good
faith and in accordance with the standards of this section are
not liable in damages to the shareholder for the consequences
of the acceptance or rejection.
(e) Corporate action based on the acceptance or rejection of a
vote, consent, waiver, or proxy appointment under this section
is valid unless a court of competent jurisdiction determines
otherwise.
2.12 INFORMAL ACTION BY SHAREHOLDERS.
Any action required or permitted to be taken at a meeting of the
shareholders may be taken without a meeting if one or more consents in
writing, setting forth the action so taken, shall be signed by all of
the shareholders entitled to vote with respect to the subject matter
thereof and are delivered to the corporation for inclusion in the
minute book. If the act to be taken requires that notice be given to
non-voting shareholders, the corporation shall give the non-voting
shareholders written notice of the proposed action at least 10 days
before the action is taken, which notice shall contain or be
accompanied by the same material that would have been required if a
formal meeting had been called to consider the action. A consent signed
under this section has the effect of a meeting vote and may be
described as such in any document.
7
<PAGE> 12
2.13 NOMINATION AND VOTING FOR DIRECTORS.
(a) Nominations.
Nominations, other than those management nominees made by or
at the direction of the board of directors, shall be made by
timely notice in writing to the secretary of the corporation.
To be timely, a shareholder's notice shall be delivered or
mailed to and received at the principal executive offices of
the corporation not less than 30 days prior to the date of the
meeting; provided, however, that in the event that less than
40 days' notice or prior public disclosure of the date of the
meeting is given or made to shareholders, notice by the
shareholder to be timely must be so received not later than
the close of business on the 10th day following the day on
which such notice of the date of the meeting is mailed or such
public disclosure was made. Such shareholder's notice shall
set forth (i) as to each person whom the shareholder proposes
to nominate for election or reelection as a director, all
information relating to such person as required to be
disclosed in solicitation of proxies for election of directors
pursuant to Regulation 14A under the Securities and Exchange
Act of 1934, as amended (including such person's written
consent to being named in a proxy statement as a nominee and
to serving as a director if elected); and (ii) as to the
shareholder giving the notice (A) the name and address, as
they appear on the books of the corporation, of such
shareholder and (B) the class and number of shares of the
corporation's capital stock that are beneficially owned by
such shareholder. At the request of the board of directors any
person nominated by the board of directors for election as a
director shall furnish to the secretary of the corporation
that information required to be set forth in a shareholder's
notice of nomination which pertains to the nominee. No person
shall be eligible for election as a director of the
corporation unless nominated in accordance with the provisions
of this Section 2.13. The officer presiding at the meeting
shall, if the facts so warrant, determine and declare to the
meeting that a nomination was not made in accordance with the
provisions of this Section 2.13 and the defective nomination
shall be disregarded.
(b) Regulatory Approval.
Notwithstanding subsection (a) of this Section 2.13, if the
corporation or any banking subsidiary of the corporation is
subject to the requirements of Section 914 of the Financial
Institutions Reform, Recovery, and Enforcement Act of 1989,
then no person may be nominated by a shareholder for election
as a director at any meeting of shareholders unless the
shareholder furnishes the written notice required by
subsection (a) of this Section 2.13 to the secretary of the
corporation at least ninety days prior to the date of the
meeting and the nominee has received regulatory approval to
serve as a director prior to the date of the meeting.
8
<PAGE> 13
(c) General Provision.
Unless otherwise provided in the articles of incorporation, at
each election for directors every shareholder entitled to vote
at such election shall have the right to vote, in person or by
proxy, the number of votes the shareholder is entitled to cast
for each director to be elected and for whose election the
shareholder has a right to vote.
(d) Plurality Requirement.
Unless otherwise provided in the articles of incorporation,
directors are elected by a plurality of the votes cast by the
shares entitled to vote in the election at a meeting at which
a quorum is present.
2.14 SHAREHOLDER'S RIGHTS TO INSPECT CORPORATE RECORDS.
(a) Minutes and Accounting Records.
The corporation shall keep as permanent records minutes of all
meetings of its shareholders and board of directors, a record
of all actions taken by the shareholders or board of directors
without a meeting, and a record of all actions taken by a
committee of the board of directors in place of the board of
directors on behalf of the corporation. The corporation shall
maintain appropriate accounting records.
(b) Absolute Inspection Rights of Records Required at Principal
Office.
Upon written demand to the corporation at least five business
days before the date on which he or she wishes to inspect and
copy, a shareholder (or his or her agent or attorney) has the
right to inspect and copy, during regular business hours any
of the following records, all of which the corporation is
required to keep at its principal office:
(1) its articles or restated articles of incorporation
and all amendments to them currently in effect;
(2) its bylaws or restated bylaws and all amendments to
them currently in effect;
(3) resolutions adopted by its board of directors
creating one or more classes or series of shares, and
fixing their relative rights, preferences, and
limitations, if shares issued pursuant to those
resolutions are outstanding;
(4) the minutes of all shareholders, meetings, and
records of all action taken by shareholders without a
meeting, for the past 10 years;
9
<PAGE> 14
(5) all written communications to shareholders generally
within the past three years, including the financial
statement furnished for the past three years to the
shareholders;
(6) a list of the names and business addresses of its
current directors and officers;
(7) its most recent annual report delivered to the Tax
commission; an
(8) if the shareholder owns at least one percent of any
class of shares, he may inspect and copy its federal
and state income tax returns for the last ten years.
(c) Conditional Inspection Right.
In addition, if a shareholder gives the corporation a written
demand made in good faith and for a proper purpose at least
five business days before the date on which he or she wishes
to inspect and copy, and describes with reasonable
particularity the purpose of the inspection and the records to
be inspected, and the records are directly connected with that
purpose, a shareholder (or his or her agent or attorney) is
entitled to inspect and copy, during regular business hours at
a reasonable location specified by the corporation, any of the
following records of the corporation:
(1) excerpts from minutes of any meeting of the board of
directors, records of any action of a committee of
the board of directors on behalf of the corporation,
minutes of any meeting of the shareholders, and
records of action taken by the shareholders or board
of directors without a meeting, to the extent not
subject to inspection under paragraph (a) of this
Section 2.14.
(2) accounting records of the corporation; and
(3) the record of shareholders (compiled no earlier than
the date of the shareholder's demand).
(d) Copy costs.
The right to copy records includes, if reasonable, the right
to receive copies made by photographic, xerographic, or other
means. The corporation may impose a reasonable charge,
covering the costs of labor and material, for copies of any
documents provided to the shareholder. The charge may not
exceed the estimated cost of production or reproduction of the
records.
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2.15 FINANCIAL STATEMENTS SHALL BE FURNISHED TO THE SHAREHOLDERS.
(a) The corporation shall furnish its shareholders annual
financial statements, which may be consolidated or combined
statements of the corporation and one or more of its
subsidiaries, as appropriate, that include a balance sheet as
of the end of the fiscal year, an income statement for that
year, and a statement of changes in shareholders' equity for
the year unless that information appears elsewhere in the
financial statements. If financial statements are prepared for
the corporation on the basis of generally accepted accounting
principles, the annual financial statements for the
shareholders also must be prepared on that basis.
(b) If the annual financial statements are reported upon by a
public accountant, his or her report must accompany them. If
not, the statements must be accompanied by a statement of the
president or the person responsible for the corporation's
accounting records:
(1) stating his or her reasonable belief whether the
statements were prepared on the basis of generally
accepted accounting principles and, if not,
describing the basis of preparation; and
(2) describing any respects in which the statements were
not prepared on a basis of accounting consistent with
the statements prepared for the preceding year.
(c) A corporation shall mail the annual financial statements to
each shareholder within 120 days after the close of each
fiscal year. Thereafter, on written request from a shareholder
who was not mailed the statements, the corporation shall mail
him the latest financial statements.
2.16 DISSENTER'S RIGHTS
Each shareholder shall have the right to dissent from, and obtain
payment for his or her shares when so authorized by the Act, articles
of incorporation, these bylaws, or in a resolution of the board of
directors.
ARTICLE III. BOARD OF DIRECTORS
3.1 GENERAL POWERS.
Unless the articles of incorporation have dispensed with or limited the
authority of the board of directors by describing who will perform some
or all of the duties of a board of directors, all corporate powers
shall be exercised by or under the authority of, and the business and
affairs of the corporation shall be managed under the direction of the
board of directors.
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3.2 NUMBER, TENURE AND QUALIFICATIONS OF DIRECTORS.
(a) Unless otherwise provided in the articles of incorporation,
the number of directors of the corporation shall be that
number as may be fixed from time to time by resolution of the
board of directors, but in no event shall the number be less
than six or greater than fifteen. The initial number of
directors shall be six. The number of directors may be fixed
or changed from time to time, within the minimum and maximum,
by the shareholders by the affirmative vote of two-thirds of
the issued and outstanding shares of the corporation entitled
to vote in an election of directors or by the board of
directors by the affirmative vote of two-thirds of all
directors then in office. In addition, unless provided
otherwise by resolution of the board of directors, if, in any
case after proxy materials for an annual meeting of
shareholders have been mailed to shareholders, any person
named therein to be nominated at the direction of the board of
directors becomes unable or unwilling to serve, the number of
authorized directors shall be automatically reduced by a
number equal to the number of such persons. The members of the
board of directors need not be shareholders nor need they be
residents of any particular state. At any time that the board
of directors has six or more members, unless provided
otherwise by the articles of incorporation, the terms of
office of directors will be staggered by dividing the total
number of directors into three classes, with each class
accounting for one-third, as near as may be, of the total. The
terms of directors in the first class expires at the first
annual shareholders' meeting after their election, the terms
of the second class expire at the second annual shareholders'
meeting after their election, and the terms of the third class
expire at the third annual shareholders' meeting after their
election. At each annual shareholders' meeting held
thereafter, directors shall be chosen for a term of three
years to succeed those whose terms expire. If the number of
directors is changed, any increase or decrease shall be so
apportioned among the classes as to make all classes as nearly
equal in number as possible, and when the number or directors
is increased and any newly created directorships are filled by
the board, the terms of the additional directors shall expire
at the next election of directors by the shareholders. Each
director, except in the case of his or her earlier death,
written resignation, retirement, disqualification or removal,
shall serve for the duration of his or her term, as staggered,
and thereafter until his or her successor shall have been
elected and qualified.
(b) No individual who is or becomes a Business Competitor (as
defined below) or who is or becomes affiliated with, employed
by or a representative of any individual, corporation,
association, partnership, firm, business enterprise or other
entity or organization which the board of directors, after
having such matter formally brought to its attention,
determines to be in competition with the corporation or any of
its subsidiaries (any such individual, corporation,
association, partnership, firm, business enterprise or other
entity or organization being hereinafter referred to as a
"Business Competitor") shall be eligible to serve as a
director if the board of directors determines that it would
not be in the
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corporation's best interests for such individual to
serve as a director of the corporation. Such
affiliation, employment or representation may
include, without limitation, service or status as an
owner, partner, shareholder, trustee, director,
officer, consultant, employee, agent, or counsel, or
the existence of any relationship which results in
the affected person having an express or implied
obligation to act on behalf of a Business Competitor;
provided, however, that passive ownership of a debt
or equity interest not exceeding 1% of the
outstanding debt or equity, as the case may be, in
any Business Competitor shall not constitute such
affiliation, employment or representation. Any
financial institution having branches or affiliates
in Horry County, South Carolina, shall be presumed to
be Business Competitor unless the board of directors
determines otherwise.
3.3 REGULAR MEETINGS.
Unless otherwise provided in the articles of incorporation, a regular
meeting of the board of directors shall be held without other notice
than this bylaw immediately after, and at the same place as, the annual
meeting of shareholders. The board of directors may provide, by
resolution, the time and place (which may be within or without the
State of South Carolina) for the holding of additional regular meetings
without other notice than such resolution. (If so permitted by Section
3.7, any such regular meeting may be held by telephone.)
3.4 SPECIAL MEETINGS.
Unless otherwise provided in the articles of incorporation, special
meetings of the board of directors may be called by or at the request
of the chairman of the board of directors, the chief executive officer
or the president. The person authorized to call special meetings of the
board of directors may fix any place, only within the County of South
Carolina where the corporation has its principal office as the place
for holding any special meeting of the board of directors, or if
permitted by Section 3.7, such meeting may be held by telephone.
3.5 NOTICE OF SPECIAL MEETING.
Unless the articles of incorporation provide for a longer or shorter
period, notice of any special meeting shall be given at least two days
previously thereto either orally or in writing. If mailed, such notice
shall be deemed to be effective at the earlier of: (1) when received;
(2) 5 days after deposited in the United States mail, addressed to the
director's business office, with postage thereon prepaid; or (3) the
date shown on the return receipt if sent by registered or certified
mail, return receipt requested, and the receipt is signed by or on
behalf of the director. Any director may waive notice of any meeting.
Except as provided in the next sentence, the waiver must be in writing,
signed by the director entitled to the notice, and filed with the
minutes or corporate records. The attendance of a director at a meeting
shall constitute a waiver of notice of such meeting, except where a
director attends a meeting for the express purpose of objecting to the
transaction of any
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business and at the beginning of the meeting (or promptly upon his or
her arrival) objects to holding the meeting or transacting business at
the meeting, and does not thereafter vote for or assent to action taken
at the meeting.
3.6 DIRECTOR QUORUM.
A majority of the number of directors in office immediately before the
meeting begins shall constitute a quorum for the transaction of
business at any meeting of the board of directors, unless the articles
of incorporation require a greater number. Any amendment to this quorum
requirement is subject to the provisions of Section 3.8 of this Article
III.
3.7 MANNER OF ACTING.
(a) Required Vote
The act of the majority of the directors present at a meeting
at which a quorum is present when the vote is taken shall be
the act of the board of directors unless the articles of
incorporation require a greater percentage. Any amendment to
these bylaws which changes the number of directors needed to
take action, is subject to the provisions of Section 3.8 of
this Article III.
(b) Telephone Meeting
Unless the articles of incorporation provide otherwise, any or
all directors may participate in a regular or special meeting
by, or conduct the meeting through the use of, any means of
communication by which all directors participating may
simultaneously hear each other during the meeting. A director
participating in a meeting by this means is deemed to be
present in person at the meeting.
