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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
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Larry N. Prosser, Partner
LESSOR
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ACKNOWLEDGED AND AGREED TO:
Sun Bancshares, Inc.
By: /s/ Thomas Bouchette
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Thomas Bouchette, President
LESSEE
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