If the securities being registered on this form are to be offered in connection
with the formation of a holding company and there is compliance with General Instruction G, check the following box. ☐
If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act,
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: ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or
a smaller reporting company. See the definitions of large accelerated filer, accelerated filer, non-accelerated filer, smaller reporting company and emergency growth company in Rule 12b-2
of the Exchange Act.
If an emerging growth company, indicate by check mark if the registrant has elected not to use
the extended transition period for complying with any new or revised financial accounting standards provided pursuant to section 7(a)(2)(B) of the Securities Act. ☐
If applicable, place an X in the box to designate the appropriate rule provision relied upon in conducting this transaction:
THE MERGER
Background of the Merger
As part of its ongoing consideration and evaluation of its long-term prospects and strategies, PBCBs board of directors
and senior management regularly review and assess its business strategies and objectives, including strategic opportunities and challenges, all with the goal of enhancing long term value for the PBCB shareholders. As a result, from time to time, the
PBCB board of directors engaged in reviews and discussions of PBCBs long-term strategies and objectives, considering ways in which the company might enhance shareholder value, provide for shareholder liquidity and enhance performance in light
of competitive and other relevant factors. Generally, these reviews centered on strategies to improve PBCBs financial condition, asset quality, existing operations or to pursue opportunities in new markets or lines of business. On occasion,
these discussions centered on the possibility of merging with another banking organization as a means to enhance or improve shareholder value and provide for shareholder liquidity.
Over a several year period, Dennis S. Hudson, the chief executive officer of Seacoast, and Calvin L. Cearley, the chief
executive officer of PBCB, engaged in a number of informal conversations from time to time regarding the state of the banking industry and the outlook for their respective organizations.
In June of 2014, the board of directors of PBCB determined that it would be appropriate to consider merging with a suitable
merger partner as a possible means of enhancing long-term shareholder value. In furtherance of this decision, PBCB engaged Sandler ONeill & Partners, L.P. (Sandler ONeill) on July 18, 2014 to act as its
financial advisor in connection with a potential transaction.
In late November of 2014, Mr. Cearley visited
Mr. Hudson at Seacoasts headquarters in Stuart, Florida. During this visit, Mr. Cearley was introduced to several other members of the Seacoast management team who reviewed company strategy and the outlook for the business.
Mr. Cearley and Mr. Hudson discussed a possible combination; however, the parties were unable to agree on an acceptable price range, and the discussions ceased.
Throughout Sandler ONeills engagement, Sandler ONeill and the PBCB management team identified a list of
potential acquirers who would likely have an interest in a potential transaction with PBCB. On behalf of PBCB, Sandler ONeill contacted approximately 15 potential acquirers throughout the process. Several potential acquirers executed
confidentiality agreements, reviewed confidential information materials and met with PBCB management. All conversations with potential acquirers throughout the process were either terminated or delayed because the parties could not come to agreement
on an acceptable price range.
Informal conversations between Seacoast and PBCB resumed in early 2015 about a possible
business combination. Mr. Hudson suggested that it might be helpful for the parties to exchange certain confidential information to determine if Seacoast would be interested in a combination at a price that might be acceptable to PBCB.
On February 6, 2015, Seacoast and PBCB executed a confidentiality agreement pursuant to which PBCB provided more detailed
information concerning PBCB to Seacoast to facilitate a potential non-binding indication of interest. Although some information was exchanged, these discussions were very preliminary and did not materialize into a commitment by either party to
proceed further.
In September 2015, Seacoast asked FIG to assist Seacoast as it considered the merits of a potential
transaction with PBCB. On February 17, 2017, Seacoast formally engaged FIG as its financial advisor in connection with the potential PBCB transaction.
During the second half of 2015, discussions regarding a potential combination between PBCB and Seacoast resumed. The parties
agreed to share additional diligence materials relating to customer metrics at PBCB to determine if Seacoast would be interested in moving forward at a price range that might be acceptable to PBCB. The parties were unable to agree on pricing terms
and conversations were discontinued.
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In late 2016, a representative from Sandler ONeill contacted Seacoast and a
number of the potential acquirers that had previously been identified by Sandler ONeill and PBCB on behalf of PBCB to see if discussions could be resumed regarding a potential transaction, at which time only Seacoast indicated an interest in
resuming discussions.
Seacoast conducted preliminary due diligence through in-person meetings with a limited number of
PBCB executives. After reviewing the results of the preliminary due diligence materials, Seacoast re-opened negotiations with representatives from PBCB, which included representatives from the PBCB board of directors.
The parties negotiated the preliminary terms for a potential agreement in a non-binding indication of interest during November
and December 2016. After an evaluation of the proposal by the PBCB board of directors and following discussions with certain members of the senior management team of PBCB, and representatives of Sandler ONeill and Holland & Knight
LLP, counsel to PBCB (Holland & Knight), and based on the boards determination that Seacoasts preliminary proposal offered substantial value to PBCB and its shareholders and was attractive for strategic reasons, the
PBCB board of directors authorized PBCB to enter into the indication of interest and a limited exclusivity agreement with Seacoast. On December 30, 2016, Seacoast and PBCB executed a non-binding letter of intent for the potential acquisition of
PBCB, along with an exclusivity agreement which expired on March 8, 2017.
Seacoast began its credit due diligence
review of PBCB in late January 2017. Based on discussions between the parties, PBCB opened an electronic data room for Seacoast to review its due diligence requests and PBCBs responses during this period. Upon the conclusion of its preliminary
review of PBCBs loan portfolio, representatives of Seacoasts financial advisor, FIG, communicated Seacoasts continued interest in a strategic business combination and gave additional detail on the terms of Seacoasts proposal
to representatives of Sandler ONeill.
During the week of February 1, 2017, representatives of PBCB met with
representatives of Seacoast at Seacoasts offices to discuss the potential transaction and continue their mutual due diligence efforts. During these meetings, Seacoasts representatives answered questions from PBCBs representatives
regarding Seacoasts business and certain financial, legal, and regulatory matters. The parties continued to negotiate the principal terms of the transaction.
On February 7, 2017, Alston & Bird LLP, counsel to Seacoast (Alston & Bird) circulated an
initial draft of the merger agreement, along with exhibits, based on the terms outlined in the letter of intent, to Holland & Knight and the parties began negotiations of the terms of the agreement.
On February 17, 2017, Holland & Knight sent a revised draft of the merger agreement to Alston & Bird.
Over the course of the following eleven weeks, Seacoast and its representatives continued negotiations with PBCB and its representatives with respect to the terms of the potential transaction and the draft merger agreement. The issues raised in
these negotiations included the respective covenants of the parties pending closing of the transaction, the rights and obligations of the parties in the event the merger agreement is terminated prior to the consummation of the merger, the amount of
the termination fee payable by PBCB in certain circumstances, the termination of a certain voting trust agreement of PBCB and a shareholders agreement of PBCB shareholders and certain price adjustments following a more complete due diligence
assessment. Representatives of Seacoast and Alston & Bird had multiple telephonic conference calls with representatives of PBCB and Holland & Knight to negotiate the terms of the draft merger agreement.
On February 23, 2017, the PBCB board of directors held a board meeting. Representatives of Holland & Knight and
Sandler ONeill were also present. During this meeting, representatives of Holland & Knight made a presentation to the PBCB board of directors regarding its fiduciary duties in connection with a potential transaction. The PBCB board of
directors then discussed the draft of the merger agreement and the ancillary documents with representatives of Holland & Knight. Then, representatives of Sandler ONeill discussed the
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general process with respect to the potential transaction and provided an update with respect to financial and other aspects of the transaction.
On February 27, 2017, Mr. Hudson convened a meeting of Seacoasts M&A Committee (the Committee)
and representatives of FIG to review a preliminary analysis of the proposed merger transaction, a preliminary due diligence report from Seacoasts chief credit officer and the non-binding letter of intent. The Committee discussed the impact of
the merger based on the limited information provided by PBCB and preliminary assumptions utilized in the analysis, and also reviewed and discussed concerns related to potential diligence issues and the various potential impacts these concerns could
have on the pricing assumptions. At this meeting, the Committee reviewed the current draft of the merger agreement. The Committee agreed with the general terms of the transaction and authorized the Seacoast management team to continue with due
diligence and negotiations.
As a result of tax diligence conducted by Seacoast and Alston & Bird, the parties
also negotiated certain matters relating to PBCBs potential tax exposure arising from (i) PBCBs invalid S corporation election as a result of its failure to properly execute a Form 2553 and properly obtain the consents of all of the
PBCB shareholders and (ii) PBCBs inadvertent termination of its S corporation election as a result of certain shareholders failing to timely file elections pursuant to Section 1361 of the Internal Revenue Code electing to be treated
as an Electing Small Business Trust or a Qualified Subchapter S Trust, which we refer to collectively as the letter ruling matters. Seacoast and its representatives and PBCB and its representatives further discussed and negotiated
PBCBs submission of a request to the Internal Revenue Service for a private letter ruling seeking relief for the letter ruling matters. The parties also decided that it would be advisable for PBCB to pursue an insurance policy to cover the
risk associated with the letter ruling matters, which we refer to as the tax insurance policy.
On
March 6, 2017, Alston & Bird circulated a revised draft of the merger agreement, which among other things, included changes related to the letter ruling matters. On March 9, 2017, the PBCB board of directors held a telephonic
board meeting. Representatives of Holland & Knight and Sandler ONeill were also present. During the March 9th meeting, the PBCB board of directors discussed the revised draft of the merger agreement received from
Alston & Bird on March 6th, as well as the proposed tax insurance policy and the indemnification by PBCB shareholders. At the meeting, the PBCB board of directors determined to proceed with engaging an insurance broker and seeking
quotes for the tax insurance policy and authorized PBCB to proceed with Aon Transactions Solutions (Aon) in that regard. Later on March 9th, Holland & Knight circulated a revised draft of the merger agreement to
Alston & Bird, which contemplated, among other things, the delivery of a conditional insurance binder with respect to the letter ruling matter prior to the signing of the merger agreement with the final insurance binder to follow prior to
the closing of the transaction as well as indemnification by the PBCB shareholders only to the extent taxes are in excess of the policy limit under the tax insurance policy and only up to the amount of merger consideration actually received by an
individual shareholder, provided that the tax insurance policy shall first have been exhausted.
The parties engaged in
several conference calls over the course of the following seven weeks to discuss the private letter ruling matters and related tax insurance policy, as well as the proposed indemnification by PBCB shareholders for taxes arising as a result of the
letter ruling matters to the extent in excess of amounts recovered under the tax insurance policy.
During the course of
discussions regarding the draft merger agreement, representatives of Seacoast and PBCB also discussed (i) the execution by PBCBs directors and officers who hold shares of PBCB common stock and certain holders of more than 5% of the
outstanding shares of PBCB common stock of a customary shareholder support agreement pursuant to which such persons would agree to vote their shares of PBCB common stock in favor of the merger agreement and the transactions provided for in the
merger agreement and (ii) the execution by PBCBs directors and executive officers of (A) claims letters releasing any claims they may have against Seacoast and PBCB and (B) restrictive covenant agreements restricting their
ability to compete with Seacoast for a specified amount of time following the closing of the transaction. Drafts of the shareholder support
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agreement, the claims letter and the form of restrictive covenant agreements were circulated by Alston & Bird on March 9, 2017.
On March 10, 2017, PBCB authorized Aon to obtain quotes and terms for the tax insurance policy from various insurance
carriers. Aon solicited proposals from a number of insurance carriers, and the parties spent several weeks in March and April of 2017 evaluating proposals from several insurance carriers. In early April 2017, PBCB entered into a non-binding
indication of interest with Concord Specialty Risk (Concord) and began negotiating a policy with Concord, while also continuing negotiations relating to the merger agreement and ancillary documents.
On March 20, 2017, management of Seacoast convened a conference call with its legal advisors to review the revised
principal terms of the proposed definitive agreement. Later that same day, Alston & Bird circulated a revised draft of the merger agreement to Holland & Knight, which contemplated, among other things, certain requirements relating
to the tax insurance policy. Over the next several weeks the parties worked to finalize the definitive agreement and the ancillary agreements, complete the disclosure schedules and address the letter ruling matters.
On March 23, 2017, the PBCB board of directors held a telephonic meeting. Representatives of Holland & Knight,
Sandler ONeill and Deloitte Tax LLP (Deloitte) also participated in the meeting. At the March 23rd meeting, representatives of Holland & Knight provided an update with regard to the merger agreement and the tax
insurance policy and representatives of Sandler ONeill provided an update with regard to its fairness opinion. Representatives of Deloitte explained the process relating to the submission of a request for a private letter ruling. The PBCB
board of directors discussed the letter ruling matters, and the quotes that had been received by two potential insurance providers, including Concord. The PBCB board of directors also discussed Concords experience with respect to issuing tax
policies, its capacity to move quickly and its good record of paying claims. The PBCB board of directors determined that it was in the best interest of the Company and its shareholders to engage Deloitte with respect to the preparation of the
request for a private letter ruling with regard to the letter ruling matters, and approved the engagement of Deloitte.
On
March 27, 2017, PBCB engaged Deloitte to prepare the private letter ruling request to be submitted to the Internal Revenue Service with respect the letter ruling matters.
On March 31, 2017, Alston & Bird circulated a revised draft of the merger agreement to Holland &
Knight.
On April 3, 2017, Holland & Knight circulated a revised draft of the merger agreement to
Alston & Bird.
On April 5, 2017, the PBCB board of directors held a telephonic meeting. Representatives of
Holland & Knight and Sandler ONeill also participated in the meeting. At the meeting, the PBCB board of directors discussed the revised draft of the merger agreement, and the progress made with respect to the binding of the tax
insurance policy by Concord. The PBCB board of directors determined that it was in the best interest of the Company and its shareholders to continue its negotiations with respect to the merger agreement, and to proceed with obtaining the tax
insurance policy from Concord.
On April 20, 2017, Concord provided an initial draft of the tax insurance policy to
PBCB and Seacoast and their respective representatives. Over the course of the following week, PBCB and Seacoast and their respective representatives and Concord negotiated and exchanged drafts of the tax insurance policy.
On April 24, 2017, Alston & Bird circulated a revised draft of the merger agreement to Holland &
Knight.
On April 25, 2017, Holland & Knight sent a revised draft of the merger agreement to
Alston & Bird.
On April 28, 2017, Alston & Bird provided a revised draft of the merger agreement
to Holland & Knight.
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On April 30, 2017, the PBCB board of directors held a call to discuss the
revised draft of the merger agreement. Representatives of Holland & Knight and Sandler ONeill participated on the call. The PBCB board of directors received an update with respect to the merger agreement and discussed the terms of the
merger agreement and the conditions to closing of the merger. The PBCB board of directors instructed Holland & Knight to send a revised draft of the merger agreement to Alston & Bird.
Later on April 30th, Holland & Knight circulated a revised draft of the merger agreement to Alston &
Bird.
Between May 2nd and May 4th, 2017, Alston & Bird and Holland & Knight, on behalf of
their respective clients, finalized the merger agreement and ancillary documents.
On May 3, 2017, PBCBs
board of directors held a meeting to consider the merger agreement and the transactions contemplated therein. Representatives of Holland & Knight summarized the merger agreement, particularly with regard to changes made since the last
meeting of the PBCB board of directors on April 5, 2017, and the transactions contemplated therein. Representatives of Sandler ONeill then reviewed the financial aspects of the proposed merger and rendered an oral opinion, which was
subsequently confirmed by delivery of a written opinion, to the effect that, as of the date of such opinion and subject to the procedures followed, assumptions made, matters considered, and qualifications and limitations on the review undertaken by
Sandler ONeill as set forth in such opinion, the merger consideration to be received by PBCB shareholders in the proposed transaction was fair, from a financial point of view, to the PBCB shareholders. The full text of the written opinion of
Sandler ONeill is attached to this proxy statement/prospectus as Appendix B and is incorporated by reference in its entirety. For further information, please see the section entitled The Merger Opinion of PBCBs Financial
Advisor beginning on page 40.
Following further discussion, the PBCB board of directors unanimously
(i) determined and declared that the merger agreement, the merger, and the other transactions contemplated by the merger agreement are advisable and in the best interests of PBCB and its shareholders, (ii) authorized, adopted and approved
the merger agreement, the merger and the other transactions contemplated by the merger agreement, (iii) recommended the adoption of the merger agreement, the merger and the other transactions contemplated by the merger agreement to the PBCB
shareholders and (iv) resolved that the merger agreement be submitted to the PBCB shareholders for adoption thereof.
On May 4, 2017, Seacoasts board of directors met in special session to review and consider the merger agreement and
the transactions and agreements contemplated by it. The management team made a presentation relating to the strategic and financial considerations of the transaction. Further to this discussion, a representative of FIG reviewed the principal terms
of the proposed transaction and the financial impacts of the merger on Seacoast and provided comparable transaction analysis for Florida and national bank mergers. At the meeting, Alston & Bird reviewed for the directors the terms and
conditions of the merger agreement, the merger and the various agreements to be signed in connection with the merger agreement, along with the Subchapter S tax matters and related insurance policy and shareholder indemnification, and engaged in
discussions with the board members on such matters. After additional discussion, the Seacoast board of directors adopted and approved the draft merger agreement and the transactions and agreements contemplated by it (subject to no material terms or
conditions being revised) and determined that the merger agreement and the transactions contemplated by it were in the best interests of Seacoast and its shareholders.
Later in the day on May 4, 2017, Concord issued the conditional binder with regard to the letter ruling matters
subsequent to which Seacoast and PBCB executed the merger agreement and the shareholder support agreement, and PBCB delivered the claims letters and the restrictive covenant agreements. A press release announcing the transaction was issued that
afternoon following the close of trading in Seacoast common stock and a conference call to discuss the merger was held on the morning of May 5, 2017.
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PBCBs Reasons for the Merger and Recommendation of the PBCB Board of Directors
After careful consideration and in consultation with its outside legal counsel and financial advisor, PBCBs
board of directors, at a meeting held on May 3, 2017, unanimously (i) determined and declared that the merger agreement, the merger, and the other transactions contemplated by the merger agreement are advisable and in the best interests of
PBCB and its shareholders, (ii) authorized, adopted and approved the merger agreement, the merger and the other transactions contemplated by the merger agreement, (iii) recommended the adoption of the merger agreement, the merger and the
other transactions contemplated by the merger agreement to the PBCB shareholders and (iv) resolved that the merger agreement be submitted to the PBCB shareholders for adoption thereof. Accordingly, the PBCB board of directors recommends that
PBCB shareholders vote
FOR
the merger proposal.
When you consider the PBCB board of directors
recommendation, you should be aware that PBCBs directors may have interests in the merger that may be different from, or in addition to, the interests of PBCB shareholders generally. See
The MergerInterests of PBCB Directors and
Executive Officers in the Merger
.
In reaching its decision, the PBCB board of directors consulted with
PBCBs management, as well as its financial and legal advisors, and considered a number of potentially positive factors, including, among others, the following factors (not necessarily in order of relative importance):
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its belief that the transaction is likely to provide substantial value to PBCB shareholders;
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the value of the merger consideration to be received by PBCB shareholders; in relation to (i) the market
price of Seacoast common stock prior to the PBCB board of directors approval of the merger agreement and (ii) the PBCB board of directors assessment, based on its and PBCBs managements experience and knowledge of the
industry, and advice from PBCBs financial advisors, of the value of PBCB as an independent entity and opportunities that could be available to PBCB were it to continue to operate on a stand-alone basis, taking into consideration the continued
costs, risks and uncertainties associated with continuing to operate independently, including national and local economic conditions, the interest rate environment, increasing operating costs resulting from regulatory initiatives and compliance
mandates, and the competitive environment for financial institutions generally and other risks associated with continued independence;
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the fact that the mixed stock and cash nature of the merger consideration offers PBCB shareholders a balance
of immediate certain value and the opportunity to participate in future earnings and growth of the combined company;
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the fact that the merger consideration will consist of shares of Seacoast common stock, which would allow PBCB
shareholders to participate in a significant portion of the future performance of the combined PBCB and Seacoast business and synergies resulting from the merger, and the value to PBCB shareholders represented by that consideration;
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the greater liquidity in the trading market for Seacoast common stock relative to the market for PBCB common
stock due to the listing of Seacoasts shares on the Nasdaq Global Select Market;
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the fact that the transaction is expected to be partially tax-free to PBCB shareholders for U.S. federal
income tax purposes;
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each of PBCBs, Seacoasts and the combined companys business, operations, financial
condition, asset quality, earnings, competitive position and prospects, on both a historical and prospective basis. In reviewing these factors, the PBCB board of directors considered its view that Seacoasts business and operations complement
those of PBCB and that the merger would result in a combined company with diversified revenue sources, a well-balanced loan portfolio and an attractive funding base, as evidenced by a significant portion of core deposit funding;
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the strategic, business and legal considerations, as well as the risks and benefits relating to a potential
transaction with Seacoast compared to the stand-alone prospects of PBCB, the results that PBCB could
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expect to achieve operating independently, and the likely risks and benefits to PBCB shareholders of that course of action. PBCBs board of directors concluded that a potential transaction
with Seacoast would likely deliver higher value to PBCB shareholders than continuing to operate independently;
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its view that the size of the institution and related economies of scale was becoming increasingly important
to continued success in the current financial services environment, including the increased expenses of regulatory compliance, and that a merger with a larger bank holding company could provide those economies of scale, increase efficiencies of
operations and enhance customer products and services;
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its belief that the number of potential acquirers interested in smaller institutions like PBCB, with total
assets less than $500 million and limited geographic markets, has diminished and may diminish even further over time;
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the complementary nature of the credit cultures of the two companies, which management believes should
facilitate integration and implementation of the transaction;
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managements expectation that the combined company will have a strong capital position upon completion of
the transaction;
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the PBCB board of directors belief that the combined enterprise would benefit from Seacoasts
ability to take advantage of economies of scale and grow in the current economic environment, making Seacoast an attractive partner for PBCB;
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the business reputation and capabilities of Seacoast and its management;
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the opinion of Sandler ONeill, delivered to PBCBs board of directors, to the effect that, as of
the date of such opinion, and subject to the procedures followed, assumptions made, matters considered, and qualifications and limitations on the review undertaken by Sandler ONeill as set forth in such opinion, the merger consideration was
fair, from a financial point of view, to the common shareholders of PBCB, as more fully described below in the section entitled
The Merger Opinion of PBCBs Financial Advisor
;
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the fact that the terms of the merger agreement were the result of robust arms-length negotiations
conducted by PBCB and its financial and outside legal advisors and the benefits that PBCB and its advisors were able to obtain during its extensive negotiations with Seacoast;
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the financial and other terms of the merger agreement, the expected tax treatment and deal protection
provisions, including the ability of PBCBs board of directors, under certain circumstances, to withdraw or modify its recommendation to PBCB shareholders, and to terminate the merger agreement in order to enter into a definitive agreement with
respect to a superior proposal (subject to payment of a termination fee), each of which it reviewed with its outside financial and legal advisors;
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the determination that the terms of the merger agreement (including the parties representations,
warranties and covenants and the conditions to their respective obligations) are fair and reasonable;
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the belief that Seacoast would have the resources needed to complete the merger and the fact that the
transaction was not subject to a financing contingency;
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the fact that PBCB shareholders who do not vote to adopt the merger agreement and who comply with the
requirements of the FBCA will have the right to dissent from the merger and to demand appraisal of the fair value of their shares under the FBCA; and
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the fact that the merger is subject to the adoption of the merger agreement by the affirmative vote of holders
of a majority of the outstanding shares of PBCB common stock entitled to vote thereon.
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In reaching its decision, the PBCB board of directors also considered a number of
potentially negative factors, including, among others, the following factors (not necessarily in order of relative importance):
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the risks that the financial results or stock price of the combined entity might decline, including the
possible adverse effects on the stock price and financial results of the combined entity if any expected benefits or synergies are not obtained on a timely basis or at all;
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the potential risk of diverting management attention and resources from the operation of PBCBs business
and towards the completion of the merger;
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the requirement that PBCB conduct its business in the ordinary course and the other restrictions on the
conduct of PBCBs business prior to the completion of the merger, which may delay or prevent PBCB from undertaking business opportunities that may arise pending completion of the merger;
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the potential risks associated with achieving anticipated cost synergies and savings and successfully
integrating Seacoasts business, operations and workforce with those of PBCB;
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the fact that the receipt of the merger consideration will be partially taxable to PBCB shareholders for U.S.
federal income tax purposes;
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the fact that there can be no assurance that all conditions to the parties obligations to consummate the
merger will be satisfied and, as a result, the merger might be delayed or not be completed, including due to a failure to obtain required regulatory approvals in accordance with the terms agreed upon by the parties, or due to a failure of other
closing conditions, and the resulting risks to PBCB and its shareholders (including with respect to the diversion of management and employee attention, potential employee attrition and potential adverse effects on PBCBs customer or other
commercial relationships following the announcement of a transaction);
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the fact that some of PBCBs directors and executive officers may have interests in the merger that may
be different from, or in addition to, those of PBCBs shareholders generally, including as result of employment and compensation arrangements and the manner in which they could be affected by the merger; and
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the regulatory approvals required in connection with the merger and the expectation that such regulatory
approvals will be received in a timely manner and without the imposition of unacceptable conditions.
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While the PBCB board of directors considered potentially positive and potentially negative factors, the PBCB board of
directors concluded that overall, the potentially positive factors outweighed the potentially negative factors. The foregoing discussion of the factors considered by the PBCB board of directors is not intended to be exhaustive, but, rather, includes
the material factors considered by the PBCB board of directors. In reaching its decision to adopt and approve the merger agreement, the merger and the other transactions contemplated by the merger agreement, the PBCB board of directors did not
quantify or assign any relative weights to the factors considered, and individual directors may have given different weights to different factors. The PBCB board of directors considered all these factors as a whole, including discussions with, and
questioning of, PBCB management and PBCBs financial and legal advisors, and overall considered the factors to be favorable to, and to support, its determination.
For the reasons set forth above, the PBCB board of directors has authorized, adopted and approved the merger agreement, the
merger and the transactions contemplated by the merger agreement and recommends that you vote FOR the PBCB merger proposal.
Each director and executive officer of PBCB, who held shares of PBCB common stock as of the date of the merger agreement, and
certain holders of more than 5% of PBCBs outstanding shares have entered into a shareholder support agreement with Seacoast, pursuant to which they have agreed to vote in favor of the merger agreement, the merger and the transactions
contemplated by the merger agreement. For more information
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regarding the support agreement, please see the section entitled Information About the PBCB Special Meeting Shares Subject to Support Agreement; Shares Held by Directors
and Executive Officers beginning on page 30.
Seacoasts Reasons for the Merger
As a part of Seacoasts growth strategy, Seacoast routinely evaluates opportunities to acquire financial institutions. The
acquisition of PBCB is consistent with Seacoasts expansion strategy. Seacoasts board of directors, and senior management reviewed the business, financial condition, results of operation and prospects for PBCB, the market condition of the
market area in which PBCB conducts business, the compatibility of the management and the proposed financial terms of the merger. In addition, management of Seacoast believes that the merger will expand Seacoasts presence in the attractive Palm
Beach County market area, provide opportunities for future growth and provide the potential to realize cost savings. Seacoasts board of directors also considered the financial condition and valuation for both PBCB and Seacoast as well as the
financial and other effects the merger would have on Seacoasts shareholders and stakeholders. The board considered the fact that the acquisition would significantly increase Seacoasts existing footprint in Palm Beach County, that market
overlap would drive cost savings, and that cultural similarities supported the probability of an efficient, low risk integration with minimal customer attritions. In addition, the board of directors also considered the analysis and presentations
from its outside financial advisor, FIG Partners, LLC.
While management of Seacoast believes that revenue opportunities
will be achieved and cost savings will be obtained following the merger, Seacoast has not quantified the amount of enhancements or projected the areas of operation in which such enhancements will occur.
In view of the variety of factors considered in connection with its evaluation of the merger, the Seacoast board did not find
it useful to and did not attempt to quantify, rank or otherwise assign relative weights to factors it considered. Further, individual directors may have given differing weights to different factors. In addition, the Seacoast board did not undertake
to make any specific determination as to whether any particular factor, or any aspect of any particular factor, was favorable or unfavorable to its ultimate determination. Rather, the board conducted an overall analysis of the factors it considered
material, including thorough discussions with, and questioning of, Seacoasts management.
Opinion of PBCBs
Financial Advisor
PBCB retained Sandler ONeill to act as financial advisor to PBCBs board of directors in
connection with PBCBs consideration of a possible business combination. Sandler ONeill is a nationally recognized investment banking firm whose principal business specialty is financial institutions. In the ordinary course of its
investment banking business, Sandler ONeill is regularly engaged in the valuation of financial institutions and their securities in connection with mergers and acquisitions and other corporate transactions.
Sandler ONeill acted as financial advisor in connection with the proposed transaction and participated in certain of the
negotiations leading to the execution of the merger agreement. At the May 3, 2017 meeting at which PBCBs board of directors considered and discussed the terms of the merger agreement and the merger, Sandler ONeill delivered to Palm
Beach Community Banks board of directors its oral opinion, which was subsequently confirmed in writing on May 3, 2017, to the effect that, as of such date, the consideration provided for in the merger agreement was fair to the holders of
PBCB common stock from a financial point of view
. The full text of Sandler ONeills opinion is attached as Appendix B to this proxy statement/prospectus. The opinion outlines the procedures followed, assumptions made, matters
considered and qualifications and limitations on the review undertaken by Sandler ONeill in rendering its opinion. The description of the opinion set forth below is qualified in its entirety by reference to the full text of the opinion.
Holders of
PBCB common stock are urged to read the entire opinion carefully in connection with their consideration of the proposed merger.
40
Sandler ONeills opinion speaks only as of the date of the opinion.
The opinion was directed to PBCBs board of directors in connection with its consideration of the merger agreement and the merger and does not constitute a recommendation to any shareholder of PBCB as to how any such shareholder should vote at
any meeting of shareholders called to consider and vote upon the approval of the merger agreement and the merger. Sandler ONeills opinion was directed only to the fairness, from a financial point of view, of the merger consideration to
the holders of PBCB common stock and does not address the underlying business decision of PBCB to engage in the merger, the form or structure of the merger or any other transactions contemplated in the merger agreement, the relative merits of the
merger as compared to any other alternative transactions or business strategies that might exist for PBCB or the effect of any other transaction in which PBCB might engage.
Sandler ONeill did not express any opinion as to the fairness of
the amount or nature of the compensation to be received in the merger by any officer, director or employee of PBCB or Seacoast, or any class of such persons, if any, relative to the compensation to be received in the merger by any other shareholder,
including the merger consideration to be received by the holders of PBCB common stock. Sandler ONeills opinion was approved by Sandler ONeills fairness opinion committee.
In connection with its opinion, Sandler ONeill reviewed and considered, among other things:
|
|
|
a draft of the merger agreement, dated May 2, 2017;
|
|
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|
certain financial statements and other historical financial information of PBCB that Sandler ONeill
deemed relevant;
|
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|
certain publicly available financial statements and other historical financial information of Seacoast that
Sandler ONeill deemed relevant;
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|
certain internal financial projections for PBCB for the year ending December 31, 2017, as provided by the
senior management of PBCB, as well as estimated long-term earnings per share and balance sheet growth rates for the years thereafter, as confirmed by the senior management of PBCB;
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|
publicly available consensus median analyst earnings per share estimates for Seacoast for the years ending
December 31, 2017 and December 31, 2018, as well as an estimated long-term earnings per share growth rate for the years thereafter;
|
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|
|
the pro forma financial impact of the merger on Seacoast based on certain assumptions relating to purchase
accounting adjustments, cost savings and transaction expenses;
|
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|
the publicly reported historical price and trading activity for Seacoast common stock, including a comparison
of certain stock market information for Seacoast common stock and certain stock indices as well as publicly available information for certain other similar companies, the securities of which are publicly traded;
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|
a comparison of certain financial information for PBCB and Seacoast with similar institutions for which
information is publicly available;
|
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|
the financial terms of certain recent business combinations in the banking industry (on a regional basis), to
the extent publicly available;
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the current market environment generally and the banking environment in particular; and
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such other information, financial studies, analyses and investigations and financial, economic and market
criteria as Sandler ONeill considered relevant.
|
Sandler ONeill also discussed with certain
members of the senior management of PBCB the business, financial condition, results of operations and prospects of PBCB and held similar discussions with certain members of the senior management of Seacoast regarding the business, financial
condition, results of operations and prospects of Seacoast.
41
In performing its review, Sandler ONeill relied upon the accuracy and
completeness of all of the financial and other information that was available to and reviewed by it from public sources, that was provided to Sandler ONeill by PBCB or Seacoast or their respective representatives or that was otherwise reviewed
by Sandler ONeill, and Sandler ONeill assumed such accuracy and completeness for purposes of rendering its opinion without any independent verification or investigation. Sandler ONeill relied on the assurances of the respective
managements of PBCB and Seacoast that they were not aware of any facts or circumstances that would have made any of such information inaccurate or misleading. Sandler ONeill was not asked to and did not undertake an independent verification of
any of such information and did not assume any responsibility or liability for the accuracy or completeness thereof. Sandler ONeill did not make an independent evaluation or perform an appraisal of the specific assets, the collateral securing
assets or the liabilities (contingent or otherwise) of PBCB or Seacoast or any of their respective subsidiaries, nor was Sandler ONeill furnished with any such evaluations or appraisals. Sandler ONeill rendered no opinion or evaluation
on the collectability of any assets or the future performance of any loans of PBCB or Seacoast. Sandler ONeill did not make an independent evaluation of the adequacy of the allowance for loan losses of PBCB or Seacoast, or of the combined
entity after the merger, and it did not review any individual credit files relating to PBCB or Seacoast. Sandler ONeill assumed, with PBCBs consent, that the respective allowances for loan losses for both PBCB and Seacoast were adequate
to cover such losses and would be adequate on a pro forma basis for the combined entity.
In preparing its analyses,
Sandler ONeill used certain internal financial projections for PBCB for the year ending December 31, 2017, as provided by the senior management of PBCB, as well as estimated long-term earnings per share and balance sheet growth rates for
the years thereafter, as confirmed by the senior management of PBCB. In addition, Sandler ONeill used publicly available consensus median analyst earnings per share estimates for Seacoast for the years ending December 31, 2017 and
December 31, 2018 as well as an estimated long-term earnings per share growth rate for the years thereafter. Sandler ONeill also received and used in its pro forma analyses certain assumptions relating to purchase accounting adjustments,
cost savings and transaction expenses. With respect to the foregoing information, the senior management of PBCB confirmed to us that such information reflected (or, in the case of the publicly available consensus median analyst estimates referred to
above, were consistent with) the best currently available estimates and judgments of senior management as to the future financial performance of PBCB and the other matters covered thereby, and Sandler ONeill assumed that the future financial
performance reflected in such information would be achieved. Sandler ONeill expressed no opinion as to such information, or the assumptions on which such information was based. Sandler ONeill assumed in all respects material to its
analysis that PBCB and Seacoast would remain as going concerns for all periods relevant to its analysis.
Sandler
ONeill also assumed, with PBCBs consent, that (i) each of the parties to the merger agreement will comply in all material respects with all material terms and conditions of the merger agreement and all related agreements, that all
of the representations and warranties contained in such agreements were true and correct in all material respects, that each of the parties to such agreements will perform in all material respects all of the covenants and other obligations required
to be performed by such party under such agreements and that the conditions precedent in such agreements were not and will not be waived, (ii) in the course of obtaining the necessary regulatory or third party approvals, consents and releases
with respect to the merger, no delay, limitation, restriction or condition will be imposed that would have an adverse effect on PBCB, Seacoast, or the merger or any related transaction, (iii) the merger and any related transactions will be
consummated in accordance with the terms of the merger agreement without any waiver, modification or amendment of any material term, condition or agreement thereof and in compliance with all applicable laws and other requirements, and (iv) the
merger will qualify as a tax-free reorganization for federal income tax purposes. Finally, with PBCBs consent, Sandler ONeill relied upon the advice that PBCB received from its legal, accounting and tax advisors as to all legal,
accounting and tax matters relating to the merger and the other transactions contemplated by the merger agreement. Sandler ONeill expressed no opinion as to any such matters.
Sandler ONeills opinion was necessarily based on financial, economic, market and other conditions as in effect on,
and the information made available to it as of, the date of its opinion. Events occurring after the date of
42
its opinion could materially affect Sandler ONeills opinion. Sandler ONeill has not undertaken to update, revise, reaffirm or withdraw its opinion or otherwise comment upon
events occurring after the date of its opinion. Sandler ONeill expressed no opinion as to the trading values of Seacoast common stock at any time or what the value of Seacoast common stock would be once it is actually received by the holders
of PBCB common stock.
In rendering its opinion, Sandler ONeill performed a variety of financial analyses. The
summary below is not a complete description of the analyses underlying Sandler ONeills opinion or the presentation made by Sandler ONeill to PBCBs board of directors, but is a summary of all material analyses performed and
presented by Sandler ONeill. The summary includes information presented in tabular format.
In order to fully understand the financial analyses, these tables must be read together with the accompanying text. The tables alone do not
constitute a complete description of the financial analyses.
The preparation of a fairness opinion is a complex process involving subjective judgments as to the most appropriate and relevant methods of financial analysis and the application of
those methods to the particular circumstances. The process, therefore, is not necessarily susceptible to a partial analysis or summary description. Sandler ONeill believes that its analyses must be considered as a whole and that selecting
portions of the factors and analyses to be considered without considering all factors and analyses, or attempting to ascribe relative weights to some or all such factors and analyses, could create an incomplete view of the evaluation process
underlying its opinion. Also, no company included in Sandler ONeills comparative analyses described below is identical to PBCB or Seacoast and no transaction is identical to the merger. Accordingly, an analysis of comparable companies or
transactions involves complex considerations and judgments concerning differences in financial and operating characteristics of the companies and other factors that could affect the public trading values or merger transaction values, as the case may
be, of PBCB and Seacoast and the companies to which they are being compared. In arriving at its opinion, Sandler ONeill did not attribute any particular weight to any analysis or factor that it considered. Rather, Sandler ONeill made
qualitative judgments as to the significance and relevance of each analysis and factor. Sandler ONeill did not form an opinion as to whether any individual analysis or factor (positive or negative) considered in isolation supported or failed
to support its opinion, rather, Sandler ONeill made its determination as to the fairness of the merger consideration on the basis of its experience and professional judgment after considering the results of all its analyses taken as a whole.
In performing its analyses, Sandler ONeill also made numerous assumptions with respect to industry performance,
business and economic conditions and various other matters, many of which are beyond the control of PBCB, Seacoast and Sandler ONeill. The analyses performed by Sandler ONeill are not necessarily indicative of actual values or future
results, both of which may be significantly more or less favorable than suggested by such analyses. Sandler ONeill prepared its analyses solely for purposes of rendering its opinion and provided such analyses to PBCBs board of directors
at its May 3, 2017 meeting. Estimates on the values of companies do not purport to be appraisals or necessarily reflect the prices at which companies or their securities may actually be sold. Such estimates are inherently subject to uncertainty
and actual values may be materially different. Accordingly, Sandler ONeills analyses do not necessarily reflect the value of PBCB common stock or the prices at which PBCB common stock or Seacoast common stock may be sold at any time. The
analyses of Sandler ONeill and its opinion were among a number of factors taken into consideration by PBCBs board of directors in making its determination to approve the merger agreement and should not be viewed as determinative of the
merger consideration or the decision of PBCBs board of directors or management with respect to the fairness of the merger. The type and amount of consideration payable in the merger were determined through negotiation between PBCB and
Seacoast.
Summary of Proposed Merger Consideration and Implied Transaction
Metrics.
Sandler ONeill reviewed the financial terms of the proposed merger. Assuming that each share of PBCB common stock receives cash consideration of $6.33 and 0.9221 shares of Seacoast common stock, based on
the closing price of Seacoast common stock on May 1, 2017, and based on 2,450,799 shares of PBCB common stock outstanding and 57,868 options outstanding with a weighted average exercise price of $10.75 as of May 1, 2017, Sandler
ONeill calculated an aggregate implied transaction value of approximately $71.2 million, or an implied transaction price
43
per share of PBCB common stock of $28.65. Based upon financial information for PBCB as or for the last twelve months (LTM) ended March 31, 2017, Sandler ONeill calculated
the following implied transaction metrics:
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Implied Transaction Value Per Share/ Last Twelve Months Net Income
1
:
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21.0
|
x
|
Implied Transaction Value Per Share/ Tangible Book Value:
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171
|
%
|
Implied Transaction Value Per Share/ Adjusted Tangible Book Value
2
:
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|
182
|
%
|
Tangible Book Premium / Core
Deposits
3
:
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|
|
16.6
|
%
|
Adjusted Tangible Book Premium
2
/ Core
Deposits
3
:
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|
18.0
|
%
|
1)
|
Last twelve months net income tax-effected at 38.0%.
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2)
|
Adjusted for S-Corporation tax distribution to PBCB shareholders.
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3)
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Core deposits are equal to total deposits less jumbo time deposits greater than $100,000.
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Stock Trading History.
Sandler ONeill reviewed the historical stock price
performance of Seacoast common stock for the three-year period ended May 1, 2017. Sandler ONeill then compared the relationship between the stock price performance of Seacoast to stock price movements in the Seacoast peer group (as
described below) as well as certain stock indices.
Seacoast Three-Year Stock Price Performance
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Beginning
May 1, 2014
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Ending
May 1, 2017
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Seacoast
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|
100
|
%
|
|
|
229.2
|
%
|
Seacoast Peer Group
|
|
|
100
|
%
|
|
|
164.5
|
%
|
NASDAQ Bank Index
|
|
|
100
|
%
|
|
|
149.7
|
%
|
S&P 500 Index
|
|
|
100
|
%
|
|
|
126.8
|
%
|
Comparable Company Analyses.
Sandler ONeill used publicly available
information to compare selected financial information for PBCB with a group of financial institutions selected by Sandler ONeill (the Palm Beach Community Bank Peer Group). The Palm Beach Community Bank Peer Group consisted of
major exchange traded nationwide banks and thrifts with assets between $200 million and $500 million and last twelve months return on average assets between 0.60% and 1.25%, excluding announced merger targets. The Palm Beach Community Bank Peer
Group consisted of the following companies:
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Killbuck Bancshares, Inc.
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River Valley Community Bank
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American Riviera Bank
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|
Pinnacle Bank
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Pinnacle Bankshares Corporation
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Capital Bank
|
Bank of Southern California, NA
|
|
Summit Bank
|
AltaPacific Bancorp
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|
Pacific Alliance Bank
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Little Bank, Inc.
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|
Golden Valley Bank
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Communities First Financial Corporation
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|
Capital Bank of New Jersey
|
44
The analysis compared publicly available financial information for PBCB as of or
the twelve months ended March 31, 2017 with the corresponding publicly available data for the Palm Beach Community Bank Peer Group as of or for the twelve months ended March 31, 2017 (or, if data as of or for the twelve months ended
March 31, 2017 was not publicly available, as of or for the twelve months ended December 31, 2016), with pricing data as of May 1, 2017. The table below sets forth the data for PBCB and the high, low, median and mean data for the Palm
Beach Community Bank Peer Group.
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|
PBCB Comparable Company Analysis
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|
Palm Beach
Community Bank
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|
|
Palm Beach
Community
Bank
Peer Group
Median
|
|
|
Palm
Beach
Community
Bank
Peer Group
Mean
|
|
|
Palm Beach
Community
Bank Peer
Group High
|
|
|
Palm
Beach
Community
Bank Peer
Group
Low
|
|
|
|
|
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|
Total assets (in millions)
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|
$
|
346
|
|
|
$
|
362
|
|
|
$
|
366
|
|
|
$
|
500
|
|
|
$
|
216
|
|
Loans/Deposits
|
|
|
103.4
|
%
|
|
|
85.4
|
%
|
|
|
80.7
|
%
|
|
|
95.1
|
%
|
|
|
54.3
|
%
|
Non-performing assets
1
/Total assets
|
|
|
1.49
|
%
|
|
|
0.10
|
%
|
|
|
0.23
|
%
|
|
|
1.25
|
%
|
|
|
0.01
|
%
|
Tangible common equity/Tangible assets
|
|
|
12.06
|
%
|
|
|
10.03
|
%
|
|
|
10.00
|
%
|
|
|
13.66
|
%
|
|
|
8.18
|
%
|
Leverage Ratio
|
|
|
12.45
|
%
|
|
|
10.20
|
%
|
|
|
10.26
|
%
|
|
|
15.27
|
%
|
|
|
8.48
|
%
|
Total RBC Ratio
|
|
|
17.17
|
%
|
|
|
14.39
|
%
|
|
|
14.36
|
%
|
|
|
20.34
|
%
|
|
|
11.24
|
%
|
CRE/Total RBC Ratio
|
|
|
262.6
|
%
|
|
|
244.6
|
%
|
|
|
236.9
|
%
|
|
|
362.5
|
%
|
|
|
92.1
|
%
|
Last Twelve Months Return on average assets²
|
|
|
1.03
|
%
|
|
|
0.92
|
%
|
|
|
0.92
|
%
|
|
|
1.14
|
%
|
|
|
0.63
|
%
|
Last Twelve Months Return on average equity²
|
|
|
8.59
|
%
|
|
|
9.05
|
%
|
|
|
9.12
|
%
|
|
|
12.11
|
%
|
|
|
5.82
|
%
|
Last Twelve Months Net interest margin²
|
|
|
4.15
|
%
|
|
|
3.88
|
%
|
|
|
4.02
|
%
|
|
|
5.63
|
%
|
|
|
2.90
|
%
|
Last Twelve Months Efficiency ratio²
|
|
|
58.2
|
%
|
|
|
59.1
|
%
|
|
|
61.2
|
%
|
|
|
74.2
|
%
|
|
|
50.5
|
%
|
Price/Tangible book value
|
|
|
|
|
|
|
130
|
%
|
|
|
132
|
%
|
|
|
204
|
%
|
|
|
88
|
%
|
Price/Last Twelve Months Earnings per share
|
|
|
|
|
|
|
15.4
|
x
|
|
|
15.3
|
x
|
|
|
19.1
|
x
|
|
|
10.3
|
x
|
Current Dividend Yield
|
|
|
|
|
|
|
0.0
|
%
|
|
|
0.6
|
%
|
|
|
2.7
|
%
|
|
|
0.0
|
%
|
Last Twelve Months Dividend ratio
|
|
|
|
|
|
|
0.0
|
%
|
|
|
7.9
|
%
|
|
|
37.2
|
%
|
|
|
0.0
|
%
|
Market value (in millions)
|
|
|
|
|
|
$
|
43.2
|
|
|
$
|
48.3
|
|
|
$
|
71.4
|
|
|
$
|
26.0
|
|
Note:
Where consolidated holding company level financial data of the relevant company in the Palm Beach
Community Bank Peer Group for March 31, 2017 and December 31, 2016 was unreported, subsidiary bank level data was utilized to calculate ratios.