(c) Failure To Object To Action
A director who is present at a meeting of the board of
directors or a committee of the board of directors when
corporate action is taken is deemed to have assented to the
action taken unless: (1) the director objects at the beginning
of the meeting (or promptly upon his or her arrival) to
holding it or transacting business at the meeting; or (2) his
or her dissent or abstention from the action taken is entered
in the minutes of the meeting; or (3) the director delivers
written notice of his or her dissent or abstention to the
presiding officer of the meeting before its adjournment or to
the corporation immediately after adjournment of the meeting.
The right of dissent or abstention is not available to a
director who votes in favor of the action taken.
3.8 ESTABLISHING A "SUPERMAJORITY" QUORUM OR VOTING REQUIREMENT.
For purposes of this Section 3.8, a "supermajority" quorum is a
requirement that more than a majority of the directors in office
constitute a quorum; and a "supermajority"
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voting requirement is any requirement that requires the vote of more
than a majority of those directors present at a meeting at which a
quorum is present to be the act of the directors.
A bylaw that fixes a supermajority quorum or supermajority voting
requirement may be amended or repealed:
(1) if originally adopted by the shareholders, only by
the shareholders (unless otherwise provided by the
shareholders);
(2) if originally adopted by the board of directors,
either by the shareholders or by the board of
directors.
A bylaw adopted or amended by the shareholders that fixes a
supermajority quorum or supermajority voting requirement for the board
of directors may provide that it may be amended or repealed only by a
specified vote of either the shareholders or the board of directors.
Subject to the provisions of the preceding paragraph, action by the
board of directors to adopt, amend, or repeal a bylaw that changes the
quorum or voting requirement for the board of directors must meet the
same quorum requirement and be adopted by the same vote required to
take action under the quorum and voting requirement then in effect or
proposed to be adopted, whichever is greater.
3.9 ACTION WITHOUT A MEETING.
Unless the articles of incorporation provide otherwise, action required
or permitted by the Act, to be taken at a board of directors, meeting
may be taken without a meeting if the action is assented to by all
members of the board.
The action may be evidence by one or more written consents describing
the action taken, signed by each director, and included in the minutes
or filed with the corporate records reflecting the action taken. Action
evidenced by written consents under this section is effective when the
last director signs the consent, unless the consent specifies a
different effective date. A consent signed under this section has the
effect of a meeting vote and may be described as such in any document.
3.10 REMOVAL OF A DIRECTOR
The shareholders may remove one or more directors at a meeting called
for that purpose if notice has been given that a purpose of the meeting
is such removal. The removal may be with or without cause unless the
articles provide that directors may only be removed with cause. If a
director is elected by a voting group of shareholders, only the
shareholders of that voting group may participate in the vote to remove
him. A director may be removed with cause only if the number of votes
cast to remove the director exceeds the number of votes cast against
removing the director. A director may be
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removed without cause only by the holders of at least two-thirds (2/3)
of the issued and outstanding shares of the corporation entitled to
vote in an election of the directors.
3.11 VACANCIES.
Unless the articles of incorporation provide otherwise, if a vacancy
occurs on a board of directors, including a vacancy resulting from an
increase in the number of directors, the shareholders may fill the
vacancy. During such time that the shareholders fail or are unable to
fill such vacancies then and until the shareholders act:
(1) the board of directors may fill the vacancy; or
(2) if the directors remaining in office constitute fewer than a
quorum of the board, they may fill the vacancy by the
affirmative vote of a majority of all the directors remaining
in office.
If the vacant office was held by a director elected by a voting group
of shareholders, only the holders of shares of that voting group are
entitled to vote to fill the vacancy if it is filled by the
shareholders.
A vacancy that will occur at a specific later date (by reason of a
resignation effective at a later date) may be filled before the vacancy
occurs but the new director may not take office until the vacancy
occurs.
The term of a director elected to fill a vacancy expires at the next
shareholders' meeting at which directors are elected. However, if his
or her term expires, the director shall continue to serve until his or
her successor is elected and qualifies or until there is a decrease in
the number of directors.
3.12 COMPENSATION.
Unless otherwise provided in the articles of incorporation, by
resolution of the board of directors, each director may be paid his or
her expenses, if any, of attendance at each meeting of the board of
directors, and may be paid a stated salary as director or a fixed sum
for attendance at each meeting of the board of directors or both. No
such payment shall preclude any director from serving the corporation
in any capacity and receiving compensation therefor.
3.13 COMMITTEES.
(a) Creation of Committees.
Unless the articles of incorporation provide otherwise, the
board of directors may create one or more committees and
appoint members of the board of directors to serve on them.
Each committee must have two or more members, who serve at the
pleasure of the board of directors.
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(b) Selection of Members.
The creation of a committee and appointment of members to it
must be approved by the greater of (1) a majority of all the
directors in office when the action is taken or (2) the number
of directors required by the articles of incorporation to take
such action, (or if not specified in the articles the numbers
required by Section 3.7 of this Article III to take action).
(c) Required Procedures.
Sections 3.3, 3.4, 3.5, 3.6, 3.7, 3.8 and 3.9 of this Article
III, which govern meetings, action without meetings, notice
and waiver of notice, quorum and voting requirements of the
board of directors, apply to committees and their members.
(d) Authority.
Unless limited by the articles of incorporation, each
committee may exercise those aspects of the authority of the
board of directors which the board of directors confers upon
such committee in the resolution creating the committee.
Provided, however, a committee may not:
(1) authorize distributions;
(2) approve or propose to shareholders action that the
Act requires be approved by shareholders;
(3) fill vacancies on the board of directors or on any of
its committees;
(4) amend the articles of incorporation pursuant to the
authority of directors, to do so granted
by ss.33-10-102 of the Act;
(5) adopt, amend, or repeal bylaws;
(6) approve a plan of merger not requiring shareholder
approval;
(7) authorize or approve reacquisition of shares, except
according to a formula or method prescribed by the
board of directors; or
(8) authorize or approve the issuance or sale or contract
for sale of shares or determine the designation and
relative rights, preferences, and limitations of a
class or series of shares, except that the board of
directors may authorize a committee (or a senior
executive officer of the corporation) to do so within
limits specifically prescribed by the board of
directors.
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ARTICLE IV. OFFICERS
4.1 NUMBER.
The officers of the corporation shall consist of a chief executive
officer, a president, a secretary, and a treasurer and may include vice
presidents and assistant officers, each of whom shall be appointed by
the board of directors. The board of directors may also create and
establish the duties of other offices as it deems appropriate. If
specifically authorized by the board of directors, an officer may
appoint one or more officers or assistant officers. The same individual
may simultaneously hold more than one office in the corporation. The
board of directors shall also elect a chairman of the board and may
elect a vice chairman of the board from among its members.
4.2 APPOINTMENT AND TERM OF OFFICE.
The officers of the corporation shall be appointed by the board of
directors for a term as determined by the board of directors. (The
designation of a specified term grants to the officer no contract
rights, and the board can remove the officer at any time prior to the
termination of such term). If no term is specified, they shall hold
office until they resign, die, or until they are removed in the manner
provided in Section 4.3 of this Article IV.
4.3 REMOVAL.
Unless appointed by the shareholders, any officer or agent may be
removed by the board of directors at any time, with or without cause.
Any officer or agent appointed by the shareholders may be removed by
the shareholders with or without cause. Such removal shall be without
prejudice to the contract rights, if any, of the person so removed.
Appointment of an officer or agent shall not of itself create contract
rights.
4.4 CHAIRMAN OF THE BOARD.
The chairman of the board of directors, if elected by the board of
directors, or if not elected, the chief executive officer or the
president, shall preside at all meetings of the shareholders and board
of directors and shall perform such other duties as may be prescribed
from time to time by the board of directors or by these bylaws.
4.5 CHIEF EXECUTIVE OFFICER.
The chief executive officer shall have general charge of the business
and affairs of the corporation and shall keep the board of directors
fully advised. The chief executive officer shall employ and discharge
employees and agents of the corporation, except such as shall be
elected by the board of directors, and he or she may delegate these
powers. The chief executive officer may vote the shares or other
securities of any other domestic or foreign corporation of any type or
kind which may at any time be owned by the corporation, may execute any
shareholders' or other consents in respect thereof and may
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in his or her discretion delegate such powers by executing proxies, or
otherwise, on behalf of the corporation. The chief executive officer
shall, in the absence of the chairman of the board, preside at all
meetings of the shareholders and of the board of directors. He may
sign, with the secretary or any other proper officer of the corporation
thereunto authorized by the board of directors, certificates for shares
of the corporation and deeds, mortgages, bonds, contracts, or other
instruments which the board of directors has authorized to be executed,
except in cases where the signing and execution thereof shall be
expressly delegated by the board of directors or by these bylaws to
some other officer or agent of the corporation, or shall be required by
law to be otherwise signed or executed; and in general shall perform
all duties incident to the office of chief executive officer and such
other duties as may be prescribed by the board of directors from time
to time. The board of directors, by resolution from time to time, may
confer like powers upon any other person or persons.
4.6 PRESIDENT.
The president shall, with the chief executive officer, shall have
general charge of the business and affairs of the corporation and shall
keep the chief executive officer and the board of directors fully
advised. The president shall employ and discharge employees and agents
of the corporation, except such as shall be elected by the board of
directors, and he or she may delegate these powers. The President may
vote the shares of other securities of any other domestic or foreign
corporation of any type or kind which may at any time be owned by the
corporation, may execute any shareholders' or other consents in respect
thereof and may in his or her discretion delegate such powers by
executing proxies, or otherwise, on behalf of the corporation. The
president shall, in the absence of the chairman of the board and the
chief executive officer, preside at all meetings of the shareholders
and of the board of directors. He may sign, with the secretary or any
other proper officer of the corporation thereunto authorized by the
board of directors, certificates for shares of the corporation and
deeds, mortgages, bonds, contracts, or other instruments which the
board of directors has authorized to be executed, except in cases where
the signing and execution thereof shall be expressly delegated by the
board of directors or by these bylaws to some other officer or agent of
the corporation, or shall be required by law to be otherwise signed or
executed; and in general shall perform all duties incident to the
office of president and such other duties as may be prescribed by the
board of directors from time to time. The board of directors, by
resolution from time to time, may confer like powers upon any other
person or persons.
4.7 THE VICE-PRESIDENTS.
In the absence of the chief executive officer or the president or in
the event of their death, inability or refusal to act, unless the board
of directors shall otherwise provide, the vice-president (or in the
event there be more than one vice-president, the vice-presidents in the
order designated at the time of their election, or in the absence of
any designation, then in the order of their appointment) shall perform
the duties of the chief executive officer and the president, and when
so acting, shall have all the powers of and be subject to all the
restrictions upon the chief executive officer and the president. (If
there is no vice-president, then the treasurer shall perform such
duties of the chief executive officer and
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the president). Any vice-president may sign, with the secretary or an
assistant secretary, certificates for shares of the corporation the
issuance of which have been authorized by resolution of the board of
directors; and shall perform such other duties as from time to time may
be assigned to him by the chief executive officer, the president or by
the board of directors.
4.8 THE SECRETARY.
The secretary shall: (a) keep the minutes of the proceedings of the
shareholders and of the board of directors in one or more books
provided for that purpose; (b) see that all notices are duly given in
accordance with the provisions of these bylaws or as required by law;
(c) be custodian of the corporate records and of any seal of the
corporation and if there is a seal of the corporation, see that it is
affixed to all documents the execution of which on behalf of the
corporation under its seal is duly authorized; (d) when requested or
required, authenticate any records of the corporation; (e) keep a
register of the post office address of each shareholder which shall be
furnished to the secretary by such shareholder; (f) sign with the chief
executive officer , the president, or a vice-president, certificates
for shares of the corporation, the issuance of which shall have been
authorized by resolution of the board of directors; (g) have general
charge of the stock transfer books of the corporation; and (h) in
general perform all duties incident to the office of secretary and such
other duties as from time to time may be assigned to him by the chief
executive officer, the president or by the board of directors.
4.9 THE TREASURER.
The treasurer shall be the chief financial officer and shall: (a) have
charge and custody of and be responsible for all funds and securities
of the corporation; (b) receive and give receipts for moneys due and
payable to the corporation from any source whatsoever, and deposit all
such moneys in the name of the corporation in such banks, trust
companies or other depositories as shall be selected by the board of
directors; and (c) in general perform all of the duties incident to the
office of treasurer and such other duties as from time to time may be
assigned to him by the chief executive officer, the president or by the
board of directors. If required by the board of directors, the
treasurer shall give a bond for the faithful discharge of his or her
duties in such sum and with such surety or sureties as the board of
directors shall determine.
4.10 ASSISTANT SECRETARIES AND ASSISTANT TREASURERS.
The assistant secretaries, when authorized by the board of directors,
may sign with the chief executive office, the president or a
vice-president certificates for shares of the corporation the issuance
of which shall have been authorized by a resolution of the board of
directors. The assistant treasurers shall respectively, if required by
the board of directors, give bonds for the faithful discharge of their
duties in such sums and with such sureties as the board of directors
shall determine. The assistant secretaries and assistant treasurers, in
general, shall perform such duties as shall be assigned to them by the
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secretary or the treasurer, respectively, or by the chief executive
officer, the president or the board of directors.
4.11 SALARIES.
The salaries of the officers shall be fixed from time to time by the
board of directors.
ARTICLE V. INDEMNIFICATION
OF DIRECTORS, OFFICERS,
AGENTS, AND EMPLOYEES
5.1 INDEMNIFICATION OF DIRECTORS.
Unless otherwise provided in the articles of incorporation, the
corporation shall indemnify any individual made a party to or is
otherwise involved in any threatened, pending or completed action, suit
or other proceeding whether civil, criminal, administrative or
investigative and whether formal or informal because he or she is or
was a director of the company, against expenses (including attorney's
fees), judgments, fines, amounts paid in settlement or other similar
costs actually and reasonably incurred in connection with such action,
suit or proceeding, but only if such indemnification is both (i)
permissible and (ii) authorized, as defined in subsection (a) of this
Section 5.1. (Such indemnification is further subject to the limitation
specified in subsection (c).)
(a) Determination and Authorization
The corporation shall not indemnify a director under this
Section 5.1 of Article V unless:
(1) Determination:
A determination has been made in accordance with the
procedures set forth in ss.33-8-550(b) of the Act
that the director met the standard of conduct set
forth in subsection (b) below, and
(2) Authorization:
The board of directors (as specified in
ss.33-8-550(c)) authorizes payment after they have
concluded that the expenses are reasonable, the
corporation has the financial ability to make the
payment, and that the financial resources of the
corporation should be devoted to this use rather than
some other use by the corporation.
