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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
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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)
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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;
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(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
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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.
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Attention: Xxxxxx Xxxxxxxxx, President
To the Warrant Holder:
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(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.
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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:
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Xxxxxx Xxxxxxxxx
President
WARRANT HOLDER
(SEAL)
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