1)
|
Nonperforming assets defined as nonaccrual loans and leases, renegotiated loans and leases, and real estate
owned.
|
2)
|
Profitability metrics for PBCB are tax-effected at 38.0% to account for S-corporation status.
|
Sandler ONeill used publicly available information to perform a similar analysis for Seacoast and
a group of financial institutions selected by Sandler ONeill (the Seacoast Peer Group). The Seacoast Peer Group consisted of major exchange traded nationwide banks with assets between $3.9 billion and $6.1 billion and last twelve
months return on average assets between 0.75% and 1.75%, excluding announced merger targets. The Seacoast Peer Group consisted of the following companies:
|
|
|
Independent Bank Group, Inc.
|
|
Meridian Bancorp, Inc.
|
Southside Bancshares, Inc.
|
|
Fidelity Southern Corporation
|
W.T.B. Financial Corporation
|
|
TriCo Bancshares
|
Mechanics Bank
|
|
Great Southern Bancorp, Inc.
|
1
st
Source Corporation
|
|
Washington Trust Bancorp, Inc.
|
Central Pacific Financial Corp.
|
|
Univest Corporation of Pennsylvania
|
Lakeland Bancorp, Inc.
|
|
Pacific Premier Bancorp, Inc.
|
45
|
|
|
Sandy Spring Bancorp, Inc.
|
|
USAmeriBancorp, Inc.
|
OceanFirst Financial Corp.
|
|
Oritani Financial Corp.
|
TrustCo Bank Corp NY
|
|
Bridge Bancorp, Inc.
|
Hanmi Financial Corporation
|
|
MainSource Financial Group, Inc.
|
Republic Bancorp, Inc.
|
|
Meta Financial Group, Inc.
|
The analysis compared publicly available financial information for Seacoast as of or for the
twelve months ended March 31, 2017 with the corresponding publicly available data for the Seacoast Peer Group as of or for the twelve months ended March 31, 2017 (or, if data as of or for the twelve months ended March 31, 2017 was not
publicly available, as of or for the twelve months ended December 31, 2016), with pricing data as of May 1, 2017. The analysis also compared the price to publicly available analyst estimated 2017 and 2018 earnings per share multiples of
Seacoast and the Seacoast Peer Group. The table below sets forth the data for Seacoast and the high, low, median and mean data for the Seacoast Peer Group:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Seacoast Comparable Company Analysis
|
|
|
|
|
|
|
|
|
|
Seacoast
|
|
|
Seacoast
Peer
Group
Median
|
|
|
Seacoast
Peer
Group
Mean
|
|
|
Seacoast
Peer
Group
Low
|
|
|
Seacoast
Peer
Group
High
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets (in millions)
|
|
$
|
4,770
|
|
|
$
|
4,652
|
|
|
$
|
4,799
|
|
|
$
|
3,986
|
|
|
$
|
6,023
|
|
Loans/Deposits
|
|
|
80.8
|
%
|
|
|
94.5
|
%
|
|
|
91.7
|
%
|
|
|
40.1
|
%
|
|
|
132.9
|
%
|
Non-performing assets
1
/Total assets
|
|
|
0.90
|
%
|
|
|
0.61
|
%
|
|
|
0.62
|
%
|
|
|
0.03
|
%
|
|
|
1.58
|
%
|
Tangible common equity/Tangible assets
|
|
|
9.04
|
%
|
|
|
8.87
|
%
|
|
|
9.17
|
%
|
|
|
6.45
|
%
|
|
|
13.49
|
%
|
Leverage Ratio
|
|
|
10.32
|
%
|
|
|
9.48
|
%
|
|
|
9.96
|
%
|
|
|
6.44
|
%
|
|
|
14.94
|
%
|
Total RBC Ratio
|
|
|
14.95
|
%
|
|
|
14.38
|
%
|
|
|
14.62
|
%
|
|
|
11.44
|
%
|
|
|
20.01
|
%
|
CRE/Total RBC Ratio
|
|
|
209.0
|
%
|
|
|
264.0
|
%
|
|
|
260.0
|
%
|
|
|
23.2
|
%
|
|
|
542.6
|
%
|
Last Twelve Months Return on average assets
|
|
|
0.74
|
%
|
|
|
1.04
|
%
|
|
|
1.06
|
%
|
|
|
0.60
|
%
|
|
|
1.50
|
%
|
Last Twelve Months Return on average equity
|
|
|
7.58
|
%
|
|
|
9.58
|
%
|
|
|
9.64
|
%
|
|
|
4.88
|
%
|
|
|
14.22
|
%
|
Last Twelve Months Net interest margin
|
|
|
3.62
|
%
|
|
|
3.50
|
%
|
|
|
3.50
|
%
|
|
|
2.54
|
%
|
|
|
4.46
|
%
|
Last Twelve Months Efficiency ratio
|
|
|
63.6
|
%
|
|
|
57.7
|
%
|
|
|
58.7
|
%
|
|
|
39.1
|
%
|
|
|
71.1
|
%
|
Price/Tangible book value
|
|
|
234
|
%
2
|
|
|
204
|
%
|
|
|
207
|
%
|
|
|
125
|
%
|
|
|
323
|
%
|
Price/Last Twelve Months Earnings per share
|
|
|
28.1
|
x
|
|
|
18.8
|
x
|
|
|
19.0
|
x
|
|
|
11.6
|
x
|
|
|
31.5
|
x
|
Price/Median Analyst 2017E Earnings per share
|
|
|
21.0
|
x
|
|
|
17.2
|
x
|
|
|
17.9
|
x
|
|
|
14.3
|
x
|
|
|
26.4
|
x
|
Price/Median Analyst 2018E Earnings per share
|
|
|
16.1
|
x
|
|
|
15.6
|
x
|
|
|
15.4
|
x
|
|
|
10.3
|
x
|
|
|
19.2
|
x
|
Current Dividend Yield
|
|
|
0.0
|
%
|
|
|
2.1
|
%
|
|
|
1.9
|
%
|
|
|
0.0
|
%
|
|
|
4.1
|
%
|
Last Twelve Months Dividend ratio
|
|
|
0.0
|
%
|
|
|
36.1
|
%
|
|
|
36.0
|
%
|
|
|
0.0
|
%
|
|
|
93.0
|
%
|
Market value (in millions)
|
|
$
|
1,049
|
2
|
|
$
|
850
|
|
|
$
|
904
|
|
|
$
|
473
|
|
|
$
|
1,722
|
|
Note:
Where consolidated holding company level financial data of the relevant company for
March 31, 2017 and December 31, 2016 was unreported, subsidiary bank level data was utilized to calculate ratios.
1)
|
Nonperforming assets defined as nonaccrual loans and leases, renegotiated loans and leases, and real estate
owned.
|
2)
|
Pro forma for pending acquisition and common equity offering.
|
46
Analysis of Selected Regional Merger Transactions
.
Sandler
ONeill reviewed a group of selected merger and acquisition transactions involving U.S. banks and thrifts headquartered in the Southeast region (the Regional Transactions). The Regional Transactions group consisted of transactions
announced between January 1, 2015 and May 1, 2017 for which targets had total assets between $250 million and $750 million and return on average assets between 0.75% and 1.25%. The Regional Transactions group was composed of the following
transactions:
|
|
|
Acquiror
|
|
Target
|
Progress Financial Corp.
|
|
First Partners Financial Inc.
|
Carolina Financial Corp.
|
|
Greer Bancshares, Inc.
|
Bay Banks of Virginia Inc.
|
|
Virginia BanCorp Inc.
|
CenterState Banks
|
|
Platinum Bank Holding Co.
|
First Bancorp
|
|
Carolina Bank Holdings Inc.
|
Sunshine Bancorp Inc.
|
|
FBC Bancorp Inc.
|
Southern BancShares (NC)
|
|
Heritage Bankshares Inc.
|
Ameris Bancorp
|
|
Jacksonville Bancorp Inc.
|
Park Sterling Corporation
|
|
First Capital Bancorp Inc.
|
BNC Bancorp
|
|
Southcoast Financial Corp.
|
Home BancShares Inc.
|
|
Florida Bus. BancGroup Inc.
|
River Financial Corp.
|
|
Keystone Bancshares Inc.
|
Pinnacle Financial Partners
|
|
Magna Bank
|
Ameris Bancorp
|
|
Merchant & Southern Banks of FL Inc.
|
Using the latest publicly available information prior to the announcement of the relevant
transaction, Sandler ONeill reviewed the following transaction metrics: transaction price to last-twelve-months earnings per share, transaction price to tangible book value per share, and core deposit premium to core deposits. Sandler
ONeill compared the indicated transaction multiples for the merger to the high, low, mean and median multiples of the Regional Transactions group.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Palm Beach
Community
Bank /
Seacoast
|
|
|
Regional
Transactions
Median
|
|
|
Regional
Transactions
Mean
|
|
|
Regional
Transactions
Low
|
|
|
Regional
Transactions
High
|
|
Transaction price/Last Twelve Months Earnings Per Share:
|
|
|
21.0
|
x
1
|
|
|
17.5
|
x
|
|
|
17.8
|
x
|
|
|
12.5
|
x
|
|
|
29.3
|
x
|
Transaction price/Tangible Book Value Per Share:
|
|
|
182
|
%
2
|
|
|
155
|
%
|
|
|
153
|
%
|
|
|
84
|
%
|
|
|
190
|
%
|
Core deposit premium:
|
|
|
16.6
|
%
|
|
|
9.1
|
%
|
|
|
9.4
|
%
|
|
|
3.8
|
%
|
|
|
17.0
|
%
|
1)
|
PBCB last twelve months income net income tax-effected at 38.0%.
|
2)
|
Tangible book value adjusted for S-Corporation tax distribution made in April 2017 to PBCB shareholders.
|
Net Present Value Analyses.
Sandler ONeill performed an analysis that estimated the
net present value per share of PBCB common stock assuming PBCB performed in accordance with financial projections for the years ending December 31, 2017, as provided by the senior management of Palm Beach Community Bank, with estimated
long-term earnings per share and balance sheet growth rates for the three years thereafter, as confirmed by the senior management of PBCB. To approximate the terminal value of a share of PBCB common stock at December 31, 2020, Sandler
ONeill applied price to 2020 earnings per share multiples ranging from 13.0x to 18.0x and price to December 31, 2020 tangible book value per share multiples ranging from 100% to 175%. The terminal values were then discounted to present
values using different discount rates ranging from 11.0% to 15.0% which were chosen to reflect different assumptions regarding required rates of return of holders or prospective buyers of PBCB common stock. As illustrated in the following tables,
the analysis indicated an
47
implied range of values per share of PBCB common stock of $15.47 to $24.68 when applying multiples of earnings per share and $13.77 to $27.76 when applying multiples of tangible book value per
share.
Earnings Per Share Multiples
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Discount
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rate
|
|
13.0x
|
|
|
14.0x
|
|
|
15.0x
|
|
|
16.0x
|
|
|
17.0x
|
|
|
18.0x
|
|
11.0%
|
|
$
|
17.82
|
|
|
$
|
19.19
|
|
|
$
|
20.56
|
|
|
$
|
21.93
|
|
|
$
|
23.31
|
|
|
$
|
24.68
|
|
12.0%
|
|
$
|
17.19
|
|
|
$
|
18.52
|
|
|
$
|
19.84
|
|
|
$
|
21.16
|
|
|
$
|
22.48
|
|
|
$
|
23.81
|
|
13.0%
|
|
$
|
16.59
|
|
|
$
|
17.87
|
|
|
$
|
19.15
|
|
|
$
|
20.42
|
|
|
$
|
21.70
|
|
|
$
|
22.98
|
|
14.0%
|
|
$
|
16.02
|
|
|
$
|
17.25
|
|
|
$
|
18.48
|
|
|
$
|
19.72
|
|
|
$
|
20.95
|
|
|
$
|
22.18
|
|
15.0%
|
|
$
|
15.47
|
|
|
$
|
16.66
|
|
|
$
|
17.85
|
|
|
$
|
19.04
|
|
|
$
|
20.23
|
|
|
$
|
21.42
|
|
Tangible Book Value Per Share Multiples
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Discount
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rate
|
|
100%
|
|
|
115%
|
|
|
130%
|
|
|
145%
|
|
|
160%
|
|
|
175%
|
|
11.0%
|
|
$
|
15.86
|
|
|
$
|
18.24
|
|
|
$
|
20.62
|
|
|
$
|
23.00
|
|
|
$
|
25.38
|
|
|
$
|
27.76
|
|
12.0%
|
|
$
|
15.30
|
|
|
$
|
17.60
|
|
|
$
|
19.89
|
|
|
$
|
22.19
|
|
|
$
|
24.48
|
|
|
$
|
26.78
|
|
13.0%
|
|
$
|
14.77
|
|
|
$
|
16.98
|
|
|
$
|
19.20
|
|
|
$
|
21.41
|
|
|
$
|
23.63
|
|
|
$
|
25.84
|
|
14.0%
|
|
$
|
14.26
|
|
|
$
|
16.39
|
|
|
$
|
18.53
|
|
|
$
|
20.67
|
|
|
$
|
22.81
|
|
|
$
|
24.95
|
|
15.0%
|
|
$
|
13.77
|
|
|
$
|
15.83
|
|
|
$
|
17.90
|
|
|
$
|
19.96
|
|
|
$
|
22.03
|
|
|
$
|
24.09
|
|
Sandler ONeill also considered and discussed with the PBCB board of directors how this
analysis would be affected by changes in the underlying assumptions, including variations with respect to net income. To illustrate this impact, Sandler ONeill performed a similar analysis assuming PBCBs net income varied from 15% above
projections to 15% below projections. This analysis resulted in the following implied range of per share values for PBCB common stock, applying the price to 2020 earnings per share multiples range of 13.0x to 18.0x referred to above and a discount
rate of 12.62%.
Earnings Per Share Multiples
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Annual
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Budget
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Variance
|
|
13.0x
|
|
|
14.0x
|
|
|
15.0x
|
|
|
16.0x
|
|
|
17.0x
|
|
|
18.0x
|
|
(15.0%)
|
|
$
|
14.30
|
|
|
$
|
15.40
|
|
|
$
|
16.49
|
|
|
$
|
17.59
|
|
|
$
|
18.69
|
|
|
$
|
19.79
|
|
(10.0%)
|
|
$
|
15.14
|
|
|
$
|
16.30
|
|
|
$
|
17.47
|
|
|
$
|
18.63
|
|
|
$
|
19.79
|
|
|
$
|
20.96
|
|
(5.0%)
|
|
$
|
15.98
|
|
|
$
|
17.21
|
|
|
$
|
18.44
|
|
|
$
|
19.66
|
|
|
$
|
20.89
|
|
|
$
|
22.12
|
|
0.0%
|
|
$
|
16.82
|
|
|
$
|
18.11
|
|
|
$
|
19.41
|
|
|
$
|
20.70
|
|
|
$
|
21.99
|
|
|
$
|
23.29
|
|
5.0%
|
|
$
|
17.66
|
|
|
$
|
19.02
|
|
|
$
|
20.38
|
|
|
$
|
21.73
|
|
|
$
|
23.09
|
|
|
$
|
24.45
|
|
10.0%
|
|
$
|
18.50
|
|
|
$
|
19.92
|
|
|
$
|
21.35
|
|
|
$
|
22.77
|
|
|
$
|
24.19
|
|
|
$
|
25.62
|
|
15.0%
|
|
$
|
19.34
|
|
|
$
|
20.83
|
|
|
$
|
22.32
|
|
|
$
|
23.80
|
|
|
$
|
25.29
|
|
|
$
|
26.78
|
|
Sandler ONeill also performed an analysis that estimated the net present value per share
of Seacoast common stock assuming that Seacoast performed in accordance with publicly available consensus median analyst estimates for Seacoast for the years ending December 31, 2017 and December 31, 2018, and an estimated long-term
earnings per share growth rate for the years thereafter. To approximate the terminal value of Seacoast common stock at December 31, 2020, Sandler ONeill applied price to 2020 earnings per share multiples ranging from 18.0x to 23.0x and
price to December 31, 2020 tangible book value per share multiples ranging from 185% to 260%. The terminal values were then discounted to present values using different discount rates ranging from
48
7.5% to 9.5% chosen to reflect different assumptions regarding required rates of return of holders or prospective buyers of Seacoast common stock. As illustrated in the following tables, the
analysis indicated an implied range of values per share of Seacoast common stock of $21.65 to $29.78 when applying multiples of earnings per share and $21.24 to $32.14 when applying multiples of tangible book value per share.
Earnings Per Share Multiples
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Discount
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rate
|
|
18.0x
|
|
|
19.0x
|
|
|
20.0x
|
|
|
21.0x
|
|
|
22.0x
|
|
|
23.0x
|
|
7.5%
|
|
$
|
23.31
|
|
|
$
|
24.60
|
|
|
$
|
25.90
|
|
|
$
|
27.19
|
|
|
$
|
28.49
|
|
|
$
|
29.78
|
|
8.0%
|
|
$
|
22.88
|
|
|
$
|
24.15
|
|
|
$
|
25.42
|
|
|
$
|
26.69
|
|
|
$
|
27.96
|
|
|
$
|
29.23
|
|
8.5%
|
|
$
|
22.46
|
|
|
$
|
23.71
|
|
|
$
|
24.95
|
|
|
$
|
26.20
|
|
|
$
|
27.45
|
|
|
$
|
28.70
|
|
9.0%
|
|
$
|
22.05
|
|
|
$
|
23.27
|
|
|
$
|
24.50
|
|
|
$
|
25.72
|
|
|
$
|
26.95
|
|
|
$
|
28.17
|
|
9.5%
|
|
$
|
21.65
|
|
|
$
|
22.85
|
|
|
$
|
24.06
|
|
|
$
|
25.26
|
|
|
$
|
26.46
|
|
|
$
|
27.66
|
|
Tangible Book Value Per Share Multiples
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Discount
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rate
|
|
185%
|
|
|
200%
|
|
|
215%
|
|
|
230%
|
|
|
245%
|
|
|
260%
|
|
7.5%
|
|
$
|
22.87
|
|
|
$
|
24.72
|
|
|
$
|
26.58
|
|
|
$
|
28.43
|
|
|
$
|
30.28
|
|
|
$
|
32.14
|
|
8.0%
|
|
$
|
22.45
|
|
|
$
|
24.27
|
|
|
$
|
26.09
|
|
|
$
|
27.91
|
|
|
$
|
29.73
|
|
|
$
|
31.55
|
|
8.5%
|
|
$
|
22.04
|
|
|
$
|
23.82
|
|
|
$
|
25.61
|
|
|
$
|
27.40
|
|
|
$
|
29.18
|
|
|
$
|
30.97
|
|
9.0%
|
|
$
|
21.64
|
|
|
$
|
23.39
|
|
|
$
|
25.14
|
|
|
$
|
26.90
|
|
|
$
|
28.65
|
|
|
$
|
30.31
|
|
9.5%
|
|
$
|
21.24
|
|
|
$
|
22.97
|
|
|
$
|
24.69
|
|
|
$
|
26.41
|
|
|
$
|
28.13
|
|
|
$
|
29.85
|
|
Sandler ONeill also considered and discussed with the PBCB board of directors how this
analysis would be affected by changes in the underlying assumptions, including variations with respect to net income. To illustrate this impact, Sandler ONeill performed a similar analysis assuming Seacoasts net income varied from 15%
above estimates to 15% below estimates. This analysis resulted in the following implied range of per share values for Seacoast common stock, applying the price to 2020 earnings per share multiples range of 18.0x to 23.0x referred to above and a
discount rate of 7.32%.
Earnings Per Share Multiples
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Annual
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Budget
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Variance
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18.0x
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19.0x
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20.0x
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21.0x
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22.0x
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23.0x
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(15.0%)
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$
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19.95
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$
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21.05
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$
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22.16
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$
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23.27
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$
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24.38
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$
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25.49
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(10.0%)
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$
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21.12
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$
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22.29
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$
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23.46
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$
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24.64
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$
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25.81
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$
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26.98
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(5.0%)
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$
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22.29
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$
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23.53
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$
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24.77
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$
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26.01
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$
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27.25
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$
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28.48
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0.0%
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$
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23.46
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$
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24.77
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$
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26.07
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$
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27.38
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$
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28.68
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$
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29.98
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5.0%
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$
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24.64
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$
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26.01
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$
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27.38
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$
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28.74
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$
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30.11
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$
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31.48
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10.0%
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$
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25.81
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$
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27.25
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$
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28.68
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$
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30.11
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$
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31.55
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$
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32.98
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15.0%
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$
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26.98
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|
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$
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28.48
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|
|
$
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29.98
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|
|
$
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31.48
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|
|
$
|
32.98
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$
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34.48
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Sandler ONeill noted that the net present value analysis is a widely used valuation
methodology, but the results of such methodology are highly dependent upon the numerous assumptions that must be made, and the results thereof are not necessarily indicative of actual values or future results.
Pro Forma Merger Analysis.
Sandler ONeill analyzed certain potential pro forma effects of the merger,
assuming the merger closes at the end of the third calendar quarter of 2017. In performing this analysis, Sandler
49
ONeill utilized the following information: (i) internal financial projections for Palm Beach Community Bank for the years ending December 31, 2017 through December 31, 2020,
as provided by the senior management of PBCB; (ii) publicly available consensus median analyst earnings per share estimates for Seacoast for the years ending December 31, 2017 and December 31, 2018 and estimated long-term earnings per
share and balance sheet growth rates for the years thereafter; and (iii) certain assumptions relating to purchase accounting adjustments, cost savings and transaction expenses. The analysis indicated that the merger could be accretive to
Seacoasts earnings per share (excluding one-time transaction costs and expenses) for the year ended December 31, 2017, and dilutive to Seacoasts estimated tangible book value per share at closing of the merger.
In connection with this analysis, Sandler ONeill considered and discussed with the PBCB board of directors how the
analysis would be affected by changes in the underlying assumptions, including the impact of final purchase accounting adjustments determined at the closing of the transaction, and noted that the actual results achieved by the combined company may
vary from projected results and the variations may be material.
Sandler ONeills Relationship.
Sandler ONeill is acting as PBCBs financial advisor in connection with the merger and will receive a transaction fee equal to 1.15% of the aggregate merger consideration for its services, which fee is estimated to be
approximately $819,000 based on the market value of Seacoasts common stock on the date the merger was announced. Sandler ONeills fee is contingent upon the closing of the merger. Sandler ONeill received a $150,000 fee upon
rendering its fairness opinion to the PBCB board of directors, which opinion fee will be credited in full towards the transaction fee which will become payable to Sandler ONeill on the day of closing of the merger. PBCB Bank has also agreed to
indemnify Sandler ONeill against certain claims and liabilities arising out of its engagement and to reimburse Sandler ONeill for certain of its out-of-pocket expenses incurred in connection with its engagement.
Sandler ONeill did not provide any other investment banking services to PBCB in the two years preceding the date of
Sandler ONeills opinion. In the two years preceding the date of Sandler ONeills opinion, Sandler ONeill provided certain investment banking services to Seacoast and received fees for such services equal to approximately
$4,164,000 in the aggregate. In 2015, Sandler ONeill was engaged as Seacoasts financial advisor in connection with Seacoasts acquisition of Grand Bankshares, Inc. In February 2017, Sandler ONeill served as a
joint-book-running manager in Seacoasts common stock offering. In addition, in the ordinary course of its business as a broker-dealer, Sandler ONeill may purchase securities from and sell securities to Seacoast and its affiliates.
Sandler ONeill may also actively trade the equity and debt securities of Seacoast and its affiliates for Sandler ONeills own account and for the accounts of its customers. Sandler ONeill may also in the future provide
investment banking services to Seacoast and its affiliates for which Sandler ONeill may receive compensation.
Material
U.S. Federal Income Tax Consequences of the Merger
The following discussion describes the anticipated material U.S.
federal income tax consequences of the merger to U.S. holders (as defined below) of PBCB common stock that exchange their shares of PBCB common stock for shares of Seacoast common stock and cash in the merger. This discussion is based on the Code,
its legislative history, existing and proposed regulations thereunder and published rulings and decisions, all as currently in effect as of the date hereof, and all of which are subject to change, possibly with retroactive effect. Any such change
could affect the accuracy of the statements and conclusions set forth in this discussion.
For purposes of this
discussion, a U.S. holder means a beneficial owner of PBCB common stock that is for U.S. federal income tax purposes a permitted S corporation shareholder and is (i) an individual citizen or resident of the United States,
(ii) a trust if (a) a court within the United States is able to exercise primary supervision over the administration of the trust and one or more U.S. persons have the authority to control all substantial decisions of the trust or
(b) such trust has made a valid election to be treated as a U.S. person for U.S. federal income tax purposes, or (iii) an estate, the income of which is includible in gross income for U.S. federal income tax purposes regardless of its
source. This discussion addresses only U.S. holders of PBCB common stock.
50
This discussion addresses only those PBCB common stockholders that hold their
shares of PBCB common stock as a capital asset within the meaning of Section 1221 of the Code (generally, stock held for investment). Further, this discussion does not address all aspects of U.S. federal income taxation that may be relevant to
you in light of your particular circumstances or if you are subject to special treatment under the U.S. federal income tax laws, including if you are:
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a financial institution;
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a tax-exempt organization;
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a regulated investment company;
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a real estate investment trust;
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a dealer or broker in stocks and securities, commodities or currencies;
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a trader in securities that elects the mark-to-market method of accounting;
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a holder of PBCB stock that received such stock through the exercise of an employee stock option, through a
tax qualified retirement plan or otherwise as compensation;
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a person that is not a U.S. holder (as defined above);
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a person that has a functional currency other than the U.S. dollar;
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a holder of PBCB stock that holds such stock as part of a hedge, straddle, constructive sale, conversion or
other integrated transaction; or
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In addition, the discussion does not address any alternative minimum tax or any state, local or foreign tax consequences of
the merger, nor does it address any tax consequences arising under the unearned income Medicare contribution tax pursuant to the Health Care and Education Reconciliation Act of 2010.
The actual tax consequences of the merger to you may be
complex. These consequences will depend on your individual situation. You should consult with your own tax advisor to determine the tax consequences of the merger to you.
Tax Consequences of the Merger Generally
The parties intend for the merger to qualify as a reorganization within the meaning of Section 368(a) of the Code. It is a
condition to Seacoasts obligation to complete the merger that Seacoast receive an opinion from Alston & Bird LLP, dated the closing date of the merger, to the effect that the merger will qualify as a reorganization within the meaning
of Section 368(a) of the Code. It is a condition to PBCBs obligation to complete the merger that PBCB receive an opinion from Holland & Knight LLP, dated the closing date of the merger, to the effect that the merger will qualify
as a reorganization within the meaning of Section 368(a) of the Code. The opinion of Alston & Bird LLP provided on behalf of Seacoast and the opinion of Holland & Knight LLP provided on behalf of PBCB, will be based on
assumptions, representations, warranties and covenants, including those contained in the merger agreement and in representation letters provided by Seacoast and PBCB and on customary factual assumptions. The accuracy of such assumptions,
representations and warranties, and compliance with such covenants, could affect the conclusions set forth in such opinions. Neither of the opinions described above will be binding on the Internal Revenue Service or any court. PBCB and Seacoast have
not sought and will not seek any ruling from the Internal Revenue Service regarding any matters relating to the merger. There can be no assurance that the Internal Revenue Service will not assert, or that a court would not sustain, a position
contrary to any of the conclusions set forth in this discussion.
51
Tax Consequences of the Merger to U.S. Holders
Provided the merger qualifies as a reorganization within the meaning of Section 368(a) of the Code, upon
exchanging your PBCB common stock for Seacoast common stock and cash (other than cash received in lieu of a fractional share), you generally will recognize gain (but not loss) in an amount equal to the lesser of (1) the amount of gain realized
(i.e., the excess of the sum of the amount of cash and the fair market value of the Seacoast common stock received pursuant to the merger over your adjusted tax basis in the shares of PBCB common stock surrendered) and (2) the amount of cash
received pursuant to the merger (excluding any cash received in lieu of a fractional share). If you acquired different blocks of PBCB common stock at different times or different prices, you should consult your tax advisor regarding the manner in
which gain or loss should be determined. Any recognized gain generally will be long-term capital gain if, as of the effective date of the merger, your holding period with respect to the PBCB common stock surrendered exceeds one year. If, however,
the cash received has the effect of the distribution of a dividend, the gain will be treated as a dividend to the extent of the holders ratable share of accumulated earnings and profits as calculated for United States federal income tax
purposes. See Possible Dividend Treatment below.
The aggregate tax basis in the Seacoast common stock
you receive in the merger (including any fractional shares deemed received and redeemed for cash as described below) will be the same as the aggregate tax basis of the PBCB common stock surrendered in exchange therefor, reduced by the amount of cash
received (excluding any cash received in lieu of a fractional share) and increased by the amount of gain, if any, recognized by you (excluding any gain recognized with respect to cash received in lieu of a fractional share) on the exchange. The
holding period of the Seacoast common stock received (including any fractional shares deemed received and sold for cash as described below) will include the holding period of the PBCB shares surrendered.
Possible Dividend Treatment
In general, the determination of whether the gain recognized in the exchange will be treated as capital gain or has the effect
of a distribution of a dividend depends upon whether and to what extent the exchange reduces the holders deemed percentage stock ownership of Seacoast. For purposes of this determination, the holder is treated as if it first exchanged all of
its shares of PBCB common stock solely for Seacoast common stock and then Seacoast immediately redeemed, which we refer to in this document as the deemed redemption, a portion of the Seacoast common stock in exchange for the cash the
holder actually received. The gain recognized in the deemed redemption will be treated as capital gain if the deemed redemption is (1) substantially disproportionate with respect to the holder or (2) not essentially
equivalent to a dividend.
The deemed redemption will generally be substantially disproportionate with
respect to a holder if the percentage described in (2) below is less than 80% of the percentage described in (1) below. Whether the deemed redemption is not essentially equivalent to a dividend with respect to a holder will
depend upon the holders particular circumstances. At a minimum, however, in order for the deemed redemption to be not essentially equivalent to a dividend, the deemed redemption must result in a meaningful reduction in
the holders deemed percentage stock ownership of Seacoast. In general, that determination requires a comparison of (1) the percentage of the outstanding stock of Seacoast that the holder is deemed actually and constructively to have owned
immediately before the deemed redemption and (2) the percentage of the outstanding stock of Seacoast that is actually and constructively owned by the holder immediately after the deemed redemption. In applying the above tests, a holder may,
under the constructive ownership rules, be deemed to own stock that is owned by other persons or stock underlying a holders option to purchase in addition to the stock actually owned by the holder.
Because the possibility of dividend treatment depends primarily on each holders particular circumstances, including the
application of the constructive ownership rules, holders of PBCB common stock should consult their own tax advisors regarding the application of the foregoing rules to their particular circumstances.
52
Cash Instead of Fractional Shares
If you receive cash instead of a fractional share of Seacoast common stock, you will be treated as having received the
fractional share of Seacoast common stock pursuant to the merger and then as having sold that fractional share of Seacoast common stock for cash. As a result, assuming that the cash received is not treated as a dividend (as described above), you
generally will recognize gain or loss equal to the difference between the amount of cash received and the tax basis allocated to such fractional share. This gain or loss generally will be capital gain or loss and generally will be long-term capital
gain or loss if, as of the effective date of the merger, your holding period for the shares (including the holding period of the PBCB common stock deemed surrendered in exchange for a fractional share of Seacoast common stock) is greater than one
year. The deductibility of capital losses is subject to limitations.
Tax Consequences of C Corporation Status
PBCB is taxed as an S corporation, while Seacoast is taxed as a C corporation, under the Code. Certain tax consequences will
change for U.S. holders as a result of holding stock in a C corporation as compared to holding stock in an S corporation including, but not limited to, the following:
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The income of an S corporation is deemed to accrue ratably to its shareholders for federal income tax
purposes. As a result, holders of PBCB common stock have been required to include their pro rata portion of PBCBs income on their tax returns and have been directly liable for the federal income taxes imposed on their portion of PBCBs
income. Except in limited situations, an S Corporation does not incur any separate federal income tax liability.
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As a C corporation, the liability for taxes on income of Seacoast does not accrue to holders of its stock, but
instead this liability is imposed on, and payable by, Seacoast at the entity level for federal income tax purposes. Accordingly, holders of Seacoast common stock do not recognize taxable income when Seacoast recognizes taxable income, but instead
recognize income when they receive a distribution from Seacoast which is treated as a dividend or capital gain income. Distributions, if any, from Seacoast to holders of its common stock are treated as a dividend to the extent of Seacoasts
current or accumulated undistributed earnings and profits. Distributions in excess of Seacoasts current or accumulated earnings and profits are treated first as a return of capital to the extent of a holders tax basis in their Seacoast
common stock and then as capital gain.
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As an S corporation, if PBCB incurred losses during any taxable year, a pro rata share of such losses was
available (subject to certain limitations) to holders of its common stock to offset such holders taxable income during such year. Losses of Seacoast remain with Seacoast and holders of Seacoast common stock cannot offset taxable income with
such losses.
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A trust that is a shareholder in an S corporation must pay particular attention to certain provisions of the
Code and rules promulgated by the Internal Revenue Service, including qualifying as an Electing Small Business Trust or Qualified Subchapter S Trust. As a shareholder of a C corporation, these rules are not applicable.
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As an S corporation, the income and loss of PBCB that is included in the taxable income of a PBCB shareholder
for federal income tax purposes is treated as net investment income for purposes of the 3.8% surtax on net investment income in excess of certain thresholds. There is an exception to this rule for shareholders that are treated as materially
participating in the activities of PBCB as determined under the passive loss rules of Section 469 of the Code. As a C corporation, the taxable income of Seacoast is not included in the taxable income of its shareholders and is not subject to
the 3.8% surtax on net investment income. However, in general, dividends received by Seacoasts shareholders and capital gains recognized on the sale of Seacoast common stock will be included as net investment income for purposes of the 3.8%
surtax on net investment income and will not be eligible for the exception described above regardless of whether or not the shareholder materially participates in the business of PBCB.
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53
A holders federal income tax basis in S corporation stock generally is
increased by the holders pro rata share of the S corporations income retained by the S corporation (and generally is decreased by the holders pro rata share of the S corporations losses). Any net increase in tax basis reduces
the amount of gain on the sale of stock by the holder and any net decrease in tax basis increases the amount of taxable gain on such sale. The income or losses of Seacoast do not impact the tax basis of a holders Seacoast common stock.
Information Reporting and Backup Withholding
In certain instances you may be subject to information reporting and backup withholding (currently at a rate of 28%) on any
cash payments you receive. You generally will not be subject to backup withholding, however, if you:
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furnish a correct taxpayer identification number, certify that you are not subject to backup withholding on
the substitute Form W-9 or successor form included in the letter of transmittal you will receive and otherwise comply with all the applicable requirements of the backup withholding rules; or
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provide proof that you are otherwise exempt from backup withholding.
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Any amounts withheld under the backup withholding rules are not additional tax and will generally be allowed as a refund or
credit against your U.S. federal income tax liability, provided you timely furnish the required information to the Internal Revenue Service. U.S. holders should consult their tax advisors regarding the application of backup withholding based on
their particular circumstances and the availability and procedure for obtaining an exemption from backup withholding.
Exercise of Dissenters Rights
A U.S. holder who receives cash pursuant to the exercise of dissenters rights generally will recognize capital gain or
loss measured by the difference between the cash received and its adjusted basis in its shares of PBCB common stock.
The preceding discussion does not purport to be a complete analysis or discussion of all the potential tax consequences of
the merger. It is for general information purposes and is not tax advice. You are urged to consult your own tax advisor with respect to the tax consequences to you, in light of your particular circumstances, of the merger (or exercise of
dissenters rights), including tax return reporting requirements, United States federal estate or gift tax rules and the applicability and effect of federal, state, local, and foreign tax laws.
Accounting Treatment
The merger will be accounted for using the acquisition method of accounting with Seacoast treated as the acquiror. Under this
method of accounting, PBCBs assets and liabilities will be recorded by Seacoast at their respective fair values as of the date of completion of the merger. Financial statements of Seacoast issued after the merger will reflect these values and
will not be restated retroactively to reflect the historical financial position or results of operations of Seacoast.
Regulatory Approvals
Under federal law, the merger must be approved by the OCC. Once the OCC approves the merger, the parties must wait for up to 30
days before completing the merger. If, however, there are no adverse comments from the U.S. Department of Justice and Seacoast receives permission from the OCC to do so, the merger may be completed on or after the fifteenth (15th) day after
approval from the OCC.
As of the date of this proxy statement/prospectus, all of the required regulatory applications
have been filed. There is no assurance as to whether the regulatory approvals will be obtained or as to the dates of the approvals.
54
There also can be no assurance that the regulatory approvals received will not contain any condition that would increase any of the minimum regulatory capital requirements of Seacoast following
the merger or have a material adverse effect. See The Merger Agreement Conditions to Completion of the Merger.
Appraisal Rights for PBCB Shareholders
Holders of PBCB common stock as of the record date are entitled to
appraisal rights under the FBCA. Pursuant to Section 607.1302 of the FBCA, a PBCB shareholder who does not wish to accept the merger consideration to be received pursuant to the terms of the merger agreement may dissent from the merger and
elect to receive the fair value of his or her shares of PBCB common stock immediately prior to the consummation of the merger, excluding any appreciation or depreciation in anticipation of the merger unless exclusion would be inequitable. Under the
terms of the merger agreement, if 5% or more of the outstanding shares of PBCB common stock validly exercise their appraisal rights, then Seacoast will not be obligated to complete the merger.
In order to exercise appraisal rights, a dissenting PBCB shareholder must strictly comply with the statutory procedures of
Sections 607.1301 through 607.1333 of the FBCA, which are summarized below. A copy of the full text of those Sections is included as Appendix C to this proxy statement/prospectus. PBCB shareholders are urged to read Appendix C in its entirety and to
consult with their legal advisors. Each PBCB shareholder who desires to assert his or her appraisal rights is cautioned that failure on his or her part to adhere strictly to the requirements of Florida law in any regard will cause a forfeiture of
any appraisal rights.
Procedures for Exercising Dissenters Rights of Appraisal.
The following summary of
Florida law is qualified in its entirety by reference to the full text of the applicable provisions of the FBCA, a copy of which is included as Appendix C to this proxy statement/prospectus.
A dissenting shareholder who desires to exercise his or her appraisal rights must file with PBCB, prior to the taking of the
vote on the merger agreement, a written notice of intent to demand payment for his or her shares if the merger is effectuated. A vote against the merger agreement will not alone be deemed to be the written notice of intent to demand payment and will
not be deemed to satisfy the notice requirements under the FBCA. A dissenting shareholder need not vote against the merger agreement, but cannot vote, or allow any nominee who holds such shares for the dissenting shareholder to vote, any of his or
her shares of PBCB common stock in favor of the merger agreement. A vote in favor of the merger agreement will constitute a waiver of the shareholders appraisal rights. A shareholders failure to vote against the merger agreement will not
constitute a waiver of such shareholders dissenters rights. Such written notification should be delivered either in person or by mail (certified mail, return receipt requested, being the recommended form of transmittal) to:
Palm Beach Community Bank
8101
Okeechobee Boulevard
West Palm Beach, Florida 33411
Attn: James Springer, Chief Operating Officer
All such notices must be signed in the same manner as the shares are registered on the books of PBCB. If a PBCB shareholder
has not provided written notice of intent to demand fair value before the vote on the proposal to approve the merger agreement is taken at the special meeting, then the PBCB shareholder will be deemed to have waived his or her appraisal rights.
Within 10 days after the completion of the merger, Seacoast must provide to each PBCB shareholder who filed a notice of intent
to demand payment for his or her shares a written appraisal notice and an election form that specifies, among other things:
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the date of the completion of the merger;
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Seacoasts estimate of the fair value of the shares of PBCB common stock;
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55
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where to return the completed appraisal election form and the shareholders stock certificates and the
date by which each must be received by Seacoast or its agent, which date with respect to the receipt of the appraisal election form may not be fewer than 40, nor more than 60, days after the date Seacoast sent the appraisal election form to the
shareholder (and shall state that the shareholder shall have waived the right to demand appraisal with respect to the shares unless such form is received by Seacoast by such specified date) and which with respect to the return of stock certificates
must not be earlier than the date for receiving the appraisal election form;
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that, if requested in writing, Seacoast will provide to the shareholder so requesting, within 10 days after
the date set for receipt by Seacoast of the appraisal election form, the number of shareholders who return the forms by such date and the total number of shares owned by them; and
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the date by which a notice from the PBCB shareholder of his or her desire to withdraw his or her appraisal
election must be received by Seacoast, which date must be within 20 days after the date set for receipt by Seacoast of the appraisal election form from the PBCB shareholder.
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The form must also contain Seacoasts offer to pay to the PBCB shareholder the amount that it has estimated as the fair
value of the shares of PBCB common stock and include PBCBs financial statements, consisting of a balance sheet as of the end of the fiscal year ending not more than 15 months prior to the date of the corporations appraisal notice, an
income statement for that year, a cash flow statement for that year, and the latest applicable interim financial statements if any, and a copy of Section 607.1301-607.1333, and request certain information from the PBCB shareholder, including:
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the shareholders name and address;
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the number of shares as to which the shareholder is asserting appraisal rights;
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that the shareholder did not vote for the merger;
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whether the shareholder accepts the offer of Seacoast to pay its estimate of the fair value of the shares of
PBCB common stock to the shareholder; and
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if the shareholder does not accept the offer of Seacoast, the shareholders estimated fair value of the
shares of PBCB common stock and a demand for payment of the shareholders estimated value plus interest.
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A dissenting shareholder must execute the appraisal election form and submit it together with the certificate(s) representing
his or her shares, and in the case of certificated shares, by the date specified in the notice. Any dissenting shareholder failing to return a properly completed appraisal election form and his or her stock certificates within the period stated in
the form will lose his or her appraisal rights and be bound by the terms of the merger agreement. Upon returning the appraisal election form, a dissenting shareholder will be entitled only to payment pursuant to the procedure set forth in the
applicable sections of the FBCA and will not be entitled to vote or to exercise any other rights of a shareholder, unless the dissenting shareholder withdraws his or her demand for appraisal within the time period specified in the appraisal election
form.
A dissenting shareholder who has delivered the appraisal election form and his or her PBCB common stock
certificates may decline to exercise appraisal rights and withdraw from the appraisal process by giving written notice to Seacoast within the time period specified in the appraisal election form. Thereafter, a dissenting shareholder may not withdraw
from the appraisal process without the written consent of Seacoast. Upon such withdrawal, the right of the dissenting shareholder to be paid the fair value of his or her shares will cease, and he or she will be reinstated as a shareholder and will
be entitled to receive the merger consideration.
If the dissenting shareholder accepts the offer of Seacoast in the
appraisal election form to pay Seacoasts estimate of the fair value of the shares of PBCB common stock, payment for the shares of the dissenting shareholder is to be made within 90 days after the receipt of the appraisal election form by
Seacoast or its agent. Upon payment of the agreed value, the dissenting shareholder will cease to have any interest in such shares.
56
A shareholder who is dissatisfied with Seacoasts estimate of the fair value
of the shares of Seacoast common stock must notify Seacoast of the shareholders estimate of the fair value of the shares and demand payment of that estimate plus interest in the appraisal election form within the time period specified in the
form. A shareholder who fails to notify Seacoast in writing of the shareholders demand to be paid its stated estimate of the fair value of the shares plus interest within the required time period waives the right to demand payment and will be
entitled only to the payment offered by Seacoast in the appraisal election form.
A shareholder must demand appraisal
rights with respect to all of the shares registered in his or her name, except that a record shareholder may assert appraisal rights as to fewer than all of the shares registered in the record shareholders name but which are owned by a
beneficial shareholder, if the record shareholder objects with respect to all shares owned by the beneficial shareholder. A record shareholder must notify PBCB in writing of the name and address of each beneficial shareholder on whose behalf
appraisal rights are being asserted. A beneficial shareholder may assert appraisal rights as to any shares held on behalf of the beneficial shareholder only if the beneficial shareholder submits to PBCB the record shareholders written consent
to the assertion of such rights before the date specified in the appraisal election form, and does so with respect to all shares that are beneficially owned by the beneficial shareholder.
Section 607.1330 of the FBCA addresses what should occur if a dissenting shareholder fails to accept the offer of
Seacoast to pay the value of the shares as estimated by Seacoast, and Seacoast fails to comply with the demand of the dissenting shareholder to pay the value of the shares as estimated by the dissenting shareholder, plus interest.
If a dissenting shareholder refuses to accept the offer of Seacoast to pay the value of the shares as estimated by Seacoast,
and Seacoast fails to comply with the demand of the dissenting shareholder to pay the value of the shares as estimated by the dissenting shareholder, plus interest, then within 60 days after receipt of a written demand from any dissenting
shareholder, Seacoast shall file an action in any court of competent jurisdiction in the county in Florida where the registered office of Seacoast, maintained pursuant to Florida law, is located requesting that the fair value of such shares be
determined by the court.
If Seacoast fails to institute a proceeding within the above-prescribed period, any dissenting
shareholder may do so in the name of Seacoast. All dissenting shareholders whose demands remain unsettled shall be made parties to the proceeding as in an action against their shares and a copy of the initial pleading will be served on each
dissenting shareholder as provided by law. The shareholders demanding appraisal rights are entitled to the same discovery rights as parties in other civil proceedings. There shall be no right to a jury trial.
Seacoast is required to pay each dissenting shareholder the amount of the fair value of such shareholders shares plus
interest, as found by the court, within 10 days after final determination of the proceedings. Upon payment of the judgment, the dissenting shareholder ceases to have any interest in such shares.
Section 607.1331 of the FBCA provides that the costs of a court appraisal proceeding, including reasonable compensation
for, and expenses of, appraisers appointed by the court, will be determined by the court and assessed against Seacoast, except that the court may assess costs against all or some of the dissenting shareholders, in amounts the court finds equitable,
to the extent that the court finds such shareholders acted arbitrarily, vexatiously or not in good faith with respect to their appraisal rights. The court also may assess the fees and expenses of counsel and experts for the respective parties, in
amounts the court finds equitable, against: (i) Seacoast and in favor of any or all dissenting shareholders if the court finds Seacoast did not substantially comply with the notification provisions set forth in Sections 607.1320 and 607.1322 of
the FBCA; or (ii) either Seacoast or a dissenting shareholder, in favor of any other party, if the court finds that the party against whom the fees and expenses are assessed acted arbitrarily, vexatiously, or not in good faith with respect to
the appraisal rights. If the court in an appraisal proceeding finds that the services of counsel for any dissenting shareholder were of substantial benefit to other dissenting shareholders, and that the fees for those services should not be assessed
against Seacoast, the court may award to such counsel reasonable fees to be paid out of the amounts
57
awarded the dissenting shareholders who were benefited. To the extent that Seacoast fails to make a required payment when a dissenting shareholder accepts Seacoasts offer to pay the value
of the shares as estimated by Seacoast, the dissenting shareholder may sue directly for the amount owed and, to the extent successful, shall be entitled to recover from Seacoast all costs and expenses of the suit, including counsel fees.
For a discussion of tax consequences with respect to dissenting shares, see The Merger Material U.S. Federal
Income Tax Consequences of the Merger.
BECAUSE OF THE COMPLEXITY OF THE PROVISIONS OF FLORIDA LAW RELATING TO DISSENTERS
APPRAISAL RIGHTS, SHAREHOLDERS WHO ARE CONSIDERING DISSENTING FROM THE MERGER ARE URGED TO CONSULT THEIR OWN LEGAL ADVISORS.
Board of Directors and Management of SNB Following the Merger
The members of the board of directors and officers of SNB immediately prior to the effective time of the merger will be the
directors and officers of the surviving bank and will hold office until their respective successors are duly elected and qualified, or their earlier death, resignation or removal.
Information regarding the executive officers and directors of SNB is contained in documents filed by Seacoast with the SEC and
incorporated by reference into this proxy statement/prospectus, including Seacoasts Annual Report on Form 10-K for the year ended December 31, 2016 and its definitive proxy statement on Schedule 14A for its 2017 annual meeting, filed with
the SEC on March 16, 2017 and April 6, 2017, respectively. See Where You Can Find More Information and Documents Incorporated by Reference.
Interests of PBCB Directors and Executive Officers in the Merger
In the merger, the directors and executive officers of PBCB will receive the same merger consideration for their PBCB shares as
the other PBCB shareholders. In considering the recommendation of the PBCB board of directors that you vote to approve the merger agreement, you should be aware that some of the executive officers and directors of PBCB may have interests in the
merger and may have arrangements, as described below, that may be considered to be different from, or in addition to, those of PBCB shareholders generally. The PBCB board of directors was aware of these interests and considered them, among other
matters, in reaching its decision to adopt and approve the merger agreement and to recommend that PBCB shareholders vote in favor of approving the merger agreement. See The Merger Background of the Merger and The Merger
PBCBs Reasons for the Merger and Recommendations of the PBCB Board of Directors. PBCBs shareholders should take these interests into account in deciding whether to vote
FOR
the proposal to adopt the merger
agreement. These interests are described in more detail below, and certain of them are quantified in the narrative below.
Treatment of PBCB Equity Awards
The merger agreement requires PBCB to take all actions necessary to terminate all
outstanding awards, grants, units, option to purchase or other similar rights to receive (PBCB Equity Awards) shares of PBCB common stock immediately prior to the effective time of the merger in exchange for an amount in cash, without
interest, equal to the product of (x) the aggregate number of shares of PBCB common stock subject to such PBCB Equity Award immediately prior to its termination, multiplied by (y) the excess, if any, of the value of the merger
consideration, as finally determined as of the effective time of the merger, over the exercise price per share of the PBCB Equity Award.
58
The table below reflects securities authorized for issuance under equity
compensation plans as of September 6, 2017.
Securities Authorized For Issuance Under Equity
Compensation Plans
|
|
|
|
|
|
|
|
|
|
|
|
|
Plan Category
|
|
Number of Securities
to be
issued upon exercise
of
outstanding options,
warrants and rights
|
|
|
Weighted-average
exercise
price of outstanding
options, warrants and
rights
|
|
|
Number of Securities
remaining available for
future issuance under
equity compensation
plans
(excluding
securities
reflected in column (a))
|
|
|
|
(a)
|
|
|
(b)
|
|
|
(c)
|
|
Equity compensation plans approved by security holders
|
|
|
9,800
|
|
|
|
11.65
|
|
|
|
|
|
Equity compensation plans not approved by security holders
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
9,800
|
|
|
|
11.65
|
|
|
|
|
|
Payments under Certain Contracts
PBCB has entered into employment agreements with each of Calvin L. Cearley, chief executive officer, James E. Springer,
president, chief operating officer and chief credit officer, James E. Nugent, executive vice president and senior loan officer and Nancy Minniear, executive vice president and chief financial officer. Under Mr. Cearleys employment
agreement, if PBCB experiences a change in control, whether or not his employment is terminated, Mr. Cearley will be entitled to a payment equal to three times his annual salary plus three times his most recent annual bonus. Additionally, if
Mr. Cearley is terminated within one year of a change in control, or if he resigns within 60 days of a change in control, he will be entitled to reimbursement for three years for his health insurance (for himself and his spouse) and life
insurance up to the annual amount that PBCB would have paid such coverages had he remained employed. Such potential payments to Mr. Cearley are estimated to be equal to $1,074,547 in the aggregate, consisting of a $1,024,542 change in control
payment and severance-based benefits reimbursement equal to approximately $50,006. Under Messrs. Springers and Nugents and Ms. Minniears employment agreements, if PBCB experiences a change in control, whether or not such
individuals employment is terminated, such individual will be entitled to a payment equal to two times his/her annual salary plus two times his/her most recent annual bonus. Additionally, if such individual is terminated within one year of a
change in control, or if he/she resigns within 60 days of a change in control, such individual will be entitled to reimbursement for two years for his/her health insurance (for such person and his/her spouse), life insurance and disability insurance
up to the annual amount that PBCB would have paid such coverages had such individual remained employed. Such potential payments to Messrs. Springer and Nugent and Ms. Minniear are estimated to be equal to $562,472, $476,405, and $540,089 in the
aggregate, respectively, consisting of a change in control payment equal to $524,928, $439,540, and $502,742, respectively, and severance-based benefits reimbursement equal to approximately $37,544, $36,865, and $37,347, respectively. The closing of
the merger will constitute a change in control for purposes of the employment agreements.