(b) Standard of Conduct
The individual shall demonstrate that he or she:
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(1) conducted himself or herself in good faith; and
(2) reasonably believed:
(i) in the case of conduct in his or her official
capacity with the corporation, that his or her
conduct was in its best interests; and
(ii) in all other cases, that his or her conduct was
at least not opposed to its best interests; and
(iii) in the case of any criminal proceeding, that he
or she had no reasonable cause to believe his or her
conduct was unlawful.
The corporation shall not indemnify a director under this
Section 5.1 of Article V:
(1) in connection with a proceeding by or in the right of the
corporation in which the director was adjudged liable to the
corporation; or
(2) in connection with any other proceeding charging improper
personal benefit to the director, whether or not involving
action in his or her official capacity, in which the director
was adjudged liable on the basis that personal benefit was
improperly received by him or her.
(c) Indemnification in Derivative Actions Limited
Indemnification permitted under this Section 5.1 of Article V
in connection with a proceeding by or in the right of the
corporation is limited to reasonable expenses incurred in
connection with the proceeding.
5.2 ADVANCE EXPENSES FOR DIRECTORS
If a determination is made, following the procedures of Article V,
Section 5.1(a), that the director has met the following requirements;
and if an authorization of payment is made, also following the
procedures and standards set forth in Article V, Section 5.1(a); then
unless otherwise provided in the articles of incorporation, the company
shall pay for or reimburse the reasonable expenses incurred by a
director who is a party to a proceeding in advance of final disposition
of the proceeding, if:
(1) the director furnishes the corporation a written affirmation
of his or her good faith belief that he has met the standard
of conduct described in subsection (b) of Section 5.1 of this
Article V.
(2) the director furnishes the corporation a written undertaking,
executed personally or on his or her behalf, to repay the
advance if it is ultimately determined that he or she did not
meet the standard of conduct (which undertaking must be an
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unlimited general obligation of the director but need not be
secured and may be accepted without reference to financial
ability to make repayment); and
(3) a determination is made that the facts then known to those
making the determination would not preclude indemnification
under Section 5.1 of this Article V or ss.33-8-500 through
ss.33-8-580 of the Act.
5.3 INDEMNIFICATION OF OFFICERS, AGENTS, AND EMPLOYEES WHO ARE NOT
DIRECTORS.
Unless otherwise provided in the articles of incorporation, the board
of directors may indemnify and advance expenses to any officer,
employee, or agent of the corporation, who is not a director of the
corporation, to any extent, consistent with public policy, as
determined by the general or specific action of the board of directors.
5.4 INSURANCE.
The corporation may purchase and maintain insurance on behalf of an
individual who is or was a director, officer, employee or agent of the
corporation, or who, while a director, officer, employee or agent of
the corporation, is or was serving at the request of the corporation as
a director, officer, partner, trustee, employee or agent of another
foreign or domestic corporation, partnership, joint venture, trust,
employee benefit plan or other enterprise, against liability asserted
against or incurred by him or her in that capacity or arising from his
or her status as a director, officer, employee or agent, whether or not
the corporation would have the power to indemnify him or her against
the same liability under this Article V.
5.5 NONEXCLUSIVITY OF RIGHTS; AGREEMENTS.
The rights conferred on any person by this Article V shall neither
limit nor be exclusive of any other rights which such person may have
or hereafter acquire under any statute, agreement, provision of the
articles of incorporation, these bylaws, vote of shareholders or
otherwise. The provisions of this Article V shall be deemed to
constitute an agreement between the corporation and each person
entitled to indemnification hereunder. In addition to the rights
provided in this Article V, the corporation shall have the power, upon
authorization by the board of directors, to enter into an agreement or
agreements providing to any person who is or was a director, officer,
employee or agent of the corporation certain indemnification rights.
Any such agreement between the corporation and any director, officer,
employee or agent of the corporation concerning indemnification shall
be given full force and effect, to the fullest extent permitted by
applicable law, even if it provides rights to such director, officer,
employee or agent more favorable than, or in addition to, those rights
provided under this Article V.
5.6 CONTINUING BENEFITS; SUCCESSORS.
The indemnification and advancement of expenses provided by or granted
pursuant to this Article V shall, unless otherwise provided when
authorized or ratified, continue as to
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a person who has ceased to be a director, officer, employee or agent
and shall inure to the benefit of the heirs, executors and
administrators of such person. For purposes of this Article V, the term
"corporation" shall include any corporation, joint venture, trust,
partnership or unincorporated business association that is the
successor to all or substantially all of the business or assets of this
corporation, as a result of merger, consolidation, sale, liquidation or
otherwise, and any such successor shall be liable to the persons
indemnified under this Article V on the same terms and conditions and
to the same extent as this corporation.
5.7 INTERPRETATION; CONSTRUCTION.
This Article V is intended to provide indemnification to the directors
and permit indemnification to the officers of the corporation to the
fullest extent permitted by applicable law as it may presently exist or
may hereafter be amended and shall be construed in order to accomplish
this result. To the extent that a provision herein prevents a director
or officer from receiving indemnification to the fullest extent
intended, such provision shall be of no effect in such situation. If at
any time the Act is amended so as to permit broader indemnification
rights to the director and officers of this corporation, then these
bylaws shall be deemed to automatically incorporate these broader
provisions so that the directors and officers of the corporation shall
continue to receive the intended indemnification to the fullest extent
permitted by applicable law.
5.8 AMENDMENT.
Any amendment to this Article V that limits or otherwise adversely
affects the right of indemnification, advancement of expenses or other
rights of any indemnified person hereunder shall, as to such
indemnified person, apply only to claims, actions, suits or proceedings
based on actions, events or omissions (collectively, "Post Amendment
Events") occurring after such amendment and after delivery of notice of
such amendment to the indemnified person so affected. Any indemnified
person shall, as to any claim, action, suit or proceeding based on
actions, events or omissions occurring prior to the date of receipt of
such notice, be entitled to the right of indemnification, advancement
of expenses and other rights under this Article V to the same extent as
if such provisions had continued as part of the bylaws of the
corporation without such amendment. This Section 5.8 cannot be altered,
amended or repealed in a manner effective as to any indemnified person
(except as to Post Amendment Events) without the prior written consent
of such indemnified person.
5.9 SEVERABILITY.
Each of the Sections of this Article V, and each of the clauses set
forth herein, shall be deemed separate and independent, and should any
part of any such Section or clause be declared invalid or unenforceable
by any court of competent jurisdiction, such invalidity or
unenforceability shall in no way render invalid or unenforceable any
other part thereof or any separate Section or clause of this Article V
that is not declared invalid or unenforceable.
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ARTICLE VI. CERTIFICATES FOR
SHARES AND THEIR TRANSFER
6.1 CERTIFICATES FOR SHARES.
(a) Content.
Certificates representing shares of the corporation shall be
in such form as determined by the board of directors and at
minimum, state on their faces:
(i) the name of the issuing corporation and that it is
formed under the laws of South Carolina;
(ii) the name of the person to whom issued;
(iii) the number and class of shares and the designation of
the series, if any, the certificate represents; and
(iv) if any shares represented by the certificate are
nonvoting shares, a statement or notation to that
effect; and, if the shares represented by the
certificate are subordinate to shares of any other
class or series with respect to dividends or amounts
payable on liquidation, the certificate shall further
set forth on either the face or back thereof a clear
and concise statement to that effect.
Such certificates shall be signed (either manually or by
facsimile) by the chief executive officer, the president or a
vice-president and by the secretary or an assistant secretary
and may be sealed with a corporate seal or a facsimile
thereof. Each certificate for shares shall be consecutively
numbered or otherwise identified.
(b) Legend as to Class or Series.
If the corporation is authorized to issue different classes of
shares or different series within a class, the designations,
relative rights, preferences, and limitations applicable to
each class and the variations in rights, preferences, and
limitations determined for each series (and the authority of
the board of directors to determine variations for future
series) must be summarized on the front or back of each
certificate. Alternatively, each certificate may state
conspicuously on its front or back that the corporation will
furnish the shareholder this information on request in writing
and without charge.
(c) Shareholder List.
The name and address of the person to whom the shares
represented thereby are issued, with the number of shares and
date of issue, shall be entered on the stock transfer books of
the corporation.
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(d) Transferring Shares.
All certificates surrendered to the corporation for transfer
shall be cancelled and no new certificate shall be issued
until the former certificate for a like number of shares shall
have been surrendered and cancelled, except that in case of a
lost, destroyed or mutilated certificate a new one may be
issued therefor upon such terms and indemnity to the
corporation as the board of directors may prescribe.
6.2 [RESERVED]
6.3 REGISTRATION OF THE TRANSFER OF SHARES.
Registration of the transfer of shares of the corporation shall be made
only on the stock transfer books of the corporation. In order to
register a transfer, the record owner shall surrender the shares to the
corporation for cancellation, properly endorsed by the appropriate
person or persons with reasonable assurances that the endorsements are
genuine and effective. Subject to the provisions of ss.33-7-300(d) of
the Act (relating to shares held in a voting trust), and unless the
corporation has established a procedure by which a beneficial owner of
shares held by a nominee is to be recognized by the corporation as the
owner, the person in whose name shares stand on the books of the
corporation shall be deemed by the corporation to be the owner thereof
for all purposes.
6.4 RESTRICTIONS ON TRANSFER OF SHARES PERMITTED.
The board of directors (or shareholders) may impose restrictions on the
transfer or registration of transfer of shares (including any security
convertible into, or carrying a right to subscribe for or acquire
shares). A restriction does not affect shares issued before the
restriction was adopted unless the holders of the shares are parties to
the restriction agreement or voted in favor of the restriction.
A restriction on the transfer or registration of transfer of shares may
be authorized:
(1) to maintain the corporation's status when it is dependent on
the number or identity of its shareholders;
(2) to preserve exemptions under federal or state securities law;
(3) for any other reasonable purpose.
A restriction on the transfer or registration of transfer of shares
may:
(1) obligate the shareholder first to offer the corporation or
other persons (separately, consecutively, or simultaneously)
an opportunity to acquire the restricted shares;
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(2) obligate the corporation or other persons (separately,
consecutively, or simultaneously) to acquire the restricted
shares;
(3) require the corporation, the holders or any class of its
shares, or another person to approve the transfer of the
restricted shares, if the requirement is not manifestly
unreasonable;
(4) prohibit the transfer of the restricted shares to designated
persons or classes of persons, if the prohibition is not
manifestly unreasonable.
A restriction on the transfer or registration of transfer of shares is
valid and enforceable against the holder or a transferee of the holder
if the restriction is authorized by this section and its existence is
noted conspicuously on the front or back of the certificate. Unless so
noted, a restriction is not enforceable against a person without
knowledge of the restriction.
6.5 ACQUISITION OF SHARES.
The corporation may acquire its own shares and unless otherwise
provided in the articles of incorporation, the shares so acquired
constitute authorized but unissued shares. If the articles of
incorporation prohibit the reissue of acquired shares, the number of
authorized shares is reduced by the number of shares acquired,
effective upon amendment of the articles of incorporation, which
amendment shall be adopted by the shareholders or the board of
directors without shareholder action. The article of amendment must be
delivered to the Secretary of State and must set forth:
(1) the name of the corporation;
(2) the reduction in the number of authorized shares, itemized by
class and series; and
(3) the total number of authorized shares, itemized by class and
series, remaining after reduction of the shares.
ARTICLE VII. DISTRIBUTIONS
7.1 DISTRIBUTIONS.
The board of directors may authorize, and the corporation may make,
distributions (including dividends on its outstanding shares) in the
manner and upon the terms and conditions provided by law and in the
corporation's articles of incorporation.
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ARTICLE VIII. CORPORATE SEAL
8.1 CORPORATE SEAL.
The board of directors may provide a corporate seal which may be
circular in form and have inscribed thereon any designation including
the name of the corporation, South Carolina as the state of
incorporation, and the words "Corporate Seal."
ARTICLE IX. EMERGENCY BYLAWS
9.1 EMERGENCY BYLAWS.
Unless the articles of incorporation provide otherwise, the following
provisions of this Article IX, Section 9.1 "Emergency Bylaws" shall be
effective during an emergency which is defined as when a quorum of the
corporation's directors cannot be readily assembled because of some
catastrophic event.
During such emergency:
(a) Notice of Board Meetings
Any one member of the board of directors or any one of the
following officers: chief executive officer, president, any
vice-president, secretary, or treasurer, may call a meeting of
the board of directors. Notice of such meeting need be given
only to those directors whom it is practicable to reach, and
may be given in any practical manner, including by publication
and radio. Such notice shall be given at least six hours prior
to commencement of the meeting.
(b) Temporary Directors and Quorum
One or more officers of the corporation present at the
emergency board meeting, as is necessary to achieve quorum,
shall be considered to be directors for the meeting, and shall
so serve in order of rank, and within the same rank, in order
of seniority. In the event that less than a quorum (as
determined by Article III, Section 3.6) of the directors are
present (including any officers who are to serve as directors
for the meeting), those directors present (including the
officers serving as directors) shall constitute a quorum.
(c) Actions Permitted to be taken
The board may as constituted in paragraph (b), and after
notice as set forth in paragraph (a):
(1) prescribe emergency powers to any officer of the
corporation;
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(2) delegate to any officer or director, any of the
powers of the board of directors;
(3) designate lines of succession of officers and agents,
in the event that any of them are unable to discharge
their duties;
(4) relocate the principal place of business, or
designate successive or simultaneous principal places
of business; and
(5) take any other action, convenient, helpful, or
necessary to carry on the business of the
corporation.
ARTICLE X. AMENDMENTS
10.1 AMENDMENTS.
The corporation's board of directors may amend or repeal any of the
corporation's bylaws unless:
(1) the articles of incorporation or the Act reserve this power
exclusively to the shareholders in whole or part; or
(2) the shareholders in adopting, amending, or repealing a
particular bylaw provide expressly that the board of directors
may not amend or repeal that bylaw; or
(3) the bylaw either establishes, amends, or deletes, a
supermajority shareholder quorum or voting requirement (as
defined in Section 2.8 of Article II).