PBCB has agreed to take all
necessary actions (including obtaining any required waivers or consents from such persons) to submit to a shareholder vote, in a manner that satisfies the stockholder approval requirements for exemption under Section 280G of the Internal Revenue
Code and the regulations promulgated thereunder, the right of each disqualified individual to receive or retain, as applicable, any payments and benefits, to the extent necessary so that no payment or benefit received by such disqualified individual
shall be deemed a parachute payment. We currently anticipate that such shareholder vote will be necessary to permit Messrs. Cearley, Springer and Nugent to receive certain payments that would otherwise be deemed a parachute payment. See The
Merger AgreementApproval of 280G Payments starting on page 72.
59
Director Restrictive Covenant Agreement; Claims Letters
Certain directors who are executive officers of PBCB have entered into a restrictive covenant agreement, covering a two year
period commencing with the effective time of the merger, with Seacoast in the form attached as Exhibit C to the merger agreement attached as Appendix A to this document and certain directors who are not executive officers of PBCB have entered into a
restrictive covenant agreement, covering a three year period commencing with the effective time of the merger, with Seacoast in the form attached as Exhibit C to the merger agreement attached as Appendix A to this document. In addition, certain
officers and directors of PBCB have entered into a claims letter in the form attached as Exhibit B to the merger agreement attached as Appendix A to this document, by which they have agreed to release certain claims against PBCB, effective as of the
effective time of the merger.
Indemnification and Insurance
As described under The Merger Agreement Indemnification and Directors and Officers Insurance,
after the effective time of the merger, Seacoast will indemnify and defend the present and former directors, officers and employees of PBCB and its subsidiaries against claims pertaining to matters occurring at or prior to the closing of the merger
as permitted by PBCBs articles of incorporation, bylaws and the FBCA. Seacoast also has agreed, for a period of six years after the effective time of the merger, to provide coverage to present and former directors and officers of PBCB pursuant
to PBCBs existing directors and officers liability insurance. This insurance policy may be substituted, but must contain at least the same coverage and amounts, and contain terms no less advantageous than the coverage currently
provided by PBCB. In no event shall Seacoast be required to expend for the tail insurance a premium amount in excess of 200% of the annual premiums paid by PBCB for its directors and officers liability insurance in effect as of the date
of the merger agreement.
60
PROPOSAL 2: ADJOURNMENT OF THE PBCB SPECIAL MEETING
PBCB shareholders are being asked to approve the adjournment proposal for the purpose of soliciting additional proxies in
favor of the merger proposal if there are not sufficient votes at the time of the special meeting to approve the merger proposal.
If this adjournment proposal is approved, the PBCB special meeting could be adjourned to any date if sufficient votes are not
obtained only if necessary to solicit additional proxies in favor of the merger proposal. If the PBCB special meeting is adjourned, PBCB shareholders who have already submitted their proxies will be able to revoke them at any time prior to their
use. If you sign and return a proxy and do not indicate how you wish to vote on the adjournment proposal, your shares of PBCB common stock will be voted in favor of the adjournment proposal.
The affirmative vote of a majority of the votes cast on the proposal, in person or by proxy, at the special meeting by holders
of shares of PBCB common stock is required to approve the adjournment proposal.
THE PBCB BOARD OF DIRECTORS RECOMMENDS
THAT PBCB SHAREHOLDERS VOTE FOR THE APPROVAL OF THE ADJOURNMENT PROPOSAL.
61
LIST OF EXHIBITS
|
|
|
Exhibit
|
|
Description
|
|
|
A
|
|
Form of Shareholder Support Agreement
|
|
|
B
|
|
Form of Claims Letter
|
|
|
C
|
|
Form of Restrictive Covenant Agreement
|
|
|
D
|
|
Form of Tax Insurance Policy
|
A-4
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER
(this
Agreement
) is made and entered into as of May 4, 2017,
by and among
Seacoast Banking Corporation of Florida
, a Florida corporation (
SBC
),
Seacoast National Bank
, a national banking association and wholly owned subsidiary of SBC (
SNB
and collectively
with SBC,
Seacoast
) and
Palm Beach Community Bank
, a Florida
chartered bank (the
Company
).
Preamble
WHEREAS,
the Boards of Directors of SBC, which owns all of the outstanding shares of SNB, and the Company have approved
this Agreement and the transactions described herein and have declared the same advisable and in the best interests of each of SBC and the Company and each of SBCs and the Companys shareholders;
WHEREAS,
this Agreement provides for the acquisition of the Company by SBC pursuant to the merger of the Company with
and into SNB (the
Merger
); and
WHEREAS,
concurrently with the execution and delivery of this
Agreement, as a condition and inducement to Seacoasts willingness to enter into this Agreement, (i) the Companys directors, (ii) certain of the Companys executive officers and (iii) beneficial holders of five percent
(5%) or more of the outstanding shares of Company Common Stock set forth on Section A of the Seacoast Disclosure Letter, have executed and delivered to SBC an agreement in substantially the form of
Exhibit A
(the
Shareholder Support
Agreement
), pursuant to which they have agreed, among other things, subject to the terms of such Shareholder Support Agreement, to vote the shares of Company Common Stock held of record by such Persons or as to which they otherwise have
sole voting power to approve and adopt this Agreement and the transactions contemplated hereby, including the Merger.
Certain terms used and not otherwise defined in this Agreement are defined in Section 7.1.
NOW, THEREFORE
, in consideration of the above and the mutual warranties, representations, covenants, and agreements set
forth herein, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, and intending to be legally bound hereby, the Parties agree as follows:
ARTICLE 1
TRANSACTIONS AND TERMS OF MERGER
1.1
Merger
.
Subject to the terms and conditions of this Agreement, at
the Effective Time (as defined in Section 1.3 herein), the Company shall be merged with and into SNB in accordance with the provisions of 12 U.S.C. Section 215 and with the effect provided in 12 U.S.C. Section 215. SNB shall be the
surviving bank (the
Surviving Bank
) resulting from the Merger and the separate existence of the Company shall thereupon cease. SNB shall continue to be governed by the Laws of the United States, and the separate existence of SNB
with all of its rights, privileges, immunities, powers and franchises shall continue unaffected by the Merger.
1.2
Time and Place of Closing
.
Unless otherwise mutually agreed to by SBC and the Company, the closing of the Merger (the
Closing
) shall take place in the offices of Alston & Bird
LLP, 1201 West Peachtree Street, Atlanta, Georgia 30309 at 10:00 a.m., Eastern Time, on the date which shall be no later than three (3) Business Days after the satisfaction or waiver (subject to applicable Law) of the latest to occur of the
conditions set forth in Article 5 hereof (other than those conditions that by their nature can only be satisfied at the Closing, but subject to the satisfaction or waiver thereof) when the Effective Time is to occur (the
Closing
Date
).
A-5
1.3
Effective Time
.
The
Merger shall take effect (the
Effective Time
) at the time specified in the certificate of merger issued by the Office of the Comptroller of the Currency (the
OCC
). Subject to the terms and conditions hereof, the
Parties shall use their reasonable best efforts to cause the Effective Time to occur on a mutually agreeable date following the date on which satisfaction or waiver of the conditions set forth in Article 5 has occurred (other than those
conditions that by their nature are to be satisfied at the Closing, but subject to the fulfillment or waiver of those conditions).
1.4
Conversion of Company Common Stock
.
(a) At the Effective Time, in each case subject to Section 1.4(d) and excluding Dissenting Shares and subject to certain
adjustments set forth in this Agreement, by virtue of the Merger and without any action on the part of the Parties or the holder thereof, each share of Company Common Stock that is issued and outstanding immediately prior to the Effective Time shall
be converted into the right to receive: (i) the number of shares of SBC Common Stock that is equal to the Exchange Ratio (the
Stock Consideration
); and (ii) subject to the terms herein, $6.33 per share of Company Common
Stock in cash (the
Cash Consideration
) which includes estimated costs and expenses related to the Tax Insurance Policy, including, but not limited to, all premiums, underwriting fees, taxes, professional fees, IRS filing fees, and
any other amounts due to bind such policy, as set forth in
Section 1.4(a) of the Seacoast Disclosure Letter
(the
S-Corp
Expenses
). At least ten (10) days prior to the Closing
Date, the Company and Seacoast shall agree on a schedule setting forth the expected final
S-Corp
Expenses through the date immediately preceding the Closing Date (the
S-Corp
Closing Statement
). In the event that the final
S-Corp
Expenses set forth on the
S-Corp
Closing
Statement (i) exceed the amounts set forth in
Section 1.4(a) of the Seacoast Disclosure Letter
, the Cash Consideration shall be adjusted downward on an equivalent per share basis, accordingly, or (ii) are less than the amounts set
forth in
Section 1.4(a) of the Seacoast Disclosure Letter
, the Cash Consideration shall be adjusted upward on an equivalent per share basis, accordingly. For the avoidance of doubt, the Exchange Ratio may be subject to adjustment based on the
Seacoast Closing Price, as set forth in Section 7.1(a) and 6.1(h), and the Cash Consideration may be subject to adjustment, as set forth herein and in Sections 6.1(g) and 6.1(h). The Cash Consideration together with the Stock Consideration is
referred to herein as the
Merger Consideration
. The consideration which all of the Company shareholders and option holders are entitled to receive pursuant to this Article 1 is collectively referred to herein as the
Aggregate Merger Consideration
.
(b) At the Effective Time, all shares of Company Common Stock shall no
longer be outstanding and shall automatically be cancelled and retired and shall cease to exist as of the Effective Time, and each certificate or electronic book-entry previously representing any such shares of Company Common Stock (the
Company Certificates
) shall thereafter represent only the right to receive the Merger Consideration and any cash in lieu of fractional shares pursuant to Section 1.4(c), and any Dissenting Shares shall thereafter represent only
the right to receive applicable payments as set forth in Section 2.3.
(c) Notwithstanding any other provision of
this Agreement, each holder of shares of Company Common Stock exchanged pursuant to the Merger who would otherwise have been entitled to receive a fraction of a share of SBC Common Stock (after taking into account all Company Certificates delivered
by such holder) shall receive, in lieu thereof, cash (without interest) in an amount equal to such fractional part of a share of SBC Common Stock multiplied by the Seacoast Closing Price less any applicable withholding Taxes. No such holder will be
entitled to dividends, voting rights, or any other rights as a shareholder in respect of any fractional shares.
(d) If,
prior to the Effective Time, the issued and outstanding shares of SBC Common Stock or Company Common Stock shall have been increased, decreased, changed into or exchanged for a different number or kind of shares or securities as a result of a
reorganization, recapitalization, reclassification, stock dividend, stock split, reverse stock split, or other similar change in capitalization, then an appropriate and proportionate adjustment shall be made to the Stock Consideration.
A-6
(e) Each share of Company Common Stock issued and outstanding immediately prior
to the Effective Time and owned by any of the Parties or their respective Subsidiaries (in each case other than shares of Company Common Stock held on behalf of third parties) shall, by virtue of the Merger and without any action on the part of the
holder thereof, cease to be outstanding, shall be cancelled and retired without payment of any consideration therefor and shall cease to exist (together with the Dissenting Shares, the
Excluded Shares
).
1.5
SBC Common Stock
.
At and after the Effective Time, each share of
SBC Common Stock issued and outstanding immediately prior to the Effective Time shall remain an issued and outstanding share of SBC Common Stock and shall not be affected by the Merger.
1.6
Company Equity Awards
.
The Company shall take all actions necessary
(including delivering all required notices and obtaining all necessary approvals and consents) to cause each Company Equity Award issued and outstanding immediately prior to the Effective Time to be terminated in exchange for an amount in cash,
without interest, equal to the product of (x) the aggregate number of shares of Company Common Stock subject to such Company Equity Award immediately prior to its termination,
multiplied by
(y) the excess, if any, of the value of
the Merger Consideration, as finally determined as of the Effective Time, over the exercise price per share of the Company Equity Award. No Company Equity Award shall be outstanding as of the Effective Time, and no obligations to issue Company
Equity Awards shall exist following the Effective Time. Prior to the Effective Time, the Company shall take all actions necessary to terminate the Company Stock Plans as of the Effective Time and to cause the provisions in any other Company Benefit
Plan providing for the issuance, transfer or grant of any capital stock of the Company or any interest in respect of any capital stock of the Company to terminate and be of no further force and effect as of the Effective Time, and the Company shall
ensure that following the Effective Time no person who was, immediately prior to the Effective Time, a holder of any Company Equity Award, a person for whom a future grant of a Company Equity Award had been approved, or a participant in any Company
Stock Plan or other Company Benefit Plan, shall have any right thereunder to acquire any capital stock of SBC, SNB, or the Company, except as provided in Section 1.6 of this Agreement with respect to the Company Common Stock which such person
received or became entitled to receive in accordance with the exercise of such Company Equity Award prior to the Effective Time.
1.7
Organizational Documents of Surviving Bank; Directors and Officers
.
(a) The Organizational Documents of SNB in effect immediately prior to the Effective Time shall be the Organizational
Documents of the Surviving Bank after the Effective Time until otherwise amended or repealed.
(b) The directors of SNB
immediately prior to the Effective Time shall be the directors of the Surviving Bank as of the Effective Time. The officers of SNB immediately prior to the Effective Time shall be the officers of the Surviving Bank as of the Effective Time, until
the earlier of their resignation or removal or otherwise ceasing to be an officer or until their respective successors are duly elected and qualified, as the case may be.
1.8
Tax Consequences
.
It is the intention of the Parties to
this Agreement that the Merger, for federal income Tax purposes, shall qualify as a reorganization within the meaning of Section 368(a) of the Internal Revenue Code and that this Agreement shall constitute a plan of
reorganization for purposes of Sections 354 and 361 of the Internal Revenue Code. The business purpose of the Merger is to combine two financial institutions to create a strong commercial banking franchise. SBC shall have the right to revise
the structure of the Merger contemplated by this Agreement in order to assure that the Merger, for federal income Tax purposes shall qualify as a reorganization within the meaning of Section 368(a) of the Internal Revenue Code or to
substitute an interim corporation that is wholly owned by SBC, which interim corporation may merge with and into the Company,
provided
, that no such revision to the structure of the Merger shall (a) result in any changes in the amount or
type of the consideration that the holders of shares of Company Common Stock are entitled to receive under this Agreement or (b) adversely affect the Tax treatment of the Merger with respect to the
A-7
Company shareholders as a result of the transactions contemplated by this Agreement. SBC may exercise this right of revision by giving written notice to the Company in the manner provided in
Section 7.9,
which notice shall be in the form of an amendment to this Agreement.
ARTICLE 2
DELIVERY OF MERGER CONSIDERATION
2.1
Exchange Procedures
.
(a)
Delivery of Transmittal Materials
. Prior to the Effective Time, SBC shall appoint an exchange agent (the
Exchange and Paying Agent
) to act as exchange agent hereunder. At or immediately prior to the Effective Time, SBC shall deposit, or cause to be deposited, with the Exchange and Paying Agent (i) SBC Common Stock issuable
pursuant to Section 1.4(a) in book-entry form equal to the aggregate SBC Common Stock portion of the Merger Consideration (excluding any fractional share consideration), and (ii) cash in immediately available funds in an amount sufficient to
pay the aggregate cash portion of the Merger Consideration, fractional share consideration and any dividends under Section 2.1(d). As promptly as practicable after the Effective Time (and within five Business Days), the Exchange and Paying Agent
shall send to each former holder of record of shares of Company Common Stock, including holders of the Company Equity Awards who received Company Common Stock in accordance with the exercise of such Company Equity Awards prior to the Effective Time,
but excluding the holders, if any, of Dissenting Shares, immediately prior to the Effective Time transmittal materials for use in exchanging such holders Company Certificates for the Merger Consideration (which shall specify that delivery
shall be effected, and risk of loss and title to the Company Certificates shall pass, only upon proper delivery of such Company Certificates (or effective affidavit of loss in lieu thereof as provided in Section 2.1(e)) to the Exchange and Paying
Agent).
(b)
Delivery of Merger Consideration
. After the Effective Time, following the surrender of a Company
Certificate to the Exchange and Paying Agent (or effective affidavit of loss in lieu thereof as provided in Section 2.1(e)) in accordance with the terms of the letter of transmittal, duly executed, the holder of such Company Certificate shall be
entitled to receive in exchange therefor the Merger Consideration in respect of the shares of Company Common Stock represented by its Company Certificate or Certificates. If any portion of the Merger Consideration is to be paid to a Person other
than the Person in whose name a Company Certificate so surrendered is registered, it shall be a condition to such payment that such Company Certificate shall be properly endorsed or otherwise be in proper form for transfer, and the Person requesting
such payment shall pay to the Exchange and Paying Agent any transfer or other similar Taxes required as a result of such payment to a Person other than the registered holder of such Company Certificate, or establish to the reasonable satisfaction of
the Exchange and Paying Agent that such Tax has been paid or is not payable. Payments to holders of Dissenting Shares shall be made as required by the FBCA.
(c)
Payment of Taxes
. The Exchange and Paying Agent (or, after the agreement with the Exchange and Paying Agent is
terminated, SBC) shall be entitled to deduct and withhold from the Merger Consideration (including cash in lieu of fractional shares of SBC Common Stock) otherwise payable pursuant to this Agreement to any holder of Company Common Stock such amounts
as the Exchange and Paying Agent or SBC, as the case may be, is required to deduct and withhold under the Internal Revenue Code, or any provision of state, local or foreign Tax law, with respect to the making of such payment. To the extent the
amounts are so withheld by the Exchange and Paying Agent or SBC, as the case may be, such withheld amounts shall be treated for all purposes of this Agreement as having been paid to the holder of shares of Company Common Stock in respect of whom
such deduction and withholding was made by the Exchange and Paying Agent or SBC, as the case may be.
(d)
Return of
Merger Consideration to SBC
. At any time upon request by SBC, SBC shall be entitled to require the Exchange and Paying Agent to deliver to it any remaining portion of the Merger Consideration not distributed within one (1) year of the
Effective Time to holders of Company Certificates that was deposited with the Exchange and Paying Agent (the
Exchange Fund
) (including any interest received with respect thereto and
A-8
other income resulting from investments by the Exchange and Paying Agent, as directed by SBC), and holders shall be entitled to look only to SBC (subject to abandoned property, escheat or other
similar laws) with respect to the Merger Consideration, any cash in lieu of fractional shares of SBC Common Stock and any dividends or other distributions with respect to SBC Common Stock payable upon due surrender of their Company Certificates,
without any interest thereon. Notwithstanding the foregoing, neither SBC nor the Exchange and Paying Agent shall be liable to any holder of a Company Certificate for Merger Consideration (or dividends or distributions with respect thereto) or cash
from the Exchange Fund in each case delivered to a public official pursuant to any applicable abandoned property, escheat or similar law.
(e)
Lost Company Certificates
. In the event any Company Certificates shall have been lost, stolen or destroyed, upon
the making of an affidavit of that fact by the Person claiming such Company Certificate(s) to be lost, stolen or destroyed and, if required by SBC or the Exchange and Paying Agent, the posting by such Person of a bond in such sum as SBC may
reasonably direct as indemnity against any claim that may be made against the Company or SBC with respect to such Company Certificate(s), the Exchange and Paying Agent will issue the Merger Consideration deliverable in respect of the shares of
Company Common Stock represented by such lost, stolen or destroyed Company Certificates.
2.2
Rights of Former Company Shareholders
.
On or before the Closing
Date, the stock transfer books of the Company shall be closed as to holders of Company Common Stock and no transfer of Company Common Stock by any such holder shall thereafter be made or recognized. Until surrendered for exchange in accordance with
the provisions of Section 2.1, each Company Certificate (other than the Company Certificates representing Excluded Shares) shall from and after the Effective Time represent for all purposes only the right to receive the Merger Consideration in
exchange therefor and any cash in lieu of fractional shares of SBC Common Stock to be issued or paid in consideration therefor upon surrender of such certificate in accordance with Section 1.4(c), and any dividends or distributions to which such
holder is entitled pursuant to this Article 2. No dividends or other distributions with respect to SBC Common Stock with a record date after the Effective Time shall be paid to the holder of any unsurrendered Company Certificate with respect to the
shares of SBC Common Stock represented thereby, and no cash payment in lieu of fractional shares shall be paid to any such holder pursuant to Section 1.4(c), and all such dividends, other distributions and cash in lieu of fractional shares of SBC
Common Stock shall be paid by SBC to the Exchange and Paying Agent and shall be included in the Exchange Fund, in each case until the surrender of such Company Certificate in accordance with this Article 2. Subject to the effect of applicable
abandoned property, escheat or similar laws, following surrender of any such Company Certificate there shall be delivered to the holder of an SBC stock certificate representing whole shares of SBC Common Stock issued in exchange therefor, without
interest, (i) at the time of such surrender, the amount of dividends or other distributions, if applicable, with a record date after the Effective Time theretofore paid with respect to such whole shares of SBC Common Stock and the amount of any
cash payable in lieu of a fractional share of SBC Common Stock to which such holder is entitled pursuant to Section 1.4(c), and (ii) at the appropriate payment date, the amount of dividends or other distributions, if applicable, with a record
date after the Effective Time but prior to such surrender and with a payment date subsequent to such surrender payable with respect to such whole shares of SBC Common Stock. SBC shall make available to the Exchange and Paying Agent cash for these
purposes, if necessary.
2.3
Dissenters
Rights
.
Any Person who otherwise would be deemed a holder of Dissenting Shares (a
Dissenting Shareholder
) shall not be entitled to receive the applicable Merger Consideration with respect to the Dissenting Shares
unless and until such Person shall have failed to perfect or shall have effectively withdrawn or lost such holders right to dissent from the Merger under the FBCA. Each Dissenting Shareholder shall be entitled to receive only the payment
provided by the provisions of Sections 607.1301 through 607.1333 of the FBCA with respect to shares of Company Common Stock owned by such Dissenting Shareholder. The Company shall give SBC (i) prompt notice of any written demands for
appraisal, attempted withdrawals of such demands, and any other instruments served pursuant to applicable Law received by the Company relating to shareholders rights of appraisal and (ii) the opportunity to direct all negotiations and
proceedings with respect to demand for appraisal under the FBCA. The Company shall not, except with the prior written consent of SBC, voluntarily make any payment with respect to any demands for appraisals of Dissenting Shares, offer to settle or
settle any such demands or approve any withdrawal of any such demands.
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ARTICLE 3
REPRESENTATIONS AND WARRANTIES
3.1
Company Disclosure Letter
.
Prior to the execution and delivery of
this Agreement, the Company has delivered to Seacoast a letter (the
Company Disclosure Letter
) setting forth, among other things, items the disclosure of which is necessary or appropriate either in response to an express
disclosure requirement contained in a provision hereof or as an exception to one or more of the Companys representations or warranties contained in this Article 3 or to one or more of its covenants contained in Article 4;
provided
, that
(a) no such item is required to be set forth in the Company Disclosure Letter as an exception to any representation or warranty of the Company if its absence would not result in the related representation or warranty being deemed untrue or
incorrect under the standard established by Section 3.2, and (b) the mere inclusion of an item in the Company Disclosure Letter as an exception to a representation or warranty shall not be deemed an admission by the Company that such item
represents a material exception or fact, event or circumstance or that such item is reasonably likely to result in a Material Adverse Effect with respect to the Company. Any disclosures made with respect to a subsection of Section 3.3 shall be
deemed to qualify any subsections of Section 3.3 that contains sufficient detail to enable a reasonable Person to recognize the relevance of such disclosure to such other subsections. All representations and warranties of Seacoast shall be
qualified by reference to Seacoasts SEC Reports and such disclosures in any such SEC Reports or other publicly available documents filed with or furnished by Seacoast to the SEC or any other Governmental Authority prior to the date hereof (but
excluding any risk factor disclosures contained under the heading Risk Factors, any disclosure of risks included in any forward-looking statements disclaimer or any other statements that are similarly forward-looking in
nature).
3.2
Standards
.
(a) No representation or warranty of any Party hereto contained in this Article 3 (other than the representations and
warranties in (i) Section 3.3(c) and 3.4(c), which shall be true and correct in all respects (except for inaccuracies that are
de minimis
in amount), and (ii) Sections 3.3(b)(i), 3.3(b)(ii), 3.3(d) and 3.4(b)(i), which shall be
true and correct in all material respects) shall be deemed untrue or incorrect, and no Party shall be deemed to have breached any of its representations or warranties, as a consequence of the existence or absence of any fact, circumstance or event
unless such fact, circumstance or event, individually or taken together in the aggregate with all other facts, circumstances or events inconsistent with such Partys representations or warranties contained in this Article 3, has had or is
reasonably likely to have a Material Adverse Effect on such Party;
provided
, that, for purposes of Sections 5.2(a) and 5.3(a) only, the representations and warranties which are qualified by references to material, Material
Adverse Effect or to the Knowledge of any Party shall be deemed not to include such qualifications.
(b)
Unless the context indicates specifically to the contrary, a
Material Adverse Effect
on a Party shall mean any change, event, development, violation, inaccuracy or circumstance the effect, individually or in the aggregate, of
which is or is reasonably likely to have, (i) a material adverse impact on the executive management team, condition (financial or otherwise), property, business, assets (tangible or intangible) or results of operations or prospects of such
Party taken as a whole or (ii) prevents or materially impairs, or would be reasonably likely to prevent or materially impair, the ability of such Party to perform its obligations under this Agreement or to timely consummate the Merger or the
other transactions contemplated by this Agreement;
provided, however
, that Material Adverse Effect shall not be deemed to include (i) the impact of actions and omissions of a Party (or any of its Subsidiaries) taken with the
prior written consent of the other Party in contemplation of the transactions contemplated hereby, (ii) changes after the date of this Agreement in GAAP or regulatory accounting requirements generally applicable to banks and their holding
companies, (iii) changes after the date of this Agreement in laws, rules or regulations or interpretations of laws, rules or regulations by Governmental Authorities of general applicability to banks and their holding companies and
(iv) changes after the date of this Agreement in general economic or market conditions in the United States or any state or territory thereof, in each case generally affecting banks and their holding companies, except to the extent with respect
to clauses (ii), (iii) or (iv) that the effect of such changes are disproportionately adverse to the condition (financial
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or otherwise), property, business, assets (tangible or intangible), liabilities or results of operations of such Party and its Subsidiaries taken as a whole, as compared to other banks and their
holding companies. Similarly, unless the context indicates specifically to the contrary, a
Material Adverse Change
is an event, change or occurrence resulting in a Material Adverse Effect on such Party and its Subsidiaries, taken
as a whole.
3.3
Representations and Warranties of the Company
.
Subject to and giving effect to Sections 3.1 and 3.2 and except as set forth in the Company Disclosure Letter, the Company hereby represents and warrants to Seacoast as follows:
(a)
Organization, Standing, and Power
. The Company (i) is duly organized, validly existing, and is in good
standing under the Laws of the State of Florida, (ii) has the requisite corporate power and authority to own, lease, and operate its properties and assets and to carry on its business as now conducted and (iii) is duly qualified or
licensed to do business and in good standing in the States of the United States and foreign jurisdictions where the character of its assets or the nature or conduct of its business requires them to be so qualified or licensed. The Company is
registered with the Federal Reserve Board as a Florida state member bank. The Company is an insured depository institution as defined in the Federal Deposit Insurance Act and applicable regulations thereunder, its deposits are insured by
the Deposit Insurance Fund and all premiums and assessments required to be paid in connection therewith have been paid when due. No action for the revocation or termination of such deposit insurance is pending, or to the Knowledge of the Company,
threatened.
(b)
Authority; No Breach of Agreement
.
(i) The Company has the corporate power and authority necessary to execute, deliver, and perform its
obligations under this Agreement and to consummate the transactions contemplated hereby. The execution, delivery, and performance of this Agreement, and the consummation of the transactions contemplated hereby, have been duly and validly authorized
by all necessary corporate action (including valid authorization and adoption of this Agreement by its duly constituted Board of Directors), subject only to the Company Shareholder Approval and such regulatory approvals as are required by law.
Subject to the Company Shareholder Approval and assuming due authorization, execution, and delivery of this Agreement by each of SBC and SNB, this Agreement represents a legal, valid, and binding obligation of the Company enforceable against the
Company in accordance with its terms (except in all cases as such enforceability may be limited by (A) bankruptcy, insolvency, reorganization, moratorium, receivership, conservatorship, and other Laws affecting the enforcement of
creditors rights generally or the rights of creditors of insured depository institutions, and (B) except that the availability of the equitable remedy of specific performance or injunctive relief is subject to the discretion of the court
before which any proceeding may be brought).
(ii) As of the date hereof, the Companys Board of
Directors has (A) by the affirmative vote of at least a majority of the entire Board of Directors of the Company duly approved and declared advisable this Agreement and the Merger and the other transactions contemplated hereby;
(B) determined that this Agreement and the transactions contemplated hereby are advisable and in the best interests of the Company and the holders of Company Common Stock; (C) resolved to recommend adoption and approval of this Agreement,
the Merger and the other transactions contemplated hereby to the holders of shares of Company Common Stock (such recommendations being the
Company Directors Recommendation
); (D) directed that this Agreement be submitted
to the holders of shares of Company Common Stock for their adoption; and (E) no Knowledge of any fact, event or circumstance that would cause any beneficial holder of five percent (5%) or more of the outstanding shares of Company Common Stock
to vote against the adoption of this Agreement, the Merger and the other transactions contemplated hereby.
(iii) Except as set forth in
Section 3.3(b)(iii
) of the Company Disclosure Letter, neither the execution
and delivery of this Agreement by the Company nor the consummation by it of the transactions contemplated hereby, nor compliance by it with any of the provisions hereof or thereof,
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will (A) violate, conflict with or result in a breach of any provision of its Organizational Documents, (B) constitute or result in a Default under, or require any Consent pursuant to,
or result in the creation of any Lien on any material assets of the Company under any Contract or Permit, or (C) subject to receipt of the Regulatory Consent and the expiration of any waiting period required by Law, violate any Law or Order
applicable to the Company or any of its material assets.
(iv) Other than in connection or compliance with
the provisions of the Securities Laws, and other than (A) the Regulatory Consents, (B) notices to or filings with the Internal Revenue Service or the Pension Benefit Guaranty Corporation or both with respect to any Benefit Plans,
(C) filing of the Articles of Merger with the Secretary of State of the State of Florida as required by the FBCA and (D) as set forth in
Section
3.3(b)(iv)(D) of the Company
Disclosure Letter
, no order of,
notice to, filing with, or Consent of, any Governmental Authority or other third party is necessary in connection with the execution, delivery or performance of this Agreement and the consummation by the Company of the Merger and the other
transactions contemplated by this Agreement.
(c)
Capital Stock
. The Companys authorized capital stock
consists of 5,000,000 shares of Company Common Stock, of which, as of the date of this Agreement, 2,450,799 shares are validly issued and outstanding. Set forth in
Section 3.3(c) of the Company Disclosure Letter
is a true and complete
schedule of all outstanding Rights to acquire shares of Company Common Stock, including grant date, vesting schedule, exercise price, expiration date and the name of the holder of such Rights. As of the date hereof, there were 57,868 options
outstanding for shares of Company Common Stock granted and vested and unvested in accordance with the Company Stock Plans and such restricted shares represent all of the Rights issued under the Company Stock Plans. Except as set forth in this
Section 3.3(c) or in
Section 3.3(c) of the Company Disclosure Letter
, there are no shares of Company Common Stock or other equity securities of the Company outstanding and no outstanding Rights relating to Company Common Stock, and no Person
has any Contract or any right or privilege (whether
pre-emptive
or contractual) capable of becoming a Contract or Right for the purchase, subscription or issuance of any securities of the Company. All of the
outstanding shares of Company Common Stock are duly and validly issued and outstanding and are fully paid and, except as expressly provided otherwise under applicable Law, nonassessable under the FBCA. None of the outstanding shares of Company
Common Stock has been issued in violation of any preemptive rights of the current or past shareholders of the Company. There are no Contracts among the Company and its shareholders or by which the Company is bound with respect to the voting or
transfer of Company Common Stock or the granting of registration rights to any holder thereof. All of the outstanding shares of Company Common Stock and all Rights to acquire shares of Company Common Stock have been issued in compliance with all
applicable federal and state Securities Laws. All issued and outstanding shares of capital stock of its Subsidiaries have been duly authorized and are validly issued, fully paid and nonassessable. The Company has no direct or indirect ownership
interest in any firm, corporation, bank, joint venture, association, partnership or other entity, nor is it under any current or prospective obligation to form or participate in, provide funds to, make any loan, capital contribution, guarantee,
credit enhancement or other investment in, or assume any liability or obligation of, any Person other than lending transactions which occur in the ordinary course of business consistent with past practice. The Company does not have any outstanding
bonds, debentures, notes or other obligations having the right to vote (or convertible into, or exchangeable or exercisable for, securities having the right to vote) with the shareholders of the Company on any matter.
(d)
Financial Statements; Regulatory Reports
.
(i) The Company has delivered or made available (which shall include access to the following by electronic data
room) to Seacoast true and complete copies of (A) all monthly reports and financial statements of the Company that were prepared for the Companys Board of Directors since December 31, 2015, including the Companys Financial
Statements; (B) the annual report of the Company to the Federal Reserve Board for the year ended December 31, 2015 and December 31, 2016; (C) all call reports and financial statements, including all amendments thereto, made to the
Federal Reserve Board and the FDIC since December 31, 2014 of the Company; and (D) the Companys Annual Report to Shareholders for the years ended 2015 and 2016, when available, and all subsequent Quarterly Reports to Shareholders.
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(ii) the Companys Financial Statements, true and correct
copies of which have been made available to Seacoast, have been (and all financial statements to be delivered to Seacoast as required by this Agreement will be) prepared in accordance with GAAP applied on a consistent basis throughout the periods
covered, except, in each case, as indicated in such statements or in the notes thereto. The Companys Financial Statements fairly present (and all financial statements to be delivered to Seacoast as required by this Agreement will fairly
present) the financial position, results of operations, changes in shareholders equity and cash flows of the Company as of the dates thereof and for the periods covered thereby (subject to, in the case of unaudited statements, recurring audit
adjustments normal in nature and amount). All call and other regulatory reports referred to above have been filed on the appropriate form and prepared in all material respects in accordance with such forms instructions and the applicable rules
and regulations of the regulating federal and/or state agency. As of the date of the latest balance sheet forming part of the Companys Financial Statements (the
Companys Latest Balance Sheet
), the Company has not had,
nor are any of its assets subject to, any material liability, commitment, indebtedness or obligation (of any kind whatsoever, whether absolute, accrued, contingent, known or unknown, matured or unmatured) that is not reflected and adequately
provided for in accordance with GAAP. No report, including any report filed with the FDIC, the Federal Reserve Board, the Florida Office of Financial Regulation or other banking regulatory agency or other federal or state regulatory agency, and no
report, proxy statement, registration statement or offering materials made or given to shareholders of the Company since January 1, 2014, as of the respective dates thereof, contained any untrue statement of a material fact or omitted to state
a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. No report, including any report filed with the FDIC, the Federal Reserve Board, or
other banking regulatory agency, and no report, proxy statement, registration statement or offering materials made or given to shareholders of the Company to be filed or disseminated after the date of this Agreement will contain any untrue statement
of a material fact or will omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they will be made, not misleading. The Companys Financial Statements
are supported by and consistent with the general ledger and detailed trial balances of investment securities, loans and commitments, depositors accounts and cash balances on deposit with other institutions, true and complete copies of which
have been made available to Seacoast. The Company has timely filed all reports and other documents required to be filed by them with the FDIC and the Federal Reserve Board. The call reports of the Company and the accompanying schedules as filed with
the FDIC, for each calendar quarter beginning with the quarter ended December 31, 2013, through the Closing Date have been, and will be, prepared in accordance with applicable regulatory requirements, including applicable regulatory accounting
principles and practices through periods covered by such reports.
(iii) The Company maintains accurate
books and records reflecting its assets and liabilities and maintains proper and adequate internal accounting controls, which provide assurance that (A) transactions are executed with managements authorization; (B) transactions are
recorded as necessary to permit preparation of the consolidated financial statements of the Company in accordance with GAAP and to maintain accountability for the Companys consolidated assets; (C) access to the Companys assets is
permitted only in accordance with managements authorization; (D) the reporting of the Companys assets is compared with existing assets at regular intervals; and (E) accounts, notes and other receivables and assets are recorded
accurately, and proper and adequate procedures are implemented to effect the collection thereof on a current and timely basis. Such records, systems, controls, data and information of the Company is recorded, stored, maintained and operated under
means (including any electronic, mechanical or photographic process, whether computerized or not) that are under the exclusive ownership and direct control of the Company. The corporate record books of the Company are complete and accurate in all
material respects and reflect all meetings, consents and other actions of the Board of Directors and shareholders of the Company.
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(iv) Since January 1, 2013, neither the Company nor any
current director, officer, nor to the Companys Knowledge, any former officer or director or current employee, auditor, accountant or representative of the Company has received or otherwise had or obtained Knowledge of any complaint,
allegation, assertion or claim, whether written or oral, regarding a material weakness, significant deficiency or other defect or failure in the accounting or auditing practices, procedures, methodologies or methods of the Company or its internal
accounting controls. No attorney representing the Company, whether or not employed by the Company, has reported evidence of a material violation (as such term is interpreted under Section 307 of the Sarbanes-Oxley Act of 2002, as amended, and
the rules and regulations promulgated thereunder (the
Sarbanes-Oxley Act
) by the Company or any officers, directors, employees or agents of the Company to the Companys Board of Directors or any committee thereof or to any
director or officer of the Company.
(v) The Companys independent public accountants, which have
expressed their opinion with respect to the Financial Statements (including the related notes), are and have been throughout the periods covered by such Financial Statements (A) a registered public accounting firm (as defined in Section
2(a)(12) of the Sarbanes-Oxley Act) (to the extent applicable during such period), (B) independent with respect to the Company within the meaning of Regulation
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and (C) with respect to the
Company, in compliance with subsections (g) through (l) of Section 10A of the 1934 Act and related Securities Laws. The Companys independent public accountants have not resigned or been dismissed as independent public accountants of the
Company as a result of or in connection with any disagreements with the Company on a matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure.
Section 3.3(d) of the Company Disclosure Letter
lists all nonaudit services performed by the Companys independent public accountants for the Company since January 1, 2013.
(vi) There is no transaction, arrangement or other relationship between the Company or any unconsolidated or
other affiliated entity that is not reflected in the Company Financial Statements. The Company has no Knowledge of (A) any significant deficiency in the design or operation of internal controls which could adversely affect the Companys
ability to record, process, summarize and report financial data or any material weaknesses in internal controls or (B) any fraud, whether or not material, that involves management or other employees who have a significant role in the
Companys internal controls. Since December 31, 2015, there have been no significant changes in internal controls or in other factors that are reasonably likely to materially affect internal controls of the Company.
(vii) The Company does not have any material Liabilities, except Liabilities which are accrued or reserved
against in the Companys Latest Balance Sheet included in the Companys Financial Statements delivered prior to the date of this Agreement or reflected in the notes thereto. The Company has not incurred or paid any Liability since
December 31, 2015, except for such Liabilities incurred or paid (A) in the ordinary course of business consistent with past business practice and which are not reasonably likely to have, individually or in the aggregate, a Company Material
Adverse Effect or (B) in connection with the transactions contemplated by this Agreement. The Company is not directly or indirectly liable, by guarantee or otherwise, to assume any Liability or to any Person for any amount in excess of $10,000.
Except (x) as reflected in the Companys Latest Balance Sheet or liabilities described in any notes thereto (or liabilities for which neither accrual nor footnote disclosure is required pursuant to GAAP) or (y) for liabilities
incurred in the ordinary course of business since January 1, 2014 consistent with past practice or in connection with this Agreement or the transactions contemplated hereby, the Company does not have any Liabilities or obligations of any
nature. The Company has delivered to Seacoast true and complete copies of the Company Financial Statements as of December 31, 2015 and the Company shall deliver promptly, when available, all subsequent Quarterly Reports of the Company Financial
Statements.
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(e)
Absence of Certain Changes or Events
. Except as set forth in
Section 3.3(e) of the Company Disclosure Letter
, since January 1, 2015, (A) the Company has conducted its business only in the ordinary course, (B) the Company has not taken any action which, if taken after the date of this
Agreement, would constitute a breach of Section 4.1 or 4.2, and (C) there have been no facts, events, changes, occurrences, circumstances or effects that have had, or are reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on the Company.
(f)
Tax Matters
.
(i) All Taxes of the Company that are or were due or payable (whether or not shown or required to be shown on
any Tax Return) have been fully and timely paid. The Company has timely filed all Tax Returns in all jurisdictions in which Tax Returns are required to have been filed by it or on its behalf, and each such Tax Return is true, complete and accurate
in all material respects and has been prepared in compliance with all applicable Laws. The Company is not currently the beneficiary of any extension of time within which to file any Tax Return. There have been no examinations or audits of any
Company Tax Return by any Taxing Authority. The Company has made available to Seacoast true and correct copies of the United States federal, state and local income Tax Returns and related workpapers filed by it for each of the three most recent
fiscal years ended on or before December 31, 2016. No claim has ever been made by a Taxing Authority in a jurisdiction where the Company does not file a Tax Return that the Company is or may be subject to Taxes by that jurisdiction, and to the
Knowledge of the Company, no basis for such a claim exists.
(ii) The Company has not received any notice
of assessment or proposed assessment in connection with any Tax, and there is no threatened or pending dispute, action, suit, proceeding, claim, investigation, audit, examination, or other Litigation regarding any Tax of the Company or the assets of
the Company. No officer or employee responsible for Tax matters of the Company expects any Taxing Authority to assess any additional Tax for any period for which a Tax Return has been filed by the Company. There are no agreements, waivers or other
arrangements providing for an extension of time with respect to the assessment of any Tax or deficiency against the Company, and the Company has not waived or extended the applicable statute of limitations for the assessment or collection of any Tax
or agreed to a Tax assessment or deficiency. The relevant statute of limitations is closed with respect to the federal and state and local income and franchise Tax Returns of the Company for all taxable periods through December 31, 2012.
(iii) The Company is not a party to a Tax allocation, sharing, indemnification or similar agreement or any
agreement pursuant to which it has any obligation to any Person with respect to Taxes, and the Company has not been a member of an affiliated group filing a consolidated federal, state or local income Tax Return or any combined, affiliated or
unitary group for any Tax purpose (other than the group of which it is currently a member), and the Company does not have any Tax liability under Treasury Regulation
Section 1.1502-6
or any similar
provision of Law, or as a transferee or successor, by contract or otherwise.
(iv) The Company has withheld
and paid over to the appropriate Taxing Authority all amounts of Taxes required to have been withheld and paid over by it, and has complied in all respects with all information reporting and backup withholding requirements under all applicable
federal, state, local and foreign Laws in connection with amounts paid or owing to any Person, including Taxes required to have been withheld and paid in connection with amounts paid or owing to any employee or independent contractor, and Taxes
required to be withheld and paid pursuant to Sections 1441, 1442 and 3406 of the Internal Revenue Code or similar provisions under state, local or foreign Law.
(v) The Company has not been a party to any distribution occurring during the five-year period ending on the
date hereof in which the parties to such distribution treated the distribution as one to which Section 355 of the Internal Revenue Code applied. No Liens for Taxes exist with respect to any assets of the Company, except for statutory Liens for
Taxes not yet due and payable.
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(vi) The Company has not been and will not be required to include
any item in income or exclude any item of deduction from taxable income for any Tax period (or portion thereof) ending after the Closing Date as a result of any: (A) change in method of accounting pursuant to Section 481 of the Internal
Revenue Code or any comparable provision under state, local or foreign Tax Laws; (B) closing agreement as described in Section 7121 of the Internal Revenue Code or any comparable provision under state, local, or foreign
Tax Laws, executed on or prior to the Closing Date; (C) intercompany transaction or excess loss account described in Treasury Regulations under Section 1502 of the Internal Revenue Code or any comparable provision under state, local, or
foreign Tax Laws; (D) installment sale or open transaction disposition made on or prior to the Closing Date; or (E) prepaid amount received on or prior to the Closing Date.
(vii) The Company has not participated in any reportable transaction, as defined in Treasury Regulation Section
1.6011-4(b)(1)
or any comparable provision of state or local Law, or a transaction substantially similar to a reportable transaction. The Company is not a party to any joint venture, partnership, or other
arrangement or contract which could be treated as a partnership for federal income Tax purposes.
(viii)
The unpaid Taxes of the Company (A) did not, as of the date of the Companys Latest Balance Sheet, exceed the reserve for Tax Liability (excluding any reserve for deferred Taxes established to reflect timing differences between book and
Tax income) set forth on the face of the Companys Latest Balance Sheet (rather than in any notes thereto) and (B) do not exceed that reserve as adjusted for the passage of time through the Closing Date in accordance with the past custom
and practice of the Company in filing its Tax Returns. Since the date of the Company Latest Balance Sheet, the Company has not incurred any liability for Taxes arising from extraordinary gains or losses, as that term is used in GAAP, outside the
ordinary course of business consistent with past practice.
(ix)
S Corporation Status and Related Tax
Matters
.
Except as set forth in
Section 3.3(f)(ix) of the Company Disclosure Letter
,
(A) at all times during its existence, the Company has been a validly electing S corporation within the meaning of
Section 1361 and 1362 of the Internal Revenue Code, and for all applicable state and local income Tax purposes;
(B)
neither the Company nor any current or former shareholder of the Company has taken any action, or failed to take any required action, that would have caused the Company to lose its status as an S corporation within the meaning of Sections 1361 and
1362 of the Internal Revenue Code or for any applicable state and local income Tax purposes;
(C) neither the IRS nor any
other Taxing Authority has ever challenged, disputed, or otherwise contested in writing the Companys status as an S corporation for federal, state or local income Tax purposes; and
(D) no shares of capital stock of the Company have ever been held by any Person that was ineligible to be an S corporation
shareholder.
(g)
Environmental Matters
.
(i) The Company has delivered, or caused to be delivered to Seacoast, or provided Seacoast access to, true and
complete copies of all environmental site assessments, test results, analytical data, boring logs and other environmental reports and studies held by the Company relating to its Properties and Facilities.
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(ii) The Company and its Facilities and Properties are, and have
been, in compliance with all Environmental Laws, except for violations that are not reasonably likely to have, individually or in the aggregate, a Material Adverse Effect, and there are no past or present events, conditions, circumstances,
activities or plans related to the Properties or Facilities that did or would violate or prevent compliance or continued compliance with any of the Environmental Laws.
(iii) There is no Litigation pending or threatened before any Governmental Authority or other forum in which
the Company or any of its respective Properties or Facilities (including but not limited to Properties and Facilities that secure or secured loans made by the Company and Properties and Facilities now or formerly held, directly or indirectly, in a
fiduciary capacity by the Company) has been or, with respect to threatened Litigation, may be named as a defendant (A) for alleged noncompliance (including by any predecessor) with or Liability under any Environmental Law or (B) relating
to the release, discharge, spillage, or disposal into the environment of any Hazardous Material, whether or not occurring at, on, under, adjacent to, or affecting (or potentially affecting) any such Properties or Facilities.
(iv) During or prior to the period of (A) the Companys ownership or operation (including but not
limited to ownership or operation, directly or indirectly, in a fiduciary capacity) of, or (B) the Companys participation in the management (including but not limited to such participation, directly or indirectly, in a fiduciary capacity)
of their respective Properties and Facilities, there have been no releases, discharges, spillages, or disposals of Hazardous Material in, on, under, adjacent to, or affecting (or potentially affecting) such Properties or Facilities.
(h)
Compliance with Permits, Laws and Orders
.
(i) The Company has in effect all Permits and has made all filings, applications and registrations with
Governmental Authorities that are required for it to own, lease or operate its properties and assets and to carry on its business as now conducted (and has paid all fees and assessments due and payable in connection therewith) and there has occurred
no Default under any Permit applicable to its business or employees conducting its business.
(ii) The
Company is not and has not since December 31, 2013, been in Default under any Laws or Orders applicable to its business or employees conducting its business. As of the date of this Agreement, the Company does not know of any reason why all
Regulatory Approvals required for the consummation of the transactions contemplated by this Agreement should not be obtained on a timely basis.
(iii) The Company has not received any notification or communication from any Governmental Authority,
(A) asserting that the Company is in Default under any of the Permits, Laws or Orders which such Governmental Authority enforces, (B) threatening or contemplating revocation or limitation of, or which could have the effect of revoking or
limiting, any Permits, or (C) requiring or advising that it may require the Company (x) to enter into or consent to the issuance of a cease and desist order, formal agreement, directive, commitment, or memorandum of understanding, or
(y) to adopt any resolution of its Board of Directors or similar undertaking that restricts materially the conduct of its business or in any material manner relates to its management.
(iv) Except as set forth in
Section 3.3(h)(iv) of the Company Disclosure Letter
, the Company is and, at
all times since December 31, 2013, has been, in compliance with all Laws applicable to its business, operations, properties or assets, including Sections 23A and 23B of the Federal Reserve Act, the Equal Credit Opportunity Act, the Fair
Housing Act, the Community Reinvestment Act, the Home Mortgage Disclosure Act, the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism (USA PATRIOT) Act of 2001, the Bank Secrecy Act, the
Truth in Lending Act, the Sarbanes-Oxley Act of 2002, the Fair Debt Collection Practices Act, the Electronic Fund Transfer Act, the Fair Credit Reporting Act and all other applicable fair lending Laws and other Laws relating to discriminatory
business practices.