Any amendment which changes the voting or quorum requirement for the
board must comply with Article III, Section 3.8, and for the
shareholders, must comply with Article II, Section 2.8.
The corporation's shareholders may amend or repeal the corporation's
bylaws even though the bylaws may also be amended or repealed by its
board of directors. Any notice of a meeting of shareholders at which
bylaws are to be adopted, amended, or repealed shall state that the
purpose, or one of the purposes, of the meeting is to consider the
adoption, amendment, or repeal of bylaws and contain or be accompanied
by a copy or summary of the proposal.
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EXHIBIT 10.1
October 20, 1999
Sun Bancshares, Inc.
c/o Thomas Bouchette
Murrells Inlet, SC 29576
In Re: Letter of Intent for Lease of lot for construction of Bank
Facility at intersection of Riverwood Drive and Highway 17
Bypass, Murrells Inlet, SC
Gentlemen:
The purpose of this Letter of Intent ("Letter") is to set forth certain
non-binding understandings and certain binding agreements between Sun
Bancshares, Inc. ("Lessee") and Prosser and Floyd, ("Lessor"), with respect to
the lease by Lessee of the lot for construction of bank facility, on the terms
and subject to the conditions set forth below.
The following numbered paragraphs reflect our understanding of the
matters described in them, but are not to constitute a complete statement of, or
a legally binding or enforceable agreement or commitment on the part of, Lessor
or Lessee, with respect to the matters described therein, although both parties
agree to negotiate in good faith towards or conclude any such agreement or
commitment.
1. Lease of Property.
(a) On the terms and subject to the conditions to be set
forth in a definitive, legally binding, written Lease
Agreement to be negotiated and entered into by Lessor
and Lessee to be executed by Lessor and Lessee
("Lease Agreement"), Lessee will lease an
approximately 1.3 acre corner lot (hereinafter
referred to as the "Property").
(b) The value of said Property will be computed on the
basis of Five Hundred Thousand and 00/100
($500,000.00) Dollars per acre.
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(c) The lease will be a triple net lease for a
twenty-five (25) year term with three five year
renewals. The rent will be on an absolute net basis.
The proposed rent schedule is as follows:
Year 1: Value of Property times 12%
(Return to Lessor)
Years 2-25: Year One plus CPI increase
(determined annually)
(d) After twenty-five (25) years, there will be an
appraisal of the property and the rent will be
adjusted at that time to provide a 12% return to
Lessor on the new value of the land. The rent will
thereafter be increased and adjusted annually by the
CPI. This does not include the improvements placed on
the property by Lessee.
2. Other Provisions.
The Lease Agreement will contain usual and customary representations,
warranties, covenants, and other agreements on behalf of Lessor and the Closing
will be subject to usual and customary conditions, including:
(a) Obtaining of necessary consent and approval from the
regulatory authorities or other third parties;
(b) Absence of pending or threatened litigation regarding
the facility;
(c) Satisfactory completion of Lessee's due diligence
investigation, which must be completed before the
signing of the definitive Lease Agreement;
(d) Delivery of customary legal opinions, closing
certificates, and other documentation.
Upon execution of counterparts of this Letter by you, the following
lettered paragraphs will constitute the legally binding and enforceable
agreement of Lessor and Lessee in recognition of the significant costs to be
borne by Lessor and Lessee in pursuing this transaction, and further, in
consideration of their mutual undertakings as to the matters described therein.
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(a) Consents. Lessor and Lessee will cooperate with one
another and proceed, as promptly as is reasonably
practical, to seek to obtain all necessary consents
and approvals from the regulatory authority and other
necessary third-parties and to endeavor to comply
with all other legal or contractual requirements for
or pre-conditions to the execution and consummation
of the Lease Agreement.
(b) Best Efforts. Lessor and Lessee will negotiate in
good faith and use their best efforts to arrive at a
mutually acceptable definitive Lease Agreement for
approval, execution, and delivery on the earliest
reasonable practicable date and to proceed with
transaction contemplated by the Agreement as promptly
as is reasonably practicable.
(c) Exclusive Dealing. Lessor and Lessee agree that
during the period in which this transaction is
pending that neither party will negotiate with any
other parties relative to any lease or sale of the
bank facility, or any part thereof.
(d) Costs. Lessor and Lessee will each be solely
responsible for and bear all of their own respective
expenses, including, without limitation, expenses of
legal counsel, accountants, and other advisors,
incurred at any time in connection with pursuing or
consummating the Lease Agreement and the transactions
contemplated thereby.
(e) Public Disclosure. Before the Closing, neither Lessor
nor Lessee shall make any public release of
information regarding the matters contemplated herein
except as both parties jointly authorize and approval
of any such joint press release in an agreed form.
(f) Confidentiality. Lessee agrees that it will not
disclose or use and will cause his officers,
directors, employees, representatives, agents and
advisors not to disclose or use, any Confidential
Information (as hereinafter defined) with respect to
Lessor furnished, or to be furnished by Lessor to
Lessee in connection herewith, at any time or in any
manner, or will not use such information
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other than in connection with its evaluation of the
lease of the bank facility.
For the purpose of this paragraph ("Confidential
Information") means any information identified as
such in writing to Lessee by Lessor. If the Lease of
the bank facility is not consummated, Lessee will
promptly return all documents, contracts, records, or
properties to Lessor. The provisions of this
paragraph shall survive the termination of this
Letter.
(g) Approval of Lease by OCC. Both parties understood
that two (2) appraisals must be obtained supporting
the Lease payments and the Lease must be approved by
the OCC; that the Lease is contingent upon approval
of Lease by the OCC.
(h) Termination of Letter of Intent. Either party hereto
may terminate this letter and thereafter this Letter
shall have no further force and effect and the
parties shall have no further obligations hereunder
if the Lease Agreement is not signed on or before
January 1, 2000, if such terminating party is not in
breach of any of the binding provisions.
Please sign and date this Letter in the spaces provided below to
confirm our mutual understandings and agreements as set forth in this Letter and
return a signed copy to the undesigned. If I do not receive a signed copy of
this Letter on or before November 1, 1999, I will assume you have no further
interest in pursuing this matter.
Very truly yours,
Prosser & Floyd, a partnership
By: /s/ Larry N. Prosser
--------------------------------------
Larry N. Prosser, Partner
LESSOR
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ACKNOWLEDGED AND AGREED TO:
Sun Bancshares, Inc.
By: /s/ Thomas Bouchette
------------------------------------------------
Thomas Bouchette, President
LESSEE
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EXHIBIT 10.2
THIS AGREEMENT CONTAINS A BINDING, IRREVOCABLE
AGREEMENT TO ARBITRATE AND IS SUBJECT TO ARBITRATION
PURSUANT TO TITLE 15, CHAPTER 47 (UNIFORM ARBITRATION ACT)
OF THE CODE OF LAWS OF SOUTH CAROLINA
STATE OF SOUTH CAROLINA )
) OPTION AGREEMENT
COUNTY OF GEORGETOWN ) (FOR LEASE)
This Option Agreement entered into this 12th day of November, 1999, by
Richmond Realty Company, LLC, a South Carolina Limited Liability Company and
C.C. Grimes, Jr. as Trustee (Lessor) and Sun Bancshares, Inc., a South Carolina
Corporation (Lessee).
W I T N E S S E T H
1. As used herein, the following terms shall have the following
meanings:
a. Agreement: This Option Agreement, any addendums and
modifications hereof or thereof.
b. Closing: Closing shall occur on or before May 1, 2000. The
date, time and location of Closing shall be on such date and at such
time and location mutually agreeable to Lessee and Lessor.
c. Defect of Title: Any impediment whatsoever affecting the
marketability of the title to the Property as determined by Lessee's
attorney other than Permitted Encumbrances and for which affirmative
coverage cannot be obtained through Title Insurance.
d. Option Money: The monies paid by Lessee to Lessor herewith for
this option created by this Agreement; said option money is to be paid
in monthly installments of Four Thousand Five Hundred Eighty-three and
33/100's ($4,583.33) Dollars each commencing on the date of this Option
Agreement and continuing monthly thereafter for the term of this option
on the first day of each month (the "due date"). Should Lessee fail to
make any monthly option payment as provided herein with five (5) days
of its due date, the Lessor may elect to terminate this Option, and
Lessee shall forfeit all rights hereunder including all option monies
previously paid to Lessor.
e. Permitted Encumbrances: Matters affecting title which Lessee
agrees to take the Property subject to as set forth in Exhibit "B"
attached hereto.
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f. Property: The real estate described on Exhibit "A" attached
hereto together with all improvements, rights, titles and interest
appurtenant thereto.
g. Terms of Lease: The lease will be a triple net lease for an
initial thirty (30) year term ending April 30, 2030 with four (4) five
(5) year renewal options to be exercised only as specified in Paragraph
"1k.", below. The rent will be on an absolute net basis. The proposed
rent schedule is as follows:
For years 1-3, the rent will be Fifty-five Thousand and
No/100's ($55,000.00) Dollars per year. For the remaining
years of the initial term, beginning the fourth (4th) year and
every three (3) years thereafter, the rent will be adjusted by
the corresponding change in the Consumer Price Index
(hereinafter CPI) over the prior three (3) year period. Should
the Lessee exercise its renewal option as herein provided in
Paragraph "1k." below, the rental for any such option period
shall be adjusted to provide a twelve (12%) percent annual
return to Lessor on the value of the land, minus all
improvements thereon, with such rental thereafter to be
adjusted by the CPI in the third (3rd) year for the balance of
that option period. Should the Lessor and Lessee fail to agree
on the value of the land within (30) days of the notice of
exercising such option, the value of the land shall be
established by the appraisal of a licensed appraiser mutually
agreed upon by the Lessor and Lessee, with the expense
therefor to be shared equally between the parties. If the
Lessor and Lessee are unable to mutually agree upon an
appraiser, each shall select a licensed appraiser and the two
(2) appraisers so selected shall select a third, and the
average value as determined by all three (3) appraisers shall
be conclusive as to the value of the land. All rent as
provided herein shall be paid annually in advance on or before
May 1 of each year.
h. Lessee: Sun Bancshares, Inc., its successors and assigns.
i. Lessor: Richmond Realty Company, LLC and C.C. Grimes, Jr. as
Trustee, their heirs, successors, assigns, executors and
administrators.
j. Term: This option shall commence on the date this Agreement is
executed by Lessor and shall terminate at midnight May 1, 2000.
k. Exercise of Renewal Options: Lessee may only exercise renewal
options as specified in Paragraph "1.g.", above, by giving the Lessor
at least 180 days written notice prior to the expiration of any term
indicating the Lessee's intention to exercise such option.
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GRANT OF OPTION
2. Grant: In consideration of the Option Money paid herewith, the
receipt and sufficiency of which is acknowledged, Lessor has granted, bargained,
sold and conveyed and by these presents does grant, bargain, sell and convey
unto Lessee an option to lease the property during the Term upon such terms and
conditions set forth in this Agreement.
EXERCISE OF OPTION
3.1 Exercise: Provided Lessee is not in default under any of the terms
hereof or this Option has not been terminated, Lessee may exercise this option
at any time during its term upon ten (10) days notice to Lessor as provided for
herein in writing and by paying to Lessor within the term of this option the
first years rent payment set forth in Item 1(g), less a credit for the option
money which has been previously paid to Lessor.
3.2 Failure to Exercise: If Lessee fails to exercise the option during
the term hereof, Lessor shall retain all Option Money paid by Lessee, and the
within Agreement shall be of no further force or effect, with neither party
having any further obligation nor liability to the other. Upon failure of Lessee
to exercise this option in its entirety, Lessee and/or Lessor shall file of
record in the office of the Register of Deeds for Georgetown County, South
Carolina a statement that this option is of no further effect and is null and
void.
DELIVERIES, REPRESENTATIONS AND WARRANTIES OF LESSOR
4.1 Conveyance of Title: At closing, Lessor must furnish Lessee good
and marketable leasehold title to the Property, subject only to the "Permitted
Encumbrances" set forth on Exhibit "B" and any other title matters acceptable to
Lessee.
4.2 Memorandum of Lease: The parties agree to also execute and deliver
a Memorandum of Lease with customary basic terms in recordable form for
recording in the State of South Carolina.
4.3 Status of Title: Lessor has good and marketable title in fee simple
to the Property free and clear of all liens, encumbrances, restrictions,
assessments except as set forth in Exhibit "B" attached hereto.
4.4 Default by Parties: In the event either party fails to comply with
or perform any condition to be complied with or any covenant or other obligation
to be performed by either party, respectively, under the terms and provisions of
this Agreement, or in the event any representation or warranty of either party,
respectively, contained herein is not true and correct as of the date hereof and
as of the Closing date, either party shall be entitled to exercise any and all
rights and remedies available to it at law or in equity, including, without
limitation, (I) an action at law equity against the offending party for the
specific performance by either party being liable for all attorney's fees in
connection with such action; and (ii) an action in equity against the offending
party for the specific performance by either party of the terms and provisions
of this Agreement by either party being liable for all attorney's fees in
connection with such action; and (iii) in the event that Lessor fails to convey
title as provided in Paragraph 4.1 and 4.2 hereof or defaults under this
Agreement then Lessee shall have the right to terminate and receive immediate
refund of Option Money paid pursuant to this option, at the option of Lessee,
provided, however, such remedy is not exclusive of (I) and (ii); (iv) in the
event Lessee defaults under this Agreement and fails to cure same after thirty
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(30) days written notice, Lessor shall have the right, in addition to any other
remedies hereinabove provided, to immediately terminate this Agreement and all
of Lessee's rights hereunder.
4.5 Brokerage: Lessor and Lessee both represent that Commercial LandTec
and Century 21, Grimes & Associates are the only brokers involved in this
transaction and the Lessor shall be responsible for all commissions due and
payable, if any, to these two (2) brokers. Each party shall indemnify and hold
harmless the other from and against all liability, loss, cost and expense,
whether or not meritorious, for any claims for real estate or brokerage fees,
commission, or expenses in connection with this transaction due, or claimed by,
any other brokers not disclosed herein.
4.6 Condition of Property: From the date hereof through Closing neither
Lessor nor Lessee may use the property in any manner inconsistent with the
intended use as bank by Lessee. Changes in the property because of an act of God
or otherwise not brought about by Lessor shall not constitute an act of default
by Lessor.
4.7 Organization and Authority: That Richmond Realty Company, LLC is a
limited liability company duly organized, validly existing and in good standing
under the laws of the State of South Carolina, and the officers who are
executing this Agreement on behalf of Lessor have all requisite power and
authority to sign and deliver this Agreement. That C.C. Grimes, Jr. is the duly
authorized Trustee under Deed of May Allston Pyatt dated December 29, 1972,
recorded in Georgetown County in Deed Book 109 at Page 743 and has all requisite
power and authority to sign and deliver this Agreement. That Lessee is a
corporation duly organized, validly existing and in good standing under the laws
of the State of South Carolina and the officers who are executing this Agreement
on behalf of Lessee have all requisite power and authority to sign and deliver
this Agreement.
4.8 Availability of Utilities: Lessor represents that to the best of
its knowledge, adequate water, sewer, electrical, telephone and cable TV
services are available nearby to serve the proposed bank of Lessee; that Lessor
is unaware of disproportionate cost for these services; and that Lessor will
allow Lessee to tie onto the existing water and sewer lines now belonging to
Lessor without any payment to Lessor. Lessor shall grant to Lessee at not cost
to Lessee, such easements as are necessary to construct, maintain and repair
such utilities and drainage as are required by governmental authorities to
dedicate same and by utility companies or authorities, and as are necessary for
ingress, egress, access, construction, and maintenance. These easements shall
cross under, over, and through the Lessor's property at location required by
such companies or governmental authorization, or at locations approved by
Lessor, which approval shall not be unreasonably withheld.
4.9 Environmental Warranties: Lessor represents that it does not know
and has no reason to know that any hazardous substances now or at the time of
closing, as contemplated under the Comprehensive Environmental Response,
Compensation and Liability Act of 1980 ("CERCLA") (42 U.S.C. ss.9601 et seq.) as
amended, was disposed of on, in or at the location of the Property and that no
enforcement actions are threatened or pending. These representations will
survive the closing of the property herein. Lessor shall provide Lessee with an
Affidavit at closing that to the best of their knowledge the above
representation is true and correct.
4
<PAGE> 5
4.10 Zoning: Lessor represents that the Property is zoned PUD General
Commercial which is consistent with use of the Property as contemplated by
Lessee.
4.11 Access: Lessor represents that the Property has unrestricted and
direct access and ingress and egress to and from abutting highways of the
Property; there are no encroachments upon the Property; that there are no
existing violations of zoning ordinances or other laws, ordinances, or
restrictions applicable to the Property.
DELIVERIES, REPRESENTATIONS AND WARRANTIES OF LESSEE
5.1 Lease Payment: At the Closing, Lessee shall pay the first year
lease payment thereof to Lessor in cash or certified funds less the option money
credit as hereinabove set forth.
5.2 Richmond Place Road Maintenance: At closing, Lessee will execute
and deliver to Lessor, for the benefit of the Lessor, a covenant and agreement
to contribute to the future cost of the upkeep and maintenance of the streets
and roads within Richmond Place PUD; said costs to be calculated on a percentage
basis as determined by the amount of acreage of the Property as compared to the
total acreage of all property with Richmond Place, exclusive of roads and
rights-of-way. The agreement shall further provide that all decisions regarding
expenditure of funds for upkeep and maintenance shall be made and determined a
majority vote of the tenants and/or owners within Richmond Place.
INSPECTION OF PROPERTY
6.1 Inspection: Lessor agrees that as of the date of this Agreement,
Lessee, its agents and representatives, shall at all times before the Closing,
have the privilege of going upon the Property to inspect, examine, survey and
otherwise do what Lessee deems necessary for the development of the Property as
a bank in keeping with terms hereof.
MISCELLANEOUS
7.1 Materialman and Mechanics Liens: As to any property standing in the
name of Lessor upon which Lessee performs any construction, surveying,
engineering or other work or construction, Lessee agrees that no materialman's
or mechanics' liens shall attach to the subject property, and that in the event
such liens should attach, Lessee agrees to remove same within thirty (30) days
and in the event that Lessee fails to so remove that Lessor may remove same at
Lessee's expense and be reimbursed by Lessee, including Lessor's attorneys' fees
and interest on all expenditures by Lessor from the date of the same at the
judgment lawful rate of interest permitted by the laws of the State of South
Carolina.
7.2 Property Tax Adjustments at Closing: With respect to real estate
taxes assessed on the subject property, the parties hereto agree to prorate, as
of closing, the amount of taxed paid or payable for the applicable year. Roll
back taxes, if any, shall be the responsibility of Lessor.
7.3 Costs and Expenses: Unless otherwise herein stated, Lessor and
Lessee shall each bear the closing costs (including stamps, documentary fees,
and transfer taxes) respectfully incurred by them in connection with this
Agreement as are imposed by custom and practice in the State of South Carolina
upon Lessee and Lessor respectively in such transactions.
5
<PAGE> 6
7.4 Applicable Law: This Agreement and the instruments referred to
herein embody the entire Agreement and understanding between the parties hereto
relating to the subject matter hereof and replaces any prior Agreement and no
modifications will be binding unless in writing and signed by Lessor and Lessee.
Any terms of this Agreement which by their terms are to be performed or
continuing after Closing shall be deemed to survive Closing.
7.5 Severability: If any term or provision of this option or the
application thereof to any person or circumstances shall, to any extent, be
invalid or unenforceable, shall not be affected thereby and each term and
provision of this option shall be valid and shall be enforced to the fullest
extent permitted by law.
7.6 Title and Caption: The titles or captions of the provisions of
this Agreement are merely descriptive and are not representations of matters
included or excluded from the provisions.
7.7 Gender and Number: Whenever the context so requires, references
herein to the neuter gender shall include the masculine and/or feminine gender,
and the singular number shall include the plural.
7.8 Additional Documents: The parties hereto hereby agree to execute,
acknowledge (if necessary) and deliver such other documents or instruments
including, but not limited to, affidavits of Lessor as may be required by any
title company and memorandums of this Agreement in form sufficient for
recording, as the other party (or its designee) may reasonably require from time
to time to carry out the intents and purposes of this Agreement.
7.9 Time is of the Essence: Time is of the essence in payment of
purchase money and performance of all terms of option.
7.10 Notices, Demands and Payments: Notices and demands hereunder shall
be given only by registered or certified letter return receipt requested and
shall be mailed with proper and adequate postage affixed to the parties hereto
at the following addresses:
LESSOR LESSEE
------ ------
Richmond Realty Company, LLC Sun Bancshares, Inc.
John P. Grimes P. O. Box 1359
1112 Highmarket Street Murrells Inlet, SC 29576
Georgetown, S.C. 29440 Att: Thomas Bouchette
And To: With Copy To:
C.C. Grimes, Jr., Trustee Dalton B. Floyd, Jr.
Post Office Drawer 459 Post Office Drawer 14607
Georgetown, S.C. 29442 Surfside Beach, S.C. 29587-4607
All Option Payments shall be mailed to Richmond Realty Company, ATT:
C.C. Grimes, Jr., P. O. Drawer 459, Georgetown, SC 29442.
6
<PAGE> 7
7.11 Binding Effect: The Option Agreement shall be binding upon and
inure to the benefit of the parties hereto and their heirs, devisees, executors,
administrators, and assignees.
7.12 Arbitration: The parties agree that any dispute arising between
the parties regarding this Agreement or the breach thereof shall be submitted to
arbitration. Any matter herein to be arbitrated will be arbitrated on the
written request of either party, who shall name an arbitrator at the time of
making such request. The other party shall select an arbitrator within ten (10)
days after written request with the power being given to those arbitrators to
select a third if the two first appointed are unable to agree within thirty (30)
days after the initial request for arbitration. The majority opinion will
control in the case of three arbitrators.
Whenever the parties hereto are each required to appoint an arbitrator
and one of the parties refuses or fails to appoint such arbitrator after the
specified notice from the other party; the Clerk of Court for Georgetown County,
South Carolina, shall be empowered to appoint such other arbitrator upon the
petition of the other party. Whenever the two arbitrators designated in the
manner provided for herein shall fail within the ten (10) days stipulated herein
to agree upon the third arbitrator, if the first two are unable to agree, then
the Clerk of Court for Georgetown County, South Carolina, shall be empowered to
appoint such third arbitrator upon the petition of either party hereto. The
Clerk may make such appointment ex parte but will give Lessor, Lessee and the
other arbitrators notice thereof by regular U.S. Mail. All costs of such
arbitration shall be borne equally by the parties.
7.13 Disclaimer of Joint Venture: Lessor and Lessee certify and
acknowledge that they are not participating in a joint venture and fully
disclaim same.
7.14 Assignment: Lessee may not assign its rights hereunder without the
express written consent of the Lessor, however such consent will not be
unreasonably withheld. No such assignment shall constitute, or be construed as,
a release or discharge of the Lessee with respect to its obligations under the
Lease, unless expressly agreed to in writing by the Lessor.
7.15 Architectural Approval By Lessor: Lessee agrees that the
exterior appearance of all improvements placed on the property must be reviewed
and approved, in advance, by the Lessor, provided however, such approvals will
not be unreasonably withheld.
7
<PAGE> 8
IN WITNESS WHEREOF, the Parties have set their hands and seals the day
and year first above written.
IN THE PRESENCE OF: LESSOR:
RICHMOND REALTY COMPANY, LLC
Signature Illegible By: Signature illegible
- --------------------------------- -----------------------------------
Authorized Member
Signature Illegible By: /s/ C.C. Grimes, Jr
- --------------------------------- -----------------------------------
As to Lessor C.C. Grimes, Jr., Trustee
LESSEE:
SUN BANCSHARES, INC.
Signature Illegible By: /s/ Thomas Bouchettte
- ---------------------------------- -----------------------------------
Thomas Bouchette, President
Signature Illegible
- ----------------------------------
As to Lessee
8
<PAGE> 9
EXHIBIT "A"
All that certain piece, parcel or lot of land situate, lying and being in the
City and County of Georgetown, State of South Carolina LOCATED ON THE SOUTH SIDE
OF THE INTERSECTION OF FRASER STREET AND (FUTURE) INDIGO HALL AVENUE, CONTAINING
ONE (1.10) ACRES and more particularly designated as Phase III-A on a sketch
attached hereto as Exhibit "A-1" and incorporated herein by reference.
[Exhibit "A-1," Sketch of Phase III-A appears here]
9
<PAGE> 10
EXHIBIT "B"
Permitted encumbrances shall be:
1) Roll Back taxes to be paid by Lessor;
2) Property Taxes for the current tax year not yet due and payable;
3) Standard Exceptions of a ALTA Owners Title Policy;
4) All terms and provisions provided for in this Option Agreement.
10
<PAGE> 1
EXHIBIT 10.4
FORM OF
WARRANT AGREEMENT
THIS AGREEMENT is made and entered into as of the __ day of _________,
1999, by and between SUN BANCSHARES, INC., a South Carolina corporation (the
"Corporation"), and _________________________ (the "Warrant Holder").
W I T N E S S E T H
- - - - - - - - - -
WHEREAS, the Warrant Holder has served as an organizer in the formation
of the Corporation and the formation and establishment of SunBank (the "Bank"),
the wholly-owned subsidiary of the Corporation; and
WHEREAS, the Warrant Holder has purchased __________ shares of the
Corporation's common stock, no par value per share (the "Common Stock"), at a
price of $10.00 per share; and
WHEREAS, the Warrant Holder will provide services to the Corporation as
a director of the Corporation; and
WHEREAS, the Corporation, in recognition of the financial risk
undertaken by the Warrant Holder in organizing the Bank and in order to
encourage the Warrant Holder's continued involvement in the successful operation
of the Corporation and the Bank, desires to provide the Warrant Holder with the
right to acquire the same number of shares as the Warrant Holder purchased in
the initial stock offering of the Corporation's Common Stock.
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. Grant of Warrant. Subject to the terms, restriction,
limitations and conditions stated herein, the Corporation hereby grants to the
Warrant Holder the right (the "Warrant") to purchase all or any part of an
aggregate of _______________ shares of the Common Stock, subject to adjustment
in accordance with Section 7 hereof.
2. Term.
(a) The term for the exercise of the Warrant begins at 9:00
a.m., Eastern Time, on the first anniversary of the date that the
Corporation first issues its common stock (the "Issue Date") and ends
at 5:00 p.m., Eastern Time, on the earlier of the tenth anniversary of
the issuance date or 90 days after the Warrant Holder ceases to serve
as a director of the Corporation (the "Expiration Time"). The Warrant
will vest at the rate of one-third (1/3)
<PAGE> 2
per year beginning on the first anniversary of the Issue Date. On each
successive anniversary of the Issue Date, an additional one-third (1/3)
of the Warrant shall vest. The vested portion of the Warrant may be
exercised in whole, or from time to time in part, at any time prior to
the Expiration Time.
(b) Notwithstanding any other provision of this Agreement, if
the Bank's capital falls below the minimum requirements as determined
by the primary federal or state regulator of the Corporation or the
Bank (the "Regulator"), the Regulator may direct the Corporation to
require the Warrant Holder to exercise or forfeit his or her Warrant.
The Corporation will notify the Warrant Holder within 45 days from the
date the Regulator notifies the Corporation in writing that the Warrant
Holder must exercise or forfeit this Warrant. The Corporation will
cancel the Warrant if not exercised within 21 days of the Corporation's
notification to the Warrant Holder. The Corporation agrees to comply
with any Regulator request that the Corporation invoke its right to
require the Warrant Holder to exercise or forfeit his or her Warrant
under the circumstances stated above.
3. Purchase Price. The price per share to be paid by the Warrant Holder
for the shares of Common Stock subject to this Warrant shall be $10.00, subject
to adjustment as set forth in Section 6 hereof (such price, as adjusted,
hereinafter called the "Purchase Price").
4. Exercise of Warrant. The Warrant may be exercised by the Warrant
Holder by delivery to the Corporation, at the address of the Corporation set
forth under Section 10(a) hereof or such other address as to which the
Corporation advises the Warrant Holder pursuant to Section 10(a) hereof, of the
following:
(a) Written notice of exercise specifying the number of shares
of Common Stock with respect to which the Warrant is being exercised;
and
(b) A cashier's or certified check payable to the Corporation
for the full amount of the aggregate Purchase Price for the number of
shares as to which the Warrant is being exercised.