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(v) The Company is not subject to any
cease-and-desist
or other order or enforcement action issued by, or is a party to any written agreement, consent agreement or memorandum of understanding with, or is a party
to any commitment letter or similar undertaking to, or is subject to any order or directive by, or has been ordered to pay any civil money penalty by, or has been since December 31, 2013, a recipient of any supervisory letter from, or since
December 31, 2013, has adopted any policies, procedures or board resolutions at the request or suggestion of any Regulatory Authority or other Governmental Authority that currently restricts in any material respect the conduct of its business
or that in any material manner relates to its capital adequacy, its ability to pay dividends, its credit or risk management policies, its management or its business (each, whether or not set forth in the Company Disclosure Letter, a
Company
Regulatory Agreement
), nor has the Company been advised in writing or, to the Knowledge of the Company, orally, since December 31, 2013, by any Regulatory Authority or other Governmental Authority that it is considering issuing,
initiating, ordering or requesting any such Company Regulatory Agreement.
(vi) There (A) is no
written, or to the Knowledge of the Company, oral unresolved violation, criticism or exception by any Governmental Authority with respect to any report or statement relating to any examinations or inspections of the Company, (B) have been no
written, or to the Knowledge of the Company, oral formal or informal inquiries by, or disagreements or disputes with, any Governmental Authority with respect to its business, operations, policies or procedures since December 31, 2013, and
(C) is not any pending or, to the Knowledge of the Company, threatened, nor has any Governmental Authority indicated an intention to conduct any, investigation or review of the Company.
(vii) Neither the Company, nor to the Companys Knowledge any of its directors, executives, officers,
employees or Representatives (A) has used or is using any corporate funds for any illegal contribution, gift, entertainment or other unlawful expense relating to political activity, (B) has used or is using any corporate funds for any
direct or indirect unlawful payment to any foreign or domestic government official or employee from corporate funds, (C) has violated or is violating any provision of the Foreign Corrupt Practices Act of 1977, as amended, or (D) has made
any bribe, unlawful rebate, payoff, influence payment, kickback or other unlawful payment.
(viii) Except
as required by the Bank Secrecy Act, to the Knowledge of the Company, no employee of the Company has provided or is providing information to any law enforcement agency regarding the commission or possible commission of any crime or the violation or
possible violation of any applicable Law by the Company or any employee thereof acting in its capacity as such. Neither the Company nor any officer, employee, contractor, subcontractor or agent of the Company has discharged, demoted, suspended,
threatened, harassed or in any other manner discriminated against any employee of the Company in the terms and conditions of employment because of any act of such employee described in 18 U.S.C. Section 1514A(a).
(ix) Since December 31,
2013, the Company has filed all reports and statements, together with any
amendments required to be made with respect thereto, that the Company was required to file with any Governmental Authority and all other reports and statements required to be filed by the Company since December 31, 2013, including any report or
statement required to be filed pursuant to the Laws of the United States, any state or political subdivision, any foreign jurisdiction, or any other Governmental Authority, have been so filed, and the Company has paid all fees and assessments due
and payable in connection therewith.
(x) The Company is not authorized to act in any capacity as a
corporate fiduciary.
(i)
Labor Relations
.
(i) The Company is not the subject of any Litigation asserting that the Company has committed an unfair labor
practice (within the meaning of the National Labor Relations Act or comparable state Law) or seeking to compel the Company to bargain with any labor organization as to wages or conditions of employment, nor is the Company a party to or bound by any
collective bargaining agreement, Contract, or other agreement or understanding with a labor union or labor organization, nor is there any strike or
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other labor dispute involving it pending or, to its Knowledge, threatened, nor, to its Knowledge, is there any activity involving its employees seeking to certify a collective bargaining unit or
engaging in any other organization activity.
(ii) (A) Each individual that renders services to the Company
who is classified as (1) an independent contractor or other
non-employee
status or (2) an exempt or
non-exempt
employee, is properly so classified for all
purposes and (B) the Company has paid or properly accrued in the ordinary course of business all wages and compensation due to employees of the Company, including all overtime pay, vacations or vacation pay, holidays or holiday pay, sick days
or sick pay, and bonuses.
(iii) The Company is not in conflict with, or in default or in violation of, any
applicable Federal, state or local Law, or any collective bargaining agreement or arrangement with respect to employment, employment practices, terms and conditions of employment, Tax withholding, prohibited discrimination, equal employment, fair
employment practices, immigration status, employee safety and health, facility closings and layoffs (including the Worker Adjustment and Retraining Notification Action of 1988), or wages and hours.
(iv) No executive officer of the Company is, or is now expected to be, in violation of any material term of any
employment Contract, confidentiality, disclosure or proprietary information agreement,
non-competition
agreement or any other agreement or any restrictive covenant, and the continued employment of each such
executive officer does not subject the Company to any liability with respect to any of the foregoing matters.
(j)
Employee Benefit Plans
.
(i)
Section
3.3(j)(i) of the Company Disclosure
Letter
sets forth each Benefit Plan whether or not such Benefit Plan is or is intended to be (A) arrived at through collective bargaining or otherwise, (B) funded or unfunded, (C) covered or qualified under the Internal Revenue
Code, ERISA, or other applicable law, (D) set forth in an employment agreement, consulting agreement, individual award agreement, or (E) written or oral.
(ii) The Company has delivered to Seacoast prior to the date of this Agreement correct and complete copies of
the following documents: (A) all Benefit Plan documents (and all amendments thereto), (B) all trust agreements or other funding arrangements for its Benefit Plans (including insurance or group annuity Contracts), and all amendments thereto,
(C) with respect to any Benefit Plans or amendments, the most recent determination letters, as well as a correct and complete copy of each pending application for a determination letter (if any), and all rulings, opinion letters, information
letters, or advisory opinions issued by the Internal Revenue Service, the United States Department of Labor, or the Pension Benefit Guaranty Corporation after December 31, 1994, (D) for the past three (3) years, annual reports or
returns, audited or unaudited financial statements, actuarial valuations and reports, and summary annual reports prepared for any Benefit Plans, including but not limited to the annual report on Form 5500 or other similar report (if such report was
required), (E) the most recent summary plan description for each Benefit Plan for which a summary plan description is required by Law, including any summary of material modifications thereto, (F) in the case of Benefit Plans that are Rights or
individual award agreements under a Company Stock Plan, a representative form of award agreement together with a list of persons covered by such representative form and the number of shares of Company Common Stock covered thereby, (G) all
documents evidencing any agreements or arrangements with service providers relating to Benefit Plans, (H) all material correspondence and/or notifications from any Governmental Authority or administrative service with regard to any Benefit
Plan, and (I) nondiscrimination testing data and results for the two most recently completed plan years (if applicable) with regard to any Benefit Plan.
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(iii) All of the Benefit Plans have been administered in
compliance with their terms and with the applicable provisions of ERISA and the Internal Revenue Code and (if applicable) in a manner that complies with and is exempt from tax or penalty under the Patient Protection and Affordable Care Act, in
combination with the Health Care and Reconciliation Act of 2010 (together, the Affordable Care Act); and any other applicable Laws. All Benefit Plans that are employee pension benefit plans, as defined in Section 3(2) of ERISA, that
are intended to be tax qualified under Section 401(a) of the Internal Revenue Code, have received a current, favorable determination letter from the Internal Revenue Service or have filed a timely application therefor, and there are no circumstances
that will or could reasonably result in revocation of any such favorable determination letter or negative consequences to an application therefor. Each trust created under any of its ERISA Plans has been determined to be exempt from Tax under
Section 501(a) of the Internal Revenue Code and the Company is not aware of any circumstance that will or could reasonably result in revocation of such exemption. With respect to each of its Benefit Plans, to the Companys Knowledge, no
event has occurred that will or could reasonably give rise to a loss of any intended Tax consequences under the Internal Revenue Code or to any Tax under Section 511 of the Internal Revenue Code. There are no pending or, to the Companys
Knowledge, threatened Litigation, governmental audits or investigations or other proceedings, or participant claims (other than claims for benefits in the normal course of business) with respect to any Benefit Plan.
(iv) The Company has not engaged in a transaction with respect to any of its Benefit Plans that would subject
the Company to a Tax or penalty imposed by either Section 4975 of the Internal Revenue Code or Section 502(i) of ERISA. Neither the Company nor any administrator or fiduciary of any of its Benefit Plans (or any agent of any of the
foregoing) has engaged in any transaction, or acted or failed to act in any manner with respect to any of its Benefit Plans that could subject it to any direct or indirect Liability (by indemnity or otherwise) for breach of any fiduciary,
co-fiduciary,
or other duty under ERISA. No oral or written representation or communication with respect to any aspect of its Benefit Plans has been made to employees of the Company that is not in conformity with
the written or otherwise preexisting terms and provisions of such plans.
(v) The Company or any ERISA
Affiliates thereof do not and have never sponsored, maintained, contributed to, or been obligated under ERISA or otherwise to contribute to (A) a defined benefit plan (as defined in ERISA Section 3(35) or Internal Revenue Code
Section 414(j)) (B) a multi-employer plan (as defined in ERISA Sections 3(37) and 4001(a)(3)) (C) a multiple employer plan (meaning a plan sponsored by more than one employer within the meaning of ERISA Sections 4063 or 4064
or Internal Revenue Code Section 413(c)) or (D) a multiple employer welfare arrangement as defined in ERISA Section 3(40). The Company and its ERISA Affiliates have not incurred and there are no circumstances under which either
could reasonably incur any Liability under Title IV of ERISA or Internal Revenue Code Section 412.
(vii) Except as set forth on
Section 3.3(j)(vii) of the Company Disclosure Letter
, neither the Company
nor its ERISA Affiliates has any incurred current or projected obligations or Liability for post-employment or post-retirement health, medical, surgical, hospitalization, death or life insurance benefits under any of its Benefit Plans, other than
with respect to benefit coverage mandated by Internal Revenue Code Section 4980B or other applicable Law.
(viii) Except as set forth in
Section 3.3(j)(viii) of the Company Disclosure Letter
, no Benefit Plan
exists and there are no other Contracts, plans, or arrangements (written or otherwise) covering any Company employee that, individually or collectively, as a result of the execution of this Agreement or the consummation of the transactions
contemplated by this Agreement (whether alone or in connection with any other event(s)), would reasonably be expected to, (A) result in any material severance pay upon any termination of employment, (B) accelerate the time of payment or
vesting or result in any material payment or material funding (through a grantor trust or otherwise) of compensation or benefits under, materially increase the amount payable, require the security of material benefits under or result in any other
material obligation pursuant to, any such Company Plans, contracts, plans, or
A-20
arrangements, or (C) result in the payment of any amount that would, individually or in combination with any other such payment, and in the absence of waivers or consents as set forth in
Section 4.24, result in the loss of a deduction under Internal Revenue Code Section 280G or be subject to an excise tax under Section 4999 of the Internal Revenue Code.
(ix) Each Benefit Plan that is a
non-qualified
deferred
compensation plan (as defined for purposes of Internal Revenue Code Section 409A) is in documentary compliance with, and has been operated and administered in compliance with, Internal Revenue Code Section 409A and the applicable guidance
issued thereunder, and no Benefit Plan provides any compensation or benefits which could subject, or have subjected, a covered service provider to gross income inclusion or tax pursuant to Internal Revenue Code Section 409A. The Company has no
indemnification obligation pursuant to any Benefit Plan or any Contract to which the Company is a party for any Taxes imposed under Section 4999 or 409A of the Internal Revenue Code. The Company has made available to Seacoast true and complete
copies of any Section 280G calculations (whether or not final) with respect to any disqualified individual, if applicable, in connection with the transactions contemplated by this Agreement.
(x) The Company does not maintain and has never maintained a supplemental executive retirement plan or any
similar plan for directors, officers or employees.
(k)
Material Contracts
.
(i) Except as listed in
Section 3.3(k) of the Company Disclosure Letter
, as of the date of this
Agreement, neither the Company nor any of its assets, businesses, or operations is a party to, or is bound or affected by, or receives benefits under, (A) any employment, severance, termination, consulting, retention, or retirement Contract,
(B) any Contract relating to the borrowing of money by the Company or the guarantee by the Company of any such obligation (other than Contracts evidencing deposit liabilities, purchases of federal funds, fully-secured repurchase agreements, and
Federal Home Loan Bank advances or Contracts pertaining to trade payables incurred in the ordinary course of business consistent with past practice), (C) any Contract containing covenants that limit the ability of the Company or any of its
Affiliates (including, after the Effective Time, Seacoast or any of its Affiliates) to engage in any line of business or to compete in any line of business or with any Person, or that involve any restriction of the geographic area in which, or
method by which, the Company or Affiliates (including, after the Effective Time, Seacoast or any of its Affiliates) may carry on its business, (D) any Contract or series of related Contracts for the purchase of materials, supplies, goods,
services, equipment or other assets that (x) provides for or is reasonably likely to require annual payments by the Company of $25,000 or more or (y) have a term exceeding 12 months in duration (except those entered into in the ordinary
course of business with respect to loans, lines of credit, letters of credit, depositor agreements, certificates of deposit and similar routine banking activities and equipment maintenance agreements that are not material), (E) any Contract
involving Intellectual Property (excluding generally commercially available off the shelf software programs licensed pursuant to shrink wrap or click and accept licenses), (F) any Contract relating to the
provision of data processing, network communications or other material technical services to or by the Company, (G) any Contract to which any Affiliate, officer, director, employee or consultant of the Company is a party or beneficiary (except
with respect to loans to, or deposits from, directors, officers and employees entered into in the ordinary course of business consistent with past practice and in accordance with all applicable regulatory requirements with respect to it), (H) any
Contract with respect to the formation, creation, operation, management or control of a joint venture, partnership, limited liability company or other similar arrangement or agreement, (I) any Contract that provides any rights to investors in
the Company, including registration, preemptive or anti-dilution rights or rights to designate members of or observers to the Companys Board of Directors, (J) any Contract that provides for potential material indemnification payments by
the Company, or (K) any other Contract or amendment thereto that would be required to be filed as an exhibit to any SEC Report (as described in Items 601(b)(4) and 601(b)(10)
A-21
of Regulation
S-K)
if the Company were required to file such with the SEC. With respect to each of its Contracts that is described above: (w) the
Contract is valid and binding on the Company thereto and, to the Knowledge of the Company, each other party thereto and is in full force and effect, enforceable in accordance with its terms (except in all cases as such enforceability may be limited
by (1) bankruptcy, insolvency, reorganization, moratorium, receivership, conservatorship and other Laws now or hereafter in effect relating to or affecting the enforcement of creditors rights generally or the rights of creditors of
insured depository institutions and (2) general equitable principles and except that the availability of the equitable remedy of specific performance or injunctive relief is subject to the discretion of the court before which any proceeding may
be brought); (x) the Company is not in Default thereunder; (y) the Company has not repudiated or waived any material provision of any such Contract; and (z) no other party to any such Contract is, to the Knowledge of the Company, in
Default in any material respect or has repudiated or waived any material provision of any such Contract. No Consent is required by any such Contract for the execution, delivery or performance of this Agreement or the consummation of the Merger or
the other transactions contemplated hereby or thereby. Except as set forth in
Section 3.3(k)(i)(B) of the Company Disclosure Letter
, all indebtedness for money borrowed of the Company is prepayable without penalty or premium.
(ii) All interest rate swaps, caps, floors, collars, option agreements, futures, and forward contracts, and
other similar risk management arrangements, contracts or agreements, whether entered into for its own account or its customers, were entered into (A) in the ordinary course of business consistent with past practice and in accordance with
prudent business practices and all applicable Laws and (B) with counterparties believed to be financially responsible, and each of them is enforceable in accordance with its terms (except in all cases as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, receivership, conservatorship, moratorium, or similar Laws affecting the enforcement of creditors rights generally and except that the availability of the equitable remedy of specific
performance or injunctive relief is subject to the discretion of the court before which any proceeding may be brought), and is in full force and effect. Neither the Company, nor to its Knowledge, any other party thereto, is in Default of any of its
obligations under any such agreement or arrangement. The Company Financial Statements disclose the value of such agreements and arrangements on a
mark-to-market
basis in
accordance with GAAP and, since January 1, 2014, there has not been a change in such value that, individually or in the aggregate, has resulted in a Material Adverse Effect on the Company.
(l)
Legal Proceedings
. There is no Litigation pending or, to its Knowledge, threatened against the Company or any of
its assets, interests, or rights, nor are there any Orders of any Governmental Authority or arbitrators outstanding against the Company, nor do any facts or circumstances exist that would be likely to form the basis for any material claim against
the Company that, if adversely determined, individually or in the aggregate, would have a Material Adverse Effect on the Company. There is no Litigation, pending or, to the Knowledge of the Company, threatened, against any officer, director,
advisory director or employee of the Company, in each case by reason of any person being or having been an officer, director, advisory director or employee of the Company.
(m)
Intellectual Property
.
(i) The Company owns, or is licensed or otherwise possesses legally enforceable and unencumbered rights to use
all Intellectual Property (including the Technology Systems) that is used by the Company in its business. The Company has not (A) licensed to any Person in source code form any Intellectual Property owned by the Company or (B) entered into
any exclusive agreements relating to Intellectual Property owned by the Company.
(ii)
Section
3.3(m)(ii) of the Company Disclosure Letter
lists all patents and patent applications, all registered and unregistered trademarks and applications therefor, trade names and service marks, registered copyrights and applications therefor, domain
names, web sites, and mask works owned by or exclusively licensed to the Company included in its Intellectual Property, including the jurisdictions in
A-22
which each such Intellectual Property right has been issued or registered or in which any application for such issuance and registration has been filed. No royalties or other continuing payment
obligations are due in respect of any third-party patents, trademarks or copyrights, including software.
(iii) All patents, registered trademarks, service marks and copyrights held by the Company are valid and
subsisting. Since January 1, 2013, the Company (A) has not been sued in any Litigation which involves a claim of infringement of any patents, trademarks, service marks, copyrights or violation of any trade secret or other proprietary right
of any third party or (B) has not brought any Litigation for infringement of its Intellectual Property or breach of any license or other Contract involving its Intellectual Property against any third party.
(n)
Loan and Investment Portfolios
.
(i) All loans, loan agreements, notes or borrowing arrangements (including leases, credit enhancements,
commitments, guarantees and interest-bearing assets) (collectively,
Loans
) in which the Company is the creditor (A) were at the time and under the circumstances in which made, made for good, valuable and adequate
consideration in the ordinary course of business of the Company and are the legal, valid and binding obligations of the obligors thereof, enforceable in accordance with their terms, (B) are evidenced by notes, agreements or other evidences of
indebtedness that are true, genuine and what they purport to be and (C) to the extent secured, have been secured by valid Liens that have been perfected. True and complete lists of all Loans as of March 31, 2017 and on a monthly basis
thereafter, and of the investment portfolios of the Company as of such date, are disclosed in
Section 3.3(n)(i) of the Company Disclosure Letter
.
(ii) Except as specifically set forth in
Section 3.3(n)(ii) of the Company Disclosure Lette
r
, the
Company is not a party to any Loan that was, as of the most recent
month-end
prior to the date of this Agreement, (A) delinquent by more than thirty (30) days in the payment of principal or interest,
(B) to the Knowledge of the Company, otherwise in material default for more than thirty (30) days, (C) classified as substandard, doubtful, loss, other assets especially mentioned or any
comparable classification by the Company or any Regulatory Authority having jurisdiction over the Company, (D) an obligation of any director, executive officer or 10% shareholder of the Company who is subject to Regulation O of the Federal
Reserve Board (12 C.F.R. Part 215), or any Person controlling, controlled by or under common control with any of the foregoing, or (E) in violation of any Law.
(iii) Each outstanding Loan (including Loans held for resale to investors) in which the Company is the creditor
was solicited and originated, and is and has been administered and, where applicable, serviced, and the relevant loan or other similar files are being maintained, in all material respects, in accordance with the relevant notes or other credit or
security documents, the written underwriting standards of the Company (and, in the case of Loans held for resale to investors, the underwriting standards, if any, of the applicable investors) and with all applicable federal, state and local Laws.
(iv) None of the agreements pursuant to which the Company has sold Loans or pools of Loans or
participations in Loans or pools of Loans contain any obligation to repurchase such Loans or interests therein solely on account of a payment default by the obligor on any such Loan.
(v) The Company is not now nor has it ever been since January 1, 2013, subject to any material fine,
suspension, settlement or other contract or other administrative agreement or sanction by, or any reduction in any loan purchase commitment from, any Governmental Authority or Regulatory Authority relating to the origination, sale or servicing of
mortgage or consumer Loans.
(o)
Adequacy of Allowances for Losses
. Each of the allowances for losses on loans,
financing leases and other real estate included on the Company Latest Balance Sheet (along with any subsequent balance sheet required to be delivered hereunder) is, and with respect to the consolidated balance sheets delivered as of the dates
subsequent to the execution of this Agreement will be as of the dates thereof, adequate in accordance with applicable regulatory guidelines and GAAP in all material respects, and, to its Knowledge, there are no facts or circumstances that are likely
to require in accordance with applicable regulatory guidelines or GAAP a future
A-23
material increase in any such provisions for losses or a material decrease in any of the allowances therefor. Each of the allowances for losses on loans, financing leases and other real estate
reflected on the books of the Company at all times from and after the date of the Company Latest Balance Sheet is, and will be, adequate in accordance with applicable regulatory guidelines and GAAP in all material respects, and, to its Knowledge,
there are no facts or circumstances that are likely to require, in accordance with applicable regulatory guidelines or GAAP, a future material increase in any of such provisions for losses or a material decrease in any of the allowances therefor.
(p)
Loans to Executive Officers and Directors
. The Company has not extended or maintained credit, arranged for the
extension of credit, or renewed an extension of credit, in the form of a personal loan to or for any director or executive officer (or equivalent thereof) of the Company, except as permitted by Section 13(k) of the 1934 Act, as applicable, and as
permitted by Federal Reserve Regulation O and that have been made in accordance with the provisions of Regulation O.
Section 3.3(p) of the Company Disclosure Letter
identifies any loan or extension of credit maintained by the Company to which
the second sentence of Section 13(k)(1) of the 1934 Act applies.
(q)
Community Reinvestment Act
. The Company has
complied in all material respects with the provisions of the Community Reinvestment Act of 1977 (
CRA
) and the rules and regulations thereunder, has a CRA rating of not less than satisfactory in its most recently
completed exam, has received no material criticism from regulators with respect to discriminatory lending practices, and has no Knowledge of any conditions, facts or circumstances that could result in a CRA rating of less than
satisfactory or material criticism from regulators or consumers with respect to discriminatory lending practices.
(r)
Privacy of Customer Information
.
(i) The Company is the sole owner of all individually identifiable personal information
(
IIPI
) relating to customers, former customers and prospective customers that will be transferred to Seacoast or a Subsidiary of Seacoast pursuant to this Agreement and the other transactions contemplated hereby. For purposes of
this Section 3.2(r), IIPI means any information relating to an identified or identifiable natural person, including, but not limited to personally identifiable financial information as that term is defined in 12 CFR Part
1016.
(ii) The Companys collection and use of such IIPI, the transfer of such IIPI to Seacoast or
any of its Subsidiaries, and the use of such IIPI by Seacoast or any of its Subsidiaries complies with all applicable privacy policies, the Fair Credit Reporting Act, the Gramm-Leach-Bliley Act and all other applicable state, federal and foreign
privacy Laws, and any contract or industry standard relating to privacy.
(s)
Technology Systems
.
(i) No action will be necessary as a result of the transactions contemplated by this Agreement to enable use of
the Technology Systems to continue by the Surviving Bank and its Subsidiaries to the same extent and in the same manner that it has been used by the Company prior to the Effective Time.
(ii) The Technology Systems (for a period of 18 months prior to the Effective Time) have not suffered unplanned
disruption causing a Material Adverse Effect on the Company. Except for ongoing payments due under Contracts with third parties, the Technology Systems are free from any Liens (other than Permitted Liens). Access to business-critical parts of the
Technology Systems is not shared with any third party.
(iii) The Company has furnished to Seacoast a true
and correct copy of its disaster recovery and business continuity arrangements.
(iv) The Company has not
received notice of and is not aware of any material circumstances, including the execution of this Agreement, that would enable any third party to terminate any of its agreements or arrangements relating to the Technology Systems (including
maintenance and support).
A-24
(t)
Insurance Policies
. The Company maintains in full force and effect
insurance policies and bonds in such amounts and against such liabilities and hazards of the types and amounts as (i) it reasonably believes to be adequate for its business and operations and the value of its properties and (ii) are
comparable to those maintained by other banking organizations of similar size and complexity. A true and complete list of all such insurance policies is attached as
Section 3.3(t) of the Company Disclosure Letter
. The Company is not now
liable for, nor has it received notice of, any material retroactive premium adjustment. The Company is in compliance in all material respects with its insurance policies and is not in Default under any of the terms thereof and each such policy is
valid and enforceable and in full force and effect, and the Company has not received any notice of a material premium increase or cancellation with respect to any of its insurance policies or bonds and, except for policies insuring against potential
liabilities of officers, directors and employees of the Company, the Company is the sole beneficiary of any such policy, and all premiums and other payments due under any such policy have been paid, and all claims thereunder have been filed in due
and timely fashion. Within the last three years, the Company has not been refused any basic insurance coverage sought or applied for (other than certain exclusions for coverage of certain events or circumstances as stated in such policies), and the
Company does not have any reason to believe that its existing insurance coverage cannot be renewed as and when the same shall expire, upon terms and conditions standard in the market at the time renewal is sought as favorable as those presently in
effect.
(u)
Corporate Documents
. The Company has delivered to SBC true and correct copies of its Organizational
Documents and the charters of each of the committees of its board of directors, all as amended and currently in effect. All of the foregoing, and all of the corporate minutes and stock transfer records of the Company that will be made available to
SBC after the date hereof, are current, complete and correct in all material respects.
(v)
State Takeover Laws
.
The Company has taken all action required to be taken by it in order to exempt this Agreement and the transactions contemplated hereby from, and this Agreement and the transactions contemplated hereby are exempt from, the requirements of any
moratorium, control share, fair price, affiliate transaction, anti-greenmail, business combination or other anti-takeover Laws of any jurisdiction (collectively,
Takeover Laws
). The Company has taken all action required to be taken by it in order to make this Agreement and the transactions contemplated hereby comply with, and this Agreement and the transactions contemplated hereby do
comply with, the requirements of any provision of its Organizational Documents concerning business combination, fair price, voting requirement, constituency requirement or other related provisions.
(w)
Certain Actions
. Neither the Company nor any of its Affiliates has taken or agreed to take any action, and it
has no Knowledge of any fact or circumstance, that is reasonably likely to (i) prevent the Merger from qualifying as a reorganization within the meaning of Section 368(a) of the Internal Revenue Code, or (ii) materially impede or
delay receipt of any required Regulatory Consents. To its Knowledge, there exists no fact, circumstance, or reason that would cause any required Consent not to be received in a timely manner.
(x)
Real and Personal Property
. The Company has good, valid and marketable title to all material real property owned by
it free and clear of all Liens, except Permitted Liens and other standard exceptions commonly found in title policies in the jurisdiction where such real property is located, and such encumbrances and imperfections of title, if any, as do not
materially detract from the value of the properties and do not materially interfere with the present or proposed use of such properties or otherwise materially impair such operations. The Company has paid, and will pay, any and all applicable
tangible personal property Taxes owed or due by the Company. The Company has good, valid and marketable title to, or in the case of leased property and leased tangible assets, a valid leasehold interest in, all material tangible personal property
owned by it, free and clear of all Liens (other than Permitted Liens). The Company has complied with the terms of all leases to which it is a party, and all such leases are valid and binding in accordance with their respective terms and in full
force and effect, and there is not under any such lease any material existing default by the Company or, to the Knowledge of the Company, any other party thereto, or any event which with notice or lapse of time or both would constitute such a
Default.
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(y)
Brokers and Finders
. Except for Sandler ONeill &
Partners, L.P., neither the Company nor any of its directors, officers, employees or Representatives, has employed any broker or finder or incurred any Liability for any financial advisory fees, investment bankers fees, brokerage fees,
commissions, or finders fees in connection with this Agreement or the transactions contemplated hereby.
(z)
Fairness Opinion
.
Prior to the execution of this Agreement, the Company has received an executed opinion of Sandler ONeill & Partners, L.P. to the effect that as of the date thereof and based upon and subject to the
matters set forth therein, the Merger Consideration is fair, from a financial point of view, to the holders of the Company Common Stock and a copy of such executed opinion will be delivered by the Company to SBC for informational purposes only
immediately following the execution of this Agreement. Such opinion has not been amended or rescinded as of the date of this Agreement.
(aa)
Transactions with Affiliates
. Except as set forth in
Section 3.3(aa) of the Company Disclosure Letter
,
there are no agreements, contracts, plans, arrangements or other transactions between the Company, on the one hand, and any (i) officer or director of the Company, (ii) record or beneficial owner of five percent (5%) or more of the voting
securities of the Company, (iii) affiliate or family member of any such officer, director or record or beneficial owner or (iv) any other affiliate of the Company, on the other hand, except those of a type available to
non-affiliates
of the Company generally.
(bb)
Tax
Insurance
Policy
.
On or prior to the date hereof, the Company has obtained a conditional binder to a tax insurance policy with respect to the Letter Ruling Matter, substantially in the form attached hereto as
Exhibit D
(the
Tax
Insurance Policy
). The Tax Insurance Policy when effective will (i) name Seacoast as an insured, (ii) have a policy limit of no less than $10.0 million, and (iii) cover any Taxes that Seacoast or the Company are
required to pay to any Taxing Authority as a result of the Letter Ruling Matter, and (iv) contain a
gross-up
provision for any additional Taxes arising from payments described in the preceding (bb)(iii).
The Company has provided evidence satisfactory to Seacoast of the conditional binder of the Tax Insurance Policy and the effective date of the conditional binder.
(cc)
Representations Not Misleading
. No representation or warranty by the Company in this Agreement contains any untrue
statement of a material fact or omits to state a material fact necessary to make the statements contained therein, in light of the circumstances in which they were made, not misleading.
3.4
Representations and Warranties of Seacoast
.
Subject to and giving
effect to Sections 3.1 and 3.2, and except as set forth in the Seacoast Disclosure Letter, SBC and SNB, jointly and severally, hereby represent and warrant to the Company as follows:
(a)
Organization, Standing, and Power
. Each of SBC and SNB is (i) duly organized, validly existing, and (as to
SBC) in good standing under the Laws of the jurisdiction in which it is incorporated and (ii) duly qualified or licensed to do business and in good standing in the States of the United States and foreign jurisdictions where the character of
their assets or conduct of their business requires them to be so qualified or licensed, except in the cause of clause (ii) where the failure to be so qualified or licensed, individually or in the aggregate, has not had or would not reasonably
be excepted to have a Material Adverse Effect on SBC or SNB. SBC is a bank holding company within the meaning of the BHC Act and meets the applicable requirements for qualification as such. SNB is a national banking association domiciled in the
State of Florida. SNB is an insured institution as defined in the Federal Deposit Insurance Act and applicable regulations thereunder, and its deposits are insured by the Deposit Insurance Fund and all premiums and assessments required
to be paid in connection therewith have been paid when due. No action for the revocation or termination of such deposit insurance is pending or, to the knowledge of SBC, threatened.
(b)
Authority; No Breach of Agreement
.
(i) SBC and SNB each have the corporate power and authority necessary to execute, deliver and perform its
obligations under this Agreement and to consummate the transactions contemplated hereby. The execution, delivery, and performance of this Agreement, and the consummation of the transactions
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contemplated hereby have been duly and validly authorized by all necessary corporate action (including valid authorization and adoption of this Agreement by its duly constituted Board of
Directors and in the case of SNB, its sole shareholder). Assuming due authorization, execution and delivery of this Agreement by the Company, this Agreement represents a legal, valid and binding obligation of each of SBC and SNB, enforceable against
each of SBC and SNB, in accordance with its terms (except in all cases as such enforceability may be limited by (A) bankruptcy, insolvency, reorganization, receivership, conservatorship, moratorium or similar Laws affecting the enforcement of
creditors rights generally and (B) except that the availability of the equitable remedy of specific performance or injunctive relief is subject to the discretion of the court before which any proceeding may be brought).
(ii) SBCs and SNBs Boards of Directors have duly approved and declared advisable this Agreement and
the Merger and the other transactions contemplated hereby.
(iii) Neither the execution and delivery of
this Agreement by SBC or SNB, nor the consummation by either of them of the transactions contemplated hereby, nor compliance by them with any of the provisions hereof, will (A) violate conflict with or result in a breach of any provision of
their respective Organizational Documents, or (B) constitute or result in a Default under, or require any Consent pursuant to, or result in the creation of any Lien on any material asset under, any Contract or Permit, or (C) subject to
receipt of the Required Consents and the expiration of any waiting period required by Law, violate any Law or Order applicable to SBC or SNB or any of their respective material assets.
(c)
Capital Stock
. SBCs authorized capital stock consists of (i) 60 million shares of SBC Common Stock, of
which, as of February 28, 2017, 40,804,134 shares are issued (of which 40,734,382 shares are issued and outstanding and 69,752 shares were held in its treasury) and (ii) 4 million shares of preferred stock, 2,000 shares of which have been
designated as Series A Preferred Stock and 50,000 of which has been designated as Series B Preferred Stock (collectively,
SBC Preferred Stock
), of which, as of the date of this Agreement, no shares are issued or outstanding. As of
the date of this Agreement, there were 322,692 restricted shares of SBC Common Stock validly issued and outstanding and the restricted shares were each issued in accordance with the SBC Stock Plans
and such restricted shares represent all of
the Rights issued under the SBC Stock Plans. Except as set forth in this Section 3.4(c),
Section 3.4(c) of the Seacoast Disclosure Letter
and as set forth in SBCs SEC Reports, as of the date of this Agreement there were no equity
securities of SBC outstanding (other than the SBC Common Stock) and no outstanding Rights relating to SBC Common Stock, and no Person has any Contract or any right or privilege (whether preemptive or contractual) capable of becoming a Contract or
Right for the purchase, subscription or issuance of any securities of SBC. All of the outstanding shares of SBC Common Stock are duly and validly issued and outstanding and are fully paid and, except as expressly provided otherwise under applicable
Law,
non-assessable
under the FBCA. None of the outstanding shares of SBC Common Stock have been issued in violation of any preemptive rights of the current or past shareholders of SBC. All of the outstanding
shares of SBC Common Stock and all Rights to acquire shares of SBC Common Stock have been issued in compliance in all material respects with all applicable federal and state Securities Laws. All issued and outstanding shares of capital stock of its
Subsidiaries have been duly authorized and are validly issued, fully paid and (except as provided in 12 U.S.C. Section 55) nonassessable. The outstanding capital stock of each of its Subsidiaries has been issued in compliance with all legal
requirements and is not subject to any preemptive or similar rights. SBC owns all of the issued and outstanding shares of capital stock of SNB free and clear of all Liens, charges, security interests, mortgages, pledges and other encumbrances.
(d)
Financial Statements
. The financial statements of SBC and its Subsidiaries included (or incorporated by reference)
in the SBC SEC Reports (including the related notes, where applicable) (A) have been prepared from, and are in accordance with, the books and records of SBC and its Subsidiaries; (B) fairly present in all material respects the consolidated
results of operations, cash flows, changes in stockholders equity and consolidated financial position of SBC and its Subsidiaries for the respective fiscal periods or as of the respective dates therein set forth (subject in the case of
unaudited statements to recurring audit adjustments normal in nature and amount); (C) complied as to form, as of their respective dates of filing with the SEC, in all material respects
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with applicable accounting requirements and with the published rules and regulations of the SEC with respect thereto; and (D) have been prepared in accordance with GAAP consistently applied
during the periods involved, except, in each case, as indicated in such statements or in the notes thereto. As of the date hereof, the books and records of SBC and its Subsidiaries have been maintained in all material respects in accordance with
GAAP and any other applicable legal and accounting requirements and reflect only actual transactions.
(e)
Legal
Proceedings
. There is no Litigation that would be required to be disclosed in a Form
10-K
or Form
10-Q
pursuant to Item 103 of Regulation
S-K
of SEC Rules and Regulations that are not so disclosed, pending or, to its Knowledge, threatened against Seacoast, or against any asset, interest, or right of any of them, nor are there any Orders of any
Governmental Authority or arbitrators outstanding against Seacoast.
(f)
Compliance with Laws
.
(i) SBC and each of its Subsidiaries are, and at all times since December 31, 2013, have been, in
compliance in all material respects with all laws applicable to their businesses, operations, properties, assets, and employees. SBC and each of its Subsidiaries have in effect, and at all relevant times since December 31, 2013, held all
material Permits necessary for them to own, lease or operate their properties and assets and to carry on their businesses and operations as now conducted and, to SBCs Knowledge, no suspension or cancellation of any such Permits is threatened
and there has occurred no violation of, default under (with or without notice or lapse of time or both) or event giving to others any right of revocation,
non-renewal,
adverse modification or cancellation of,
with or without notice or lapse of time or both, any such Permit. The deposit accounts of SNB are insured by the FDIC through the Deposit Insurance Fund to the fullest extent permitted by law, and all premiums and assessments required to be paid in
connection therewith have been paid when due. No action for the revocation or termination of such deposit insurance is pending or, to the Knowledge of SBC, threatened.
(ii) Since January 1, 2013, neither SBC nor any of its Subsidiaries has received any written notification
or communication from any Governmental Authority (A) requiring SBC or any of its Subsidiaries to enter into or consent to the issuance of a cease and desist order, formal or written agreement, directive, commitment, memorandum of understanding,
board resolution, extraordinary supervisory letter or other formal or informal enforcement action of any kind that imposes any restrictions on its conduct of business or that relates to its capital adequacy, its credit or risk management policies,
its dividend policy, its management, its business or its operations (any of the foregoing, a
SBC Regulatory Agreement
), or (B) threatening or contemplating revocation or limitation of, or which would have the effect of
revoking or limiting, FDIC insurance coverage, and, to the Knowledge of SBC, neither SBC nor any of its Subsidiaries has been advised by any Governmental Authority that such Governmental Authority is contemplating issuing or requesting (or is
considering the appropriateness of issuing or requesting) any such judgment, order, injunction, rule, agreement, memorandum of understanding, commitment letter, supervisory letter, decree or similar submission. Neither SBC nor any of its
Subsidiaries is currently a party to or subject to any SBC Regulatory Agreement.
(iii) Neither SBC nor any
of its Subsidiaries (nor, to the Knowledge of SBC, any of their respective directors, executives, representatives, agents or employees) (A) has used or is using any corporate funds for any illegal contributions, gifts, entertainment or other
unlawful expenses relating to political activity, (B) has used or is using any corporate funds for any direct or indirect unlawful payments to any foreign or domestic governmental officials or employees, (C) has violated or is violating
any provision of the Foreign Corrupt Practices Act of 1977, (D) has established or maintained, or is maintaining, any unlawful fund of corporate monies or other properties or (E) has made any bribe, unlawful rebate, payoff, influence
payment, kickback or other unlawful payment of any nature.
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(g)
Reports
. Except as set forth on
Section 3.4(g) of the Seacoast
Disclosure Letter
, SBC has and each of its Subsidiaries have timely filed all reports, statements, and certifications, together with any amendments required to be made with respect thereto, that they were required to file since December 31,
2014 and prior to the date hereof with Governmental Authorities, and have paid all fees and assessments due and payable in connection therewith. There is no unresolved violation or exception of which SBC has been given notice by any Governmental
Authority with respect to any such report, statement or certification. No report, including any report filed with the SEC, the FDIC, the OCC, the Federal Reserve Board or other banking regulatory agency, and no report, proxy statement, statement or
offering materials made or given to shareholders of SBC or SNB since December 31, 2014, as of the respective dates thereof, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. As of their respective dates, all of the foregoing reports complied as to form in all material respects with the published rules and
regulations of the Governmental Authority with jurisdiction thereof and with respect thereto. There are no outstanding comments from or unresolved issues raised by the Governmental Authorities with respect to any of the foregoing reports filed by
SBC or its Subsidiaries.
(h)
Community Reinvestment Act
. SNB has complied in all material respects with the
provisions of the CRA and the rules and regulations thereunder, has a CRA rating of not less than satisfactory in its most recently completed exam, has received no material criticism from regulators with respect to discriminatory lending
practices, and has no knowledge of any conditions, facts or circumstances that could result in a CRA rating of less than satisfactory or material criticism from regulators or consumers with respect to discriminatory lending practices.
(i)
Legality of Seacoast Securities
. All shares of SBC Common Stock to be issued pursuant to the Merger have been
duly authorized and, when issued pursuant to this Agreement, will be validly and legally issued, fully paid and nonassessable, and will be, at the time of their delivery, free and clear of all Liens and any preemptive or similar rights.
(j)
Certain Actions
. Neither SBC nor any of its Subsidiaries or Affiliates has taken or agreed to take any action and
it has no Knowledge of any fact or circumstance, that is reasonably likely to (i) prevent the Merger from qualifying as a reorganization with the meaning of Section 368(e) of the Internal Revenue Code, or (ii) materially impede or delay
receipt of any required Regulatory Consents. To SBCs Knowledge, there exists no fact, circumstance, or reason that would cause any required Regulatory Consent not to be received in a timely manner.
(k)
Brokers and Finders
. Except for FIG Partners, LLC, neither SBC nor any of its Subsidiaries, nor any of their
respective directors, officers, employees or Representatives, has employed any broker or finder or incurred any Liability for any financial advisory fees, investment bankers fees, brokerage fees, commissions, or finders fees in
connection with this Agreement or the transactions contemplated hereby.
(l)
Representations Not Misleading
. No
representation or warranty by Seacoast in this Agreement contains any untrue statement of a material fact or omits to state a material fact necessary to make the statements contained therein, in light of the circumstances in which they were made,
not misleading.
ARTICLE 4
COVENANTS AND ADDITIONAL AGREEMENTS OF THE PARTIES
4.1
Conduct of Business Prior to Effective Time
.
During the period
from the date of this Agreement until the earlier of the termination of this Agreement pursuant to Article 6 or the Effective Time, except as expressly contemplated or permitted by this Agreement, (a) the Company shall (i) conduct its
business in the ordinary course consistent with past practice, (ii) use commercially reasonable efforts to maintain and preserve intact its
A-29
business organization, employees and advantageous business relationships, (iii) maintain its books, accounts and records in the usual manner on a basis consistent with that heretofore
employed and (iv) provide Seacoast with the Companys consolidated balance sheets (including related notes and schedules, if any), and related statements of operations and shareholders equity and comprehensive income (loss)
(including related notes and schedules, if any) prepared for any periods subsequent to the date of this Agreement and each party shall (b) take no action that would adversely affect or delay the satisfaction of the conditions set forth in
Section 5.1(a) or 5.1(b) or the ability of either Party to perform its covenants and agreements under this Agreement or to consummate the transactions contemplated hereby.
4.2
Forbearances
.
During the period from the date of this Agreement
until the earlier of the termination of this Agreement pursuant to Article 6 or the Effective Time, except as expressly contemplated or permitted by this Agreement or as otherwise indicated in this Section 4.2, the Company shall not, without
the prior written consent of the chief executive officer or chief financial officer of SBC (which consent shall not be unreasonably withheld or delayed):
(a) amend its Organizational Documents or any resolution or agreement concerning indemnification of its directors or officers;
(b) (i) adjust, split, combine, subdivide or reclassify any capital stock, (ii) make, declare, set aside or pay
any dividend or make any other distribution on, or directly or indirectly redeem, purchase or otherwise acquire, any shares of its capital stock or any securities or obligations convertible (whether currently convertible or convertible only after
the passage of time or the occurrence of certain events) into or exchangeable for any shares of its capital stock, (iii) grant any Rights, (iv) issue, sell, pledge, dispose of, grant, transfer, lease, license, guarantee, encumber, or
authorize the issuance, sale, pledge, disposition, grant, transfer, lease, license, guarantee or encumbrance of, any shares of its capital stock except pursuant to the exercise of the Company Equity Awards outstanding as of the date of this
Agreement, or (v) make any change in any instrument or Contract governing the terms of any of its securities;
(c)
other than in the ordinary course of business or consistent with past practice or permitted by this Agreement, make any investment (either by purchase of stock or securities, contributions to capital, property transfers, or purchase of any property
or assets) in any other Person;
(d) (i) charge off (except as may otherwise be required by law or by regulatory
authorities or by GAAP) or sell (except in the ordinary course of business consistent with past practices) any of its portfolio of loans, discounts or financing leases, or (ii) sell any asset held as other real estate or other foreclosed assets
for an amount less than its book value;
(e) terminate or allow to be terminated any of the policies of insurance it
maintains on its business or property, cancel any material indebtedness owing to it or any claims that it may have possessed, or waive any right of substantial value or discharge or satisfy any material noncurrent liability;
(f) enter into any new line of business, or change its lending, investment, underwriting, risk and asset liability management
and other banking and operating policies, except as required by applicable Laws or any policies imposed on it by any Governmental Authority;
(g) except in the ordinary course of business consistent with past practices: (i) lend any money or pledge any of its
credit in connection with any aspect of its business whether as a guarantor, surety, issuer of a letter of credit or otherwise, (ii) mortgage or otherwise subject to any Lien, encumbrance or other liability any of its assets, (iii) except
for property held as other real estate owned, sell, assign or transfer any of its assets in excess of $50,000 in the aggregate or (iv) incur any material liability, commitment, indebtedness or obligation (of any kind whatsoever, whether
absolute or contingent), or cancel, release or assign any indebtedness of any Person or any claims against any Person, except pursuant to Contracts in force as of the date of this Agreement
A-30
and disclosed in
Section 4.2(g) of the Company Disclosure Letter
or transfer, agree to transfer or grant, or agree to grant a license to, any of its material Intellectual Property;
(h) other than in the ordinary course of business consistent with past practice, incur any indebtedness for borrowed money
(other than short-term indebtedness incurred to refinance short-term indebtedness (it being understood that for purposes of this Section 4.2(h), short-term shall mean maturities of six months or less)); assume, guarantee, endorse or
otherwise as an accommodation become responsible for the obligations of any Person;
(i) other than purchases of
investment securities in the ordinary course of business consistent with past practice or in consultation with SBC, restructure or change its investment securities portfolio or its gap position, through purchases, sales or otherwise, or the manner
in which the portfolio is classified or reported;
(j) terminate or waive any material provision of any Contract other
than normal renewals of Contracts without materially adverse changes of terms or otherwise amend or modify any material Contract;
(k) other than in the ordinary course of business and consistent with past practice or as required by Benefit Plans and
Contracts as in effect at the date of this Agreement, (i) increase in any manner the compensation or fringe benefits of, or grant any bonuses to, any of its officers, employees or directors, whether under a Benefit Plan or otherwise; provided,
however, that the Company may pay employees cash bonuses prior to the Closing, consistent with past practice in an aggregate amount up to $300,000, (ii) pay any pension or retirement allowance not required by any existing Benefit Plan or
Contract to any such officers, employees or directors, (iii) become a party to, amend or commit itself to any Benefit Plan or Contract (or any individual Contracts evidencing grants or awards thereunder) or employment agreement, retention
agreement or severance arrangement with or for the benefit of any officer, employee or director, (iv) accelerate the vesting of, or the lapsing of restrictions with respect to, Rights pursuant to any the Company Stock Plan, except pursuant to
Section 1.6, (v) make any changes to a Benefit Plan that are not required by Law or (vi) hire or terminate the employment of a chief executive officer, president, chief financial officer, chief risk officer, chief credit officer, internal
auditor, general counsel or other officer holding the position of senior vice president or above or any employee with annual base salary and annual incentive compensation that is reasonably anticipated to exceed $125,000;
(l) settle any Litigation, except in the ordinary course of business;
(m) revalue any of its assets or change any method of accounting or accounting practice used by it, other than changes
required by GAAP or the FDIC or any Regulatory Authority;
(n) file or amend any Tax Return except in the ordinary course
of business; settle or compromise any Tax Liability; or make, change or revoke any Tax election or change any method of Tax accounting, except as required by applicable Law; enter into any closing agreement as described in
Section 7121 of the Internal Revenue Code (or any similar provision of state, local or foreign Law); surrender any claim for a refund of Taxes; or consent to any extension or waiver of the limitations period applicable to any claim or
assessment with respect to Taxes;
(o) knowingly take, or knowingly omit to take, any action that is reasonably likely to
result in any of the conditions to the Merger set forth in Article 5 not being satisfied, except as may be required by applicable Law;
provided
, that nothing in this Section 4.2(o) shall preclude the Company from exercising its rights
under Sections 4.5 or 4.12;
(p) merge or consolidate with any other Person;
(q) acquire assets outside of the ordinary course of business consistent with past practices from any other Person with a
value or purchase price in the aggregate in excess of $50,000, other than purchase obligations pursuant to Contracts to the extent in effect immediately prior to the execution of this Agreement and described in
Section 4.2(q) of the Company
Disclosure Letter
;
A-31
(r) enter into any Contract that is material and would have been material had it
been entered into prior to the execution of this Agreement;
(s) make any adverse changes in the mix, rates, terms or
maturities of its deposits or other Liabilities;
(t) close or relocate any existing branch or facility;
(u) make any extension of credit that, when added to all other extensions of credit to a borrower and its affiliates, would
exceed its applicable regulatory lending limits;
(v) take any action or fail to take any action that will cause the
Companys Consolidated Tangible Shareholders Equity to be less than $36.5 million at the Effective Time;
(w) make any loans, or enter into any commitments to make loans, which vary other than in immaterial respects from its written
loan policies, a true and correct copy of such policies has been provided to Seacoast;
provided
, that this covenant shall not prohibit the Company from extending or renewing credit or loans in the ordinary course of business consistent with
past lending practices or in connection with the workout or renegotiation of loans currently in its loan portfolio;
provided further
, that from the date hereof, any new individual loan or new extension of credit in excess of $250,000 and
which is unsecured, or $1.0 million and which is secured, shall require the written approval of the chief executive officer, chief financial officer or chief credit officer of SNB, which approval shall not be unreasonably withheld, and the
approval or rejection shall be given in writing within two (2) Business Days after the loan package is delivered to SNB;
(x) take any action that at the time of taking such action is reasonably likely to prevent, or would materially interfere
with, the consummation of the Merger;
(y) knowingly take any action that would prevent or impede the Merger from
qualifying as a reorganization within the meaning of Section 368(a) of the Internal Revenue Code;
(z) take any
action or fail to take any action that will cause the Company to no longer have a valid S corporation election under the Internal Revenue Code; or
(aa) agree or commit to take any of the actions prohibited by this Section 4.2.