5. Issuance of Shares. Upon receipt of the items set forth in Section
4, and subject to the terms hereof, the Corporation shall cause to be delivered
to the Warrant Holder stock certificates for the number of shares specified in
the notice to exercise, such share or shares to be registered under the name of
the Warrant Holder. Notwithstanding the foregoing, the Corporation shall not be
required to issue or deliver any certificate for shares of the Common Stock
purchased upon exercise of the Warrant or any portion thereof prior to the
fulfillment of the following conditions:
(a) The admission of such shares for listing on all stock
exchanges on which the Common Stock is then listed;
(b) The completion of any registration or other qualification
of such shares which the Corporation shall deem necessary or advisable
under any federal or state law or under the rulings or regulations of
the Securities and Exchange Commission or any other governmental
regulatory body;
2
<PAGE> 3
(c) The obtaining of any approval or other clearance from any
federal or state governmental agency or body, which the Corporation
shall determine to be necessary or advisable; or
(d) The lapse of such reasonable period of time following the
exercise of the Warrant as the Corporation from time to time may
establish for reasons of administrative convenience.
The Corporation shall have no obligation to obtain the fulfillment of
these conditions; provided, however, the Warrant Holder shall have one full
calendar year after these conditions have been fulfilled to exercise his or her
warrants granted herein, notwithstanding any other provision herein.
6. Antidilution, Etc.
(a) If, prior to the Expiration Time, the Corporation shall
subdivide its outstanding shares of Common Stock into a greater number
of shares, or declare and pay a dividend of its Common Stock payable in
additional shares of its Common Stock, the Purchase Price as then in
effect shall be proportionately reduced, and the number of shares of
Common Stock then subject to exercise under the Warrant (and not
previously exercised) shall be proportionately increased.
(b) If, prior to the Expiration Time, the Corporation shall
combine its outstanding shares of the Common Stock into a smaller
number of shares, the Purchase Price, as then in effect, shall be
proportionately increased, and the number of shares of Common Stock
then subject to exercise under the Warrant (and not previously
exercised), shall be proportionately reduced.
7. Reorganization, Reclassification, Consolidation or Merger. If,
prior to the Expiration Time, there shall be any reorganization or
reclassification of the Common Stock (other than a subdivision or combination of
shares provided for in Section 6 hereof), or any consolidation or merger of the
Corporation with another entity, the Warrant Holder shall thereafter be entitled
to receive, during the term hereof and upon payment of the Purchase Price, the
number of shares of stock or other securities or property of the Corporation or
of the successor entity (or its parent company) resulting from such
consolidation or merger, as the case may be, to which a holder of the Common
Stock, deliverable upon the exercise of this Warrant, would have been entitled
upon such reorganization, reclassification, consolidation or merger; and in any
case, appropriate adjustment (as determined by the Board of Directors of the
Corporation in its sole discretion) shall be made in the application of the
provisions herein set forth with respect to the rights and interest thereafter
of the Warrant Holder to the end that the provisions set forth herein (including
the adjustment of the Purchase Price and the number of shares issuable upon the
exercise of this Warrant) shall thereafter be applicable, as near as may
reasonably be practicable, in relation to any shares or other property
thereafter deliverable upon the exercise hereof.
8. Notice of Adjustments. Upon any adjustment provided for in
Section 6 or Section 7 hereof, the Corporation, within thirty (30) days
thereafter, shall give written notice thereof to the Warrant Holder at the
address set forth under Section 10(a) hereof or such other address as the
3
<PAGE> 4
Warrant Holder may advise the Corporation pursuant to Section 10(a) hereof,
which notice shall state the Warrant Price as adjusted and the increased or
decreased number of shares purchasable upon the exercise of this Warrant,
setting forth in reasonable detail the method of calculation of each.
9. Transfer and Assignment.
(a) Neither this Warrant nor any rights hereunder are
assignable or transferable by the Warrant Holder otherwise than by will
or under the laws of descent and distribution. During Warrant Holder's
lifetime, this Warrant is exercisable only by the Warrant Holder (or by
the Warrant Holder's guardian or legal representative, should one be
appointed). More particularly, but without limiting the generality of
the foregoing, this Warrant may not be assigned, transferred (except as
aforesaid), pledged or hypothecated in any way (whether by operation of
law or otherwise) and shall not be subject to execution, attachment or
similar process. Any attempted assignment, transfer, pledge,
hypothecation or other disposition of this Warrant shall be null and
void and without legal effect.
(b) Shares of Common Stock acquired by exercise of the Warrant
granted hereby may not be transferred or sold unless the transfer is
exempt from further regulatory approval or otherwise permissible under
applicable law, including state and federal securities laws, and will
bear a legend to this effect.
10. Miscellaneous.
(a) All notices, requests, demands and other communications
required or permitted hereunder shall be in writing and shall be deemed
to have been duly given when delivered by hand, telegram or facsimile
transmission, or if mailed, by postage prepaid first class mail, on the
third business day after mailing, to the following address (or at such
other address as a party may notify the other hereunder):
To the Corporation:
Sun Bancshares, Inc.
------------------------------------------
------------------------------------------
Attention: Thomas Bouchette, President
To the Warrant Holder:
------------------------------------------
------------------------------------------
------------------------------------------
4
<PAGE> 5
(b) The Corporation covenants that it has reserved and will
keep available, solely for the purpose of issue upon the exercise
hereof, a sufficient number of shares of Common Stock to permit the
exercise hereof in full.
(c) No holder of this Warrant, as such, shall be entitled to
vote or receive dividends with respect to the shares of Common Stock
subject hereto or be deemed to be a shareholder of the Corporation for
any purpose until such Common Stock has been issued.
(d) This Warrant may be amended only by an instrument in
writing executed by the party against whom enforcement of amendment is
sought.
(e) This Warrant may be executed in counterparts, each of
which shall be deemed an original, but all of which shall constitute
one and the same instrument.
(f) This Warrant shall be governed by and construed and
enforced in accordance with the laws of the State of South Carolina.
[The remainder of this page is intentionally left blank.]
5
<PAGE> 6
IN WITNESS WHEREOF, the Corporation has caused this Warrant to be
signed by its duly authorized officers and its corporate seal to be affixed
hereto, and the Warrant Holder has executed this Warrant under seal, all as of
the day and year first above written.
SUN BANCSHARES, INC.
By:
-------------------------------------
Thomas Bouchette
President
WARRANT HOLDER
(SEAL)
---------------------------------
6
<PAGE> 1
EXHIBIT 10.7
PROMISSORY NOTE
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
PRINCIPAL LOAN DATE MATURITY LOAN NO CALL COLLATERAL ACCOUNT OFFICER INITIALS
$850,000.00 01-26-2000 09-30-2000 JKG
- ----------------------------------------------------------------------------------------------------------------------------------
Reference in the shaded area are for lender's use only and do not limit the applicability of this document to any particular loan
or item.
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Borrower: Sun Bancshares, Inc. (IO) Lender: THE BANKERS BANK
P.O. Box 1359 2410 PACES FERRY ROAD
Murrells Inlet, SC 29576 600 PACES SUMMIT
ATLANTA, GA 30339
<TABLE>
==============================================================================================
<S> <C> <C>
Principal Amount: $850,000.00 Initial Rate: 8.000% Date of Note: January 26, 2000
</TABLE>
PROMISE TO PAY. SUN BANCSHARES, INC. (IO) ("BORROWER") PROMISES TO PAY TO THE
BANKERS BANK ("LENDER"), OR ORDER, IN LAWFUL MONEY OF THE UNITED STATES OF
AMERICA, THE PRINCIPAL AMOUNT OF EIGHT HUNDRED FIFTY THOUSAND & 00/100
DOLLARS ($850,000.00) OR SO MUCH AS MAY BE OUTSTANDING, TOGETHER WITH
INTEREST ON THE UNPAID OUTSTANDING PRINCIPAL BALANCE OF EACH ADVANCE.
INTEREST SHALL BE CALCULATED FROM THE DATE OF EACH ADVANCE UNTIL REPAYMENT OF
EACH ADVANCE.
PAYMENT. BORROWER WILL PAY THIS LOAN IN ONE PAYMENT OF ALL OUTSTANDING
PRINCIPAL PLUS ALL ACCRUED UNPAID INTEREST ON SEPTEMBER 30, 2000. IN
ADDITION, BORROWER WILL PAY REGULAR QUARTERLY PAYMENTS OF ACCRUED UNPAID
INTEREST BEGINNING APRIL 28, 2000, AND ALL SUBSEQUENT INTEREST PAYMENTS ARE
DUE ON THE SAME DAY OF EACH QUARTER AFTER THAT. Borrower will pay Lender at
Lender's address shown above or at such other place as Lender may designate
in writing. Unless otherwise agreed or required by applicable law, payments
will be applied first to accrued unpaid interest, then to principal, and any
remaining amount to any unpaid collection costs and late charges.
VARIABLE INTEREST RATE. The interest rate on this Note is subject to change
from time to time based on changes in an index which is the Prime rate as
published in the Money Rates section of the Wall Street Journal. (the
"Index"). If two or more rates exist, then the highest rate will prevail.
Lender will tell Borrower the current Index rate upon Borrower's request.
Borrower understands that Lender may make loans based on other rates as well.
The interest rate change will not occur more often than each day. THE INDEX
CURRENTLY IS 8.500% PER ANNUM. THE INTEREST RATE TO BE APPLIED TO THE UNPAID
PRINCIPAL BALANCE OF THIS NOTE WILL BE AT A RATE OF 0.500 PERCENTAGE POINTS
UNDER THE INDEX, RESULTING IN AN INITIAL ANNUAL RATE OF SIMPLE INTEREST OF
8.000%. NOTICE: Under no circumstances will the interest rate on this Note be
more than the maximum rate allowed by applicable law.
PREPAYMENT. Borrower may pay without penalty all or a portion of the amount
owed earlier than it is due. Early payments will not, unless agreed to by
Lender in writing, relieve Borrower of Borrower's obligation to continue to
make payments of accrued unpaid interest. Rather, they will reduce the
principal balance due.
LATECHARGE. If a payment is 15 DAYS OR MORE LATE, Borrower will be charged
$100.00.
DEFAULT. Borrower will be in default if any of the following happens: (a)
Borrower fails to make any payment when due. (b) Borrower breaks any promise
Borrower has made to Lender, or Borrower falls to comply with or to perform
when due any other term, obligation, covenant, or condition contained in this
Note or any agreement related to this Note, or in any other agreement or loan
Borrower has with Lender. (c) Any representation or statement made or
furnished to Lender by Borrower or on Borrower's behalf is false or
misleading in any material respect either now or at the time made or
furnished. (d) Borrower becomes insolvent, a receiver is appointed for any
part of Borrower's property, Borrower makes an assignment for the benefit of
creditors, or any proceeding is commenced either by Borrower or against
Borrower under any bankruptcy or insolvency laws. (e) Any creditor tries to
take any of Borrower's property on or in which Lender has a lien or security
interest. This includes a garnishment of any of Borrower's accounts with
Lender. (f) Any guarantor dies or any of the other events described in this
default section occurs with respect to any guarantor of this Note. (g) A
material adverse change occurs in Borrower's financial condition, or Lender
believes the prospect of payment or performance of the Indebtedness is
impaired. (h) Lender in good faith deems itself insecure.
LENDER'S RIGHTS. Upon default, Lender may declare the entire unpaid principal
balance on this Note and all accrued unpaid interest immediately due, without
notice, and then Borrower will pay that amount. Upon default, including
failure to pay upon final maturity, Lender, at its option, may also, if
permitted under applicable law, increase the variable interest rate on this
Note 3.000 percentage points. The interest rate will not exceed the maximum
rate permitted by applicable law. Lender may hire or pay someone else to help
collect this Note if Borrower does not pay. Borrower also will pay Lender
that amount. This includes, subject to any limits under applicable law,
Lender's, costs of collection, including court costs and fifteen percent
(15%) of the principal plus accrued interest as attorneys' fees, if any sums
owing under this Note are collected by or through an attorney-at-law, whether
or not there is a lawsuit, and legal expenses for bankruptcy proceedings
(including efforts to modify or vacate any automatic stay or injunction),
appeals, and any anticipated post-judgment collection services. If not
prohibited by applicable law, Borrower also will pay any court costs, in
addition to all other sums provided by law. THIS NOTE HAS BEEN DELIVERED TO
LENDER AND ACCEPTED BY LENDER in THE STATE OF GEORGIA. SUBJECT TO THE
PROVISIONS ON ARBITRATION, THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF GEORGIA.
DISHONORED ITEM FEE. Borrower will pay a fee to Lender of twenty dollars
($20.00) or five percent (5%) of the face amount of the check, whichever is
greater, if Borrower makes a payment on Borrower's loan and the check or
preauthorized charge with which Borrower pays is later dishonored.
RIGHT OF SETOFF. Borrower grants to Lender a contractual possessory security
interest in, and hereby assigns, conveys, delivers, pledges, and transfers to
Lender all Borrower's right, title and interest in and to, Borrower's
accounts with Lender (whether checking, savings, or some other account),
including without limitation all accounts held jointly with someone else and
all accounts Borrower may open in the future, excluding however all IRA and
Keogh accounts, and all trust accounts for which the grant of a security
interest would be prohibited by law. Borrower authorizes Lender, to the
extent permitted by applicable law, to charge or setoff all sums owing on
this Note against any and all such accounts.
<PAGE> 2
01-26-2000 PROMISSORY NOTE PAGE 2
LOAN NO (CONTINUED)
===============================================================================
LINE OF CREDIT. This Note evidences a revolving line of credit. Advances
under this Note, as well as directions for payment from Borrower's accounts,
may be requested orally or in writing by Borrower or by an authorized person.
Lender may, but need not, require that all oral requests be confirmed in
writing. Borrower agrees to be liable for all sums either: (a) advanced in
accordance with the instructions of an authorized person or (b) credited to
any of Borrower's accounts with Lender. The unpaid principal balance owing on
this Note at any time may be evidenced by endorsements on this Note or by
Lender's internal records, including daily computer print-outs. Lender will
have no obligation to advance funds under this Note if: (a) Borrower or any
guarantor is in default under the terms of this Note or any agreement that
Borrower or any guarantor has with Lender, including any agreement made in
connection with the signing of this Note; (b) Borrower or any guarantor
ceases doing business or is insolvent; (c) any guarantor seeks, claims or
otherwise attempts to limit, modify or revoke such guarantor's guarantee of
this Note or any other loan with Lender; (d) Borrower has applied funds
provided pursuant to this Note for purposes other than those authorized by
Lender; or (e) Lender in good faith deems itself insecure under this Note or
any other agreement between Lender and Borrower.
ARBITRATION. LENDER AND BORROWER AGREE THAT ALL DISPUTES, CLAIMS AND
CONTROVERSIES BETWEEN THEM, WHETHER INDIVIDUAL, JOINT, OR CLASS IN NATURE,
ARISING FROM THIS NOTE OR OTHERWISE, INCLUDING WITHOUT LIMITATION CONTRACT
AND TORT DISPUTES, SHALL BE ARBITRATED PURSUANT TO THE RULES OF THE AMERICAN
ARBITRATION ASSOCIATION, UPON REQUEST OF EITHER PARTY. No act to take or
dispose of any collateral securing this Note shall constitute a waiver of
this arbitration agreement or be prohibited by this arbitration agreement.
This includes, without limitation, obtaining injunctive relief or a temporary
restraining order; invoking a power of sale under any deed of trust or
mortgage; obtaining a writ of attachment or imposition of a receiver; or
exercising any rights relating to personal property, including taking or
disposing of such property with or without judicial process pursuant to
Article 9 of the Uniform Commercial Code. Any disputes, claims, or
controversies concerning the lawfulness or reasonableness of any act, or
exercise of any right, concerning any collateral securing this Note,
including any claim to rescind, reform, or otherwise modify any agreement
relating to the collateral securing this Note, shall also be arbitrated,
provided however that no arbitrator shall have the right or the power to
enjoin or restrain any act of any party. Judgment upon any award rendered by
any arbitrator may be entered in any court having jurisdiction. Nothing in
this Note shall preclude any party from seeking equitable relief from a court
of competent jurisdiction. The statute of limitations, estoppel, waiver,
laches, and similar doctrines which would otherwise be applicable in an
action brought by a party shall be applicable in any arbitration proceeding,
and the commencement of an arbitration proceeding shall be deemed the
commencement of an action for these purposes. The Federal Arbitration Act
shall apply to the construction, interpretation, and enforcement of this
arbitration provision.
ACCRUAL METHOD. interest will be calculated on an Actual/360 basis.
GENERAL PROVISIONS. Lender may delay or forgo enforcing any of its rights or
remedies under this Note without losing them. Borrower and any other person
who signs, guarantees or endorses this Note, to the extent allowed by law,
waive presentment, demand for payment, protest and notice of dishonor. Upon
any change in the terms of this Note, and unless otherwise expressly stated
in writing, no party who signs this Note, whether as maker, guarantor,
accommodation maker or endorser, shall be released from liability. All such
parties waive any right to require Lender to take action against any other
party who signs this Note as provided in O.C.G.A. Section 10-7-24 and agree
that Lender may renew or extend (repeatedly and for any length of time) this
loan, or release any party or guarantor or collateral; or impair, fail to
realize upon or perfect Lender's security interest in the collateral; and
take any other action deemed necessary by Lender without the consent of or
notice to anyone. All such parties also agree that Lender may modify this
loan without the consent of or notice to anyone other than the party with
whom the modification is made.
IN WITNESS WHEREOF, THIS NOTE HAS BEEN SIGNED AND SEALED BY THE UNDERSIGNED,
WHO ACKNOWLEDGES A COMPLETED COPY HEREOF.
BORROWER:
Sun Bancshares, Inc. (IO)
By: /s/ Thomas Bouchette (SEAL)
-----------------------------------------------
Thomas Bouchette, President
LENDER:
THE BANKERS BANK
By:
-----------------------------------------------
Authorized Officer
===============================================================================
Variable Rate. Line of Credit. LASER PRO, Reg. U.S. Pat. & T.M. Off., Ver.
3.24a(c) 1999 CFI ProServices, Inc. All rights reserved. [GA-D20 E3.24
FUTURUS.LN C1.OVL]
<PAGE> 1
EXHIBIT 10.8
FORM OF COMMERCIAL GUARANTY
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
PRINCIPAL LOAN DATE MATURITY LOAN NO CALL COLLATERAL ACCOUNT OFFICER JKG INITIALS
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
References in the shaded area are for Lender's use only and do not limit the
applicability of this document to any particular loan or item.
- -------------------------------------------------------------------------------
Borrower: Sun Bancshares, Inc. (IO) Lender: THE BANKERS BANK
P.O. Box 1359 2410 PACES FERRY ROAD
Murrells Inlet, SC 29578 600 PACES SUMMIT
ATLANTA, GA 30339
Guarantor:
===============================================================================
AMOUNT OF GUARANTY. The principal amount of this Guaranty is Eighty Five
Thousand & 00/100 Dollars ($85,000.00).
GUARANTY. In consideration of the sum of Five Dollars ($5.00) and other good
and valuable consideration, the receipt and adequacy of which are hereby
acknowledged by Guarantor and to induce Lender to make loans or otherwise
extend credit to Borrower, or to renew or extend in whole or in part any
existing indebtedness of Borrower to Lender, or to make other financial
accommodations to Borrower, ____________________("Guarantor") absolutely and
unconditionally guarantees and promises to pay to THE BANKERS BANK ("Lender")
or its order, in legal tender of the United States of America, the
indebtedness (as that term is defined below) of Sun Bancshares, Inc. (IO)
("Borrower") to Lender on the terms and conditions set forth in this
Guaranty.
DEFINITIONS. The following words shall have the following meanings when used
in this Guaranty:
BORROWER. The word "Borrower" means Sun Bancshares, Inc. (IO)
GUARANTOR. The word "Guarantor" means .
-------------------------------
GUARANTY. The word "Guaranty" means this Guaranty made by Guarantor for
the benefit of Lender dated January 26, 2000.
INDEBTEDNESS. The word "Indebtedness" means the Note, including (a) all
principal, (b) all interest, (c) all late charges, (d) all loan fees
and loan charges, and (e) all collection costs and expenses relating to
the Note or to any collateral for the Note. Collection costs and
expenses include without limitation of all of Lender's attorneys' fees
and Lender's legal expenses, including court costs and fifteen percent
(15%) of the principal plus accrued interest as attorneys' fees, if any
sums owing under this Guaranty are collected by or through an
attorney-at-law, whether or not suit is instituted, and attorneys' fees
and legal expenses for bankruptcy proceedings (including efforts to
modify or vacate any automatic stay or injunction), appeals, and any
anticipated post-judgment collection services.
LENDER. The word "Lender" means THE BANKERS BANK, its successors and
assigns.
NOTE. The word "Note" means the promissory note or credit agreement
dated January 26, 2000, IN THE ORIGINAL PRINCIPAL AMOUNT OF $850,000.00
from Borrower to Lender, together with all renewals of, extensions of,
modifications of, refinancings of, consolidations of, and substitutions
for the promissory note or agreement. Notice to Guarantor: THE NOTE
EVIDENCES A REVOLVING LINE OF CREDIT FROM LENDER TO BORROWER.
RELATED DOCUMENTS. The word "Related Documents" mean and include
without limitation all promissory notes, credit agreements, loan
agreements, environmental agreements, guarantees, security agreements,
security deeds, mortgages, deeds of trust, and all other instruments,
agreements and documents, whether now or hereafter existing, executed
in connection with the Indebtedness.
MAXIMUM LIABILITY. THE MAXIMUM LIABILITY OF GUARANTOR UNDER THIS GUARANTY
SHALL NOT EXCEED AT ANY ONE TIME $85,000.00 PLUS ALL COSTS AND EXPENSES OF
(A) ENFORCEMENT OF THIS GUARANTY AND (B) COLLECTION AND SALE OF ANY
COLLATERAL SECURING THIS GUARANTY.
The above limitation on liability is not a restriction on the amount of the
Indebtedness of Borrower to Lender, either in the aggregate or at any one
time. If Lender presently holds one or more guaranties, or hereafter receives
additional guaranties from Guarantor, the rights of Lender under all
guaranties shall be cumulative. This Guaranty shall not (unless specifically
provided below to the contrary) affect or invalidate any such other
guaranties. The liability of Guarantor will be the aggregate liability of
Guarantor under the terms of this Guaranty and any such other unterminated
guaranties.
NATURE OF GUARANTY. Guarantor intends to guarantee at all times the
performance and prompt payment when due, whether at maturity or earlier by
reason of acceleration or otherwise, of all Indebtedness within the limits
set forth in the preceding section of this Guaranty. THIS GUARANTY COVERS A
REVOLVING LINE OF CREDIT AND GUARANTOR UNDERSTANDS AND AGREES THAT THIS
GUARANTEE SHALL BE OPEN AND CONTINUOUS UNTIL THE LINE OF CREDIT IS TERMINATED
AND THE INDEBTEDNESS IS PAID IN FULL, AS PROVIDED BELOW.
DURATION OF GUARANTY. This Guaranty will take effect when received by Lender
without the necessity of any acceptance by Lender, or any notice to Guarantor
or to Borrower, and will continue in full force until all Indebtedness shall
have been fully and finally paid and satisfied and all other obligations of
Guarantor under this Guaranty shall have been performed in full. Release of
any other guarantor or termination of any other guaranty of the Indebtedness
shall not affect the liability of Guarantor under this Guaranty. A revocation
received by Lender from any one or more Guarantors shall not affect the
liability of any remaining Guarantors under this Guaranty. THIS GUARANTY
COVERS A REVOLVING LINE OF CREDIT AND IT IS SPECIFICALLY ANTICIPATED THAT
FLUCTUATIONS WILL OCCUR IN THE AGGREGATE AMOUNT OF INDEBTEDNESS OWING FROM
BORROWER TO LENDER. GUARANTOR SPECIFICALLY ACKNOWLEDGES AND AGREES THAT
FLUCTUATIONS IN THE AMOUNT OF INDEBTEDNESS, EVEN TO ZERO DOLLARS ($0.00),
SHALL NOT CONSTITUTE A TERMINATION OF THIS GUARANTY. GUARANTOR'S LIABILITY
UNDER THIS GUARANTY SHALL TERMINATE ONLY UPON (A) TERMINATION IN WRITING BY
BORROWER AND LENDER OF THE LINE OF CREDIT, (B) PAYMENT OF THE INDEBTEDNESS IN
FULL IN LEGAL TENDER, AND (C) PAYMENT IN FULL IN LEGAL TENDER OF ALL OTHER
OBLIGATIONS OF GUARANTOR UNDER THIS GUARANTY.
<PAGE> 2
LOAN NO COMMERCIAL GUARANTY PAGE 2
(CONTINUED)
===============================================================================
GUARANTOR'S AUTHORIZATION TO LENDER. Guarantor authorizes Lender, without
notice or demand and without lessening Guarantor's liability under this
Guaranty, from time to time: (a) to make one or more additional secured or
unsecured loans to Borrower, to lease equipment or other goods to Borrower,
or otherwise to extend additional credit to Borrower; (b) to alter,
compromise, renew, extend, accelerate, or otherwise change one or more times
the time for payment or other terms of the Indebtedness or any part of the
Indebtedness, including increases and decreases of the rate of interest on
the Indebtedness; extensions may be repeated and may be for longer than the
original loan term; (c) to take and hold security for the payment of this
Guaranty or the Indebtedness, and exchange, enforce, waive, subordinate, fail
or decide not to perfect, and release any such security, with or without the
substitution of new collateral; (d) to release, substitute, agree not to sue,
or deal with any one or more of Borrower's sureties, endorsers, or other
guarantors on any terms or in any manner Lender may choose; (e) to determine
how, when and what application of payments and credits shall be made on the
Indebtedness; (f) to apply such security and direct the order or manner of
sale thereof, including without limitation, any nonjudicial sale permitted by
the terms of the controlling security agreement or deed of trust, as Lender
in its discretion may determine; (g) to sell, transfer, assign, or grant
participations in all or any part of the Indebtedness; and (h) to assign or
transfer this Guaranty in whole or in part.
GUARANTOR'S REPRESENTATIONS AND WARRANTIES. Guarantor represents and warrants
to Lender that (a) no representations or agreements of any kind have been
made to Guarantor which would limit or qualify in any way the terms of this
Guaranty; (b) this Guaranty is executed at Borrower's request and not at the
request of Lender; (c) Guarantor has full power, right and authority to enter
into this Guaranty; (d) the provisions of this Guaranty do not conflict with
or result in a default under any agreement or other instrument binding upon
Guarantor and do not result in violation of any law, regulation, court decree
or order applicable to Guarantor; (e) Guarantor has not and will not, without
the prior written consent of Lender, sell, lease, assign, encumber,
hypothecate, transfer, or otherwise dispose of all or substantially all of
Guarantor's assets, or any interest therein; (f) upon Lender's request,
Guarantor will provide to Lender financial and credit information in form
acceptable to Lender, and all such financial information which currently has
been, and all future financial information which will be provided to Lender
is and will be true and correct in all material respects and fairly present
the financial condition of Guarantor as of the dates the financial
information is provided; (g) no material adverse change has occurred in
Guarantor's financial condition since the date of the most recent financial
statements provided to Lender and no event has occurred which may materially
adversely affect Guarantor's financial condition; (h) no litigation, claim,
investigation, administrative proceeding or similar action (including those
for unpaid taxes) against Guarantor is pending or threatened; (i) Lender has
made no representation to Guarantor as to the creditworthiness of Borrower;
and (j) Guarantor has established adequate means of obtaining from Borrower
on a continuing basis information regarding Borrower's financial condition.
Guarantor agrees to keep adequately informed from such means of any facts,
events, or circumstances which might in any way affect Guarantor's risks
under this Guaranty, and Guarantor further agrees that, absent a request for
information, Lender shall have no obligation to disclose to Guarantor any
information or documents acquired by Lender in the course of its relationship
with Borrower.
GUARANTOR'S WAIVERS. Except as prohibited by applicable law, Guarantor waives
any right to require Lender (a) to continue lending money or to extend other
credit to Borrower; (b) to make any presentment, protest, demand, or notice
of any kind, including notice of any nonpayment of the Indebtedness or of any
nonpayment related to any collateral, or notice of any action or nonaction on
the part of Borrower, Lender, any surety, endorser, or other guarantor in
connection with the Indebtedness or in connection with the creation of new or
additional loans or obligations; (c) to resort for payment or to proceed
directly or at once against any person, including Borrower or any other
guarantor; (d) to proceed directly against or exhaust any collateral held by
Lender from Borrower, any other guarantor, or any other person; (e) to give
notice of the terms, time, and place of any public or private sale of
personal property security held by Lender from Borrower or to comply with any
other applicable provisions of the Uniform Commercial Code; (f) to pursue any
other remedy within Lender's power; or (g) to commit any act or omission, of
any kind, or at any time, with respect to any matter whatsoever.