4.3
Litigation
.
Each of SBC and the Company shall promptly notify each
other in writing of any Litigation issued, commenced, brought, conducted or heard by or before, or otherwise involving, any Governmental Authority pending or, to the Knowledge of SBC or the Company, as applicable, threatened against SBC, the Company
or any of their respective Subsidiaries or directors that (a) questions or would reasonably be expected to question the validity of this Agreement or the other agreements contemplated hereby or any actions taken or to be taken by SBC, the
Company or their respective Subsidiaries with respect hereto or thereto, or (b) seeks to enjoin or otherwise restrain the transactions contemplated hereby or thereby. The Company shall give Seacoast the opportunity to participate in the defense
or settlement of any shareholder or derivative Litigation against the Company and/or its directors relating to the transactions contemplated by this Agreement, and no such settlement shall be agreed to without Seacoasts prior written consent,
which shall not be unreasonably withheld or delayed.
4.4
Regulatory
Filings
.
Upon the terms and subject to the conditions of this Agreement and prior to or in connection with the Closing, SBC and the Company shall execute and the Parties shall cause to be filed the Articles of Merger with the Office
of the Comptroller of the Currency.
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4.5
Company Shareholder Approval; Registration
Statement and Proxy Statement/Prospectus
.
(a) The Company shall call a meeting of its shareholders to be held as
soon as reasonably practicable after the Registration Statement is declared effective by the SEC for the purpose of obtaining the Company Shareholder Approval and such other matters as the Board of Directors of the Company or SBC may direct, and the
Company shall use its reasonable best efforts to cause such meeting to occur as soon as reasonably practicable. SBC shall be entitled to have a representative attend such meeting of shareholders. The Board of Directors of the Company shall make the
Company Directors Recommendation to its shareholders and the Company Directors Recommendation shall be included in the Proxy Statement/Prospectus;
provided
, that the Companys Board of Directors may withdraw, modify, or
change in an adverse manner to Seacoast its recommendations if the Board of Directors of the Company concludes in good faith (and based upon the written advice of its outside counsel) that the failure to so withdraw, modify, or change its
recommendations would constitute, or would be reasonably likely to result in, a breach of the fiduciary duties of the Companys Board of Directors under applicable Law. Notwithstanding such withdrawal of such the Company Directors
Recommendation then the Company shall nevertheless submit this Agreement to its shareholders for adoption.
(b) As soon as
reasonably practicable after the execution of this Agreement (but in no event later than forty-five (45) days following the date of this Agreement), SBC shall file the Registration Statement with the SEC and shall use all reasonable efforts to
cause the Registration Statement to be declared effective under the 1933 Act as promptly as practicable after filing thereof. Each Party agrees to cooperate with the other Party, and its Representatives, in the preparation of the Registration
Statement and the Proxy Statement/Prospectus. The Parties agree to use all reasonable best efforts to obtain all Permits required by the Securities Laws to carry out the transactions contemplated by this Agreement, and each Party agrees to furnish
all information concerning it and the holders of its capital stock as may be reasonably requested in connection with any such action.
(c) Each Party agrees, as to itself and its Subsidiaries, that none of the information supplied or to be supplied by it for
inclusion or incorporation by reference in (i) the Registration Statement will, at the time the Registration Statement and each amendment and supplement thereto, if any, become effective under the 1933 Act, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading, and (ii) the Proxy Statement/Prospectus and any amendment or supplement thereto, at the date of mailing
to the Company shareholders and at the times of the meeting of the Company shareholders, will contain an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements, in light of the circumstances
under which they were made, not misleading, or necessary to correct any statement in any earlier statement in the Proxy Statement/Prospectus or any amendment or supplement thereto. Each Party further agrees that if it shall become aware prior to the
Effective Time of any information furnished by it that would cause any of the statements in the Proxy Statement/Prospectus or the Registration Statement to be false or misleading with respect to any material fact, or to omit to state any material
fact necessary to make the statements therein not false or misleading, to promptly inform the other Party thereof and to take the necessary steps to correct the Proxy Statement/Prospectus or the Registration Statement.
4.6
Listing of SBC Common Stock
.
SBC shall cause the shares of SBC
Common Stock to be issued in the Merger to be approved for listing on NASDAQ, subject to official notice of issuance, prior to the Effective Time.
4.7
Reasonable Best Efforts
.
(a) Subject to the terms and conditions of this Agreement, the Parties will use all reasonable best efforts to take, or cause
to be taken, in good faith, all actions, and to do, or cause to be done, all things necessary, proper or desirable, or advisable under applicable Laws, including using its reasonable best efforts to lift or rescind any Order adversely affecting its
ability to consummate the transactions contemplated hereby and to cause to be satisfied the conditions in Article 5, to permit consummation of the Merger as promptly as practicable and otherwise to enable consummation of the transactions
contemplated hereby, and each will cooperate fully with and furnish information to, the other Party to that end, and obtain all consents of, and give all notices to and make
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all filings with, all Governmental Authorities and other third parties that may be or become necessary for the performance of its obligations under this Agreement and the consummation of the
transactions contemplated hereby;
provided
, that nothing contained herein shall preclude any Party from exercising its rights under this Agreement.
(b) Each Party undertakes and agrees to use its reasonable efforts to cause the Merger and to take no action that would cause
the Merger to not qualify for treatment as a reorganization within the meaning of Section 368(a) of the Internal Revenue Code for federal income Tax purposes.
(c) The Parties shall consult with respect to the character, amount and timing of restructuring charges to be taken by each of
them in connection with the transactions contemplated hereby and shall take such charges in accordance with GAAP, as such Parties mutually agree upon.
4.8
Applications and Consents
.
(a) The Parties shall cooperate in seeking all Consents of Governmental Authorities and other Persons necessary to consummate
the transactions contemplated hereby.
(b) Without limiting the foregoing, the Parties shall cooperate in (i) the
filing of applications and notices, as applicable, with the Board of Governors of the Federal Reserve System under the BHC Act, and obtaining approval of such applications and notices, (ii) the filing of any required applications or notices
with any foreign or state banking, insurance or other Regulatory Authorities and obtaining approval of such applications and notices, (iii) making any notices to or filings with the Small Business Administration, (iv) making any notices or
filings under the HSR Act, and (v) making any filings with and obtaining any Consents in connection with compliance with the applicable provisions of the rules and regulations of any applicable industry self-regulatory organization, including
approvals from FINRA and any relevant state regulator in connection with a change of control of the Company Subsidiaries that are broker-dealers, or that are required under consumer finance, mortgage banking and other similar Laws (collectively, the
Regulatory Consents
). Each Party shall file any application and notice required of it to any Regulatory Authority within forty-five (45) days following the date of this Agreement.
(c) Each Party will promptly furnish to the other Party copies of applications filed with all Governmental Authorities and
copies of written communications received by such Party from any Governmental Authorities with respect to the transactions contemplated hereby. Each Party agrees that it will consult with the other Party with respect to the obtaining of all
Regulatory Consents and other material Consents advisable to consummate the transactions contemplated by this Agreement and each Party will keep the other Party apprised of the status of material matters relating to completion of the transactions
contemplated hereby. All documents that the Parties or their respective Subsidiaries are responsible for filing with any Governmental Authority in connection with the transactions contemplated hereby (including to obtain Regulatory Consents) will
comply as to form in all material respects with the provisions of applicable Law.
4.9
Notification of Certain Matters
.
Each Party will give prompt notice to the other (and subsequently keep such other Party informed on a current basis) upon its becoming aware of the occurrence or existence of any fact, event,
development or circumstance that (a) is reasonably likely to result in any Material Adverse Effect on it, or (b) would cause or constitute a breach of any of its representations, warranties, covenants, or agreements contained herein;
provided
,
that any failure to give notice in accordance with the foregoing with respect to any breach shall not be deemed to constitute the failure of any condition set forth in Section 5.2(a) or 5.2(b), or 5.3(a) or 5.3(b), as
the case may be, to be satisfied, or otherwise constitute a breach of this Agreement by such Party due to its failure to give such notice unless the underlying breach would independently result in a failure of the conditions set forth in Sections
5.2(a) or 5.2(b), or Section 5.3(a) or 5.3(b), as the case may be or give rise to a termination right under Section 6.1. The Company shall deliver to Seacoast a copy of each written opinion (or any withdrawal of such opinion) of Sandler
ONeill & Partners, L.P. or any other financial advisor, as soon as reasonably practicable after the Companys receipt thereof.
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4.10
Investigation and Confidentiality
.
(a) Upon reasonable notice and subject to applicable Laws, each Party shall permit the other to make or cause to be
made such investigations of the business and Properties of it and its Subsidiaries and of its Subsidiaries financial and legal conditions as the other reasonably requests;
provided,
that such investigation shall be reasonably related to
the transactions contemplated hereby and shall not interfere unnecessarily with normal operations. No investigation by a Party shall affect the representations and warranties of the other or the right of a Party to rely thereon. Neither Party shall
be required to provide access to or to disclose information where such access or disclosure would jeopardize the attorney-client privilege of the Company (after giving due consideration to the existence of any common interest, joint defense or
similar agreement between the Parties) or contravene any Law or binding agreement entered into prior to the date of this Agreement. The Parties will make appropriate substitute disclosure arrangements under circumstances in which the restrictions of
the preceding sentence apply.
(b) Each Party shall, and shall cause its directors, officers, employees and
Representatives to, maintain the confidentiality of all confidential information furnished to it by the other Party concerning its and its Subsidiaries businesses, operations, and financial positions to the extent required by, and in
accordance with, the Confidentiality Agreement, and shall not use such information for any purpose except in furtherance of the transactions contemplated by this Agreement. No investigation by Seacoast shall affect the representations and warranties
of the Company or the right of Seacoast to rely thereon.
4.11
Press Releases;
Publicity
.
Prior to the Effective Time, Seacoast shall provide the Company with a draft of any press release, other public statement or shareholder communication related to this Agreement and the transactions contemplated hereby prior
to issuing such press release, public statement or shareholder communication or making any other public or shareholder disclosure related thereto and Seacoast shall consider any comments and/or modifications to any such press release or public
statement provided by the Company;
provided
, that nothing in this Section 4.11 shall be deemed to prohibit any Party from making any disclosure that its counsel deems necessary or advisable in order to satisfy such Partys
disclosure obligations imposed by Law, the SEC or NASDAQ.
4.12
Acquisition
Proposals
.
(a) The Company agrees that it will not, and will cause its directors, officers, employees and
Representatives and Affiliates not to, (i) initiate, solicit, encourage or knowingly facilitate inquiries or proposals with respect to, (ii) engage or participate in any negotiations concerning, or (iii) provide any confidential or
nonpublic information or data to, or have or participate in any discussions with, any Person relating to, any Acquisition Proposal;
provided
,
that, in the event the Company receives an unsolicited
bona fide
Acquisition Proposal
that does not violate (i) and (ii) above at any time prior to, but not after, the time this Agreement is adopted by the Company Shareholder Approval, and the Companys Board of Directors concludes in good faith that there is a reasonable
likelihood that such Acquisition Proposal constitutes or is reasonably likely to result in a Superior Proposal, the Company may, and may permit its officers and Representatives to, furnish or cause to be furnished nonpublic information or data and
participate in such negotiations or discussions to the extent that the Board of Directors of the Company concludes in good faith (and based upon the written advice of its outside counsel) that failure to take such actions would result in a violation
of its fiduciary duties under applicable Law;
provided further
,
that prior to providing any nonpublic information permitted to be provided pursuant to the foregoing proviso, the Company shall have entered into a confidentiality
agreement with such third party on terms no less favorable to it than the Confidentiality Agreement. The Company will immediately cease and cause to be terminated any activities, discussions or negotiations conducted before the date of this
Agreement with any Persons other than Seacoast with respect to any Acquisition Proposal. The Company shall promptly (and in any event within two Business Days) advise Seacoast following the receipt or notice of any Acquisition Proposal and the
substance thereof (including the identity of the Person making such Acquisition Proposal), and will keep Seacoast apprised of any related developments, discussions and negotiations on a current basis. The Company agrees that any breach by its
Representatives of this Section 4.12 shall be deemed a breach by the Company.
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(b) Notwithstanding the foregoing, if the Companys Board of Directors
concludes in good faith (and based upon the written advice of its outside counsel and after consultation with its financial advisor) that an Acquisition Proposal constitutes or would reasonably be expected to constitute a Superior Proposal and that
failure to accept such Superior Proposal would reasonably be expected to result in a violation of its fiduciary obligations to shareholders of the Company under applicable Laws, the Company Board of Directors may at any time prior to the Company
Shareholder Approval (i) withdraw or modify (a
Change in Recommendation
) the Company Directors Recommendation or make or cause to be made any third party or public communication proposing or announcing an intention to
withdraw or modify the Company Directors Recommendation, and (ii) terminate this Agreement to enter into a definitive agreement with respect to such Superior Proposal;
provided, however
, that the Board of Directors of the Company
may not make a Change in Recommendation, and terminate this Agreement, with respect to an Acquisition Proposal unless (i) the Company shall not have breached this Section 4.12 in any respect and (ii) (A) the Board of Directors of the
Company determines in good faith (after consultation with counsel and its financial advisors) that such Superior Proposal has been made and has not been withdrawn and continues or is reasonably expected to continue to be a Superior Proposal after
taking into account all adjustments to the terms of this Agreement that may be offered by SBC under this Section 4.12(b); (B) the Company has given SBC at least four (4) Business Days prior written notice of its intention to take such
actions set forth above (which notice shall specify the material terms and conditions of any such Superior Proposal (including the identity of the Person making such Superior Proposal)) and has contemporaneously provided an unredacted copy of the
relevant proposed transaction agreements with the Person making such Superior Proposal; and (C) before effecting such Change in Recommendation, the Company has negotiated, and has caused its representatives to negotiate in good faith with SBC
during such notice period to the extent SBC wishes to negotiate, to enable SBC to revise the terms of this Agreement such that it would cause such Superior Proposal to no longer constitute a Superior Proposal. In the event of any material change to
the terms of such Superior Proposal, the Company shall, in each case, be required to deliver to SBC a new written notice, the notice period shall have recommenced and the Company shall be required to comply with its obligations under this
Section 4.12 with respect to such new written notice. The Company will advise SBC in writing within twenty-four (24) hours following the receipt of any Acquisition Proposal and the substance thereof (including the identity of the Person
making such Acquisition Proposal) and will keep SBC apprised of any related developments, discussions and negotiations (including the terms and conditions of the Acquisition Proposal) on a current basis.
4.13
Takeover Laws
.
If any Takeover Law may become, or may purport to
be, applicable to the transactions contemplated hereby, the Company and the members of its Board of Directors will grant such approvals and take such actions as are necessary (other than any action requiring the approval of its shareholders (other
than as contemplated by Section 4.5)) so that the transactions contemplated by this Agreement may be consummated as promptly as practicable on the terms contemplated hereby and otherwise act to eliminate or minimize the effects of any Takeover
Law on any of the transactions contemplated by this Agreement.
4.14
Employee Benefits
and Contracts
.
(a) Following the Effective Time, SBC shall maintain or cause to be maintained employee benefit
plans and compensation opportunities for the benefit of employees (as a group) who are full-time active employees of the Company on the Closing Date (
Covered Employees
) that provide employee benefits and compensation opportunities
which, in the aggregate, are substantially comparable to the employee benefits and compensation opportunities that are made available on a uniform and
non-discriminatory
basis to similarly situated employees
of SBC or its Subsidiaries, as applicable;
provided, however
, that in no event shall any Covered Employee be eligible to participate in any closed or frozen plan of SBC or its Subsidiaries; and
provided further
that in no event shall
SBC be required to take into account any retention arrangements or equity compensation when determining whether employee benefits are substantially comparable. SBC shall give the Covered Employees full credit for their prior service with the Company
and its Subsidiaries (i) for purposes of eligibility (including initial participation and eligibility for current benefits) and vesting under any qualified or
non-qualified
employee benefit plan
maintained by SBC and in which Covered Employees may be eligible to participate and (ii) for all purposes under any welfare benefit plans, vacation plans and similar arrangements maintained by SBC.
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(b) With respect to any employee benefit plan of SBC that is a health, dental,
vision or other welfare plan in which any Covered Employee is eligible to participate, for the plan year in which such Covered Employee is first eligible to participate, SBC or its applicable Subsidiary shall use its commercially reasonable best
efforts to (i) cause any
pre-existing
condition limitations or eligibility waiting periods under such SBC or Subsidiary plan to be waived with respect to such Covered Employee to the extent such condition
was or would have been covered under the Company Benefit Plan in which such Covered Employee participated immediately prior to the Effective Time, and (ii) recognize any health, dental, vision or other welfare expenses incurred by such Covered
Employee in the year that includes the Closing Date (or, if later, the year in which such Covered Employee is first eligible to participate) for purposes of any applicable deductible and annual
out-of-pocket
expense requirements under any such health, dental, vision or other welfare plan.
(c) Prior to the Effective Time, the Company shall take all actions requested by SBC that may be necessary or appropriate to
(i) cause the Companys 401(k) Plan, one or more the Company Benefits Plans to terminate as of the Effective Time, or as of the date immediately preceding the Effective Time, (ii) cause benefit accruals and entitlements under any
Company Benefit Plan to cease as of the Effective Time, or as of the date immediately preceding the Effective Time, (iii) cause the termination of the Companys 401(k) Plan, (iv) cause the continuation on and after the Effective Time
of any contract, arrangement or insurance policy relating to any Company Benefit Plan for such period as may be requested by SBC, or (v) facilitate the merger of any Company Benefit Plan into any employee benefit plan maintained by SBC or an
SBC Subsidiary. All resolutions, notices, or other documents issued, adopted or executed in connection with the implementation of this Section 4.14(c) shall be subject to SBCs reasonable prior review and approval, which shall not be
unreasonably withheld, conditioned, or delayed.
(d) Nothing in this Section 4.14 shall be construed to limit the
right of SBC or any of its Subsidiaries (including, following the Closing Date, the Company) to amend or terminate any Company Benefit Plan or other employee benefit plan, to the extent such amendment or termination is permitted by the terms of the
applicable plan, nor shall anything in this Section 4.14 be construed to require SBC or any of its Subsidiaries (including, following the Closing Date, the Company) to retain the employment of any particular Covered Employee for any fixed
period of time following the Closing Date, and the continued retention (or termination) by SBC or any of its Subsidiaries of any Covered Employee subsequent to the Effective Time shall be subject in all events to SBCs or its applicable
Subsidiarys normal and customary employment procedures and practices, including customary background screening and evaluation procedures, and satisfactory employment performance.
(e) If, within six (6) months after the Effective Time, any Covered Employee (other than those Covered Employees who
receive change in control benefits or retention benefits pursuant to employment or retention agreements with the Company), is terminated by SBC or its Subsidiaries other than for cause or as a result of death, disability, or
unsatisfactory job performance, then SBC shall pay severance to such Covered Employee in an amount as set forth in the severance policies set forth in
Section 4.14(e)(i) of the Seacoast Disclosure Letter
(and based upon the
non-exempt
and exempt status and/or title for the Covered Employee with the Company at the Closing). Any severance to which a Covered Employee may be entitled in connection with a termination occurring more than six
(6) months after the Effective Time will be as set forth in the severance policies set forth in
Section
4.14 (e)(ii) of the Seacoast Disclosure Letter
.
4.15
Indemnification
.
(a) From and after the Effective Time, in the event of any threatened or actual claim, action, suit, proceeding, or
investigation, whether civil, criminal, or administrative, in which any Person who is now, or has been at any time prior to the date of this Agreement, or who becomes prior to the Effective Time, a director or officer of the Company (each an
Indemnified Party
) is, or is threatened to be, made a party based in whole or in part on, or arising in whole or in part out of, or pertaining to (i) the fact that the Indemnified Party is or was a director, officer, or
employee of the Company, its Subsidiaries or any of its predecessors, or (ii) this Agreement or any of the transactions contemplated hereby, whether in any case asserted or arising before or after the
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Effective Time, Seacoast shall indemnify, defend and hold harmless, to the same extent permitted by Law, such Indemnified Parties are indemnified or have the right to advancement of expenses
pursuant to (x) the Organizational Documents of the Company and (y) the FBCA, each such Indemnified Party against any Liability (including advancement of reasonable attorneys fees and expenses prior to the final disposition of any
claim, suit, proceeding, or investigation to each Indemnified Party to the fullest extent permitted by Law upon receipt of any undertaking required by applicable Law), judgments, fines, and amounts paid in settlement in connection with any such
threatened or actual claim, action, suit, proceeding, or investigation. In the event of any such threatened or actual claim, action, suit, proceeding, or investigation (whether asserted or arising before or after the Effective Time), the Indemnified
Parties may retain counsel reasonably satisfactory to them;
provided
, that (1) Seacoast shall have the right to assume the defense thereof and upon such assumption Seacoast shall not be required to advance to any Indemnified Party any
legal expenses of other counsel or any other expenses subsequently incurred by any Indemnified Party in connection with the defense thereof, except that if Seacoast elects not to assume such defense or counsel for the Indemnified Parties reasonably
advises the Indemnified Parties that there are material issues that raise conflicts of interest between Seacoast and the Indemnified Parties, the Indemnified Parties may retain counsel reasonably satisfactory to them, and Seacoast shall advance the
reasonable fees and expenses of such counsel for the Indemnified Parties, (2) Seacoast shall not be liable for any settlement effected without its prior written consent (which consent shall not be unreasonably withheld), and (3) Seacoast
shall have no obligation hereunder to any Indemnified Party when and if a court of competent jurisdiction shall determine, and such determination shall have become final, that indemnification of such Indemnified Party in the manner contemplated
hereby is prohibited by applicable Law.
(b) Seacoast agrees that all existing rights to indemnification and all existing
limitations on Liability existing in favor of the directors, officers, and employees of the Company (the
Covered Parties
) as provided in their respective Organizational Documents as in effect as of the date of this Agreement shall
survive the Merger and shall continue in full force and effect, and shall be honored by such entities or their respective successors as if they were the indemnifying party thereunder, without any amendment thereto;
provided
, that nothing
contained in this Section 4.15(b) shall be deemed to preclude the liquidation, consolidation, or merger of Seacoast or SNB, in which case all of such rights to indemnification and limitations on Liability shall be deemed to so survive and
continue notwithstanding any such liquidation, consolidation or merger. Without limiting the foregoing, in any case in which approval by Seacoast is required to effectuate any indemnification for any director or officer of the Company, Seacoast
shall direct, at the election of the Indemnified Party that the determination of any such approval shall be made by independent counsel mutually agreed upon between Seacoast and the Indemnified Party.
(c) Seacoast, from and after the Effective Time, will directly or indirectly cause the Persons who served as directors or
officers of the Company at or before the Effective Time to be covered by the Companys existing directors and officers liability insurance policy;
provided
,
that Seacoast may substitute therefor policies of at least
the same coverage and amounts containing terms and conditions that are not less advantageous than such policy;
provided further
,
that in no event shall the aggregate premiums applicable to coverage exceed 200% of the current annual
premium paid by the Company (as set forth in
Section 4.15(c) of the Company Disclosure Letter
) for such insurance. Such insurance coverage shall commence at the Effective Time and will be provided for a period of no less than six
(6) years after the Effective Time.
(d) If SBC or SNB or any of their respective successors or assigns shall
consolidate with or merge into any other Person and shall not be the continuing or surviving Person of such consolidation or merger or shall transfer all or substantially all of its assets to any Person, then and in each case, proper provision shall
be made so that the successors and assigns of SBC or SNB, as applicable, as the surviving entities shall assume the obligations set forth in this Section 4.15.
(e) The provisions of this Section 4.15 are intended to be for the benefit of and shall be enforceable by, each
Indemnified Party and his or her heirs and representatives.
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4.16.
Resolution of Certain Matters
.
The Company shall use its reasonable best efforts and take any and all actions (including completing any necessary filings with Regulatory Authorities) to resolve the items set forth on
Section
4.16 of the Seacoast Disclosure
Letter
, all subject to SBCs reasonable satisfaction.
4.17
Claims
Letters
.
Concurrently with the execution and delivery of this Agreement and effective upon the Closing, the Company has caused each director or officer of the Company set forth on
Section
4.17 of the Seacoast
Disclosure Letter
to execute and deliver a Claims Letter in the form attached hereto as
Exhibit B
.
4.18
Restrictive Covenant Agreement
.
Concurrently with the execution and delivery of this Agreement, the Company has caused each director or officer of the Company set forth on
Section
4.18 to the Seacoast Disclosure Letter
to execute and deliver a Restrictive Covenant Agreement in the form attached hereto as
Exhibit C
.
4.19.
Systems Integration; Operating Functions
.
From and after the
date hereof, the Company shall and shall cause its directors, officers and employees to, and shall make all commercially reasonable best efforts (without undue disruption to either business) to cause the Companys data processing consultants
and software providers to, cooperate and assist the Company and Seacoast in connection with an electronic and systems conversion of all applicable data of the Company to the Seacoast systems, including the training of the Company employees during
normal banking hours. Following the date hereof, the Company shall provide Seacoast access to its data files to facilitate the conversion process, including but not limited to, (i) sample data files with data dictionary no later than 30 days
following the date of this Agreement; (ii) a full set of data files, including electronic banking and online bill payment data, for mapping and mock conversion no later than 90 days prior to the targeted conversion date as determined by
Seacoast; (iii) a second full set of data files from which to establish CIS records, deposit shells, electronic banking accounts, bill payment payees and order debit cards no later than 21 days prior to the targeted conversion date; and
(iv) a final set of data files no later than the date of the targeted conversion date. The Company shall cooperate with Seacoast in connection with the planning for the efficient and orderly combination of the parties and the operation of SNB
(including the former operations of Company) after the Merger, and in preparing for the consolidation of appropriate operating functions to be effective at the Effective Time or such later date as Seacoast may decide. The Company shall take any
action Seacoast may reasonably request prior to the Effective Time to facilitate the combination of the operations of the Company with SNB. Without limiting the foregoing, the Company shall provide office space and support services (and other
reasonably requested support and assistance) in connection with the foregoing, and senior officers of the Company and Seacoast shall meet from time to as the Company or Seacoast may reasonably request, to review the financial and operational affairs
of the Company and its Subsidiaries, and the Company shall give due consideration to Seacoasts input on such matters, with the understanding that, notwithstanding any other provision contained in this Agreement, (i) neither SBC nor SNB
shall be permitted to exercise control of the Company prior to the Effective Time, and (ii) the Company shall not be under any obligation to act in a manner that could reasonably be deemed to constitute anti-competitive behavior under federal
or state antitrust Laws.
4.20.
Taxes
.
(a)
Tax Returns
. The Company shareholders, at their sole cost and expense, shall prepare and timely file, or cause to
be prepared and timely filed, all income Tax Returns of the Company and its Subsidiaries for any Taxable Period (or portion thereof) ending on or before the Closing Date (the
Pre-Closing
Tax
Period
), which are filed after the Closing Date. Such Tax Returns shall be prepared in a manner consistent with the prior practices of the Company unless otherwise required by applicable Law, and shall claim a deduction for all Permitted
Expenses. Such Tax Returns shall be submitted by the Company shareholders to Seacoast (together with applicable schedules and statements) at least 45 days prior to the due date (taking into account any extensions) of such Tax Return. If
Seacoast objects to any item on any such Tax Return, it shall, within 15 days after delivery of such Tax Return, notify the Company shareholders in writing that it so objects, specifying with particularity any such item and stating the specific
factual or legal basis for any such objection. If a notice of objection shall be duly delivered, Seacoast and the Company shareholders shall cooperate in good faith and use their reasonable best efforts to resolve such items. If Seacoast and
the Company shareholders are unable to reach
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an agreement within 10 days after receipt by the Company shareholders of such notice of objection, the disputed items shall be resolved by the Tax Referee, who shall resolve such dispute within
20 days and the Tax Return shall be filed to reflect the Tax Referees resolution, which shall be final, conclusive and binding on the parties. Each party shall be responsible for its respective fees and expenses associated with any
dispute, and costs associated with any Tax Referee shall be paid equally by Seacoast, on the one hand, and the Company shareholders, on the other hand. For the avoidance of doubt, Seacoast shall prepare and timely file, or cause to be prepared
and timely filed, all
non-income
Tax Returns for the
Pre-Closing
Tax Period, which are filed after the Closing Date.
(b)
Straddle Tax Period
. Seacoast shall prepare, or cause to be prepared, and timely file, or cause to be timely filed,
all Tax Returns of the Company for any Taxable Period that begins before and ends after the Closing Date (a
Straddle Tax Period
). Seacoast shall permit the Company shareholders to review and comment on any income Tax Return of
Seacoast for any Straddle Period.
(c)
Payment of Taxes
. The Company shareholders shall be responsible for and
shall timely pay, or cause to be timely paid, any Taxes attributable to the
Pre-Closing
Tax Period and that portion of any Straddle Tax Period that ends on the day before the Closing Date (the
Pre-Closing
Period
). In the case of any Taxes that are payable for a Straddle Tax Period, the portion of such Tax which relates to the portion of such Taxable Period ending on the day before the Closing
Date shall (i) in the case of any Taxes other than Taxes based upon or related to income or receipts, be deemed to be the amount of such Tax for the entire Taxable Period multiplied by a fraction the numerator of which is the number of days in
the Taxable Period ending on the day before the Closing Date and the denominator of which is the number of days in the entire Taxable Period, and (ii) in the case of any Tax based upon or related to income or receipts be deemed equal to the
amount which would be payable if the books of the Company were closed and the relevant Taxable Period ended on the day before the Closing Date. Seacoast and the Company agree that the Permitted Expenses will be reported on the Companys final S
corporation tax return and agree not to take a position on any Tax Return that is inconsistent with such treatment. Notwithstanding any other provisions on this Agreement to the contrary, the Company shall take all necessary action to cause the
Permitted Expenses to be paid no later than the day before the Closing Date. Seacoast and the Company agree that all deductions resulting from the termination and
cash-out
of the Company Equity Awards and any
other actions contemplated by Section 1.6 of this Agreement shall be treated as deductible items in the
Pre-Closing
Period pursuant to Proposed Treasury Regulation Section
1.1502-76(b)(1)(ii)(B)(2)
and agree not to take a position on any Tax Return that is inconsistent with such treatment. Notwithstanding any other provision of this Agreement, Seacoast shall have no obligation
(as successor or otherwise) for, and the Company shareholders shall indemnify Seacoast for, any Taxes attributable to the
Pre-Closing
Period.
(d)
Cooperation
. The parties will provide each other with such cooperation and information as they may reasonably
request of each other in preparing or filing any Tax Return, in determining a liability or right of refund, or in conducting any audit or other proceeding, in respect of Taxes attributable to the
Pre-Closing
Period. Seacoast agrees to retain all books and records with respect to Tax matters pertinent to the Company relating to any taxable period beginning before the Closing Date until expiration of the statute of limitations (and any extensions thereof)
of the respective taxable periods.
(e)
Tax Contest
. Seacoast shall promptly provide written notice to the Company
Shareholder Representative of an audit, administrative or judicial proceeding or examination of a
Pre-Closing
Tax Period that may give rise to a Tax liability for the Company shareholders (a
Tax
Claim
). Seacoast shall determine in consultation with the Company Shareholder Representative whether to contest such Tax Claim but in no event shall Seacoast be required to begin or continue a contest of the Tax Claim if, in the reasonable
opinion of Seacoast, such contest would result in the possibility of the imposition of a Lien on the assets of Seacoast or otherwise result in significant adverse consequences to Seacoast. If Seacoast contests a Tax Claim, Seacoast shall
(i) permit the Company Shareholder Representative to participate in such contest, at the expense of the Company shareholders, (ii) keep the Company Shareholder Representative reasonably informed of all proceedings, communications and
correspondence and (iii) make available all relevant documents in connection therewith.
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Seacoast shall not enter into any settlement or compromise of a Tax Claim without the prior written consent of the Company Shareholder Representative, which consent shall not be unreasonably
withheld or delayed. In the case of a Tax Claim relating to or arising from the Letter Ruling Matter; provided that such Tax Claim does not seek criminal penalties against the Company or material equitable or other
non-monetary
remedies against the Company, the Company Shareholder Representative shall have the right, at the expense of the Company shareholders, to participate in and control the conduct of such Tax Claim.
The Company Shareholder Representative shall keep Seacoast reasonably informed of all proceedings, communications and correspondence with respect to any such Tax Claim and make available all relevant documents in connection therewith. The Company
Shareholder Representative shall not enter into any settlement or compromise of a Tax Claim relating to or arising from the Letter Ruling Matter without the prior written consent of Seacoast, which consent shall not be unreasonably withheld or
delayed.
(f)
Closing of the Tax Year
. Subject to the allocation of Taxes attributable to a Straddle Tax Period
provided for in
Section 4.20(c)
, the Company and Seacoast shall make (or cause any of their respective affiliates to make) any election available or required under Law to treat the Closing Date as the end of a relevant Taxable Period.
(g)
2016 Tax Distributions
. Prior to the date hereof, the Company shall be permitted to make a Tax distribution in
the aggregate amount of $2.52 million for its shareholders to satisfy their respective Tax obligations for the Taxable Period ended December 31, 2016. The Tax distribution shall be equal to the product of the taxable income for such
Taxable Period, as reflected on the Companys federal income tax return for such period, multiplied by the Applicable Percentage.
(h)
Submission of Letter Ruling Request
. As promptly as practicable, but in no event later than twenty
(20) Business Days after the execution of this Agreement, the Company shall request a letter ruling (the
Letter Ruling Request
) pursuant to Treasury Regulation
1.1362-4(c)
seeking
relief for (i) an invalid S corporation election by the Company as a result of the failure to properly execute the Form 2553 and obtain the consents of all the shareholders of the Company, and (ii) an inadvertent termination of the
Companys S corporation election as a result of certain shareholders failing to timely file elections pursuant to Section 1361 of the Internal Revenue Code electing to be treated as an Electing Small Business Trust or a Qualified
Subchapter S Trust, as the case may be (the
Letter Ruling Matter
). No later than five (5) Business Days prior to the submission of the Letter Ruling Request, the Company shall submit a draft of Letter Ruling Request to
Seacoast for review and comment. The Company shall incorporate Seacoasts reasonable comments, if any, into the Letter Ruling Request.
(i) The provisions of this Section 4.20 are intended to be for the benefit of the Companys shareholders and shall
be enforceable by, the Company Shareholder Representative and his or her heirs and representatives.
4.21
Closing Payments
.
Immediately prior to the Closing, the Company shall wire, in immediately payable funds, the sums due to the persons listed on
Section
4.21 of the Seacoast Disclosure Letter
.
4.22
Exchange with Voting Trust
. Within twenty (20) Business Days of the
date hereof, the Voting Trust shall (i) distribute all of the shares of Company Common Stock held by it to the owners of the interests in the Voting Trust in proportion to the current ownership of the Voting Trust and (ii) be terminated
with respect to the Company Common Stock, subject to reversion and
re-establishment
of the Voting Trust in the event that the Merger is not consummated.
4.23
Tax Insurance
. After the date hereof and continuing through the term of
the Tax Insurance Policy, each of the Company, the Companys shareholders and Seacoast shall cooperate and comply with the terms of the Tax Insurance Policy to ensure that the insured parties are in compliance with their obligations therein and
to maximize the availability of any recovery that may be available thereunder. The Company shall be responsible for and pay any costs and expenses related to such insurance policy incurred between the date hereof and the Closing, including all
premiums, underwriting fees, taxes and other amounts due to bind such policy, and such costs and expenses shall not reduce the Aggregate Merger Consideration. Each of Seacoast, the Companys
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shareholders and the Company covenants and agrees to not cancel, redeem or take any action that would adversely affect the terms and conditions of the Tax Insurance Policy or any recovery
thereunder. Nothing in this Section 4.23 shall prevent Seacoast from seeking indemnification from the Companys shareholders pursuant to Section 7.2(b) to the extent that the insurer denies coverage under the Tax Insurance Policy with
respect to the Taxes arising out of, or resulting from, the Letter Ruling Matter; provided, that the total amount of indemnification under Section 7.2(b) combined with the total amount of Tax Insurance Policy proceeds under this Section 4.23
shall not exceed $10.0 million in the aggregate.
Prior to the Closing, the Company shall take all commercially
reasonable actions necessary to obtain and bind, and shall obtain and bind, the Tax Insurance Policy, which shall contain the same terms and conditions as set forth in
Exhibit D
except as consented to by the Parties in writing;
provided
that, in all events, the Tax Insurance Policy shall provide that (i) the insurer shall have no, and shall waive and not pursue any and all subrogation rights against the shareholders of the Company and their respective
affiliates and (ii) the shareholders of the Company and their respective affiliates are third party beneficiaries of such waiver.
Following the Closing, the Company and Seacoast shall not and shall cause their respective affiliates not to, amend, modify or
otherwise change, terminate or waive any provision of the Tax Insurance Policy without the Company Shareholder Representatives prior written consent (i) with respect to the waiver of subrogation set forth therein, (ii) in any manner
that would be reasonably likely to increase or expand the ability or rights of the insurer thereunder to bring a claim against, or otherwise seek recourse from the shareholders of the Company, (iii) in any manner that would be reasonably likely
to reduce the Companys or Seacoasts (or its affiliates) access to the Tax Insurance Policys coverage or cause any coverage provided under the Tax Insurance Policy to be more difficult for the Company or Seacoast (or its
affiliates) to access or (iv) that would result in an increased retention or deductible under the Tax Insurance Policy.
4.24
Approval of 280G Payments
. If the execution of this Agreement and the
consummation of the transactions contemplated hereby would entitle any Person who is a disqualified individual to a parachute payment (as such terms are defined in Section 280G of the Internal Revenue Code and the regulations
promulgated thereunder) absent approval by the shareholders of the Company, then, at least three (3) Business Days prior to the Closing Date, the Company will take all necessary actions (including obtaining any required waivers or consents from
each disqualified individual) to submit to a shareholder vote, in a manner that satisfies the stockholder approval requirements for exemption under Section 280G(b)(5)(A)(ii) of the Internal Revenue Code and the regulations promulgated thereunder,
the right of each disqualified individual to receive or retain, as applicable, any payments and benefits to the extent necessary so that no payment or benefit received by such disqualified person shall be deemed a parachute payment. Such vote shall
establish the disqualified individuals right to the payment or benefits. The Company and the shareholders will be responsible for all liabilities and obligations related to the matters described in this
Section
4.24
,
including any claims by disqualified individuals that they are entitled to payment or reimbursement for any related excise taxes. The Company will provide to Seacoast copies of any waivers, consents, and shareholder information statements or
disclosures relating to Section 280G and the shareholder vote described in this Section 4.24, a reasonable period of time before disseminating such materials to the disqualified individuals and the Companys shareholders, and will work
with Seacoast in good faith regarding the inclusion of any comments provided by Seacoast thereto.
ARTICLE 5
CONDITIONS PRECEDENT TO OBLIGATIONS TO CONSUMMATE
5.1
Conditions to Obligations of Each Party
.
The respective
obligations of each Party to perform this Agreement and to consummate the Merger and the other transactions contemplated hereby are subject to the satisfaction of the following conditions, unless waived by each Party pursuant to Section 7.7:
(a)
The Company Shareholder Approval
. The Company shall have obtained the Company Shareholder Approval.
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(b)
Regulatory Approvals
. All Regulatory Consents required by law to
consummate the transactions contemplated by this Agreement (the
Required Consents
) shall (i) have been obtained or made and be in full force and effect and all waiting periods required by Law shall have expired, and
(ii) not be subject to any condition or consequence that would, after the Effective Time, have a Material Adverse Effect on Seacoast or any of its Subsidiaries, including the Company.
(c)
No Orders or Restraints; Illegality
. No Order issued by any Governmental Authority (whether temporary, preliminary,
or permanent) preventing the consummation of the Merger shall be in effect and no Law or Order shall have been enacted, entered, promulgated or enforced by any Governmental Authority that prohibits, restrains or makes illegal the consummation of the
Merger.
(d)
Registration Statement
. The Registration Statement shall be effective under the 1933 Act, no stop
orders suspending the effectiveness of the Registration Statement shall have been issued, and no action, suit, proceeding, or investigation by the SEC to suspend the effectiveness thereof shall have been initiated and be continuing.
(e)
Listing of SBC Common Stock
. The shares of SBC Common Stock to be issued to the holders of Company Common Stock
upon consummation of the Merger shall have been approved for listing on NASDAQ.
5.2
Conditions to Obligations of Seacoast
.
The obligations of Seacoast to perform this Agreement and consummate the Merger and the other transactions contemplated hereby are subject to the satisfaction of the following conditions,
unless waived by Seacoast pursuant to Section 7.7:
(a)
Representations and Warranties
. The representations
and warranties of the Company set forth in this Agreement, after giving effect to Sections 3.1 and 3.2, shall be true and correct as of the date of this Agreement and as of the Closing Date as though made at and as of the Closing Date (except
that representations and warranties that by their terms speak specifically as of the date of this Agreement or some other date shall be true and correct as of such date), and Seacoast shall have received certificates, dated the Closing Date, signed
on behalf of the Company by the chief executive officer and the chief financial officer of the Company, to such effect.
(b)
Performance of Agreements and Covenants
. Each and all of the agreements and covenants of the Company to be
performed and complied with pursuant to this Agreement prior to the Effective Time shall have been duly performed and complied with in all material respects and Seacoast shall have received certificates, dated the Closing Date, signed on behalf of
the Company by the chief executive officer and the chief financial officer of the Company, to such effect.
(c)
Corporate Authorization
. Seacoast shall have received from the Company (i) certified resolutions of its Board of Directors and shareholders authorizing the execution and delivery of this Agreement and the consummation of the transactions
contemplated hereby; (ii) a certificate as to the incumbency and signatures of officers authorized to execute this Agreement; and (iii) certificates of good standing, dated not more than three Business Days before the Closing Date, from
the Secretary of State of the State of Florida.
(d)
Consents
. The Company shall have obtained all Consents
required as a result of the transactions contemplated by this Agreement pursuant to the Contracts set forth in Section 3.3(b) of the Company Disclosure Letter.
(e)
Material Adverse Effect
. Since the date hereof, there shall not have occurred any fact, circumstance or event,
individually or taken together with all other facts, circumstances or events that has had or is reasonably likely to have a Material Adverse Effect on the Company.
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(f)
Tax Opinions
. Seacoast shall have received a written opinion from
Alston & Bird LLP in a form reasonably satisfactory to it, dated the date of the Effective Time, substantially to the effect that the Merger will constitute a reorganization within the meaning of Section 368(a) of the Internal
Revenue Code, and each of SBC and the Company will be a party to that reorganization within the meaning of Section 368(a) of the Internal Revenue Code. In rendering such opinion, such counsel shall be entitled to rely upon representations of
officers of Seacoast and the Company reasonably satisfactory in form and substance to such counsel.
(g)
Claims
Letters
. Seacoast shall have received from the Persons listed in Section 4.17 of the Seacoast Disclosure Letter an executed written agreement in substantially the form of
Exhibit
B
.
(h)
Restrictive Covenant Agreement
. Each of the Persons as set forth in Section 4.18 of the Seacoast Disclosure
Letter shall have entered into the Restrictive Covenant Agreement in substantially the form of
Exhibit C
.
(i)
The Companys Consolidated Tangible Shareholders Equity
. The Companys Consolidated Tangible Shareholders Equity as of the close of business on the fifth Business Day prior to the Closing Date shall be an amount not less
than $36.5 million and the Companys general allowance for loan and lease losses shall be an amount not less than 0.75% of total loans and leases outstanding.
(j)
Termination of the Company Equity Awards
. All outstanding Company Equity Awards shall have been terminated and
cashed out as provided in Section 1.6, and the Companys Board of Directors and shareholders shall have taken all action necessary to terminate the Company Stock Plans effective prior to the Effective Time. No Company Equity Awards,
whether vested or unvested, or obligations to issue Company Equity Awards, shall be outstanding as of the Effective Time.
(k)
Section 280G
. The Company shall have taken all necessary actions as provided in Section 4.24, and, to the
extent required by Section 4.24, the shareholders of the Company shall have voted, in a manner that satisfies the stockholder approval requirements for exemption under Section 280G(b)(5)(A)(ii) of the Internal Revenue Code and the regulations
promulgated thereunder, the right of each disqualified individual to receive or retain, as applicable, any payments and benefits to the extent necessary so that no payment or benefit received by such disqualified person shall be deemed a parachute
payment (as such terms are defined in Section 280G of the Internal Revenue Code and the regulations promulgated thereunder).
(l)
Non-Foreign
Affidavit.
Delivery to Seacoast of an affidavit, in the form
provided by Treasury Regulation Section
1.1445-2(b)(2),
from each Person who is a shareholder of the Company on the Closing Date that each such shareholder is not a foreign person for purposes of
Section 1445 of the Internal Revenue Code.
(m)
Completion of Section
4.16 Items
. Each of
the items set forth in Section 4.16 of the Seacoast Disclosure Letter shall have been completed and finalized prior to the Effective Time, all to the reasonable satisfaction of Seacoast.
5.3
Conditions to Obligations of the Company
.
The obligations of the
Company to perform this Agreement and consummate the Merger and the other transactions contemplated hereby are subject to the satisfaction of the following conditions, unless waived by the Company pursuant to Section 7.7:
(a)
Representations and Warranties
. The representations and warranties of Seacoast set forth in this Agreement, after
giving effect to Sections 3.1 and 3.2, shall be true and correct as of the date of this Agreement and as of the Closing Date as though made at and as of the Closing Date (except that representations and warranties that by their terms speak
specifically as of the date of this Agreement or some other date shall be true and correct as of such date) and the Company shall have received a certificate, dated the Closing Date, signed on behalf of Seacoast by a duly authorized officer of
Seacoast, to such effect.
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(b)
Performance of Agreements and Covenants
. Each and all of the
agreements and covenants of Seacoast to be performed and complied with pursuant to this Agreement prior to the Effective Time shall have been duly performed and complied with in all material respects and the Company shall have received a
certificate, dated the Closing Date, signed on behalf of Seacoast by a duly authorized officer of Seacoast, to such effect.
(c)
Tax Opinion
. The Company shall have received a written opinion from Holland & Knight LLP in a form
reasonably satisfactory to it, dated the date of the Effective Time, substantially to the effect that, (i) the Merger will constitute a reorganization within the meaning of Section 368(a) of the Internal Revenue Code, (ii) each of SBC
and the Company will be a party to that reorganization within the meaning of Section 368(a) of the Internal Revenue Code, (iii) no gain or loss will be recognized by holders of Company Common Stock who exchange all of their Company Common
Stock solely for SBC Common Stock pursuant to the Merger (except with respect to any cash received), (iv) that basis in the shares of SBC Common Stock received in the Merger will consist of the basis for the shares of Company Common Stock exchanged
therefor (reduced by an amount of any cash received), and (v) the holding period for the shares of SBC Common Stock received in the Merger will include the holding period for the shares of Company Common Stock exchanged therefor. In rendering
such opinion, Holland & Knight LLP shall be entitled to rely upon representations of officers of Seacoast and the Company reasonably satisfactory in form and substance to it.
(d)
Material Adverse Effect
. Since the date hereof, there shall not have occurred any fact, circumstance or even,
individually or taken together with all other facts, circumstances or events that has had or is reasonably likely to have a Material Adverse Effect on Seacoast.
(e)
Corporate Authorization
. The Company shall have received from Seacoast: (i) certified resolutions of its Board
of Directors authorizing the execution and delivery of this Agreement and the consummation of the transactions contemplated hereby and thereby; (ii) a certificate as to the incumbency and signatures of officers authorized to execute this
Agreement; and (iii) certificates of good standings, dated not more the three (3) Business Days before the Closing Date, from the Secretary of State of the State of Florida and the FDIC.
ARTICLE 6
TERMINATION
6.1
Termination
.