If now or hereafter (a) Borrower shall be or become insolvent, and (b) the
Indebtedness shall not at all times until paid be fully secured by collateral
pledged by Borrower, Guarantor hereby forever waives and relinquishes in
favor of Lender and Borrower, and their respective successors, any claim or
right to payment Guarantor may now have or hereafter have or acquire against
Borrower, by subrogation or otherwise, so that at no time shall Guarantor be
or become a "creditor" of Borrower within the meaning of 11 U.S.C. Section
547(b), or any successor provision of the Federal bankruptcy laws.
Guarantor also waives any and all rights or defenses arising by reason of (a)
the provisions of O.C.G.A. Section 10-7-24 concerning Guarantor's right to
require Lender to take action against Borrower or any "one action" or
"anti-deficiency" law or any other law which may prevent Lender from bringing
any action, including a claim for deficiency, against Guarantor, before or
after Lender's commencement or completion of any foreclosure action, either
judicially or by exercise of a power of sale; (b) any election of remedies by
Lender which destroys or otherwise adversely affects Guarantor's subrogation
rights or Guarantor's rights to proceed against Borrower for reimbursement,
including without limitation, any loss of rights Guarantor may suffer by
reason of any law limiting, qualifying, or discharging the Indebtedness; (c)
any disability or other defense of Borrower, of any other guarantor, or of
any other person, or by reason of the cessation of Borrower's liability from
any cause whatsoever, other than payment in full in legal tender, of the
Indebtedness; (d) any right to claim discharge of the Indebtedness on the
basis of unjustified impairment of any collateral for the Indebtedness; (e)
any statue of limitation, if at any time any action or suit brought by Lender
against Guarantor is commenced there is outstanding Indebtedness of Borrower
to Lender which is not barred by any applicable statute of limitations; or
(f) any defenses given to guarantors at law or in equity other than actual
payment and performance of the Indebtedness. If payment is made by Borrower,
whether voluntarily or otherwise, or by any third party, on the Indebtedness
and thereafter Lender is forced to remit the amount of that payment to
Borrower's trustee in bankruptcy or to any similar person under any federal
or state bankruptcy law or law for the relief of debtors, the Indebtedness
shall be considered unpaid for the purpose of enforcement of this Guaranty.
Guarantor further waives and agrees not to assert or claim at any time any
deductions to the amount guaranteed under this Guaranty for any claim of
setoff, counterclaim, counter demand, recoupment or similar right, whether
such claim, demand or right may be asserted by the Borrower, the Guarantor,
or both.
GUARANTOR'S UNDERSTANDING WITH RESPECT TO WAIVERS. Guarantor warrants and
agrees that each of the waivers set forth above is made with Guarantor's full
knowledge of its significance and consequences and that, under the
circumstances, the waivers are reasonable and not contrary to public policy
or law. If any such waiver is determined to be contrary to any applicable law
or public policy, such waiver shall be effective only to the extent permitted
by law or public policy.
<PAGE> 3
LOAN NO COMMERCIAL GUARANTY PAGE 3
(CONTINUED)
===============================================================================
LENDER'S RIGHT OF SETOFF. In addition to all liens upon and rights of setoff
against the moneys, securities or other property of Guarantor given to Lender
by law, Lender shall have, with respect to Guarantor's obligations to Lender
under this Guaranty and to the extent permitted by law, a contractual
possessory security interest in and a right of setoff against, and Guarantor
hereby assigns, conveys, delivers, pledges, and transfers to Lender all of
Guarantor's right, title and interest in and to, all deposits, moneys,
securities and other property of Guarantor now or hereafter in the possession
of or on deposit with Lender, whether held in a general or special account or
deposit, whether held jointly with someone else, or whether held for
safekeeping or otherwise, excluding however all IRA, Keogh, and trust
accounts. Every such security interest and right of setoff may be exercised
without demand upon or notice to Guarantor. No security interest or right of
setoff shall be deemed to have been waived by any act or conduct on the part
of Lender or by any neglect to exercise such right of setoff or to enforce
such security interest or by any delay in so doing. Every right of setoff and
security interest shall continue in full force and effect until such right of
setoff or security interest is specifically waived or released by an
instrument in writing executed by Lender.
SUBORDINATION OF BORROWER'S DEBTS TO GUARANTOR. Guarantor agrees that the
Indebtedness of Borrower to Lender, whether now existing or hereafter
created, shall be prior to any claim that Guarantor may now have or hereafter
acquire against Borrower, whether or not Borrower becomes insolvent.
Guarantor hereby expressly subordinates any claim Guarantor may have against
Borrower, upon any account whatsoever, to any claim that Lender may now or
hereafter have against Borrower. In the event of insolvency and consequent
liquidation of the assets of Borrower, through bankruptcy, by an assignment
for the benefit of creditors, by voluntary liquidation, or otherwise, the
assets of Borrower applicable to the payment of the claims of both Lender and
Guarantor shall be paid to Lender and shall be first applied by Lender to the
Indebtedness of Borrower to Lender. Guarantor does hereby assign to Lender
all claims which it may have or acquire against Borrower or against any
assignee or trustee in bankruptcy of Borrower; provided however, that such
assignment shall be effective only for the purpose of assuring to Lender full
payment in legal tender of the Indebtedness. If Lender so requests, any notes
or credit agreements now or hereafter evidencing any debts or obligations of
Borrower to Guarantor shall be marked with a legend that the same are subject
to this Guaranty and shall be delivered to Lender. Guarantor agrees, and
Lender hereby is authorized, in the name of Guarantor, from time to time to
execute and file financing statements and continuation statements and to
execute such other documents and to take such other actions as Lender deems
necessary or appropriate to perfect, preserve and enforce its rights under
this Guaranty.
MISCELLANEOUS PROVISIONS. The following miscellaneous provisions are a part
of this Guaranty:
AMENDMENTS. This Guaranty, together with any Related Documents,
constitutes the entire understanding and agreement of the parties as to
the matters set forth in this Guaranty. No alteration of or amendment
to this Guaranty shall be effective unless given in writing and signed
by the party or parties sought to be charged or bound by the alteration
or amendment.
APPLICABLE LAW. This Guaranty has been delivered to Lender and accepted
by Lender in the State of Georgia. Subject to the provisions on
arbitration, this Guaranty shall be governed by and construed in
accordance with the laws of the State of Georgia.
ARBITRATION. LENDER AND GUARANTOR AGREE THAT ALL DISPUTES, CLAIMS AND
CONTROVERSIES BETWEEN THEM, WHETHER INDIVIDUAL, JOINT, OR CLASS IN
NATURE, ARISING FROM THIS GUARANTY OR OTHERWISE, INCLUDING WITHOUT
LIMITATION CONTRACT AND TORT DISPUTES, SHALL BE ARBITRATED PURSUANT TO
THE RULES OF THE AMERICAN ARBITRATION ASSOCIATION, UPON REQUEST OF
EITHER PARTY. No act to take or dispose of any Collateral shall
constitute a waiver of this arbitration agreement or be prohibited by
this arbitration agreement. This includes, without limitation,
obtaining injunctive relief or a temporary restraining order; invoking
a power of sale under any deed of trust or mortgage; obtaining a writ
of attachment or imposition of a receiver; or exercising any rights
relating to personal property, including taking or disposing of such
property with or without judicial process pursuant to Article 9 of the
Uniform Commercial Code. Any disputes, claims, or controversies
concerning the lawfulness or reasonableness of any act, or exercise of
any right, concerning any Collateral, including any claim to rescind,
reform, or otherwise modify any agreement relating to the Collateral,
shall also be arbitrated, provided however that no arbitrator shall
have the right or the power to enjoin or restrain any act of any party.
Judgment upon any award rendered by any arbitrator may be entered in
any court having jurisdiction. Nothing in this Guaranty shall preclude
any party from seeking equitable relief from a court of competent
jurisdiction. The statute of limitations, estoppel, waiver, laches, and
similar doctrines which would otherwise be applicable in an action
brought by a party shall be applicable in any arbitration proceeding,
and the commencement of an arbitration proceeding shall be deemed the
commencement of an action for these purposes. The Federal Arbitration
Act shall apply to the construction, interpretation, and enforcement of
this arbitration provision.
ATTORNEYS' FEES; EXPENSES: Guarantor agrees to pay upon demand all of
Lender's costs and expenses, including attorneys' fees and Lender's
legal expenses, incurred in connection with the enforcement of this
Guaranty. Lender may pay someone else to help enforce this Guaranty,
and Guarantor shall pay the costs and expenses of such enforcement.
Costs and expenses include all costs and expenses of collection,
including fifteen percent (15%) of the principal plus accrued interest
as attorneys' fees, if any sums owing under this Guaranty are collected
by or through an attorney-at-law, whether or not there is a lawsuit,
including attorneys' fees and legal expenses for bankruptcy proceedings
(and including efforts to modify or vacate any automatic stay or
injunction), appeals, and any anticipated post-judgment collection
services. Guarantor also shall pay all court costs and such additional
fees as may be directed by the court.
NOTICES. All notices required to be given by either party to the other
under this Guaranty shall be in writing, may be sent by telefacsimile
(unless otherwise required by law), and shall be effective when
actually delivered or when deposited with a nationally recognized
overnight courier, or when deposited in the United States mail, first
class postage prepaid, addressed to the party to whom the notice is to
be given at the address shown above or to such other addressee as
either party may designate to the other in writing. If there is more
than one Guarantor, notice to any Guarantor will constitute notice to
all Guarantors. For notice purposes, Guarantor agrees to keep Lender
informed at all times of Guarantor's current address.
INTERPRETATION. In all cases where there is more than one Borrower or
Guarantor, then all words used in this Guaranty in the singular shall
be deemed to have been used in the plural where the context and
construction so require; and where there is more than one Borrower
named in this Guaranty or when this Guaranty is executed by more than
one Guarantor, the words "Borrower" and "Guarantor" respectively shall
mean all and any one or more of them. The words "Guarantor" "Borrower"
and "Lender" include the heirs, successors, assigns, and transferees of
each of them. Caption headings in this Guaranty are for convenience
purposes only and are not to be used to interpret or define the
provisions of this Guaranty. If a court of competent jurisdiction finds
any provision of this Guaranty to be invalid or unenforceable as to any
person or circumstance, such finding shall not render that provision
invalid or unenforceable as to any other persons or circumstances, and
all provisions of this Guaranty in all other respects shall remain
valid and enforceable. If any one or more of Borrower or Guarantor are
corporations or partnerships, it is not necessary for Lender to inquire
into the powers of Borrower or Guarantor or of the officers, directors,
<PAGE> 4
LOAN NO COMMERCIAL GUARANTY PAGE 4
(CONTINUED)
===============================================================================
partners, or agents acting or purporting to act on their behalf, and
any Indebtedness made or created in reliance upon the professed
exercise of such powers shall be guaranteed under this Guaranty.
WAIVER. Lender shall not be deemed to have waived any rights under this
Guaranty unless such waiver is given in writing and signed by Lender.
No delay or omission on the part of Lender in exercising any right
shall operate as a waiver of such right or any other right. A waiver by
Lender of a provision of this Guaranty shall not prejudice or
constitute a waiver of Lender's right otherwise to demand strict
compliance with that provision or any other provision of this Guaranty.
No prior waiver by Lender, nor any course of dealing between Lender and
Guarantor, shall constitute a waiver of any of Lender's rights or of
any of Guarantor's obligations as to any future transactions. Whenever
the consent of Lender is required under this Guaranty, the granting of
such consent by Lender in any instance shall not constitute continuing
consent to subsequent instances where such consent is required and in
all cases such consent may be granted or withheld in the sole
discretion of Lender.
EACH UNDERSIGNED GUARANTOR ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS
GUARANTY AND AGREES TO ITS TERMS. IN ADDITION, EACH GUARANTOR UNDERSTANDS THAT
THIS GUARANTY IS EFFECTIVE UPON GUARANTOR'S EXECUTION AND DELIVERY OF THIS
GUARANTY TO LENDER AND THAT THE GUARANTY WILL CONTINUE UNTIL TERMINATED IN THE
MANNER SET FORTH IN THE SECTION TITLED "DURATION OF GUARANTY." NO FORMAL
ACCEPTANCE BY LENDER IS NECESSARY TO MAKE THIS GUARANTY EFFECTIVE. THIS GUARANTY
IS DATED AUGUST 23, 1999.
IN WITNESS WHEREOF, THIS GUARANTY HAS BEEN SIGNED AND SEALED BY THE UNDERSIGNED,
WHO ACKNOWLEDGES A COMPLETED COPY HEREOF.
GUARANTOR:
X (SEAL)
- ------------------------------------
Signed, Sealed and Delivered in the presence of:
X
- ------------------------------------
Unofficial Witness
- ------------------------------------
Notary Public County
---------------
(NOTARY SEAL)
My Commission expires:
-----------------------
LENDER:
THE BANKERS BANK
By:
-------------------------------------------
Authorized Officer
===============================================================================
LASER PRO, REG. U.S. Pat. & T.M. Off., Ver. 3-24a(c) 1999 CFI ProServices, Inc.
All rights reserved. (GA-E320 E3.24 F3-24 FUTURUS, LN C1.OVL)
<PAGE> 1
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We hereby consent to the inclusion of our report dated January 26, 2000
on the financial statements of Sun Bancshares, Inc., at December 31, 1999 and
for the period then ended, in the Form SB-2 Registration Statement filed by Sun
Bancshares, Inc., under the Securities Act of 1933 and the reference to us under
the caption "Experts" in the same Form SB-2 Registration Statement.
/s/ Tourville, Simpson & Caskey, L.L.P.
Tourville, Simpson & Caskey, L.L.P.
Columbia, South Carolina
February 9, 2000
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1
<CURRENCY>U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> AUG-03-1999
<PERIOD-END> DEC-31-1999
<EXCHANGE-RATE> 1
<CASH> 10,750
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 0
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
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0
0
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</TABLE>