Notwithstanding any other provision of this
Agreement, and notwithstanding the Company Shareholder Approval, this Agreement may be terminated and the Merger abandoned at any time prior to the Effective Time:
(a) By mutual consent of the Board of Directors of the Company and the Board of Directors or Executive Committee of the Board
of Directors of SBC; or
(b) By the Board of Directors of either Party in the event of a breach of any representation,
warranty, covenant or agreement contained in this Agreement on the part of the other Party, which breach would result in, if occurring or continuing on the Closing Date, the failure of the conditions to the terminating Partys obligations set
forth in Sections 5.2 or 5.3, as the case dictates, and that cannot be or has not been cured within 30 days after the giving of written notice to the breaching Party of such breach, provided that the right to effect such cure shall not extend
beyond the date set forth in subparagraph (d) below; or
(c) By the Board of Directors of either Party in the event
that (i) any Regulatory Consent required to be obtained from any Governmental Authority has been denied by final
non-appealable
action of such Governmental Authority, or (ii) the Company Shareholder
Approval has not been obtained by reason of the failure to obtain the required vote at the Company shareholders meeting where this Agreement was presented to such shareholders for approval and voted upon; or
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(d) By the Board of Directors of either Party in the event that the Merger has
not been consummated by November 30, 2017, if the failure to consummate the transactions contemplated hereby on or before such date is not caused by any breach of this Agreement by the Party electing to terminate pursuant to this
Section 6.1(d); or
(e) By the Board of Directors of SBC in the event that (i) the Company has withdrawn,
qualified or modified the Company Directors Recommendation in a manner adverse to Seacoast or shall have resolved to do any of the foregoing, (ii) the Company has failed to substantially comply with its obligations under Sections 4.5 or
4.12, or (iii) the Board of Directors of the Company has recommended, endorsed, accepted or agreed to an Acquisition Proposal; or
(f) By the Board of Directors of the Company in the event that (i) the Board of Directors of the Company has determined
in accordance with Section 4.12 that a Superior Proposal has been made with respect to it and has not been withdrawn, and (ii) neither the Company nor any of its Representatives has failed to comply in all material respects with
Section 4.12; or
(g) By the Board of Directors of the Company, if the Companys Board of Directors so
determines at any time during the five (5) day period commencing on the Determination Date, if, and only if, the Seacoast Closing Price is less than $19.00; subject, however, to the following sentences. If the Company elects to exercise its
termination right under this Section 6.1(g), it shall give prompt written notice thereof to SBC. Within five (5) Business Days following its receipt of such notice, Seacoast shall have the option to increase the Cash Consideration such that the
aggregate value of the Aggregate Merger Consideration equals $26.93 per share of Company Common Stock (including Company Equity Awards);
provided that
in no event shall: (A) the Cash Consideration be less than $6.33 per share; and
(B) the number of shares of SBC Common Stock to be received by the Companys shareholders be less than the number of shares that the Company shareholders would have received if the Seacoast Closing Price had been $19.00;
provided
further
that the Cash Consideration after any such increase as set forth in this Section 6.1(g) shall not exceed thirty percent (30%) of the Aggregate Merger Consideration. If Seacoast so elects, it shall give written notice to the Company of
such election and the amount of increase in the Cash Consideration within the five (5) Business Day period following its receipt of notice of termination from the Company, whereupon no termination shall have occurred pursuant to this Section
6.1(g) and this Agreement shall remain in full force and effect in accordance with its terms (except that the Cash Consideration and the corresponding total Merger Consideration shall have been so modified); or
(h) By the Board of Directors of Seacoast, if the Seacoasts Board of Directors so determines at any time during the five
(5) day period commencing on the Determination Date, if, and only if, the Seacoast Closing Price is less than $19.00; subject, however, to the following sentences. If Seacoast elects to exercise its termination right under this Section 6.1(h),
it shall give prompt written notice thereof to the Company. If Seacoast is to proceed with the Merger, it shall give prompt written notice thereof to the Company and within five (5) Business Days following the delivery of such notice, Seacoast
shall adjust either the Cash Consideration or the Exchange Ratio such that the aggregate value of the Aggregate Merger Consideration equals $26.93 per share of Company Common Stock (including Company Equity Awards);
provided that
in no event
shall: (A) the Cash Consideration be less than $6.33 per share; and (B) the number of shares of SBC Common Stock to be received by the Companys shareholders be less than the number of shares that the Company shareholders would have
received if the Seacoast Closing Price had been $19.00;
provided further
that the Cash Consideration after any such increase as set forth in this Section 6.1(h) shall not exceed thirty percent (30%) of the Aggregate Merger Consideration. If
Seacoast elects to proceed with the Merger by adjusting the Cash Consideration or the Exchange Ratio, accordingly, within the five (5) Business Day period following its delivery of notice to the Company, no termination shall have occurred
pursuant to this Section 6.1(h). This Agreement shall remain in full force and effect in accordance with its terms (except that the Stock Consideration and/or Cash Consideration and the corresponding Aggregate Merger Consideration shall have been so
modified). Notwithstanding the foregoing, if the increase in SBCs Common Stock price is the result of the announcement of a signed definitive agreement to sell SBC, then SBCs right to terminate this Agreement or adjust the Exchange Ratio
or Cash Consideration will not apply. For illustrative purposes, attached to
Section 7.1(a) of the Seacoast Disclosure Letter
is an example of the price mechanisms and adjustments set forth herein.
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(i) By the Board of Directors of SBC if holders of more than five percent (5.0%)
in the aggregate of the outstanding shares of Company Common Stock shall have voted such shares against this Agreement or the Merger at any meeting called for the purpose of voting thereon and shall have given notice of their intention to exercise
their dissenters rights in accordance with the FBCA.
6.2
Effect of
Termination
.
In the event of the termination and abandonment of this Agreement pursuant to Section 6.1, this Agreement shall become void and have no effect, and none of Seacoast, the Company, any of their respective Subsidiaries,
or any of the officers or directors of any of them, shall have any Liability of any nature whatsoever hereunder or in conjunction with the transactions contemplated hereby, except that (i) the provisions of Section 4.10(b), Article 6 and
Article 7 shall survive any such termination and abandonment, and (ii) a termination of this Agreement shall not relieve the breaching Party from Liability for an uncured willful breach of a representation, warranty, covenant, or agreement
of such Party contained in this Agreement.
ARTICLE 7
MISCELLANEOUS
7.1
Definitions
.
(a) Except as otherwise provided herein, the capitalized terms set forth below shall have the following meanings:
1933 Act
shall mean the Securities Act of 1933, as amended, and the rules and regulations
thereunder.
1934 Act
shall mean the Securities Exchange Act of 1934, as amended, and
the rules and regulations thereunder.
Acquisition Proposal
shall mean, other than the
transactions contemplated by this Agreement, any offer, proposal or inquiry relating to, or any third party indication of interest in, (i) any acquisition or purchase, direct or indirect, of 25% or more of the consolidated assets of the Company
or 25% or more of any class of equity or voting securities of the Company, (ii) any tender offer (including a self-tender offer) or exchange offer that, if consummated, would result in or would reasonably be expected to result in such third
party beneficially owning 25% or more of any class of equity or voting securities of the Company, (iii) a merger, consolidation, share exchange, business combination, reorganization, recapitalization, liquidation, dissolution or other similar
transaction involving the Company, or (iv) any other transaction the consummation of which could reasonably be expected to impede, interfere with, prevent or materially delay the Merger or that could reasonably be expected to dilute materially
the benefits to Seacoast of the transactions contemplated hereby.
Affiliate
of a Person
shall mean (i) any other Person directly, or indirectly through one or more intermediaries, controlling, controlled by or under common control with such Person or (ii) any director, partner or officer of such Person or, for any Person that
is a limited liability company, any manager or managing member thereof. For purposes of this definition, control (and its derivatives) shall mean the possession, directly or indirectly, of the power to direct or cause the direction of
the management and policies of a Person, whether through ownership of equity, voting or other interests, as trustee or executor, by contract or otherwise.
Applicable Percentage
shall mean the tax rate of the Companys shareholder with the
highest marginal individual combined effective federal, state and local income tax rate as of the Closing Date.
Benefit Plan
shall mean any employee benefit plan (as that term is defined in
Section 3(3) of ERISA), and the Company Stock Plan, and any other employee benefit plan, policy, or agreement, whether or not covered by ERISA, and any pension, retirement, profit-sharing, deferred compensation, equity compensation, employment,
stock purchase,
gross-up,
retention, incentive compensation, employee stock ownership, severance, vacation, bonus, or deferred compensation plan, policy, or
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arrangement, any medical, vision, dental, or other written health plan, any life insurance plan, fringe benefit plan, and any other employee program or agreement, whether formal or informal, that
is entered into, maintained by, sponsored in whole or in part by, or contributed to by the Company or any Subsidiaries thereof, or under which the Company or any Subsidiaries thereof could have any obligation or Liability, whether actual or
contingent, with respect to any Company employee.
BHC Act
shall mean the federal Bank
Holding Company Act of 1956, as amended, and rules and regulations thereunder.
Business
Day
shall mean any day that NASDAQ is normally open for trading for a full day and that is not a Saturday, a Sunday or a day on which banks in New York, New York are authorized or required to close for regular banking business.
Company Common Stock
shall mean the $5.00 par value per share common stock of the Company.
Company Equity Award
shall mean an award, grant, unit, option to purchase, or other
right to receive a share or shares of Company Common Stock and shall specifically include any restricted stock awards.
Company Shareholder Approval
shall mean
the approval of this Agreement by the holders
of at least a majority of the outstanding shares of Company Common Stock.
Company Shareholder
Representative
shall mean Jim Springer.
Company Stock Plan
shall mean any
equity compensation plan, stock purchase plan, incentive compensation plan, or any other Benefit Plan under which the Company Equity Awards have been or may be issued.
Confidentiality Agreement
shall mean that certain Confidentiality Agreement, dated
February 6, 2015, by and between Seacoast and the Company.
Consent
shall mean any
consent, approval, authorization, clearance, exemption, waiver, or similar affirmation by any Person pursuant to any Contract, Law, Order, or Permit.
Consolidated Tangible Shareholders Equity
shall mean as to a Party as of the close of
business on the fifth Business Day prior to the Closing Date (the
Measuring Date
), the consolidated shareholders equity of such Party as set forth on its balance sheet on the Measuring Date calculated in accordance with GAAP
and including the recognition of or accrual for all Permitted Expenses paid or incurred, or projected to be paid or incurred, in connection with this Agreement and the transactions contemplated by it, excluding (i) any change related to
recapture of any of the allowance for loan and lease losses following the date of this Agreement and receipt of any related regulatory approval, (ii) all intangible assets, and minus any unrealized gains or plus any unrealized losses (as the
case may be) in such Partys Subsidiaries securities portfolio due to
mark-to-market
adjustments as of the Measuring Date. The calculation of Consolidated
Tangible Shareholders Equity shall be delivered by each Party to the other Party, accompanied by appropriate supporting detail, no later than the close of business on the fourth Business Day preceding the Closing Date, and such calculation
shall be subject to verification and approval by the other Party, which approval shall not be unreasonably withheld.
Contract
shall mean any written or oral agreement, arrangement, commitment, contract,
indenture, instrument, lease, understanding, note, bond, license, mortgage, deed of trust or undertaking of any kind or character to which any Person is a party or that is binding on any Person or its capital stock, assets, or business.
Default
shall mean (i) any breach or violation of or default under any Contract, Law,
Order, or Permit, (ii) any occurrence of any event that with the passage of time or the giving of notice or both would constitute a breach or violation of or default under any Contract, Law, Order, or Permit, or (iii) any occurrence of any
event that with or without the passage of time or the giving of notice would give rise to a right to terminate or revoke, change the current terms of, or renegotiate, or to accelerate, increase, or impose any Liability under, any Contract, Law,
Order, or Permit.
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Determination Date
means the later of
(i) the date on which the last Required Consent is obtained without regard to any requisite waiting period or (ii) the date on which the Company Shareholder Approval is obtained.
Dissenting Shares
shall mean shares of Company Common Stock that are owned by shareholders
that properly demand and exercise their dissenters rights and who complies in all respects with the provisions of Section 607.1301 to 607.1333 of the FBCA.
Environmental Laws
shall mean all Laws relating to pollution or protection of human health
or the environment (including ambient air, surface water, ground water, land surface, or subsurface strata) and which are administered, interpreted, or enforced by the United States Environmental Protection Agency and state and local agencies with
jurisdiction over, and including common Law in respect of, pollution or protection of the environment, including the Comprehensive Environmental Response, Compensation and Liability Act, as amended, the Resource Conservation and Recovery Act, as
amended, and other Laws relating to emissions, discharges, releases, or threatened releases of any Hazardous Material, or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport, or handling of
any Hazardous Material, including all requirements for permits, licenses and other authorizations that may be required.
ERISA Affiliate
of any Person means any entity that is, or at any relevant time was, a
member of (i) a controlled group of corporations (as defined in Section 414(b) of the Internal Revenue Code), (ii) a group of trades or businesses under common control (as defined in Section 414(c) of the Internal Revenue Code)
or (iii) an affiliated service group (as defined under Section 414(m) of the Internal Revenue Code or the regulations under Section 414(o) of the Internal Revenue Code) with such Person.
ERISA Plan
shall mean any Benefit Plan that is an employee welfare benefit plan,
as that term is defined in Section 3(l) of ERISA, or an employee pension benefit plan, as that term is defined in Section 3(2) of ERISA.
Exchange Ratio
shall mean 0.9809, which shall remain fixed if the Seacoast Closing Price is
between $22.75 and $21.00. However, if the Seacoast Closing Price is (i) greater than $22.75, then the Exchange Ratio will equal the product of (A) a quotient, the numerator of which is equal to $28.65, and the denominator of which is the
Seacoast Closing Price, (B) multiplied by 0.7789; or (ii) less than $21.00 but greater than $19.00, then Seacoast shall have the option of adjusting the Exchange Ratio or the Cash Consideration so that the Aggregate Merger Consideration is
$26.93 per share of Company Common Stock. If under scenario (ii), Seacoast elects to adjust the Cash Consideration then the Exchange Ratio remains 0.9809; however, if Seacoast elects to instead increase the Stock Consideration then the Exchange
Ratio will equal the product of (A) a quotient, the numerator of which is equal to $26.93, and the denominator of which is the Seacoast Closing Price, (B) multiplied by 0.7648. The Exchange Ratio may be subject to further adjustment
pursuant to Section 6.1(g) and 6.1(h), to the extent that the Seacoast Closing Price is less than $19.00. For illustrative purposes, attached to
Section 7.1(a) of the Seacoast Disclosure Letter
is an example of the price mechanisms and
adjustments set forth herein.
Exhibits
A through D, inclusive, shall mean the Exhibits
so marked, copies of which are attached to this Agreement. Such Exhibits are hereby incorporated by reference herein and made a part hereof, and may be referred to in this Agreement and any other related instrument or document without being attached
hereto.
Facilities
shall mean all buildings and improvements on the Property of any
Person.
FBCA
shall mean the Florida Business Corporation Act.
FDIC
shall mean the Federal Deposit Insurance Corporation.
FINRA
shall mean the Financial Industry Regulatory Authority.
Federal Reserve Board
shall mean the Board of Governors of the Federal Reserve System.
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Financial Statements
shall mean (i) the
consolidated balance sheets (including related notes and schedules, if any) of a Party and its Subsidiaries as of December 31, 2015 and 2016, and the related consolidated statements of operations, cash flows (as to annual financial statements
only), and shareholders equity and comprehensive income (loss) (including related notes and schedules, if any) for each of the three years ended December 31, 2014, 2015 and 2016, as delivered by such party to the other Party or as filed
or to be filed by such Party in its SEC Reports, and (ii) the consolidated balance sheets of such Party and its Subsidiaries (including related notes and schedules, if any), and related statements of operations, cash flows (as to annual
financial statements only), and shareholders equity and comprehensive income (loss) (including related notes and schedules, if any) filed with respect to periods ended subsequent to December 31, 2016.
GAAP
shall mean accounting principles generally accepted in the United States of America,
consistently applied during the periods involved.
Governmental Authority
shall mean
each Regulatory Authority and any other domestic or foreign court, administrative agency, commission or other governmental authority or instrumentality (including the staff thereof), or any industry self-regulatory authority (including the staff
thereof).
Hazardous Material
shall mean (i) any hazardous substance, hazardous
material, hazardous waste, regulated substance, or toxic substance (as those terms are defined by any applicable Environmental Laws), and (ii) any chemicals, pollutants, contaminants, petroleum, petroleum products that are or become regulated
under any applicable local, state, or federal Law (and specifically shall include asbestos requiring abatement, removal, or encapsulation pursuant to the requirements of governmental authorities and any polychlorinated biphenyls).
Intellectual Property
shall mean (i) any patents, copyrights, trademarks, service
marks, mask works or similar rights throughout the world, and applications or registrations for any of the foregoing, (ii) any proprietary interest, whether registered or unregistered, in
know-how,
copyrights, trade secrets, database rights, data in databases, website content, inventions, invention disclosures or applications, software (including source and object code), operating and manufacturing procedures, designs, specifications and the
like, (iii) any proprietary interest in any similar intangible asset of a technical, scientific or creative nature, including slogans, logos and the like and (iv) any proprietary interest in or to any documents or other tangible media
containing any of the foregoing.
Internal Revenue Code
shall mean the Internal Revenue
Code of 1986, as amended, any successor statute thereto, and the rules and regulations thereunder.
Knowledge
of any Party or
known to
a Party and any other phrases of
similar import means, with respect to any matter in question relating to a Party, if any of the Chairman of the Board, Chief Executive Officer, President, Chief Operating Officer, Chief Financial Officer or General Counsel of such Party have actual
knowledge of such matter, after due inquiry of their direct subordinates who would be likely to have knowledge of such matter.
Law
shall mean any code, law (including any rule of common law), ordinance, regulation,
rule, or statute applicable to a Person or its assets, Liabilities, or business, including those promulgated, interpreted, or enforced by any Governmental Authority.
Letter Ruling Request
has the meaning set forth in
Section 4.20(h)
.
Liability
shall mean any direct or indirect, primary or secondary, liability, indebtedness,
obligation, penalty, cost, or expense (including costs of investigation, collection, and defense), claim, deficiency, or guaranty of any type, whether accrued, absolute or contingent, liquidated or unliquidated, matured or unmatured, or otherwise.
Lien
shall mean any mortgage, pledge, reservation, restriction (other than a
restriction on transfers arising under the Securities Laws), security interest, lien, or encumbrance of any nature whatsoever of, on, or with respect to any property or property interest, other than Liens for property Taxes not yet due and payable.
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Litigation
shall mean any action, arbitration,
cause of action, claim, complaint, criminal prosecution, demand letter, governmental or other examination or investigation, hearing, inquiry, administrative or other proceeding, or notice (written or oral) by any Person alleging potential Liability,
but shall not include claims of entitlement under any Benefit Plans that are made or received in the ordinary course of business.
NASDAQ
shall mean the National Market System of The NASDAQ Stock Market.
OCC
shall mean the Office of the Comptroller of the Currency.
Order
shall mean any administrative decision or award, decree, injunction, judgment, order,
quasi-judicial decision or award, ruling, or writ of any federal, state, local, or foreign or other court, arbitrator, mediator, tribunal, administrative agency, or Governmental Authority.
Organizational Documents
shall mean
the articles of incorporation, certificate of
incorporation, charter, bylaws or other similar governing instruments, in each case as amended as of the date specified, of any Person.
Party
shall mean Seacoast, on the one hand, or the Company, on the other hand, and
Parties
shall mean Seacoast and the Company.
Permit
shall mean any
federal, state, local, and foreign governmental approval, authorization, certificate, easement, filing, franchise, license, or permit from Governmental Authorities that are required for the operation of the businesses of a Person or its
Subsidiaries.
Permitted Expenses
shall mean the reasonable expenses of the Company
incurred in connection with the Merger (including fees and expenses of attorneys, accountants or other consultants) as set forth in
Section 7.1(b) of the Seacoast Disclosure Letter
.
Permitted Liens
shall mean (i) Liens for current Taxes and assessment not yet past due
or the amount or validity of which is being contested in good faith by appropriate proceedings, (ii) mechanics, workmens, repairmans, warehousemens and carriers Liens arising in the ordinary course of business of
the Company consistent with past practice, or (iii) restrictions on transfers under applicable securities Laws.
Person
shall mean any natural person or any legal, commercial, or governmental entity,
including, a corporation, general partnership, joint venture, limited partnership, limited liability company, trust, business association, or person acting in a representative capacity, as well as any syndicate or group that would be deemed to be a
person under Section 13(d)(3) of the 1934 Act.
Pre-Closing
Period
shall have the meaning as set
forth in Section 4.20(c).
Pre-Closing
Tax
Period
shall have the meaning as set forth in Section 4.20(a)(i).
Property
shall mean all real property leased or owned by any Person and its Subsidiaries, either currently or in the past.
Proxy Statement/Prospectus
shall mean the proxy statement and other proxy solicitation
materials of the Company and the prospectus of SBC constituting a part of the Registration Statement.
Registration Statement
shall mean the Registration Statement on Form
S-4,
or other appropriate form, including any
pre-effective
or post-effective amendments or supplements thereto, filed with the SEC by SBC under the 1933 Act with respect to
the shares of SBC Common Stock to be issued to the shareholders of the Company in connection with the transactions contemplated by this Agreement.
Regulatory Authorities
shall mean, collectively, the Federal Trade Commission, the United
States Department of Justice, the Federal Reserve Board, the OCC, the FDIC, the Consumer Financial Protection Bureau, the Internal Revenue Service, NASDAQ, all federal and state regulatory agencies having jurisdiction over the Parties and their
respective Subsidiaries, FINRA, and the SEC (including, in each case, the staff thereof).
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Representative
shall mean any investment
banker, financial advisor, attorney, accountant, consultant, agent or other representative of a Person.
Rights
shall mean, with respect to any Person, securities, or obligations convertible into
or exercisable for, or giving any other Person any right to subscribe for or acquire, or any options, calls, restricted stock, deferred stock awards, stock units, phantom awards, dividend equivalents, or commitments relating to, or any stock
appreciation right or other instrument the value of which is determined in whole or in part by reference to the market price or value of, shares of capital stock of such Person, whether vested or unvested or exercisable or unexercisable, and shall
include the Company Equity Awards.
SBC Common Stock
shall mean the $0.10 par value per
share common stock of SBC.
SEC
shall mean the United States Securities and Exchange
Commission or any successor thereto.
SEC Reports
shall mean all forms, proxy
statements, registration statements, reports, schedules, and other documents filed, or required to be filed, by a Party or any of its Subsidiaries with the SEC.
Seacoast Closing Price
shall mean the average of the VWAP for the ten (10) Trading Days
ending on the Trading Day immediately prior to the Determination Date.
Securities Laws
shall mean the 1933 Act, the 1934 Act, the Investment Company Act of 1940, the Investment Advisers Act of 1940, and the Trust Indenture Act of 1939, each as amended, state securities and Blue Sky Laws, including in each case the
rules and regulations thereunder.
Straddle Tax Period
shall have the meaning as set
forth in Section 4.20(b).
Subsidiary
or
Subsidiaries
shall
have the meaning assigned in
Rule 1-02(x)
of Regulation
S-X
of the SEC.
Superior Proposal
means any bona fide, unsolicited, written Acquisition Proposal for at
least a majority of the outstanding shares of Company Common Stock on terms that the Board of Directors of the Company concludes in good faith to be more favorable from a financial point of view to its shareholders than the Merger and the other
transactions contemplated by this Agreement (including the terms, if any, proposed by Seacoast to amend or modify the terms of the transactions contemplated by this Agreement), (1) after receiving the written advice of its financial advisor (which
shall be a nationally recognized investment banking firm, Seacoast acknowledging that Sandler ONeill & Partners, L.P. is a nationally recognized investment banking firm), (2) after taking into account the likelihood of consummation of
such transaction on the terms set forth therein (as compared to, and with due regard for, the terms herein) and (3) after taking into account all legal (with the written advice of outside counsel), financial (including the financing terms of
any such proposal), regulatory and other aspects of such proposal and any other relevant factors permitted under applicable Law.
Tax or Taxes
shall mean all federal, state, local, and foreign taxes, charges,
fees, levies, imposts, duties, or other like assessments, including assessments for unclaimed property, as well as income, gross receipts, excise, employment, sales, use, transfer, intangible, recording, license, payroll, franchise, severance,
documentary, stamp, occupation, windfall profits, environmental, federal highway use, commercial rent, customs duties, capital stock,
paid-up
capital, profits, withholding, Social Security, single business and
unemployment, disability, real property, personal property, registration, ad valorem, value added, alternative or
add-on
minimum, estimated, or other tax or governmental fee of any kind whatsoever, or any
amount in respect of unclaimed property or escheat, imposed by or required to be paid or withheld by the United States or any state, local, or foreign government or subdivision or agency thereof, whether disputed or not, including any related
interest, penalties, and additions imposed thereon or with respect thereto, and including any liability for Taxes of another Person pursuant to a contract, as a transferee or successor, under Treasury Regulation
Section 1.1502-6
or analogous provision of state, local or foreign Law or otherwise.
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Tax Referee
means a nationally recognized firm
of independent certified public accountants selected by Seacoast and the Company (or, if Seacoast and the Company cannot agree on such firm, they shall cause their respective selected accounting firms to select a firm).
Tax Return
shall mean any report, return, declaration, claim for refund, or information
return or statement relating to Taxes, including any associated schedules, forms, attachments or amendments and any related or supporting information, estimates, elections, or statements provided or required to be provided to a Taxing Authority in
connection with Taxes, including any return of an Affiliated or combined or unitary group that includes a Party or its Subsidiaries and including without limitation any estimated Tax return.
Taxable Period
shall mean any period prescribed by any Taxing Authority.
Taxing Authority
shall mean any federal, state, local, municipal, foreign, or other
Governmental Authority, instrumentality, commission, board or body having jurisdiction over the Parties to impose or collect any Tax.
Technology Systems
shall mean the electronic data processing, information, record keeping,
communications, telecommunications, hardware, third-party software, networks, peripherals, portfolio trading and computer systems, including any outsourced systems and processes, and Intellectual Property used by the Company.
Termination Fee
shall mean $3,600,000.
Trading Day
means any day on which the NASDAQ Stock Market is open for trading;
provided
that a Trading Day only includes those days that have a scheduled closing time of 4:00 pm (Eastern Time).
Voting Trust
shall mean the Palm Beach Community Bank Voting Trust.
VWAP
shall mean the daily volume weighted average price of the SBC Common Stock on the
NASDAQ Stock Market or such other exchange or market on which the SBC Common Stock is then listed or quoted for trading on the day in question.
(b) The terms set forth below shall have the meanings ascribed thereto in the referenced sections:
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Affordable Care Act
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Section 3.3(iii)
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Aggregate Merger Consideration
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Section 1.4(a)
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Articles of Merger
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Section 3.3
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Agreement
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Parties
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Cash Consideration
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1.4(a)
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Change in Recommendation
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Section 4.12(b)
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Closing
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Section 1.2
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Closing Date
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Section 1.2
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Company
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Parties
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Company Certificates
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Section 1.4(b)
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Company Directors Recommendation
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Section 3.3(b)(ii)
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Company Disclosure Letter
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Section 3.1
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Company Latest Balance Sheet
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Section 3.3(d)(ii)
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Company Regulatory Agreement
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Section 3.3(v)
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Covered Employees
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Section 4.14(a)
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Covered Parties
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Section 4.15(b)
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CRA
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Section 3.3(q)
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Dissenting Shareholder
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Section 2.3
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Effective Time
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Section 1.3
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Exchange and Paying Agent
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Section 2.1(a)
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Exchange Fund
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Section 2.1(d)
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Excluded Shares
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Section 1.4(e)
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IIPI
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Section 3.3(r)(i)
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Indemnification Notice
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Section 7.2(b)
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Indemnified Party
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Section 4.15(a)
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Indemnified Parties
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Section 7.2(b)
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Letter Ruling Matter
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Section 4.20(h)
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Letter Ruling Request
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Section 4.20(h)
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Material Adverse Effect
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Section 3.2(b)
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Measuring Date
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Section 7.1(a)
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Merger
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Preamble
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Merger Consideration
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Section 1.4(a)
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OCC
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Section 1.3
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Pre-Closing
Period
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Section 4.20(c)
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Pre-Closing
Tax Period
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Section 4.20(a)
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Regulatory Consents
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Section 4.8(b)
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Required Consents
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Section 5.1(b)
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Sarbanes-Oxley Act
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Section 3.3(d)(iv)
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S-Corp
Closing Statement
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Section 1.4(a)
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S-Corp
Expenses
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Section 1.4(a)
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Shareholder Support Agreement
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Preamble
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Stock Consideration
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Section 1.4(a)
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Surviving Bank
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Section 1.1
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Tax Insurance Policy
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Section 3.3(bb)
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Tax Claim
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Section 4.20(e)
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Takeover Laws
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Section 3.3(v)
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SBC
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Parties
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SBC Preferred Stock
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Section 3.4(c)
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SBC Regulatory Agreement
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Section 3.4(f)(ii)
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Seacoast
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Parties
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SNB
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Parties
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(c) Any singular term in this Agreement shall be deemed to include the plural, and any plural
term the singular. Whenever the words include, includes, or including are used in this Agreement, they shall be deemed followed by the words without limitation. The words hereby,
herein, hereof or hereunder, and similar terms are to be deemed to refer to this Agreement as a whole and not to any specific section.
7.2
Non-Survival
of Representations and Covenants;
Indemnification
.
(a)
Non-Survival
of Representations and
Covenants
. Except for Articles 1 and 2, Sections 4.7(b), 4.7(c), 4.10(b), 4.15 4.20, 4.23 and this Article 7, the respective representations, warranties, obligations, covenants, and agreements of the Parties shall be deemed only to be conditions
of the Merger and shall not survive the Effective Time.
(b)
Indemnification
. Subject to the terms of this Section
7.2(b), effective at and after the Closing, each shareholder, severally but not jointly (based on their pro rata ownership percentage of the Company immediately prior to the Closing), shall indemnify, defend and hold harmless Seacoast and its
officers, directors and employees (the
Indemnified Parties
) from and against any and all Taxes arising from or relating to the Letter Ruling Matter, including any Taxes arising from the indemnity payment required hereunder. With
respect to Taxes for which the Indemnified Parties are entitled to indemnification hereunder with respect to the Letter Ruling Matter, the Indemnified Parties shall (A) first seek recovery from and exhaust the Tax Insurance Policy and then
(B) solely to the extent such Taxes are in excess of amounts recovered under the Tax Insurance Policy,
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such Taxes shall be paid by each shareholder, severally but not jointly (based on their pro rata ownership percentage of the Company immediately prior to the Closing). Notwithstanding anything to
the contrary set forth in this Agreement, the maximum aggregate amount for which the Indemnified Parties may recover from the shareholders of the Company with respect to any indemnification claim for losses related to the Letter Ruling Matter shall
be $10.0 million reduced by all amounts recovered under the Tax Insurance Policy. If an Indemnified Party receives any amounts under the Tax Insurance Policy subsequent to an indemnification payment by the shareholders of the Company, then such
Indemnified Party shall promptly reimburse the shareholders of the Company for any payment made or expense incurred by such shareholders in connection with providing such indemnification payment up to the amount received by the Indemnified Party,
net of reasonable attorneys fees, and
out-of-pocket
expenses and cost of recovery. In the event the Indemnified Parties suffer Taxes actually paid to a Taxing
Authority arising from or related to the Letter Ruling Matter in excess of the amounts recovered under the Tax Insurance Policy, Seacoast shall promptly provide written notice to the Company Shareholder Representative specifying and documenting the
amount of such excess (
Indemnification Notice
). Upon receipt of the Indemnification Notice, the Company Shareholder Representative shall promptly notify those persons who were shareholders of the Company immediately prior to the
Closing of their respective payment obligations pursuant to this Section 7.2(b) taking into account their respective equity ownership percentages immediately prior to the Closing. Payment of the amount specified in the Indemnification Notice shall
be made no later than forty-five (45) days after receipt by the Company Shareholder Representative. There shall be no right of subrogation against the shareholders with respect to their indemnity obligation under this Agreement. The indemnity
obligation set forth in this Section 7.2 shall survive until the date that coverage for the Letter Ruling Matter expires under the terms of the Tax Insurance Policy and shall then terminate and be of no further force and effect. This Section
7.2(b) sets forth the sole and exclusive source of recovery for any and all losses, liabilities and Taxes resulting from or relating to the Letter Ruling Matter or otherwise relating to or resulting from the loss of the Companys S corporation
election.
(c)
Exclusive Remedy
. Except as expressly set forth in this Section 7.2, the Tax Insurance Policy
shall be the sole and exclusive source for recovery for any and all losses related to the Letter Ruling Matter and the shareholders have no liability to the Indemnified Parties in connection with this Agreement and the transactions contemplated
hereby. No Indemnified Party may avoid the limitations on liability set forth in this Section 7.2 by seeking damages for breach of contract, tort or pursuant to any other theory of liability.
7.3
Expenses
.
(a) Except as otherwise provided in this Section 7.3 or in Section 7.4, each of the Parties shall bear and pay all
direct costs and expenses incurred by it or on its behalf in connection with the transactions contemplated hereunder, including filing, registration, and application fees, printing fees, and fees and expenses of its own financial or other
consultants, investment bankers, accountants, and counsel, except that Seacoast shall bear and pay the filing fees payable in connection with the Registration Statement and the Proxy Statement/Prospectus and
one-half
of the printing costs incurred in connection with the printing of the Registration Statement and the Proxy Statement/Prospectus.
(b) Nothing contained in this Section 7.3 or Section 7.4 shall constitute or shall be deemed to constitute
liquidated damages for the willful breach by a Party of the terms of this Agreement or otherwise limit the rights of the
non-breaching
Party.
7.4
Termination Fee
.
(a) In the event that (A) (i) either Party terminates this Agreement pursuant to Section 6.1(c)(ii), or
(ii) SBC terminates this Agreement pursuant to Section 6.1(b), as a result of a willful breach of a covenant or agreement by the Company, or pursuant to Sections 6.1(e)(i) or 6.1(e)(ii), (B) at any time after the date of this
Agreement and prior to such termination Company shall have received or there shall have been publicly announced an Acquisition Proposal that has not been formally withdrawn or abandoned prior to such termination,
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and (C) within twelve (12) months following such termination an Acquisition Proposal is consummated or a definitive agreement or letter of intent is entered into by the Company with
respect to an Acquisition Proposal, the Company shall pay Seacoast the Termination Fee within five Business Days after the date it becomes payable pursuant hereto, by wire transfer of immediately available funds;
provided that
for purposes of
this Section 7.4(a) all references in the definition of Acquisition Proposal to 25% shall be to 50%.
(b) In the event that SBC terminates this Agreement pursuant to Section 6.1(e)(iii), the Company shall pay to Seacoast
the Termination Fee within five Business Days after the date this Agreement is terminated, by wire transfer of immediately available funds. In the event that the Company terminates this Agreement pursuant to Section 6.1(f), the Company shall
pay to Seacoast the Termination Fee on the date this Agreement is terminated, by wire transfer of immediately available funds.
(c) The Company hereby acknowledges that the agreements contained in this Section 7.4 are an integral part of the
transactions contemplated by this Agreement and that, without these agreements, Seacoast would not enter into this Agreement. In the event that the Company fails to pay when due any amount payable under this Section 7.4, then (i) the
Company shall reimburse Seacoast for all costs and expenses (including disbursements and reasonable fees of counsel) incurred in connection with the collection of such overdue amount, and (ii) the Company shall pay to Seacoast interest on such
overdue amount (for the period commencing as of the date such overdue amount was originally required to be paid and ending on the date such overdue amount is actually paid in full) at a rate per annum equal to five percent (5%) over the prime
rate (as published in the Money Rates column in
The Wall Street Journal
or, if not published therein, in another national financial publication selected by Seacoast) in effect on the date such overdue amount was originally
required to be paid.
(d) Assuming the Company is not in breach of its obligations under this Agreement, including
Sections 4.5 and 4.12, then the payment of the Termination Fee shall fully discharge the Company from and be the sole and exclusive remedy of the other Party with respect to, any and all losses that may be suffered by such other Party based upon,
resulting from or rising out of the circumstances giving rise to such termination of this Agreement under Section 7.4(a) or 7.4(b). In no event shall the Company be required to pay the Termination Fee on more than one occasion.
7.5
Entire Agreement
.
Except as otherwise expressly provided herein,
this Agreement (including the Company Disclosure Letter and the Exhibits) constitutes the entire agreement between the Parties with respect to the transactions contemplated hereunder and supersedes all prior arrangements or understandings with
respect thereto, written or oral, other than the Confidentiality Agreement, which shall remain in effect. The representations and warranties in this Agreement are the product of negotiations among the Parties hereto and are for the sole benefit of
the Parties. Any inaccuracies in such representations and warranties are subject to waiver by the Parties hereto in accordance herewith without notice or liability to any other Person. In some instances, the representations and warranties in this
Agreement may represent an allocation among the Parties hereto of risks associated with particular matters regardless of the knowledge of any of the Parties hereto. Consequently, Persons other than the Parties may not rely upon the representations
and warranties in this Agreement as characterizations of actual facts or circumstances as of the date of this Agreement or as of any other date. Notwithstanding any other provision hereof to the contrary, no consent, approval, or agreement of any
third party beneficiary will be required to amend, modify or waive any provision of the Agreement. Nothing in this Agreement expressed or implied, is intended to confer upon any Person, other than the Parties or their respective successors, any
rights, remedies, obligations, or liabilities under or by reason of this Agreement.
7.6
Amendments
.
Before the Effective Time, this Agreement (including
the Company Disclosure Letter, the Seacoast Disclosure Letter and the Exhibits) may be amended by a subsequent writing signed by each of the Parties, whether before or after the Company Shareholder Approval has been obtained, except to the extent
that any such amendment would require the approval of the shareholders of the Company, unless such required approval is obtained.
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7.7
Waivers
.
(a) Prior to or at the Effective Time, either Party shall have the right to waive any Default in the performance of any term
of this Agreement by the other Party, to waive or extend the time for the compliance or fulfillment by the other Party of any and all of such other Partys obligations under this Agreement, and to waive any or all of the conditions precedent to
its obligations under this Agreement, except any condition which, if not satisfied, would result in the violation of any Law. No waiver by a Party shall be effective unless in writing signed by a duly authorized officer of such Party.
(b) The failure of any Party at any time or times to require performance of any provision hereof shall in no manner affect the
right of such Party at a later time to enforce the same or any other provision of this Agreement. No waiver of any condition or of the breach of any term contained in this Agreement in one or more instances shall be deemed to be or construed as a
further or continuing waiver of such condition or breach or a waiver of any other condition or of the breach of any other term of this Agreement.
7.8
Assignment
.
Except as expressly contemplated hereby, neither this
Agreement nor any of the rights, interests, or obligations hereunder shall be assigned by any Party hereto (whether by operation of Law or otherwise) without the prior written consent of each other party. Subject to the preceding sentence, this
Agreement will be binding upon, inure to the benefit of, and be enforceable by the parties and their respective successors and assigns.
7.9
Notices
.
All notices or other communications which are required or
permitted hereunder shall be in writing and sufficient if delivered by hand, by facsimile or electronic transmission, by registered or certified mail, postage
pre-paid,
or by courier or overnight carrier, to
the Persons at the addresses set forth below (or at such other address as may be provided hereunder), and shall be deemed effective as of the date so delivered:
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Seacoast:
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Seacoast Banking Corporation of Florida
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815 Colorado Avenue
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Stuart, Florida 34994
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Telecopy Number: (772)
288-6086
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Attention: Dennis Hudson
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Copy to Counsel (which shall not constitute notice):
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Alston & Bird LLP
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1201 West Peachtree Street
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Atlanta, Georgia 30309
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Telecopy Number: (404)
881-7777
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Attention: Randolph A. Moore III
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Company:
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Palm Beach Community Bank
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8101 Okeechobee Boulevard
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West Palm Beach, Florida 33411
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Telecopy Number: (561)
681-7201
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Attention: Calvin L. Cearley
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Copy to Counsel (which shall not constitute notice):
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Holland & Knight LLP
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701 Brickell Avenue, Suite 3300
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Miami, Florida 33131
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Telecopy Number: (305)
789-7799
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Attention: Bradley D. Houser
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7.10
Governing Law
.
This
Agreement shall be governed by and construed in accordance with the Laws of the State of Florida, without regard to any applicable principles of conflicts of Laws that would result in the application of the law of another jurisdiction, except that
the Laws of the United States shall govern the consummation of the Merger.
7.11
Counterparts
.
This Agreement may be executed in two or more counterparts, each of which shall be deemed to be an original, but all of which together shall constitute one and the same instrument. The exchange of copies of this
Agreement and of signature pages by facsimile or electronic transmission shall constitute effective execution and delivery of this Agreement as to the Parties and may be used in lieu of the original Agreement for all purposes. Signatures of the
parties transmitted by facsimile or electronic transmission shall be deemed to be their original signatures for all purposes.
7.12
Captions
.
The captions contained in this Agreement are for
reference purposes only and are not part of this Agreement.
7.13
Interpretations
.
Neither this Agreement nor any uncertainty or ambiguity herein shall be construed or resolved against any Party, whether under any rule of construction or otherwise. No Party to this Agreement shall be
considered the draftsman. The Parties acknowledge and agree that this Agreement has been reviewed, negotiated, and accepted by all Parties and their attorneys and shall be construed and interpreted according to the ordinary meaning of the words used
so as fairly to accomplish the purposes and intentions of the Parties.
7.14
Severability
.
If any term or provision of this Agreement is determined by a court of competent jurisdiction to be invalid, void or unenforceable, the remaining provisions hereof, or the application of such provision to Persons
or circumstances other than those as to which it has been held invalid or unenforceable, shall remain in full force and effect and in no way be affected, impaired or invalidated thereby, so long as the economic or legal substance of the transactions
contemplated hereby is not affected in any manner materially adverse to any Party. Upon such determination, the Parties shall negotiate in good faith in an effort to agree upon a suitable and equitable substitute provision to effect the original
intent of the Parties. If any provision of this Agreement is so broad as to be unenforceable, the provision shall be interpreted to be only so broad as is enforceable.
7.15
Attorneys
Fees
.
In any action at law or suit in equity to enforce this Agreement or the rights of any of the parties hereunder, the prevailing
party in such action or suit shall be entitled to receive its reasonable attorneys fees and costs and expenses incurred in such action or suit.
7.16.
Waiver of Jury Trial
.
THE PARTIES HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHT THAT ANY PARTY MAY HAVE TO TRIAL BY JURY IN
RESPECT OF ANY PROCEEDING, LITIGATION OR COUNTERCLAIM BASED ON, OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY. IF THE SUBJECT
MATTER OF ANY LAWSUIT IS ONE IN WHICH THE WAIVER OF JURY TRIAL IS PROHIBITED, NO PARTY TO THIS AGREEMENT SHALL PRESENT AS A NONCOMPULSORY COUNTERCLAIM IN ANY SUCH LAWSUIT ANY CLAIM BASED ON, OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS
AGREEMENT. FURTHERMORE, NO PARTY TO THIS AGREEMENT SHALL SEEK TO CONSOLIDATE ANY SUCH ACTION IN WHICH A JURY TRIAL CANNOT BE WAIVED.
[
SIGNATURES ON NEXT PAGE
]
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IN WITNESS WHEREOF
, each of the Parties has caused this Agreement to be
executed on its behalf and its seal to be hereunto affixed and attested by officers thereunto as of the day and year first above written.
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SEACOAST BANKING CORPORATION OF FLORIDA
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By:
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/s/ Charles M. Shaffer
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Charles M. Shaffer
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Chief Financial Officer
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SEACOAST NATIONAL BANK
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By:
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/s/ Charles M. Shaffer
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Charles M. Shaffer
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Chief Financial Officer
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PALM BEACH COMMUNITY BANK
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By:
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/s/ Calvin L. Cearley
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Calvin L. Cearley
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Chief Executive Officer
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[
Signature Page to Agreement and Plan of Merger
]
A-59
Exhibit A
FORM OF COMPANY SHAREHOLDER SUPPORT AGREEMENT
THIS SHAREHOLDER SUPPORT AGREEMENT (this
Agreement
) is made and entered into as of May 4, 2017, by and
among Seacoast Banking Corporation of Florida, a Florida corporation (
Buyer
), Palm Beach Community Bank, a Florida chartered bank (
Seller
), and each of the undersigned (i) directors of Seller that are
beneficial owners of any shares of Seller Stock and (ii) executive officers of Seller that are beneficial owners of any shares of Seller Stock (each of (i), and (ii), a
Shareholder
, and collectively, the
Shareholders
).
RECITALS
WHEREAS
, the Shareholders desire that Buyer and Seller consummate the transactions (the
Transactions
) set forth in that certain Agreement and Plan of Merger, dated as of May 4, 2017 (as the same may be amended or supplemented, the
Merger Agreement
), by and among Buyer, Seacoast National Bank,
and Seller, that provides for, among other things, the merger of Seller with and into Buyer (the
Merger
); and
WHEREAS
, the Shareholders, Seller and Buyer are executing this Agreement as an inducement and condition to Buyer
entering into, executing and performing the Merger Agreement and consummating the Transactions.
NOW,
THEREFORE
, in consideration of, and as a material inducement to, entering into and the execution and delivery by Buyer of the Merger Agreement and the mutual covenants, conditions and agreements contained herein and therein, and other good
and valuable consideration, the receipt and sufficiency of which are acknowledged, the parties, intending to be legally bound, hereby agree as follows:
1.
Representations
and
Warranties
. Each
Shareholder represents and warrants to Buyer severally, but not jointly, as follows:
(a) The Shareholder has voting power over the number of shares
(
Shareholders Shares
) of the common stock of Seller, par value $5.00 per share (
Seller Stock
), set forth below such Shareholders name on the signature page hereof. Except for the Shareholders
Shares, the Shareholder does not have voting power over any shares of Seller Stock.
(b) This Agreement has been duly authorized, executed and delivered by, and constitutes
a valid and binding agreement of, the Shareholder, enforceable in accordance with its terms.
(c) Neither the execution and delivery of this Agreement nor the consummation by the
Shareholder of the transactions contemplated hereby will result in a violation of, or a default under, or conflict with, any contract, trust, commitment, agreement, understanding, arrangement or restriction of any kind to which the Shareholder is a
party or bound or to which the Shareholders Shares are subject. Consummation by the Shareholder of the transactions contemplated hereby will not violate, or require any consent, approval, or notice under, any provision of any judgment, order,
decree, statute, law, rule or regulation applicable to the Shareholder or the Shareholders Shares.
(d) The Shareholders Shares and the certificates representing the
Shareholders Shares are now, and at all times during the term hereof will be, held by the Shareholder, or by a nominee or custodian for the benefit of such Shareholder, free and clear of all pledges, liens, security interests, claims, proxies,
voting trusts or agreements, understandings or arrangements or any other encumbrances whatsoever (any such encumbrance, a
Lien
), except for (i) any such Liens arising hereunder, and (ii) Liens, if any, which have been
previously disclosed in writing to Buyer and will be satisfied and released at Closing.
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(e) The Shareholder understands and
acknowledges that Buyer entered into the Merger Agreement in reliance upon the Shareholders execution and delivery of this Agreement. The Shareholder acknowledges that the irrevocable proxy set forth in Section 4 of this Agreement is
granted in consideration of the execution and delivery of the Merger Agreement by Buyer.
(f) No broker, investment banker, financial adviser or other Person is entitled to any
brokers, finders, financial advisers or other similar fee or commission in connection with the transactions contemplated hereby based upon arrangements made by or on behalf of the Shareholder.
(g) The Shareholder represents that there are no outstanding or valid proxies or voting
rights given to any Person in connection with Shareholders Shares.
2.
Voting
Agreements
. The Shareholder agrees with, and
covenants to, Buyer as follows:
(a) At any meeting of shareholders of Seller called
to vote upon the Merger Agreement, the Merger and the Transactions, and at any adjournment or postponement thereof, or in any other circumstances upon which a vote, consent or other approval with respect to the Merger Agreement, the Merger and the
Transactions is sought (collectively, the
Shareholders Meeting
), the Shareholder shall vote (or cause to be voted) all of the Shareholders Shares in favor of the approval of the terms of the Merger Agreement, the
Merger and each of the Transactions, and shall not grant any proxies to any third party, except where such proxies are expressly directed to vote in favor of the Merger Agreement, the Merger and the Transactions. The Shareholder hereby waives all
notice and publication of notice of any Shareholders Meeting to be called or held with respect to the Merger Agreement, the Merger and the Transactions.
(b) At any Shareholders Meeting or in any other circumstances upon which their
vote, consent or other approval is sought, the Shareholder shall vote (or cause to be voted) such Shareholders Shares against (i) any acquisition proposal, including, without limitation, any merger or exchange agreement or merger or
exchange (other than the Merger Agreement, the Merger and the Transactions), consolidation, combination, sale of substantial assets, reorganization, recapitalization, dissolution, liquidation or winding up of or by Seller; (ii) any action or
agreement that would result in a breach of any covenant, representation or warranty or any other obligation or agreement of Seller contained in the Merger Agreement or of Shareholder contained in this Agreement; and (iii) any amendment of
Sellers articles of incorporation or bylaws or other proposal or transaction involving Seller or any of its Subsidiaries, which amendment or other proposal or transaction would in any manner delay, impede, frustrate, prevent or nullify the
Merger Agreement, or any of the Transactions (each of the foregoing in clauses (i), (ii) or (iii) above, a
Competing Transaction
).
Shareholder further agrees not to vote or execute any written consent to rescind or amend in any manner any prior vote or
written consent, as a shareholder of Seller, to approve or adopt the Merger Agreement unless this Agreement shall have been terminated in accordance with its terms.
3.
Covenants
. The Shareholder agrees with, and covenants to, the Buyer as follows:
(a) Without the prior written consent of Buyer, the Shareholder shall not
(i)
Transfer
(which term shall include, without limitation, for the purposes of this Agreement, any sale, gift, pledge, transfer, hypothecation or other disposition), or consent to any Transfer of, any or all of the
Shareholders Shares or any interest therein, (ii) enter into any contract, option or other agreement, arrangement or understanding with respect to any Transfer of any or all of Shareholders Shares or any interest therein,
(iii) grant or solicit any proxy, power of attorney or other authorization in or with respect to Shareholders Shares, except for this Agreement, (iv) deposit Shareholders Shares into a voting trust or enter into any voting
agreement, arrangement or understanding with respect to Shareholders Shares for any purpose (other than to satisfy its obligations under this Agreement), or (v) initiate a shareholders vote or action by consent of Sellers
shareholders with respect to a Competing Transaction; provided, however, that the foregoing shall not preclude a Transfer in connection with bona fide estate planning purposes to the shareholders affiliates or immediate family members,
provided that as a condition to such Transfer, such affiliate or immediate family member shall execute an agreement that is identical to this Agreement (except to reflect the change in the
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ownership of the Shares) and provided further, that the assigning Shareholder shall remain jointly and severally liable for any breaches by any of his or her affiliates or immediate family
members of the terms hereof. The restriction on the Transfer of the Shareholders Shares set forth in this Section 3(a) shall terminate upon the first to occur of (x) the Effective Time of the Merger and the Transactions or (y) the
date upon which the Merger Agreement is terminated in accordance with its terms.
(b) The Shareholder hereby waives any rights of appraisal, or rights to dissent from the
Merger or the Transactions that such Shareholder may have.
(c) The Shareholder
shall not, nor shall it permit any investment banker, attorney or other adviser or representative of the Shareholder to, directly or indirectly, (i) solicit, initiate, induce or knowingly encourage, or knowingly take an action to facilitate the
making of the submission of any Competing Transaction, or (ii) except as provided in the Merger Agreement, participate in any discussions or negotiations regarding, or furnish to any person any information with respect to, or take any other
action to facilitate any inquiries or the making of any proposal that constitutes, or may reasonably be expected to lead to, any Competing Transactions, other than the Merger or the Transactions contemplated by the Merger Agreement.
4.
Irrevocable
Proxy
. Subject to the last sentence of this
Section 4, by execution of this Agreement, Shareholder does hereby appoint Buyer with the full power of substitution and resubstitution, as Shareholders true and lawful attorney and irrevocable proxy, to the full extent of
Shareholders rights with respect to Shareholders Shares, to vote each of such Shares that Shareholder shall be entitled to so vote with respect to the matters set forth in Section 2 hereof at any meeting of the shareholders of
Seller, and at any adjournment or postponement thereof, and in connection with any action of the shareholders of Seller taken by written consent. Shareholder intends this proxy to be irrevocable and coupled with an interest hereafter until the
termination of this Agreement pursuant to the terms of Section 9 hereof and hereby revokes any proxy previously granted by Shareholder with respect to the Shares. Notwithstanding anything contained herein to the contrary, this irrevocable proxy
shall automatically terminate upon the termination of this Agreement.
5.
Certain
Events
. The Shareholder agrees that this Agreement
and the obligations hereunder shall attach to the Shareholders Shares and shall be binding upon any person or entity to which legal or beneficial ownership of Shareholders Shares shall pass, whether by operation of law or otherwise,
including the Shareholders successors or assigns. In the event of any stock split, stock dividend, merger, exchange, reorganization, recapitalization or other change in the capital structure of the Seller affecting the Seller Common Stock, or
the acquisition of additional shares of Seller Stock or other voting securities of Seller by Shareholder, the number of shares of Seller Stock subject to the terms of this Agreement shall be adjusted appropriately and this Agreement and the
obligations hereunder shall attach to any additional shares of Seller Stock or other voting securities of the Seller issued to or acquired by the Shareholder.
6.
Specific
Performance;
Remedies;
Attorneys
Fees
. Shareholder acknowledges that it is a condition to the willingness of Buyer to enter into the Merger Agreement that Shareholder execute and deliver this Agreement and that it
will be impossible to measure in money the damage to Buyer if Shareholder fails to comply with the obligations imposed by this Agreement and that, in the event of any such failure, irreparable damage will occur and Buyer will not have any adequate
remedy at law. It is accordingly agreed that Buyer shall be entitled to seek specific performance and injunctive or other equitable relief as a remedy for any such breach or to prevent any breach and to enforce specifically the terms and provisions
of this Agreement, in addition to any other remedy to which they are entitled at law or in equity. Seller agrees that it shall not oppose the granting of such relief on the basis that Buyer has an adequate remedy at law. In addition, any third party
participating with Shareholder or receiving from Shareholder assistance in violation of this Agreement and of the rights of Buyer hereunder, and any such participation by such third party with Shareholder in activities in violation of the
Shareholders agreement with Buyer set forth in this Agreement may give rise to claims by Buyer against such third party and Buyer acknowledges that Shareholder may be responsible for any associated liabilities caused by such third party. In
any legal action or other proceeding relating to this Agreement and the transactions contemplated
A-62
hereby or if the enforcement of any provision of this Agreement is brought against either Party, the prevailing Party in such action or proceeding shall be entitled to recover all reasonable
expenses relating thereto (including reasonable attorneys fees and expenses, court costs and expenses incident to arbitration, appellate and post-judgment proceedings) from the other Party, in addition to any other relief to which such
prevailing Party may be entitled.
7.
Further
Assurances
.
The Shareholder shall, upon the request of the Buyer, promptly execute and deliver any additional documents and take such further actions as may reasonably be deemed by the Buyer to be necessary or desirable to carry out the provisions hereof and to
vest in the Buyer the power to vote such Shareholders Shares as contemplated by Section 2 and 4 of this Agreement and the other irrevocable proxies provided herein.
8.
Confidentiality.
The undersigned recognizes and acknowledges that he or she may have
access to certain confidential information of the Buyer and its Subsidiaries (including that obtained from the Seller and its shareholders in connection with the Transactions), the Seller and its Subsidiaries and their shareholders, including,
without limitation, customer lists, information regarding customers, confidential methods of operation, lending, credit information, organization, pricing,
mark-ups,
commissions and other information and that
all such information constitutes valuable, special and unique property of the Buyer, the Seller and the Buyers shareholders. All such information, which shall exclude any information that is publicly known or hereafter becomes publicly known
other than as a result of any action or omission by the undersigned, is herein referred to as
Confidential Information
. The undersigned will not disclose or directly or indirectly utilize in any manner any such Confidential
Information for Shareholders own benefit or the benefit of anyone other than the Buyer and/or its shareholders during the term of this Agreement and for a period of two (2) years after the termination of this Agreement pursuant to
Section 9; provided that the undersigned may disclose such Confidential Information as required by law, court order or other valid and appropriate legal process.
9.
Term
of
Agreement;
Termination
. The term of this Agreement shall commence on the date hereof. This Agreement may be terminated at any time prior to consummation of the transactions contemplated by the Merger Agreement by the written consent of the
parties hereto, and this Agreement shall be automatically terminated upon either (i) the termination of the Merger Agreement in accordance with its terms, or (ii) the consummation of the Merger. Upon such termination, no party shall have
any further obligations or liabilities hereunder;
provided,
however
, that such termination shall not relieve any party from liability for any breach of this Agreement prior to such termination.
10.
Severability
. In the event that any one or more provisions of this Agreement
shall for any reason be held invalid, illegal or unenforceable in any respect by any court of competent jurisdiction, such invalidity, illegality or unenforceability shall not affect any other provisions of this Agreement, and the parties shall use
their reasonable best efforts to substitute a valid, legal and enforceable provision which, insofar as practical, implements the purpose and intents of this Agreement.
11.
Miscellaneous
.
(a) Capitalized terms used and not otherwise defined in this Agreement shall have the
respective meanings assigned to them in the Merger Agreement. As used herein, the singular shall include the plural and any reference to gender shall include all other genders. The terms
include
,
including
and
similar phrases shall mean including without limitation, whether by enumeration or otherwise.
(b) All notices, requests, claims, demands and other communications under this Agreement
shall be in writing and shall be deemed given if delivered personally or sent by reliable overnight delivery or by facsimile or electronic transmission to the parties at the following addresses (or at such other address for a party as shall be
specified by like notice): (i) if to the Buyer or Seller, to the addresses set forth in Section 7.9 of the Merger Agreement; and (ii) if to the Shareholder, to its address shown below its signature on the last page hereof.
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(c) The headings contained in this
Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.
(d) This Agreement may be executed in two or more counterparts by facsimile or other
electronic means, all of which shall be considered and have the same force and effect as one and the same agreement.
(e) This Agreement (including the documents and instruments referred to herein)
constitutes the entire agreement and understanding of the parties with respect to the subject matter hereof, and supersedes all prior agreements and understandings, both written and oral, among the parties with respect to the subject matter hereof.
(f) This Agreement shall be governed by and construed and interpreted in accordance
with the laws of the State of Florida without regard to the applicable conflicts of laws principles thereof.
(g) If any term, provision, covenant or restriction herein, or the application thereof
to any circumstance, shall, to any extent, be held by a court of competent jurisdiction to be invalid, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions herein and the application thereof to any other
circumstances, shall remain in full force and effect, shall not in any way be affected, impaired or invalidated, and shall be enforced to the fullest extent permitted by law.
(h) Neither this Agreement nor any of the rights, interests or obligations under this
Agreement shall be assigned, in whole or in part, by operation of law or otherwise, by any of the parties without the prior written consent of the other parties, except as expressly contemplated by Section 3(a) of this Agreement. Any assignment in
violation of the foregoing shall be void.
(i) No amendment, modification or waiver
in respect of this Agreement shall be effective against any party unless it shall be in writing and signed by such party.
(j) The parties acknowledge that nothing in this Agreement shall be interpreted to give
rise to joint obligations among the Shareholders. No Shareholder shall be deemed to be in breach of this Agreement as a result of the actions of any other Shareholder.
(k) Notwithstanding any other provision of this Agreement, the obligations of the
Shareholder under this Agreement shall not be applicable in connection with an Acquisition Proposal that is a Superior Proposal, provided that Seller and its Affiliate have complied with the terms and conditions of the Merger Agreement, including
Section 4.5 and 4.12 of the Merger Agreement.
(l) Notwithstanding anything to
the contrary in this Agreement, nothing herein is intended or shall be construed or require the Shareholder, in his or her capacity as a director, officer, or employee of the Company, to act or fail to act in accordance with his or her fiduciary
duties as a director or officer, subject to the terms and conditions of the Merger Agreement.
[Signatures on following pages]
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IN WITNESS WHEREOF, the undersigned parties have executed and delivered this
Support Agreement as of the day and year first above written.
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SELLER
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PALM BEACH COMMUNITY BANK BANK
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By:
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Name: Calvin L. Cearley
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Title: Chief Executive Officer
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BUYER
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SEACOAST BANKING CORPORATION OF FLORIDA
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By:
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Name: Charles M. Shaffer
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Title: Chief Financial Officer
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SHAREHOLDER
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Name:
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Address:
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Number of Shares of Common Stock Over Which Shareholder Has Voting Power and Capacity of Ownership:
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[Signature Page to the Shareholder Support Agreement]
A-65
Exhibit B
FORM OF CLAIMS LETTER
May 4, 2017
Seacoast Banking Corporation
of Florida
815 Coloroda Avenue
Stuart, Florida 34994
Attention: Dennis S. Hudson, III
Gentlemen:
This claims letter (
Claims Letter
) is delivered pursuant to Section 4.17 of that certain
Agreement and Plan of Merger, dated as of May 4, 2017 (as the same may be amended or supplemented, the
Merger Agreement
), by and among Seacoast Banking Corporation of Florida, a Florida corporation (
Buyer
),
Seacost National Bank, a national banking association and wholly owned subsidiary of Buyer, and Palm Beach Community Bank, a Florida chartered bank (
Seller
). Capitalized terms used herein and not otherwise defined shall have the
respective meanings ascribed to them in the Merger Agreement.
Concerning claims which the undersigned may have against
Seller or Buyer or any of their respective Subsidiaries in all capacities, whether as an officer, director, employee, partner, controlling person or Affiliate or otherwise of Seller or any Seller entity, and in consideration of the premises, and the
mutual covenants contained herein and in the Merger Agreement and the mutual benefits to be derived hereunder and thereunder, and other good and valuable consideration, the receipt and sufficiency of which are acknowledged, the undersigned,
intending to be legally bound, hereby affirms and agrees to the following in each and every such capacity of the undersigned.
1.
Claims
.
The undersigned does not have, and is not aware of, any claims
he or she might have against Seller or Buyer or any of their respective Subsidiaries, except for: (i) compensation and related benefits for services rendered that have been accrued but not yet paid in the ordinary course of business consistent
with past practice; (ii) contract rights, under written loan commitments and agreements between the undersigned and Seller, specifically limited to possible future advances in accordance with the terms of such commitments or agreements;
(iii) certificates of deposit and deposit accounts; (iv) fees owed on account of any services rendered by the undersigned that have been accrued but not yet paid in the ordinary course of business consistent with past practice;
(v) checks issued by any other depositor of Seller; (vi) any rights that the undersigned has or may have under the Merger Agreement; and (vii) amounts payable to the undersigned pursuant to the Merger Agreement or any ancillary
document referred to therein in his or her capacity as a shareholder of Seller or as an officer or director of the Company or a holder of a Company Equity Award (collectively, the
Disclosed Claims
).
2.
Releases
.
Upon the Closing, the undersigned hereby fully, finally and
irrevocably releases and forever discharges Seller, Buyer and all other Seller entities and Buyer entities, and their respective directors, officers, employees, agents, attorneys, representatives, Subsidiaries, partners, Affiliates, controlling
persons and insurers in their capacities as such, and their respective successors and assigns, and each of them (hereinafter, individually and collectively, the
Releasees
) of and from any and all liabilities, losses, claims,
demands, debts, accounts, covenants, agreements, obligations, costs, expenses, actions or causes of action of every nature, character or description, now accrued or which may hereafter accrue, without limitation and whether or not in law, equity or
otherwise, based in whole or in part on any known or unknown facts, conduct, activities, transactions, events or occurrences, matured or unmatured, contingent or otherwise, which have or allegedly have existed, occurred, happened, arisen or
transpired from the beginning of time to the date of the closing of the transactions contemplated by the Merger Agreement, except for the Disclosed Claims (collectively, the
Claims
). The
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undersigned further irrevocably releases, discharges, and transfers to Buyer, as successor to Seller, respectively, all claims, actions and interests of the undersigned in any Intellectual
Property of any nature whatsoever created, developed, registered, licensed or used by or for the undersigned or the Seller or any Seller entity (which shall also be considered to be Claims). The undersigned represents, warrants and covenants that no
Claim released herein has been assigned, expressly, impliedly, by operation of law or otherwise, and that all Claims released hereby are owned solely by the undersigned, which has the sole authority to release them.
3.
Forbearance
.
The undersigned shall forever refrain and forebear from
commencing, instituting, prosecuting or making any lawsuit, action, claim or proceeding before or in any court, Regulatory Authority, Governmental Authority, Taxing Authority arbitral or other authority to collect or enforce any Claims which are
released and discharged hereby.
4.
Miscellaneous
.
(a) This Claims Letter shall be governed by, and construed in accordance with, the laws of the State of
Florida without regard to conflict of laws principles (other than the choice of law provisions thereof).
(b) This Claims Letter contains the entire agreement between the parties with respect to the Claims
released hereby, and such Claims Letter supersedes all prior agreements, arrangements or understandings (written or otherwise) with respect to such Claims, and no representation or warranty, oral or written, express or implied, has been made by or
relied upon by any party hereto, except as expressly contained herein, or in the Merger Agreement.
(c) This Claims Letter shall be binding upon and inure to the benefit of the undersigned and the
Releasees and their respective heirs, legal representatives, successors and assigns.
(d) In any
legal action or other proceeding relating to this Claims Letter and the transactions contemplated hereby or if the enforcement of any right or benefit provided by this Claims Letter is brought against a Party, the prevailing Party in any such
Litigation pursuant to which an arbitral panel, court or other Governmental Authority issues a final order, judgment, decree or award granting substantially the relief sought shall be entitled upon demand to be paid by the other party all reasonable
costs incurred in connection with such Litigation, including the reasonable legal fees and charges of one counsel, court costs and expenses incident to arbitration, appellate and post-judgement proceedings, provided no party shall be entitled to any
punitive or exemplary damages, which are hereby waived.
(e) IN ANY CIVIL ACTION, COUNTERCLAIM,
PROCEEDING, OR LITIGATION, WHETHER AT LAW OR IN EQUITY, WHICH ARISES OUT OF, CONCERNS, OR RELATES TO THIS CLAIMS LETTER, ANY AND ALL TRANSACTIONS CONTEMPLATED BY THIS CLAIMS LETTER, THE PERFORMANCE OF THIS CLAIMS LETTER, OR THE RELATIONSHIP CREATED
BY THIS CLAIMS LETTER, WHETHER SOUNDING IN CONTRACT, TORT, STRICT LIABILITY, OR OTHERWISE, TRIAL SHALL BE TO A COURT OF COMPETENT JURISDICTION AND NOT TO A JURY. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY. ANY
PARTY MAY FILE AN ORIGINAL COUNTERPART OF A COPY OF THIS CLAIMS LETTER WITH ANY COURT, AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES TO THIS CLAIMS LETTER OF THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY. NEITHER PARTY HAS MADE OR RELIED UPON ANY
ORAL REPRESENTATIONS TO OR BY ANY OTHER PARTY REGARDING THE ENFORCEABILITY OF THIS PROVISION. EACH PARTY HAS READ AND UNDERSTANDS THE EFFECT OF THIS JURY WAIVER PROVISION. EACH PARTY ACKNOWLEDGES THAT IT HAS BEEN ADVISED BY ITS OWN COUNSEL WITH
RESPECT TO THE TRANSACTIONS GOVERNED BY THIS CLAIMS LETTER AND SPECIFICALLY WITH RESPECT TO THE TERMS OF THIS SECTION.
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(f) This Claims Letter may not be modified, amended or
rescinded except by the written agreement of the undersigned and the Buyer, it being the express understanding of the undersigned and the Releasees that no term hereof may be waived by the action, inaction or course of dealing by or between the
undersigned or the Releasees, except in strict accordance with this paragraph, and further that the waiver of any breach of this Claims Letter shall not constitute or be construed as the waiver of any other breach of the terms hereof.
(g) The undersigned represents, warrants and covenants that he or she is fully aware of his or her
rights to discuss any and all aspects of this matter with any attorney he or she chooses, and that the undersigned has carefully read and fully understands all the provisions of this Claims Letter, and that the undersigned is voluntarily entering
into this Claims Letter.
(h) This Claims Letter shall become effective upon the consummation of
the Merger, and its operation to extinguish all of the Claims released hereby is not dependent on or affected by the performance or
non-performance
of any future act by the undersigned or the Releasees.
[
Signatures on following page
.]
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Sincerely,
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Signature of Officer or Director
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Printed Name of Officer or Director
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On behalf of Releasees, the undersigned thereunto duly authorized, acknowledges receipt
of this letter as of May 4, 2017.
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SEACOAST BANKING CORPORATION OF FLORIDA
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By:
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Name: Charles M. Shaffer
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Title: Chief Financial Officer
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[
Signature Page to Claims Letter
]
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Exhibit C
FORM OF RESTRICTIVE COVENANT AGREEMENT
THIS RESTRICTIVE COVENANT AGREEMENT (the
Agreement
) is made and entered into as of May 4, 2017, by and
between Seacoast Banking Corporation of Florida, a Florida corporation (
Buyer
), and the undersigned director (
Director
) of Palm Beach Community Bank, a Florida chartered bank (
Seller
), and
shall become effective as of the Effective Time of the Merger as provided in the Merger Agreement (defined below).
WHEREAS, Buyer, Seacoast National Bank, a national banking association and wholly owned subsidiary of Buyer
(
SNB
), and Seller are parties to that certain Agreement and Plan of Merger, dated as of May 4, 2017, as the same may be amended or supplemented (the
Merger Agreement
), that provides for, among other things,
the merger of Seller with and into SNB (the
Merger
);
WHEREAS, Director is a shareholder and director
of Seller;
WHEREAS, as a result of the Merger and pursuant to the transactions contemplated by the Merger Agreement,
Director or an Affiliate of Director is selling shares of Company Common Stock held by Director and/or the Directors Affiliate to Buyer and will receive Merger Consideration in exchange for such shares;
WHEREAS, Director is in possession of trade secrets and valuable confidential business information of Seller, and has
substantial relationships with its banking customers;
WHEREAS, prior to the date hereof, Director has served as a member
of the Board of Directors of Seller, and, therefore, Director has knowledge of the Confidential Information (hereinafter defined);
WHEREAS, the Director acknowledges that the Buyer has legitimate business interests to justify the enforcement of this
Agreement;
WHEREAS, as a result of the Merger, Buyer and SNB will succeed to all of the Confidential Information, for
which Buyer, as of the Effective Time, will have paid valuable considerations and desires reasonable protection; and
WHEREAS, the Merger Agreement contemplates that, upon the execution and delivery of the Merger Agreement by Seller, as a
condition and inducement to the willingness of Buyer and SNB to enter into the Merger Agreement, Director will enter into and perform this Agreement.
NOW THEREFORE, in consideration of the premises and for other good and valuable consideration, including, without limitation,
the Merger Consideration to be received by Director and/or the Directors Affiliate, the sufficiency and receipt of which are hereby acknowledged, the parties hereto, intending to be legally bound, covenant and agree as follows:
1.
Certain Definitions
.
(a)
Affiliated Company
means any company or entity controlled by, controlling or
under common control with Buyer or Seller.
(b)
Confidential Information
means
all information regarding Seller, Buyer and their Affiliated Companies and any of their respective activities, businesses or customers that is not generally known to persons not employed by Seller, Buyer or their respective Affiliated Companies, and
that is not generally disclosed publicly to persons not employed by Seller, Buyer or their respective Affiliated Companies (except to applicable regulatory authorities and/or pursuant to confidential or other relationships where there is no
expectation of public disclosure or use by third Persons).
Confidential Information
shall include, without limitation, all customer information, customer lists, confidential methods of operation, lending and credit information,
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commissions,
mark-ups,
product/service formulas, information concerning techniques for use and integration of websites and other products/services, current
and future development and expansion or contraction plans of Seller, Buyer or their respective Affiliated Companies, sale/acquisition plans and contacts, marketing plans and contacts, information concerning the legal affairs of and information
concerning the pricing of products and services, strategy, tactics and financial affairs of Seller, Buyer or their respective Affiliated Companies.
Confidential Information
also includes any confidential information,
trade secrets or any equivalent term under any applicable federal, state or local law.
Confidential Information
shall not include information that (i) has become generally available to the public by the act of one
who has the right to disclose such information without violating any right or privilege of Seller or Buyer or their respective Affiliated Companies or any duty owed to any of them; or (ii) is independently developed by a person or entity
without reference to or use of Confidential Information. Director acknowledges and agrees that the trading in Buyer or Seller securities using Confidential Information or other
non-public
information may
violate federal and state securities laws.
(c) Capitalized terms used but not defined herein
shall have the same meanings provided in the Merger Agreement.
2.
Restrictive Covenants
.
(a)
Nondisclosure of Confidential Information.
From and after the Effective Time, Director
shall not directly or indirectly transmit or disclose any Confidential Information to any Person, or use or permit others to use any such Confidential Information, directly or indirectly, for any purpose for so long as such information remains
Confidential Information, without the prior express written consent of the Chief Executive Officer of Buyer, which consent may be withheld in the sole discretion of Buyers Chief Executive Officer. Anything herein to the contrary
notwithstanding, Director shall not be restricted from disclosing information that is required to be disclosed by law, court order or other valid and appropriate legal process;
provided,
however
, that in the event such disclosure is
required by law, Director shall (i) if allowed by law or legal process, provide Buyer with prompt notice of such requirement so that Buyer may seek an appropriate protective order prior to any such required disclosure by Director; and
(ii) use commercially reasonable efforts to obtain assurances that any Confidential Information disclosed will be accorded confidential treatment;
provided
,
further
, that no such notice or efforts shall be required in connection
with any routine audit or investigation by any Governmental Authority or Taxing Authority that does not expressly reference Seller, Buyer or any of their Affiliated Companies. If, in the absence of a required waiver or protective order, Director is
nonetheless, in the good faith written opinion of his legal counsel, required to disclose Confidential Information to a government entity, disclosure may be made to that government entity only as to that portion of the Confidential Information that
counsel advises Director is required to be disclosed.
(b)
Nonrecruitment of Employees
.
Director hereby agrees that, for two (2) years following the Effective Time, Director shall not, without the prior written consent of the Buyers Chief Executive Officer, which consent may be withheld at the sole discretion of the
Buyers Chief Executive Officer, directly or indirectly solicit or recruit or hire, or attempt to solicit or recruit or hire, for employment or encourage to leave employment with Buyer or any of its Affiliated Companies, on his own behalf or on
behalf of any other Person, (i) any then-current employee of Buyer or any of its Affiliated Companies or (ii) any employee of Seller who worked at Seller or any of its Affiliated Companies during Directors services as a director of
Seller or any Seller Affiliated Company and who has not ceased employment for a minimum of a six month period with Buyer, Seller, or any Affiliated Companies, as applicable. It is acknowledged that general advertisements shall not be deemed to
violate this provision.
(c)
Nonsolicitation of Customers
. Director hereby agrees that, for
two (2) years following the Effective Time, Director shall not, without the prior written consent of the Buyers Chief Executive Officer, which consent may be withheld at the sole discretion of Buyers Chief Executive Officer,
directly or indirectly, on behalf of himself or of anyone other than Seller, Buyer or any Affiliated Company, in the Restricted Area (as defined in Section 2(d) below), solicit or attempt to solicit any customer or client of Seller for the purpose
of either (i) providing any Business Activities (as defined in Section 2(d)) or (ii) inducing such customer or client to
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cease, reduce, restrict or divert its business with Seller, Buyer or any Affiliated Company. It is acknowledged that general advertisements shall not be deemed to violate this provision. It is
further acknowledged that this provision shall not apply to the activities of a financial institution for which Director serves as a member of the board of directors as of the date hereof.
(d)
Noncompetition
. Director hereby agrees that, for two (2) years following the Effective
Time, Director shall not, without the prior written consent of Buyers Chief Executive Officer, which consent may be withheld at the sole discretion of Buyers Chief Executive Officer, prepare or apply to commence, or engage or participate
in, Business Activities with, for or on behalf of any other financial institution as an officer, director, manager, owner, partner, joint venture, consultant, independent contractor, employee, or shareholder of, or on behalf of any other Person,
business or enterprise that competes in the Restricted Area with the Buyer and its Affiliated Companies with respect to Business Activities. For purposes of this Agreement,
Business Activities
shall be any business activities
conducted by Buyer, Seller or any of their Affiliated Companies, which consist of commercial or consumer loans and extensions of credit, letters of credit, commercial and consumer deposits and deposit accounts, securities repurchase agreements and
sweep accounts, cash management services, money transfer and bill payment services, internet or electronic banking, automated teller machines, IRA and retirement accounts, mortgage loans, and home equity lines of credit. For the avoidance of doubt,
nothing in this Section 2(d) shall prohibit a Director from providing services that the Director provides as of the date of this Agreement as well as services that the Director has provided prior to the date of this Agreement as a part of such
Directors current business to any entity which engages in Business Activities within the Restricted Area. For purposes of this Agreement, the
Restricted Area
shall mean Brevard, DeSoto, Glades, Hendry, Highlands,
Hillsborough, Indian River, Lake, Manatee, Martin, Okeechobee, Orange, Palm Beach, Pinellas, Polk, Seminole, St. Lucie and Volusia counties in Florida. Nothing in this Section 2(d) shall prohibit Director from acquiring or holding, for investment
purposes only, less than five percent (5%) of the outstanding securities of any public company business organization which may compete directly or indirectly with Seller, Buyer or any of their Affiliated Companies. Nothing in this Agreement shall
prohibit a Director or any of such Directors Affiliated Companies from continuing to hold outstanding securities held by the Director and any Affiliated Company as of the date of this Agreement and which engages in Business Activities.
(e)
Enforceability of Covenants.
Director acknowledges and agrees that the covenants in this
Agreement are direct consideration for a sale of a business and should be governed by standards applicable to restrictive covenants entered into in connection with a sale of a business. Director acknowledges that each of Buyer and its Affiliated
Companies have a current and future expectation of business within the Restricted Area and from the current and proposed customers of Seller that are derived from the acquisition of Seller by Buyer. Director acknowledges that the term, geographic
area, and scope of the covenants set forth in this Agreement are reasonable, and agrees that he will not, in any action, suit or other proceeding, deny the reasonableness of, or assert the unreasonableness of, the premises, consideration or scope of
the covenants set forth herein. Director agrees that his position as a director of Seller involves duties and authority relating to all aspects of the Business Activities and all of the Restricted Area. Director further acknowledges that complying
with the provisions contained in this Agreement will not preclude him from engaging in a lawful profession, trade or business, or from becoming gainfully employed. Director and Buyer agree that Directors obligations under the above covenants
are separate and distinct under this Agreement, and the failure or alleged failure of the Buyer to perform its obligations under any other provisions of this Agreement shall not constitute a defense to the enforceability of this covenant. Director
and Buyer agree that if any portion of the foregoing provisions is deemed to be unenforceable because the geography, time or scope of activities restricted is deemed to be too broad, the court shall be authorized to substitute for the overbroad term
an enforceable term that will enable the enforcement of the covenants to the maximum extent possible under applicable law. Director acknowledges and agrees that any breach or threatened breach of this covenant will result in irreparable damage and
injury to the Buyer and its Affiliated Companies and that damages arising out of such breach would be difficult to ascertain. Director hereby agrees that, in addition to all other remedies provided at law or in equity, Buyer will be entitled to
exercise all rights including, without limitation, obtaining one or more temporary restraining orders, injunctive relief and other equitable relief, including specific performance in the event of any breach or threatened breach of
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this Agreement, without the necessity of posting any bond or security (all of which are waived by the Director), and to exercise all other rights or remedies, at law or in equity, including,
without limitation, the rights to damages.
3.
Successors
.
(a) This Agreement is personal to Director, is not assignable by Director, and none of Directors
duties hereunder may be delegated.
(b) This Agreement may be assigned by, and shall be binding
upon and inure to the benefit of the Buyer and any of its Affiliated Companies and their successors and assigns.
4.
Miscellaneous
.
(a)
Waiver
. No provision of this Agreement may be modified, waived or discharged unless such
waiver, modification or discharge is agreed to in writing signed by Director and Buyer. No waiver by either party hereto at any time of any breach by the other party hereto of, or compliance with, any condition or provision of this Agreement to be
performed by such other party shall be deemed a waiver of dissimilar provisions or conditions at the same or any prior subsequent time.
(b)
Severability
. If any provision or covenant, or any part thereof, of this Agreement should be
held by any court to be invalid, illegal or unenforceable, either in whole or in part, such invalidity, illegality or unenforceability shall not affect the validity, legality or enforceability of the remaining provisions or covenants, or any part
thereof, of this Agreement, all of which shall remain in full force and effect.
(c)
Attorneys Fees
. In any legal action or other proceeding relating to this Agreement and
the transactions contemplated hereby or if the enforcement of any right or benefit provided by this Agreement is brought against a Party, the prevailing Party in any such Litigation pursuant to which an arbitral panel, court or other Governmental
Authority issues a final order, judgment, decree or award granting substantially the relief sought shall be entitled upon demand to be paid by the other party, all reasonable costs incurred in connection with such Litigation, including the
reasonable legal fees and charges of counsel, court costs and expenses incident to arbitration, appellate and post-judgement proceedings, provided no party shall be entitled to any punitive or exemplary damages, which are hereby waived.
(d)
Governing Law and Forum Selection
. Buyer and Director agree that this Agreement shall be
governed by and construed and interpreted in accordance with the laws of the State of Florida without giving effect to its conflicts of law principles. Director agrees that any action to enforce this Agreement, as well as any action relating to or
arising out of this Agreement, shall be filed only in the state courts of Palm Beach County, Florida. With respect to any such court action, Director hereby (i) irrevocably submits to the personal jurisdiction of such courts; (ii) consents
to service of process; (iii) consents to venue; and (iv) waives any other requirement (whether imposed by statute, rule of court, or otherwise) with respect to personal jurisdiction, service of process, or venue. Both parties hereto
further agree that the state courts of Palm Beach County, Florida are convenient forums for any dispute that may arise herefrom and that neither party shall raise as a defense that such courts are not convenient forums.
(e)
Notices
. All notice, consent, demand, request or other communication given to a party hereto
in connection with this Agreement shall be in writing and shall be deemed to have been given such party (i) when delivered personally to such party or (ii) provided that a written acknowledgement of receipt is obtained, five (5) days
after being sent by prepaid certified or registered mail or two (2) days after being sent by a nationally recognized overnight courier, to the address (if any) specified below for such party (or to such other address at such party shall have
specified by ten (10) days advance notice given in accordance with this Section 4(e), or (iii) in the case of Buyer only, on the first business day after it is sent by electronic transmission or facsimile to
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the facsimile number set forth below (or to other such facsimile number as shall have specified by ten (10) days advance notice given in accordance with this Section 4(e)), with a
confirmation copy sent by certified or registered mail or by overnight courier in accordance with this Section 4(e).
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To Buyer:
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Seacoast Banking Corporation of Florida
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815 Colorado Avenue
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Stuart, Florida 34994
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Facsimile Number: (772)
288-6086
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Attention: Dennis S. Hudson, III
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To Director:
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To the address set forth under such Directors name on the signature page of this Agreement
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Any party may change the address to which notices, requests, demands and other communications shall be
delivered or mailed by giving notice thereof to the other party in the same manner provided herein.
(f)
Amendments and Modifications
. This Agreement may be amended or modified only by a writing
signed by both parties hereto, which makes specific reference to this Agreement.
(g)
Entire
Agreement
. Except as provided herein, this Agreement contains the entire agreement between Buyer and Director with respect to the subject matter hereof and, from and after the date hereof, this Agreement shall supersede any prior agreement,
understanding and arrangement, oral or written, between the parties with respect to the subject matter hereof.
(h)
Counterparts, etc
. This Agreement may be executed in identical counterparts, each of which
shall be deemed to be an original, but all of which together shall constitute one and the same instrument. A facsimile signature shall constitute and have the same force and effect as an original signature for all purposes under this Agreement.
(i)
Termination
. If the Merger Agreement is terminated in accordance with Article 6 thereof,
this Agreement shall become null and void.
[Signatures on following page]
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IN WITNESS WHEREOF, the parties hereto have duly executed and delivered this
Agreement as of the date first above written.
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BUYER:
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SEACOAST BANKING CORPORATION OF FLORIDA
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By:
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Name:
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Charles M. Shaffer
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Title:
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Chief Financial Officer
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DIRECTOR:
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Name:
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Address:
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[
Signature
Page
to
Restrictive
Covenant
Agreement
]
A-75
FORM OF RESTRICTIVE COVENANT AGREEMENT
THIS RESTRICTIVE COVENANT AGREEMENT (the
Agreement
) is made and entered into as of May 4, 2017, by and
between Seacoast Banking Corporation of Florida, a Florida corporation (
Buyer
), and the undersigned director (
Director
) of Palm Beach Community Bank, a Florida chartered bank (
Seller
), and
shall become effective as of the Effective Time of the Merger as provided in the Merger Agreement (defined below).
WHEREAS, Buyer, Seacoast National Bank, a national banking association and wholly owned subsidiary of Buyer
(
SNB
), and Seller are parties to that certain Agreement and Plan of Merger, dated as of May 4, 2017, as the same may be amended or supplemented (the
Merger Agreement
), that provides for, among other things,
the merger of Seller with and into SNB (the
Merger
);
WHEREAS, Director is a shareholder and director
of Seller;
WHEREAS, as a result of the Merger and pursuant to the transactions contemplated by the Merger Agreement,
Director or an Affiliate of Director is selling shares of Company Common Stock held by Director and/or the Directors Affiliate to Buyer and will receive Merger Consideration in exchange for such shares;
WHEREAS, Director is in possession of trade secrets and valuable confidential business information of Seller, and has
substantial relationships with its banking customers;
WHEREAS, prior to the date hereof, Director has served as a member
of the Board of Directors of Seller, and, therefore, Director has knowledge of the Confidential Information (hereinafter defined);
WHEREAS, the Director acknowledges that the Buyer has legitimate business interests to justify the enforcement of this
Agreement;
WHEREAS, as a result of the Merger, Buyer and SNB will succeed to all of the Confidential Information, for
which Buyer, as of the Effective Time, will have paid valuable considerations and desires reasonable protection; and
WHEREAS, the Merger Agreement contemplates that, upon the execution and delivery of the Merger Agreement by Seller, as a
condition and inducement to the willingness of Buyer and SNB to enter into the Merger Agreement, Director will enter into and perform this Agreement.
NOW THEREFORE, in consideration of the premises and for other good and valuable consideration, including, without limitation,
the Merger Consideration to be received by Director and/or the Directors Affiliate, the sufficiency and receipt of which are hereby acknowledged, the parties hereto, intending to be legally bound, covenant and agree as follows:
1.
Certain Definitions
.
(a)
Affiliated Company
means any company or entity controlled by, controlling or
under common control with Buyer or Seller.
(b)
Confidential Information
means
all information regarding Seller, Buyer and their Affiliated Companies and any of their respective activities, businesses or customers that is not generally known to persons not employed by Seller, Buyer or their respective Affiliated Companies, and
that is not generally disclosed publicly to persons not employed by Seller, Buyer or their respective Affiliated Companies (except to applicable regulatory authorities and/or pursuant to confidential or other relationships where there is no
expectation of public disclosure or use by third Persons).
Confidential Information
shall include, without limitation, all customer information, customer lists, confidential methods of operation, lending and credit information,
commissions,
mark-ups,
product/service formulas, information concerning techniques for use and integration of
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websites and other products/services, current and future development and expansion or contraction plans of Seller, Buyer or their respective Affiliated Companies, sale/acquisition plans and
contacts, marketing plans and contacts, information concerning the legal affairs of and information concerning the pricing of products and services, strategy, tactics and financial affairs of Seller, Buyer or their respective Affiliated Companies.
Confidential Information
also includes any confidential information, trade secrets or any equivalent term under any applicable federal, state or local law.
Confidential Information
shall
not include information that (i) has become generally available to the public by the act of one who has the right to disclose such information without violating any right or privilege of Seller or Buyer or their respective Affiliated Companies
or any duty owed to any of them; or (ii) is independently developed by a person or entity without reference to or use of Confidential Information. Director acknowledges and agrees that the trading in Buyer or Seller securities using
Confidential Information or other
non-public
information may violate federal and state securities laws.
(c) Capitalized terms used but not defined herein shall have the same meanings provided in the Merger
Agreement.
2.
Restrictive Covenants
.
(a)
Nondisclosure of Confidential Information.
From and after the Effective Time, Director shall
not directly or indirectly transmit or disclose any Confidential Information to any Person, or use or permit others to use any such Confidential Information, directly or indirectly, for any purpose for so long as such information remains
Confidential Information, without the prior express written consent of the Chief Executive Officer of Buyer, which consent may be withheld in the sole discretion of Buyers Chief Executive Officer. Anything herein to the contrary
notwithstanding, Director shall not be restricted from disclosing information that is required to be disclosed by law, court order or other valid and appropriate legal process;
provided, however
, that in the event such disclosure is required
by law, Director shall (i) if allowed by law or legal process, provide Buyer with prompt notice of such requirement so that Buyer may seek an appropriate protective order prior to any such required disclosure by Director; and (ii) use
commercially reasonable efforts to obtain assurances that any Confidential Information disclosed will be accorded confidential treatment;
provided
,
further
, that no such notice or efforts shall be required in connection with any
routine audit or investigation by any Governmental Authority or Taxing Authority that does not expressly reference Seller, Buyer or any of their Affiliated Companies. If, in the absence of a required waiver or protective order, Director is
nonetheless, in the good faith written opinion of his legal counsel, required to disclose Confidential Information to a government entity, disclosure may be made to that government entity only as to that portion of the Confidential Information that
counsel advises Director is required to be disclosed.
(b)
Nonrecruitment of Employees
.
Director hereby agrees that, for three (3) years following the Effective Time, Director shall not, without the prior written consent of the Buyers Chief Executive Officer, which consent may be withheld at the sole discretion of the
Buyers Chief Executive Officer, directly or indirectly solicit or recruit or hire, or attempt to solicit or recruit or hire, for employment or encourage to leave employment with Buyer or any of its Affiliated Companies, on his own behalf or on
behalf of any other Person, (i) any then-current employee of Buyer or any of its Affiliated Companies or (ii) any employee of Seller who worked at Seller or any of its Affiliated Companies during Directors services as a director of
Seller or any Seller Affiliated Company and who has not ceased employment for a minimum of a six month period with Buyer, Seller, or any Affiliated Companies, as applicable. It is acknowledged that general advertisements shall not be deemed to
violate this provision.
(c)
Nonsolicitation of Customers
. Director hereby agrees that, for
three (3) years following the Effective Time, Director shall not, without the prior written consent of the Buyers Chief Executive Officer, which consent may be withheld at the sole discretion of Buyers Chief Executive Officer,
directly or indirectly, on behalf of himself or of anyone other than Seller, Buyer or any Affiliated Company, in the Restricted Area (as defined in Section 2(d) below), solicit or attempt to solicit any customer or client of Seller for the purpose
of either (i) providing any Business Activities (as defined in Section 2(d)) or (ii) inducing such customer or client to
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cease, reduce, restrict or divert its business with Seller, Buyer or any Affiliated Company. It is acknowledged that general advertisements shall not be deemed to violate this provision. It is
further acknowledged that this provision shall not apply to the activities of a financial institution for which Director serves as a member of the board of directors as of the date hereof.
(d)
Noncompetition
. Director hereby agrees that, for three (3) years following the
Effective Time, Director shall not, without the prior written consent of Buyers Chief Executive Officer, which consent may be withheld at the sole discretion of Buyers Chief Executive Officer, prepare or apply to commence, or engage or
participate in, Business Activities with, for or on behalf of any other financial institution as an officer, director, manager, owner, partner, joint venture, consultant, independent contractor, employee, or shareholder of, or on behalf of any other
Person, business or enterprise that competes in the Restricted Area with the Buyer and its Affiliated Companies with respect to Business Activities. For purposes of this Agreement,
Business Activities
shall be any business
activities conducted by Buyer, Seller or any of their Affiliated Companies, which consist of commercial or consumer loans and extensions of credit, letters of credit, commercial and consumer deposits and deposit accounts, securities repurchase
agreements and sweep accounts, cash management services, money transfer and bill payment services, internet or electronic banking, automated teller machines, IRA and retirement accounts, mortgage loans, and home equity lines of credit. For avoidance
of doubt, nothing in this Section 2(d) shall prohibit a Director from providing services that the Director provides as of the date of this Agreement as well as services that the Director has provided prior to the date of this Agreement as a part of
such Directors current business to any entity which engages in Business Activities within the Restricted Area. For purposes of this Agreement, the
Restricted Area
shall mean Brevard, DeSoto, Glades, Hendry, Highlands,
Hillsborough, Indian River, Lake, Manatee, Martin, Okeechobee, Orange, Palm Beach, Pinellas, Polk, Seminole, St. Lucie and Volusia counties in Florida. Nothing in this Section 2(d) shall prohibit Director from acquiring or holding, for investment
purposes only, less than five percent (5%) of the outstanding securities of any public company business organization which may compete directly or indirectly with Seller, Buyer or any of their Affiliated Companies. Nothing in this Agreement shall
prohibit a Director or any of such Directors Affiliated Companies from continuing to hold outstanding securities held by the Director and any Affiliated Company as of the date of this Agreement and which engages in Business Activities. If
Buyer is sold during the term of the Agreement, the terms under Section 2(b), 2(c) and (d) hereof shall be automatically reduced from three (3) to two (2) years.
(e)
Enforceability of Covenants.
Director acknowledges and agrees that the covenants in this
Agreement are direct consideration for a sale of a business and should be governed by standards applicable to restrictive covenants entered into in connection with a sale of a business. Director acknowledges that each of Buyer and its Affiliated
Companies have a current and future expectation of business within the Restricted Area and from the current and proposed customers of Seller that are derived from the acquisition of Seller by Buyer. Director acknowledges that the term, geographic
area, and scope of the covenants set forth in this Agreement are reasonable, and agrees that he will not, in any action, suit or other proceeding, deny the reasonableness of, or assert the unreasonableness of, the premises, consideration or scope of
the covenants set forth herein. Director agrees that his position as a director of Seller involves duties and authority relating to all aspects of the Business Activities and all of the Restricted Area. Director further acknowledges that complying
with the provisions contained in this Agreement will not preclude him from engaging in a lawful profession, trade or business, or from becoming gainfully employed. Director and Buyer agree that Directors obligations under the above covenants
are separate and distinct under this Agreement, and the failure or alleged failure of the Buyer to perform its obligations under any other provisions of this Agreement shall not constitute a defense to the enforceability of this covenant. Director
and Buyer agree that if any portion of the foregoing provisions is deemed to be unenforceable because the geography, time or scope of activities restricted is deemed to be too broad, the court shall be authorized to substitute for the overbroad term
an enforceable term that will enable the enforcement of the covenants to the maximum extent possible under applicable law. Director acknowledges and agrees that any breach or threatened breach of this covenant will result in irreparable damage and
injury to the Buyer and its Affiliated Companies and that damages arising out of such breach would be difficult to ascertain. Director hereby agrees that, in addition to all other remedies provided at law or in equity, Buyer will be entitled to
exercise all rights including, without limitation, obtaining one or more temporary restraining orders, injunctive
A-78
relief and other equitable relief, including specific performance in the event of any breach or threatened breach of this Agreement, without the necessity of posting any bond or security (all of
which are waived by the Director), and to exercise all other rights or remedies, at law or in equity, including, without limitation, the rights to damages.
3.
Successors
.
(a) This Agreement is personal to Director, is not assignable by Director, and none of Directors
duties hereunder may be delegated.
(b) This Agreement may be assigned by, and shall be binding
upon and inure to the benefit of the Buyer and any of its Affiliated Companies and their successors and assigns.
4.
Miscellaneous
.
(a)
Waiver
. No provision of this Agreement may be modified, waived or discharged unless such
waiver, modification or discharge is agreed to in writing signed by Director and Buyer. No waiver by either party hereto at any time of any breach by the other party hereto of, or compliance with, any condition or provision of this Agreement to be
performed by such other party shall be deemed a waiver of dissimilar provisions or conditions at the same or any prior subsequent time.
(b)
Severability
. If any provision or covenant, or any part thereof, of this Agreement should be
held by any court to be invalid, illegal or unenforceable, either in whole or in part, such invalidity, illegality or unenforceability shall not affect the validity, legality or enforceability of the remaining provisions or covenants, or any part
thereof, of this Agreement, all of which shall remain in full force and effect.
(c)
Attorneys Fees
. In any legal action or other proceeding relating to this Agreement and
the transactions contemplated hereby or if the enforcement of any right or benefit provided by this Agreement is brought against a Party, the prevailing Party in any such Litigation pursuant to which an arbitral panel, court or other Governmental
Authority issues a final order, judgment, decree or award granting substantially the relief sought shall be entitled upon demand to be paid by the other party, all reasonable costs incurred in connection with such Litigation, including the
reasonable legal fees and charges of counsel, court costs and expenses incident to arbitration, appellate and post-judgement proceedings, provided no party shall be entitled to any punitive or exemplary damages, which are hereby waived.
(d)
Governing Law and Forum Selection
. Buyer and Director agree that this Agreement shall be
governed by and construed and interpreted in accordance with the laws of the State of Florida without giving effect to its conflicts of law principles. Director agrees that any action to enforce this Agreement, as well as any action relating to or
arising out of this Agreement, shall be filed only in the state courts of Palm Beach County, Florida. With respect to any such court action, Director hereby (i) irrevocably submits to the personal jurisdiction of such courts; (ii) consents
to service of process; (iii) consents to venue; and (iv) waives any other requirement (whether imposed by statute, rule of court, or otherwise) with respect to personal jurisdiction, service of process, or venue. Both parties hereto
further agree that the state courts of Palm Beach County, Florida are convenient forums for any dispute that may arise herefrom and that neither party shall raise as a defense that such courts are not convenient forums.
(e)
Notices
. All notice, consent, demand, request or other communication given to a party hereto
in connection with this Agreement shall be in writing and shall be deemed to have been given such party (i) when delivered personally to such party or (ii) provided that a written acknowledgement of receipt is obtained, five (5) days
after being sent by prepaid certified or registered mail or two (2) days after being sent by a nationally recognized overnight courier, to the address (if any) specified below for such party (or to such other address at such party shall have
specified by ten (10) days advance notice given in accordance with this Section 4(e), or
A-79
(iii) in the case of Buyer only, on the first business day after it is sent by electronic transmission or facsimile to the facsimile number set forth below (or to other such facsimile number
as shall have specified by ten (10) days advance notice given in accordance with this Section 4(e)), with a confirmation copy sent by certified or registered mail or by overnight courier in accordance with this Section 4(e).
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To Buyer:
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Seacoast Banking Corporation of Florida
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815 Colorado Avenue
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Stuart, Florida 34994
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Facsimile Number: (772)
288-6086
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Attention: Dennis S. Hudson, III
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To Director:
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To the address set forth under such Directors name on the signature page of this Agreement
|
Any party may change the address to which notices, requests, demands and other communications shall be
delivered or mailed by giving notice thereof to the other party in the same manner provided herein.
(f)
Amendments and Modifications
. This Agreement may be amended or modified only by a writing
signed by both parties hereto, which makes specific reference to this Agreement.
(g)
Entire
Agreement
. Except as provided herein, this Agreement contains the entire agreement between Buyer and Director with respect to the subject matter hereof and, from and after the date hereof, this Agreement shall supersede any prior agreement,
understanding and arrangement, oral or written, between the parties with respect to the subject matter hereof.
(h)
Counterparts, etc
. This Agreement may be executed in identical counterparts, each of which
shall be deemed to be an original, but all of which together shall constitute one and the same instrument. A facsimile signature shall constitute and have the same force and effect as an original signature for all purposes under this Agreement.
(i)
Termination
. If the Merger Agreement is terminated in accordance with Article 6 thereof,
this Agreement shall become null and void.
[Signatures on following page]
A-80
IN WITNESS WHEREOF, the parties hereto have duly executed and delivered this
Agreement as of the date first above written.
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BUYER:
|
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SEACOAST BANKING CORPORATION OF FLORIDA
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By:
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Name:
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Charles M. Shaffer
|
Title:
|
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Chief Financial Officer
|
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DIRECTOR:
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Name:
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Address:
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[
Signature Page to Restrictive Covenant Agreement
]
A-81
Exhibit D
TAX INSURANCE POLICY
This declares and certifies that pursuant to the authority granted to the undersigned by the insurance carriers identified below (the
Insurers and each, an Insurer), in consideration of the payment of premium specified herein, and in accordance with the terms and conditions of this Policy, the Insurers are bound, severally and not jointly, to provide the
insurance as set forth in this Policy.
POLICY DECLARATIONS
|
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|
Named Insured:
|
|
Palm Beach Community Bank, its successors and/or its assigns
|
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|
Mailing Address:
|
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8101 Okeechobee Boulevard
|
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|
West Palm Beach, FL 33411
|
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|
Broker of Record:
|
|
Aon Risk Services Northeast, Inc.
|
|
|
Surplus Lines No.:
|
|
[●]
|
|
|
Limit of Liability:
|
|
$10,000,000, in the aggregate (as allocated among the Insurers severally).
|
|
|
Retention:
|
|
None.
|
|
|
Premium:
|
|
$475,000, plus surplus lines tax and fees.
|
The coverage offered by this Policy is subject to the Terrorism Risk Insurance Act. Your election to accept or reject
Terrorism Risk Insurance is reflected in Endorsement No. 1 attached to this Policy.
There is no premium attributable to Terrorism Risk Insurance with respect to this Policy.
|
|
|
Policy Period:
|
|
Seven years, commencing May 4, 2017 (the Inception Date) and expiring May 4, 2024 (the Expiry Date), each as of 12:01 A.M. ET.
|
|
|
Endorsements:
|
|
1) Terrorism; 2) OFAC Disclosure
|
|
|
Schedules:
|
|
(A) Covered Tax Risk; and
|
|
|
(B) Statement of the Material Events Regarding the Tax Risk
|
|
|
Exhibits:
|
|
(1) Initial Stockholders Register
|
4-28-17
Concord Specialty Risk is a series of RSG Underwriting Managers, LLC. RSG Underwriting Managers is a Delaware Series limited liability company
and a subsidiary of Ryan Specialty Group, LLC, specializing in providing underwriting management and other services to insurance companies, whose insurance products are distributed through agents and brokers.
In California: RSG Insurance Services, LLC License # 0E50879
©
2017
Ryan Specialty Group, LLC
A-82
INSURER DECLARATIONS
The following Insurers authorize this Policy and participate severally, and not jointly, in any
Loss
(as defined in the Policy) by
their respective Quota Share Fraction of
Loss
indicated below:
|
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|
|
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|
|
Insurer
|
|
Insurers Policy No.
|
|
Quota Share Fraction
|
|
Allocable Premium
|
|
Scottsdale Insurance Company (Nationwide)
|
|
CNS0000522
|
|
$3,500,000 p/o
$10,000,000
|
|
$
|
166,250
|
|
Arch Specialty Insurance Company
|
|
TOP 9300054 00
|
|
$3,500,000 p/o
$10,000,000
|
|
$
|
166,250
|
|
Steadfast Insurance Company (Zurich)
|
|
DOC 0280912-00
|
|
$3,000,000 p/o
$10,000,000
|
|
$
|
142,500
|
|
Unless otherwise specified, the term Insurer, as used in this Policy, shall refer
to all Insurers, collectively, with the understanding that each is liable only for its respective Quota Share Fraction of Loss.
Claim
Representative Provision:
If more than one carrier is the Insurer, Concord Specialty Risk
(
Concord
or
Claim Representative
) shall serve as the
Claim Representative
on behalf of all the Insurers and shall participate in the
Ruling Request
(as defined in this Policy) process and
investigate and adjust any
Claim
(as defined in this Policy), including without limitation the determination of whether a
Claim
is covered and the amount of covered
Loss
hereunder. All Insurers shall be bound by the decisions
communicated by Concord. The
Insured
shall reasonably cooperate with Concord and may rely upon communications made to or received from Concord as the
Claim Representative
for all Insurers for any
Claim
reported under this
Policy.
This Declarations Page, together with the Tax Insurance Policy attached hereto, the Endorsements, Schedules and
the Proposal, shall constitute the Policy declared to hereby.
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Concord Specialty Risk
|
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|
By:
|
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DRAFT NOT VALID
|
Authorized Representative
|
A-83
Required Legends
: FLORIDA
THIS INSURANCE IS ISSUED PURSUANT TO THE FLORIDA SURPLUS LINES LAW. PERSONS INSURED BY SURPLUS LINES CARRIERS DO NOT HAVE THE PROTECTION OF
THE FLORIDA INSURANCE GUARANTY ACT TO THE EXTENT OF ANY RIGHT OF RECOVERY FOR THE OBLIGATION OF AN INSOLVENT UNLICENSED INSURER.
Surplus Lines
Broker
:
Name: [●]
Aon Risk Services Northeast, Inc.
199 Water
Street
New York, NY 10038
Filing License #:
[●]
State: Florida
A-84
THIS IS A CLAIMS MADE POLICY WITH COVERAGE FOR CLAIM EXPENSES INCLUDED IN THE LIMIT OF
LIABILITY. PLEASE READ THE ENTIRE POLICY CAREFULLY.
TAX INSURANCE POLICY
In consideration of, and subject to, the payment of the premium and subject to all the terms and conditions of this
Policy
, the
Insurer
and the
Insured
agree as follows. (All capitalized terms set forth in bold are defined in Section II of this
Policy
.)
Subject to the terms, conditions and limitations of this
Policy
, the
Insurer
shall promptly indemnify the
Insured
for and pay to the
Insured
all
Loss
but not in excess of the
Limit of Liability
arising from one or more
Claims
, provided that each such
Claim
is (a) made prior to the expiration of the
Policy Period
or within the thirty (30) day period immediately following the expiration of the
Policy Period
and (b) reported to the
Insurer
in accordance with the provisions of this
Policy
.
As used herein, the following terms are defined as follows:
(A)
|
Additional Taxes
means the amount of additional United States federal, state and local
income taxes owed to any
Taxing Authority
as a result of the disallowance, in whole or in part, of the
Covered Tax Risk
pursuant to a
Final Adjudication
against the
Taxpayer
for
Covered Tax Years
.
|
(B)
|
Amended Income Tax Returns
has the meaning set forth in Section VII(A).
|
(C)
|
Amending Trusts
has the meaning set forth in Section VII(A).
|
(D)
|
Business Day
means any day that the National Market System of The NASDAQ Stock Market is
normally open for trading for a full day and that is not a Saturday, a Sunday or a day on which banks in New York, New York are authorized or required to close for regular banking business.
|
(E)
|
Change of Law
means the enactment of any change, amendment or modification in or to the
Code
or the promulgation of any Treasury regulations after the
Inception Date.
|
(F)
|
Claim
means any of the following:
|
i.
|
The initial written notice provided to the
Insured
that the
Covered Tax Risk
is being
investigated or challenged by a
Taxing Authority
;
|
ii.
|
The
Insureds
granting to a
Taxing Authority
a written waiver or consent extending
any statute of limitation for the assessment of any
Additional Taxes
related to an
Examination
with the prior consent of the
Insurer
, which consent shall not be unreasonably withheld, conditioned or delayed; or
|
iii.
|
If at the time the
Policy
is about to terminate, any
Taxing Authority
is conducting an
Examination
of the
Taxpayers
U.S. federal or state income tax return for a
Covered
Tax Year
(or has notified the
Taxpayer
in writing of its intentions to do so) and the
Insured
reports such
Examination
to the Insurer during the
Policy Period
or within thirty (30) days after the termination of the Policy in accordance with the provisions of this
Policy
.
|
(G)
|
Claim Expenses
means reasonable fees, including attorneys fees and
accountants fees, consulting fees and experts fees, and expenses incurred by the
Taxpayer
in the investigation, defense,
|
A-85
|
prosecution, settlement or appeal of a challenge to the
Covered Tax Risk
after all administrative recourse has been exhausted but only to the extent that such fees and expenses relate to
proposed
Additional Taxes
,
do not include the wages, salaries or benefits of any directors, officers or employees of the
Insured
and are within the terms and conditions of this Policy (including without limitation the
Limit
of Liability
and the provisions of Section V hereof).
The
Limit of Liability
available to pay other items of
Loss
shall be reduced by
Claim Expenses
. For the avoidance of doubt,
Claim Expenses
does not include
any fees and expenses incurred by the
Taxpayer
in the preparation or filing of the
Ruling
Request
.
|
(H)
|
Claim Representative
means the entity identified as such on the Declarations Page.
|
(I)
|
Closing Date
means the date ascribed to such term in the
Purchase Agreement
.
|
(J)
|
Code
means the U.S. Internal Revenue Code of 1986, as amended, and the regulations
promulgated thereunder.
|
(K)
|
Concord
means the entity identified as such on the Declarations Page
|
(L)
|
Covered Tax Jurisdictions
means the respective jurisdictions of all
Taxing
Authorities
.
|
(M)
|
Covered Tax Risk
means the covered tax risk stated as such in Schedule A
attached to this Policy
of the
Taxpayer
in U.S. federal, state and local income tax returns filed with the
Covered Tax Jurisdictions
with respect to the
Covered Tax Years
.
|
(N)
|
Covered Tax Years
means the following tax years of the
Taxpayer
: the (short and
final) 2017 tax year ending on the day immediately prior to the
Closing Date
; and open tax years prior to the 2017 tax year.
|
(O)
|
Deceased Shareholders
means: (i) John D. Martin, Jr., (ii) Melvin W. Tanen,
(iii) William R. Martin, and (iv) Jo Ann Zuccala.
|
(P)
|
Denied Relief
means a written or oral notification from the
IRS
indicating that it
will not issue relief under the
Ruling Request
.
|
(Q)
|
Electronic Delivery
has the meaning set forth in Section VIII(I).
|
(R)
|
ESBT
means an electing small business trust, within the meaning of section
1361(e)(1) of the
Code
.
|
(S)
|
ESBT Election
means an election to be treated as an
ESBT
pursuant to Section
1361(e)(3) of the
Code
and Treas. Reg. Section
1.1361-1(m)(2).
|
(T)
|
Examination
means an audit, administrative and/or judicial proceeding (whichever first
occurs) to determine the validity of one or more proposed items on or changes to an income tax return filed (or allegedly required to be filed) with any
Taxing Authority
on behalf of any
Insured
or any written notice by any
Taxing
Authority
of its intent to commence such an audit, administrative and/or judicial proceeding.
|
(U)
|
Expiry Date
means the date identified as such on the Declarations Page.
|
(V)
|
Filing Issues
means the failure of (i) each of the
Trusts
, as
Stockholders
of
Taxpayer
, to timely file an
ESBT Election
and (ii) each of the
Initial Stockholders
to timely provide the required consents on
IRS
Form 2553,
Election by a Small Business Corporation
, in
the manner provided in Treas. Reg.
Section 1.1362-6.
|
(W)
|
Final Adjudication
means any of the following: (a) with respect to U.S. federal income
taxes, a determination as defined in Section 1313(a) of the
Code
, (b) with respect to
Additional Taxes
other
|
A-86
|
than U.S. federal income taxes, any final determination of liability that, under applicable law, is not subject to further appeal, review or modification through proceedings or otherwise
(including a state settlement that merely follows a federal determination, which state settlement will not require the consent of the
Insurer
) and (c) any settlement (other than the state settlement described above) or
determination obtained via settlement, default or failure to protest, petition, defend or prosecute with the consent of the
Insurer
, which consent will shall not be unreasonably withheld or delayed.
|
(X)
|
Gross-Up
Costs
means an additional amount that
approximates the income tax that would be incurred by the
Insured
as a result of the receipt of insurance proceeds
under this
Policy
computed (without taking into account any tax attributes, including net operating losses, of
the
Insured
) as the difference between B less A, where A is the sum of
Additional Taxes
,
Interest
and
Penalties
paid under this Policy and B is the quotient of A
divided by 1 minus the combined United States federal, state and local income tax rates, net of any federal tax benefit, applicable to a corporate resident in Martin County, Florida at the time of payment of a
Loss
.
|
(Y)
|
Inception Date
means the dated identified as such on the Declarations Page.
|
(Z)
|
Initial Stockholders
mean the initial shareholders of
Taxpayer
, who were
issued shares of
Taxpayer
on March 7, 2008, as set forth on the stockholder register listed as Exhibit 1 annexed to this
Policy
.
|
(AA)
|
Insured
means the
Taxpayer
, Seacoast Banking Corporation of Florida
and their
respective successors and assigns.
|
(BB)
|
Insurer
means the entities identified as Insurers on the Declarations Page.
|
(CC)
|
Insurers Counsel
has the meaning set forth in Section V(E).
|
(DD)
|
Interest
means the amount of interest assessed by the
Taxing Authorities
with
respect to
Additional Taxes
and
Penalties.
|
(EE)
|
IRS
means the United States Internal Revenue Service.
|
(FF)
|
Knowledge
means, with respect to the
Taxpayer
, the actual personal knowledge as of
the
Inception Date
of the following individuals: (i) Jim Springer (President and COO, Palm Beach Community Bank), (ii) Calvin Cearley (CEO, Palm Beach Community Bank) and (iii) Nancy Minniear (CFO, Palm Beach Community Bank) and for
the avoidance of doubt, does to include constructive or imputed knowledge nor does it include any actual, constructive or imputed knowledge of any advisor or agent of the
Taxpayer
. The
Insurer
shall bear the burden of proving that any
of the persons listed in clauses (i), (ii) and (iii) above had
Knowledge
.
|
(GG)
|
Letter Ruling
means written correspondence from the
IRS
fully resolving (by
granting, denying, or refusing to rule) all issues presented in the
Ruling Request
.
|
(HH)
|
Limit of Liability
means the amount shown as such on the Declarations Page, which is the
maximum amount payable, in the aggregate, under this
Policy
.
|
(II)
|
Loss
means each of the following (1)
Additional Taxes
,
(2)
Penalties
,
(3)
Interest
, (4)
Gross-Up
Costs
and (5)
Claim Expenses
.
|
(JJ)
|
Named Insured
means the entity identified as the Named Insured on the Declarations Page.
|
(KK)
|
Notice of a Claim
has the meaning set forth in Section III of this
Policy
.
|
A-87
(LL)
|
Penalties
means the amount imposed pursuant to Chapter 68 of Subtitle F of the
Code
(or similar provision of state and local law) as a penalty or addition to tax (other than
Interest
) by the
Taxing Authorities
with respect to the
Covered Tax Risk.
|
(MM)
|
Policy Period
means the period shown as such on the Declarations Page of this
Policy
.
|
(NN)
|
Proposal
means the information contained, identified, referred to or described in the
Statement of the Material Events Regarding the Tax Risk annexed hereto as Schedule B as well as the information and materials provided to the
Insurer
in the underwriting of this
Policy
.
|
(OO)
|
Purchase Agreement
means the Agreement and Plan of Merger by and among Seacoast Banking
Corporation of Florida, Seacoast National Bank and Palm Beach Community Bank, dated as of May 4, 2017, including all exhibits and schedules attached thereto.
|
(PP)
|
Ruling Request
means the private letter ruling request under section 1362(f) of the
Code
for relief from an inadvertent termination (or invalidity) of
S Status
of
Taxpayer
due to the
Filing Issues
seeking leave to (i) allow the
Trusts
an extension of time to file
ESBT Elections
so that
S Status
of
Taxpayer
is valid as of the date that the
ESBT Elections
should have been made effective (if necessary) and (ii) allow the
Initial Shareholders
an extension of time to provide the required shareholder
consents in the manner provided in section 1362(a)(2) of the
Code
and Treas. Reg. Section
1.1362-6(b)
so that the
S Status
of
Taxpayer
is valid as of the date the
Taxpayer
first had
shareholders, together with all exhibits referred to therein.
|
(QQ)
|
S Status
means the tax status of an S corporation, within the meaning of
section 1361 of the
Code
(and analogous state tax law of other
Taxing Authorities
);
provided, however, that for purposes of determining whether the
S Status
of
Taxpayer
is invalid or was terminated by any
Taxing
Authority
, the
S Status
must be found to be invalid or have terminated by such
Taxing Authority
pursuant to a
Final Adjudication
.
|
(RR)
|
Stockholders
mean all shareholders of
Taxpayer
since its incorporation on
January 17, 2008.
|
(SS)
|
Taxpayer
means the
Named Insured
.
|
(TT)
|
Taxing Authorities
means the
IRS
and each state and local taxing authority whose
income tax is similar to the
Code
and
IRS
guidance (as existing as of the
Inception Date
)
with respect to the
Covered Tax Risk
.
|
(UU)
|
Trust FBO Zachary H. Rapaport
has the meaning set forth in Section VII(A).
|
(VV)
|
Trusts
means collectively: (i) the Jonathan and Laurie Rapaport Irrevocable Trust
Agreement for the benefit of Zachary H. Rapaport, dated December 29, 2005, (ii) the Jonathan and Laurie Rapaport Irrevocable Trust Agreement for the benefit of Matthew T. Rapaport, dated December 29, 2005, (iii) the Irrevocable Trust
Agreement for the benefit of Tali Beth Rapaport, dated December 28, 1983, (iv) the Irrevocable Trust Agreement for the benefit of Jeffrey Irving Rapport, dated May 28, 1981, and (v) The Melvin W. Tanen Credit Shelter Trust, dated
October 27, 2011 as governed pursuant to the Amended and Restated Melann Family Trust, dated August 15, 2006.
|
(WW)
|
Voting Trust
means the voting trust agreement entered into as of February 18, 2008 by
and among
Taxpayer
, the Stockholders (as defined therein) and the
Voting Trustees (as defined therein).
|
A-88
III.
|
NOTICE TO CLAIM REPRESENTATIVE
|
All notices to the
Insurers
shall be given via email to claims@concordspecialtyrisk.com, with a copy to
daviddeberry@concordspecialtyrisk.com and in writing to (a) Concord Specialty Risk, 14 Penn Plaza, 225 West 34th Street, Suite 1510, New York, New York 10122 Attention: Claims, with a copy to (b) Aon Risk Services Northeast, Inc., 199
Water Street, New York, NY 10038, and shall refer to the
Insurers
and their respective Policy Numbers assigned to this
Policy
.
All notices to the
Insured
shall be given in writing to the address set forth on the
Declarations Page. Any notices under this
Policy
shall be in writing, shall be given by electronic mail, mail, hand delivery or prepaid express courier and shall be effective upon receipt. All notices of a
Claim
(
Notice of a
Claim
) shall state with specificity how and when the
Taxing Authority
first challenged the
Covered Tax Risk
or when and how the
Insured
became aware of a
Claim
as described in the definition of
Claim
under (iii) and shall attach or enclose all documents issued by the
Taxing Authority
in connection therewith or all documents related to the
Insureds
awareness of a
Claim
under (iii) in connection therewith.
The information provided in or pursuant to any
Notice of a Claim
shall be provided solely for the purpose of making a
claim under this
Policy
. In disclosing such information, the
Insured
expressly does not waive any
attorney-client
privilege associated with such information or any protection afforded by the
work-product
doctrine or other privilege with respect to any of the matters disclosed or discussed therein. No information contained in any
Notice of a Claim
shall be deemed to be an admission by any
Insured
to any third party of any matter whatsoever (including any violation of law or breach of contract).
IV.
|
RIGHTS & DUTIES WITH RESPECT TO THE RULING REQUEST
|
(A)
|
The
Ruling Request
shall be prepared by Deloitte & Touche LLP pursuant to (and in
accordance with) the requirements outlined in section 1362(f) of the
Code
(other than obtaining the consent of the
Deceased Shareholders
but subject to Section VII(B) of this Policy) and Revenue Procedure
2017-1.
The facts and statements set forth in the
Ruling Request
shall be consistent with the information and documentation provided to the
Claims Representative
during underwriting of this
Policy
. The preparation and timely filing of the
Ruling Request
in accordance with Section IV of this
Policy
is a condition subsequent to coverage hereunder.
|
(B)
|
The
Insured
shall (i) promptly file the
Ruling Request
with the
IRS
as soon
as reasonably practicable but
no later than twenty (20)
Business Days
after the
Inception Date
, (ii) fully cooperate with the
Claims Representative
to pursue the
Ruling Request
(including filing any
amendments or changes made thereto), and (iii) pursue throughout the
Ruling Request
process with reasonable zeal and diligence.
|
(C)
|
Prior to submitting any written submissions to the
IRS
with respect to the
Ruling
Request
, the
Insured
shall provide the
Claim Representative
with a copy of any draft written submissions in reasonably sufficient time to allow the
Claim Representative
to review and comment on such written submissions.
|
(D)
|
The
Insured
shall promptly (but no later than five (5)
Business Days
) provide the
Claim
Representative
with a copy of all written communications and a summary of all oral statements between the
Taxpayer
and the
IRS
during the pendency of the
Ruling Request
.
|
(E)
|
If the
Taxpayer
has a conference of right on the
Ruling Request
, the
Claim
Representative
shall have the right (but not the duty) to attend and participate in the conference of right.
|
A-89
(F)
|
The
Insured
shall give to the
Claim Representative
all information and cooperation as the
Insurer may reasonably request (such request to be in writing and addressed to the
Insured
) and as may be permitted by law and shall take no action or fail to take any action (other than cooperate, with the consent of the
Claim
Representative
, such consent not to be unreasonably withheld, conditioned or delayed) with the
Taxing Authority
with respect to the
Ruling Request
that may unreasonably prejudice the Insurers position or its potential or
actual rights of recovery. During the
Policy Period
the
Insured
shall cause to be maintained the documents referred to or relied upon with respect to the
Ruling Request
.
|
V.
|
RIGHTS & DUTIES IN THE EVENT OF A CLAIM
|
(A)
|
The
Insured
shall give
Notice of a Claim
to the
Claim Representative
as soon as
practicable and, in all instances, within fifteen (15) days of any notice of proposed adjustment to the
Insured
or any information document request of a
Taxing Authority
to the
Insured
and within thirty (30) days of
any other
Notice of a Claim
from when a Vice President, President, COO, CEO, CFO or General Counsel of the Insured first becomes aware of the
Claim
. Failure to timely provide
Notice of a Claim
shall not excuse the
Insurer
from performance hereunder unless, and only to the extent that such failure actually prejudices the
Insurer
(which prejudice the
Insurer
shall bear the burden of proving). Notwithstanding the foregoing, in no event may a
Notice of a
Claim
be delivered to the
Insurer
later than thirty (30) days following the
Expiry Date
. If
Notice of a Claim
is delivered to the
Insurer
by the
Insured
prior to the 30th day following the
Expiry
Date
, then any subsequent
Loss
arising out of the matters identified in such
Notice of a Claim
shall be deemed notified to the
Insurer
by that
Notice of a Claim
.
|
(B)
|
As soon as reasonably practicable after the
Insurer
receives a
Notice of a Claim
(and in
any event within sixty (60) days after receipt), the
Claim Representative
shall respond with the coverage position of the
Insurer
(including reasons in the case where the
Insurer
has denied claimed
Loss
) but only to
the extent the
Insurer
and its advisors have reasonably sufficient information and reasonable time to review and analyze such information; provided that the
Insurer
shall have no obligation to independently investigate any facts not
included in the
Notice of a Claim
. If the
Insurer
is not in a position to determine the coverage position based on the information provided in the
Notice of a Claim
, then the
Insurers
response shall state why it is
unable to do so in reasonable detail. The
Claim Representative
shall use commercially reasonable efforts to respond to any
Notice of a Claim
in a manner which provides the
Insured
sufficient time to satisfy any litigation
deadlines or similar deadlines of which the
Insurer
has actual knowledge that relate to the subject matter of the
Notice of a Claim
.
|
(C)
|
In the event of a
Claim
, the
Claim Representative
shall have the right (but not the duty)
to participate in the
Examination
but only to the extent that the
Examination
relates to proposed
Additional Taxes
.
|
(D)
|
Each
Insured
shall have a duty to use commercially reasonable steps, as reasonably requested in
writing by the
Claim Representative
, to mitigate
Loss
and defend any
Claim
as if no insurance coverage were in force;
provided
that
the failure of any
Insured
to so mitigate or defend shall only reduce the
rights of the
Insured
to recover for
Loss
under this
Policy
to the extent of the
Loss
that would have been avoided by such mitigation, and the burden of proving such amount shall be on the
Insurer
and the
Claim
Representative
. If a
Claim
implicates issues and/or items reported that would not give rise to
Additional Taxes
,
the
Taxpayer
may negotiate, settle or contest such additional matters pursuant to its discretion and
best judgment and the
Taxpayer
shall not be deemed to have
|
A-90
|
failed to mitigate
Loss
by having exercised its discretion in such matters;
provided
, however, the
Taxpayer
shall not settle or contest any such additional matter in a manner
that is intentionally designed to result in a less favorable resolution with respect to the
Covered Tax Risk
.
|
(E)
|
In the event of a
Claim
(unless the
Insurer
elects otherwise in writing), the
Taxpayer
shall timely file (or timely amend) an appropriate Power of Attorney form (e.g.,
IRS
Form 2848) identifying as
co-counsel
for the
Taxpayer
, an additional counsel selected by the
Claim
Representative
(
Insurers Counsel
). The selection of
Insurers Counsel
shall be subject to the consent of the
Taxpayer
, which shall not be unreasonably withheld, conditioned or delayed. The
Insurers Counsel
shall be a named representative of the
Taxpayer
only with respect to issues that could give rise to
Additional Taxes
,
with no other deletions or restrictions to authority and with the right to
obtain notices and other written communications.
Insurers Counsel
shall represent the interests of the
Insurer
.
Insurers Counsel
shall not communicate with the
Taxing Authorities
without the consent of the
Taxpayer
, which shall not be unreasonably withheld, conditioned or delayed.
Insurers Counsel
shall not have any obligation to represent or advise the
Taxpayer
, but shall (upon request) disclose all communications with a
Taxing Authority
regarding
Additional Taxes
to the
Taxpayer
.
Insurers Counsel
shall have the right to observe as a representative of the
Taxpayer
in any and all communications with the
Taxing
Authorities
(whether oral or written) and to appear in any and all administrative and judicial proceedings. The
Taxpayer
shall not disclose to the
Taxing Authorities
or to any tribunal (whether administrative or judicial) that
Insurers Counsel
represents the
Insurer
, unless legally required to do so.
|
(F)
|
In the event of a
Claim
, the
Taxpayer
shall not settle any dispute with the
Taxing
Authority
concerning
Additional Taxes,
absent the consent of the
Claim Representative
,
which consent shall not be unreasonably withheld, conditioned or delayed.
|
(G)
|
Except as provided in the following paragraph, the
Taxpayer
shall litigate any dispute over
Additional Taxes
purportedly owed to the United States
before the U.S. Tax Court.
|
(H)
|
Unless otherwise directed in writing by the
Claim Representative
, the
Taxpayer
shall
litigate any dispute over
Additional Taxes
purportedly owed to the United States
before the U.S. Tax Court. If the
Claim Representative
directs in writing the
Insured
to pay
Additional Taxes
and have any such
Taxpayer
seek a refund and recourse in either a U.S. District Court or the Court of Claims, the
Insurer
shall advance such
Additional Taxes
up to the
Limit of Liability
with the understanding that the
Insured
shall
reimburse the
Insurer
if (and to the extent that) such recourse is successful.
|
(I)
|
The
Insured
shall give to the
Claim Representative
all information and cooperation as the
Insurer
may reasonably request (such request to be in writing and addressed to the
Insured
) and as may be permitted by law and shall take no action or fail to take any action (other than cooperate, with the consent of the
Claim
Representative
, such consent not to be unreasonably withheld, conditioned or delayed) with the
Taxing Authorities
in any potential or actual
Examination
that may unreasonably prejudice the
Insurers
position or its
potential or actual rights of recovery. The
Claim Representative
and the
Insurer
shall reasonably cooperate in good faith with the
Insured
to ensure and preserve the privileged and/or confidential status of any information
shared in connection with this
Policy
. Without limiting the generality of the foregoing, during the
Policy Period
, the
Insured
shall (1) cause to be maintained the documents referred to or relied upon in its
Covered Tax
Risk
; (2) not execute or grant any waiver or consent extending any statute of limitations for the assessment or collection of any
Additional Taxes
without the written consent of the
Insurer
; (3) neither waive, fail to
exercise nor exercise any administrative remedies or administrative recourse without the written consent of the
Insurer
, which shall not be unreasonably withheld, conditioned or delayed (e.g., any right, election or
|
A-91
|
opportunity to request to further a matter with the supervisor of the taxing examiner, the Taxpayer Advocates Office and/or an appeals officer; or to request expedited dispute resolution
via Fast Track Appeals, pursuant to Rev. Proc.
2003-40,
Early Referral to Appeals, pursuant to Rev. Proc.
99-28,
or Accelerated Issue Resolution, pursuant to Rev. Proc.
94-67);
and (4) pursue throughout the
Examination
with reasonable zeal and diligence its position that no
Additional Taxes
are owed until a
Final Adjudication
is rendered.
|
(J)
|
If a
Claim
is, in part, covered under this
Policy
and, in part, not covered under this
Policy
(for example, if a
Claim
relates to taxes in addition to
Additional Taxes
), the
Insured
and the
Claim Representative
shall fairly and reasonably allocate any
Claim Expenses
relating to such
Claim
between that which is covered and that which is not covered under this
Policy
based upon the following precepts: (1) the
Insured
shall direct that all outside professionals retained on its behalf use their best
efforts to fairly and properly allocate the actual time incurred in directly defending a challenge to the
Covered Tax Risk
and other tax positions and (2) the
Insured
shall cooperate in the allocation process by providing all
pertinent information with respect thereto. If the parties cannot reach an agreement about such allocation, the matter shall be submitted to arbitration in accordance with this
Policy
.
|
The
Insurer
shall not be liable to make any payment of
Loss
in connection with any
Claim
to the extent, and only to the
extent, it arises out of or results from:
(A)
|
the filing of any return or amended return (including any information return, report, statement,
schedule, notice, form, estimate or declaration or election, but excluding the
Ruling Request
) after the issuance of this
Policy
with any
Covered Tax Jurisdiction
(whether or not filed by the
Insured
)
that is
inconsistent with the
Covered Tax Risk
; provided, however, this exclusion shall not apply if the
Insured
can establish that the
Insurer
was not prejudiced by such filing;
|
(B)
|
a material inaccuracy (or materially misleading statement) made in the
Proposal
but only to the
extent that the
Insurer
can establish (a) that the
Taxpayer
had
Knowledge
that such statement was materially inaccurate or materially misleading as of the
Inception Date
and (b) the
Insurer
was actually
prejudiced by such statement in terms of the acceptance of the risk assumed by the
Insurer
under this
Policy
;
|
(C)
|
a
Change of Law
, provided, however, that this exclusion shall not apply to the amount of
Loss
imposed to any tax year, or the portion of any tax year, to which the
Change of Law
does not apply or to which precedes the enactment of such
Change of Law
;
|
(D)
|
having failed to (i) pursue the
Ruling Request
until a
Letter Ruling
has been issued
to the
Taxpayer
, (ii) satisfy the procedural requirements outlined in section 1362(f) of the
Code
and Rev Proc.
2017-1
or file the required
IRS
Form 56,
Notice Concerning Fiduciary
Relationship
, or (iii) satisfy any of the conditions imposed by the
IRS
as a condition to granting the
Ruling Request
, including, for example, requiring the
Stockholders
to make adjustments consistent with the
Taxpayer
having
S Status
during the time covered by the
Ruling Request
or the
Trusts
to file any
ESBT Election
within the specified time period or the
Taxpayer
to file a
IRS
Form 2553,
Election by
a Small Business Corporation
, with the required shareholder consents within the specified time period, in case of (i), (ii) or (iii), other than obtaining the consent of the
Deceased Shareholders
but subject to Section VII(B) of this
Policy
;
|
(E)
|
(i) the failure of the
Taxpayer
to qualify for
S Status
other than for the
Filing Issues
;
(ii) the failure of the
Trusts
to qualify as an
ESBT
; or (iii) the inaccuracy or incorrectness of any representation or statement set forth in the
Ruling Request
; and
|
A-92
(F)
|
any amendment to the
Purchase Agreement
, corporate documents of
Taxpayer
,
or the
Ruling Request
that alters the transfer of risk under this
Policy
or the rights or ability to seek and obtain a remedy for any
Denied Relief
or to recover
Loss
therefrom.
|
VII.
|
PARTICULAR CONDITIONS
|
The
Insured
shall assure that (i) the Jonathan and Laurie Rapaport Irrevocable Trust Agreement for the benefit of
Zachary H. Rapaport, dated December 29, 2005 (the
Trust FBO Zachary H. Rapaport
) and (ii) the Jonathan and Laurie Rapaport Irrevocable Trust Agreement for the benefit of Matthew T. Rapaport, dated December 29, 2005
(together with the
Trust FBO Zachary H. Rapaport
, the
Amending Trusts
), each file amended income tax returns (the
Amended Income Tax Returns
) and pay the correct amount of income taxes due for the period
2008 2012 as an
ESBT
prior to the filing of the
Ruling Request
. The filing of such
Amended Income Tax Returns
and payment of the correct amount of taxes is a condition subsequent to coverage hereunder. The
Insured
shall provide the
Claims Representative
documentation, including the
Amended Income Tax Returns
, to substantiate the satisfaction of this provision. For clarity, the filing of the
Amended Income Tax Returns
with the
IRS
and the payment of any amounts due thereunder to the
IRS
shall satisfy the conditions set forth in this Section VII(A). In the event that the
IRS
rejects the
Amended Income Tax Returns
and/or returns any payment
received with respect to the
Amended Income Tax Returns
, neither the
Insured
nor the
Amending Trusts
will have any further obligation with respect thereto and the conditions set forth in this Section VII(A) shall be deemed
satisfied.
If the
IRS
either (i) refuses to rule on the
Ruling Request
because the
Ruling Request
failed to
satisfy Section 1362(f)(4) of the
Code
due to the failure to provide the consent of the
Deceased Shareholders
or (ii) conditions the granting of the
Ruling Request
on receiving the consent of the
Deceased
Shareholders
, the
Insured
shall use commercially reasonable efforts to obtain the consent of the
Deceased Shareholders
within the specified time period, including, but not limited to: notifying the estate and/or family of the
Deceased Shareholders
of the
Ruling Request
; informing the estate and/or family of the
Deceased Shareholders
of the adverse income tax implications of the
S Status
termination of
Taxpayer
; informing the estate
and/or family of the
Deceased Shareholders
obligation
to take all such action as may be necessary by such
Deceased Shareholder
to continue the
S Status
of
Taxpayer
pursuant to the executed subscription
agreement and shareholder agreement of
Taxpayer
; and seek the required consents of the
Deceased Shareholders
. It shall be unreasonable if
Insured
fails to get the required consents of the
Deceased Shareholders
because the
Insured
has to incur reasonable costs. The
Insured
shall not disclose the existence of this
Policy
to the estate and/or family of the
Deceased Shareholders
, other than through any disclosure of the existence or terms of
this
Policy
in any document to be filed with the Securities and Exchange Commission. The
Insured
shall keep the
Claim Representative
informed of the
Insureds
efforts to obtain the consent of the
Deceased
Shareholders
. For the avoidance of doubt, if the
Insured
uses commercially reasonable efforts to obtain the consent of the
Deceased Shareholders
and fails to obtain such consents, the
Insured
shall be treated as having fully
complied with this Section VII(B).
A-93
|
(A)
|
CANCELLATION OF POLICY
|
The
Insurer
may cancel this
Policy
for
non-payment
of premium when due by
sending not less than ten (10) days notice to the
Insured
at its last known address. This
Policy
cannot otherwise be cancelled.
In the event of any payment for
Loss
under this
Policy
, the
Insurer
shall be subrogated to the extent of
such payment to all rights of recovery thereof, including any right to file a claim for refund with any
Taxing Authority
and to file suit for a credit or refund in the United States District Court or in the United States Court of Federal
Claims or the applicable state court. The
Insured
shall execute all papers required and shall do everything that may be necessary to enable the Insurer effectively to claim these rights. These obligations shall survive the termination of the
Policy
. Notwithstanding anything in this
Policy
to the contrary, the
Insurer
shall not have any rights of subrogation against Holland & Knight LLP, Alston & Bird LLP and Deloitte & Touche LLP.
Notwithstanding anything in this
Policy
to the contrary, the
Insurer
shall not have any rights of subrogation against the
Taxpayer
, any individual set forth in Exhibit 1 or any shareholder, member, officer, partner, officer,
employee, agent, representative or professional of the
Taxpayer
(or the functional equivalents of such positions), except to the extent that the
Insurer
has otherwise paid
Loss
, and after such payment, it is determined by way of
a final
non-appealable
adjudication that such
Loss
are not covered under this
Policy
because of the fraudulent conduct committed by such individual directly in connection with the
Ruling
Request
or the
Covered Tax Risk
. The
Insurer
shall defend at its own expense and be liable for any counterclaim or third party claim asserted in connection with any subrogation claim pursued by the
Insurer
.
If any
Loss
arising from a
Claim
is insured by another valid and collectible policy or policies, then this
Policy
shall apply only in excess of the amount of any deductibles, retention and limits of liability under such other policy or policies, whether such other policy or policies are stated to be primary, contributory, excess, contingent or
otherwise , unless such other insurance is written specifically excess of this
Policy
by reference in such other policy to this
Policys
Policy Number.
Any dispute as to the applicability of, or delay in obtaining, coverage under any other insurance policy, shall not be a basis
for delay or refusal of payment hereunder and the
Insurer
shall not use the terms of this Section VIII(C) to deny coverage hereunder; provided, further, that it is understood that the foregoing shall not limit the
Insurer
s rights
of subrogation against any other insurance policies or other sources of recovery to the extent provided for in this
Policy
. The
Insured
shall not be obligated to first pursue
Claims
against any other insurance policy or other
source of recovery prior to being eligible for any payment under this
Policy
and if there is a dispute as to whether the coverage under this
Policy
shall be excess of other coverage or if other coverage shall be excess of the coverage
under this
Policy,
the
Insured
may recover under this
Policy
and the
Insurer
shall be subrogated to the extent provided in this
Policy
to the
Insureds
rights to such coverage. To the extent the payment
of any deductible or retention under any other insurance policy would constitute
Loss
hereunder, such deductible or retention payment will be eligible for coverage pursuant to the terms and conditions of this
Policy
.
A-94
|
(D)
|
PORTABILITY (SUCCESSOR COVERAGE) & LOSS PAYEE COVERAGE
|
This
Policy
may be freely assigned by the
Insured
to (1) an affiliate of the
Insured
, (2) a
subsequent purchaser (whether through a merger or acquisition) of either (a) the
Insured
,
(b) the
Taxpayer
or (c)
substantially all of the assets of the
Insured
or the
Taxpayer
. A lender to
the
Insured,
any
Taxpayer
or any purchaser described in the immediately preceding sentence may, upon written notice to the
Insurer
, be named as a
co-payee,
to the extent its interests may
appear, on this
Policy
.
Any assignment of interests under this
Policy
shall become effective upon receipt of
written notice of such assignment to the
Insurer;
provided, however, that no assignment of this
Policy
or any interest under this
Policy
shall be effective if (or to the extent that) the result would be to otherwise alter the
terms of coverage under this
Policy
or to create multiple
Claims
or multiple payees for the same
Claim
.
No change in or modification of this
Policy
shall be effective except when agreed by the
Insurer
and
Insured
in writing and made by written endorsement signed by an authorized representative of the
Insurer
.
All disputes between the
Insured
and the
Insurer
(or
Claim Representative)
which may arise under or in
connection with this
Policy
, whether arising before or after the termination of this
Policy
, and whether arising in connection with the interpretation of this provision of the
Policy
, shall be submitted to binding arbitration
before the American Arbitration Association under its then prevailing Commercial Arbitration Rules. New York shall be the forum of any arbitration proceeding, unless otherwise agreed. This
Policy
shall be governed and construed in accordance
with Delaware law, without giving effect to its conflict of laws rules or principles. The construction of this
Policy
shall be made in accordance with the general principles of construction with respect to negotiated agreements and without
any presumption in favor of any party. A judgment may be entered on the award by any court of competent jurisdiction and the parties hereby consent to the jurisdiction of any state or federal court in the county of New York, state of New York and
irrevocably waive any challenge to the jurisdiction or appropriateness of the venue of such a court including any challenge based on convenience of the forum.
The parties hereto agree that:
|
(1)
|
the speedy resolution of any disputes between them to be had as a consequence of this arbitration clause is a
mutual and material inducement to enter into this
Policy
;
|
|
(2)
|
the arbitrators in any award may assess arbitration fees and expenses in favor of any party and in favor of
the American Arbitration Association, in the event that any administrative fees or expenses are due the American Arbitration Association; and
|
|
(3)
|
awards pursuant to this clause are intended to be the exclusive dispute resolution mechanism among the
parties.
|
A-95
The
Insured
shall not disclose the existence of this
Policy
absent legal compulsion or the written consent of the
Insurer
, which shall not be unreasonably withheld, conditioned or delayed. Notwithstanding the foregoing, the
Insured
may disclose the existence and terms of this
Policy
to its attorneys, insurance brokers, lenders, investors,
liquidating trustees and its advisors, auditors and tax advisors; provided, however, any disclosure of the existence or terms of this
Policy
in any financial statement or other document to be filed with the Securities and Exchange Commission
requires the prior written consent of the
Insurer
, which shall not be unreasonably withheld, conditioned or delayed.
This
Policy
, including the Declarations Page,
Proposal
,
any Schedule, any Exhibits and/or Endorsements
attached hereto, constitute the entire agreement between the
Insured
, the
Taxpayer
and the
Insurer
relating to this insurance.
This
Policy
may be executed in any number of counterparts, all of which taken together shall constitute one and the same
instrument. Any such counterpart, to the extent delivered by means of a facsimile machine or by .pdf, .tif, .gif, .jpeg or similar attachment to electronic mail (any such delivery, an
Electronic Delivery
) shall be treated in all
manner and respects as an original executed counterpart and shall be considered to have the same binding legal effect as if it were the original signed version thereof delivered in person. No party hereto shall raise the use of
Electronic
Delivery
to deliver a signature or the fact that any signature or agreement or instrument was transmitted or communicated through the use of
Electronic Delivery
as a defense to the formation of a contract, and each such party forever
waives any such defense, except to the extent such defense relates to lack of authenticity.
If any provision of this
Policy
is or becomes invalid, illegal or unenforceable in any respect, the validity or
enforceability of any other provision shall not be affected or impaired in any way.
A-96
SCHEDULE A
COVERED TAX RISK
The
Policy
to which this Schedule is attached provides coverage, subject to its terms and conditions, for only the following tax risk for the
Covered Tax Years
:
The termination or invalidity of the
S Status
of
Taxpayer
solely as a result of the
Filing Issues
.
A-97
SCHEDULE B
STATEMENT OF THE MATERIAL EVENTS REGARDING THE TAX RISK
This Statement of the Material Events Regarding the Tax Risk (the
Statement
) is part of the Proposal for the Tax Insurance
Policy to which this Statement is attached (the
Policy
). Capitalized terms not defined in this
Statement
are defined in the
Policy
.
As of the
Inception Date
, no
Insured
has
Knowledge
that any of the following statements is materially inaccurate or
misleading.
A.
|
Documents Provided to Concord
. All of the documents provided to
Concord
are true and complete
copies of genuine documents. It is expressly acknowledged that the final
Purchase Agreement
was provided to
Concord
prior to the issuance of this
Policy
.
|
B.
|
Material Information Provided to Concord.
|
|
1.
|
The factual statements provided to
Concord
during underwriting are neither materially inaccurate nor
misleading and the factual statements made in the
Purchase Agreement
(whether as representations or scheduled disclosures)
that relate to or could impact the
Covered Tax Risk
are neither materially inaccurate nor misleading.
|
|
2.
|
There are no
side-letters
or side-agreements as respects the
Covered Tax Risk
that have
not been disclosed to the
Insurers
.
|
|
3.
|
Concord
has been provided with (i) all trusts agreements for the
Trusts
and
Voting
Trust
,
(ii)
copies of the
Taxpayers
Offering Circular, dated December 24, 2007 (the
Offering Circular
), the Shareholders Agreement between the
Taxpayer
and
Stockholders
(the
Shareholders Agreement
), and the
Taxpayers
Stock Subscription Agreement (
Subscription Agreement
), and (iii) a complete legend of
Stockholders
.
|
|
4.
|
To the
Knowledge
of the
Taxpayer
, the statements and representations set forth in each of the
Trust
affidavits, signed by the respective trustee of each
Trust
, is true and correct.
|
|
5.
|
Prior to the due diligence findings of the Seacoast Banking Corporation of Florida,
Taxpayer
believed
that (i) it timely made an effective election to be treated as an S corporation on
IRS
Form 2553,
Election by a Small Business Corporation
, and (ii) the
Trusts
were permitted shareholders to own shares in
Taxpayer
, in each case,
without invalidating the
S Status
of
Taxpayer
. Other than the
Filing Issues
,
Taxpayer
has qualified as a small business corporation within the meaning of section 1361(b) of the
Code
at all times since its election on January 17, 2008.
|
|
6.
|
Taxpayer
was incorporated on January 17, 2008, and
issued shares to the
Initial
Stockholders
on March 7, 2008. As of March 7, 2008, there were exactly 100
Initial Stockholders
on the
Taxpayers
shareholder register, as set forth in Exhibit 1. Each of the
Stockholders
executed the
Subscription Agreement. Shareholders Agreement and stockholders joinder to the
Voting Trust
prior to being issued shares of
Taxpayer
.
|
|
7.
|
Taxpayer
has timely filed its U.S. federal income tax returns consistent with having a valid S
corporation election in effect for all tax years since
Taxpayer
elected to be an S corporation. No
Taxing Authority
has raised any issue or challenge to the
S Status
of
Taxpayer
.
Taxpayer
has never been subject to
a U.S. federal income tax audit since its incorporation. There is no pending
Examination
of
Taxpayer
nor has there been any written or oral correspondence from the
IRS
indicating that an
Examination
may be, or will be,
commenced.
|
A-98
|
8.
|
Taxpayer
and its
Stockholders
(other than the
Deceased Shareholders
) have agreed to make
any adjustments required as a condition of obtaining relief under the inadvertent termination rule as provided under section 1362(f) of the
Code
that may be required by the Secretary, and each of the
Initial Stockholders
(other than
the
Deceased Shareholders
) have agreed to provide the required shareholder consent in the manner provided in Treas. Reg. Section
1.1362-6(b)(1).
|
|
9.
|
John D. Martin, Jr., Melvin W. Tanen, William R. Martin, and Jo Ann Zuccala were
Initial
Stockholders
of
Taxpayer
but are deceased. The estates of John D. Martin, Jr., Melvin W. Tanen and William R. Martin have been fully settled and closed. The shares of
Taxpayer
held by Jo Ann Zuccala and her husband as joint
tenants with the right of survivorship, and such shares were automatically transferred to her husband upon her death. As of March 7, 2008, John D. Martin, Jr., Melvin W. Tanen, William R. Martin and Jo Ann Zuccala each owned (directly and
indirectly by attribution) 8.4%, 0.85%, 4.2% and 0.21% of
Taxpayer
, respectively.
|
A-99
ENDORSEMENT NO. 1
POLICYHOLDER DISCLOSURE
ACCEPTANCE OR REJECTION OF
TERRORISM
INSURANCE COVERAGE
You are hereby notified that under the Terrorism Risk Insurance Act, as amended, that you have a right to purchase insurance coverage for
losses resulting from acts of terrorism, as defined in Section 102(1) of the Act: The term act of terrorism means any act that is certified by the Secretary of the Treasuryin concurrence with the Secretary of State, and the
Attorney General of the United Statesto be an act of terrorism; to be a violent act or an act that is dangerous to human life, property, or infrastructure; to have resulted in damage within the United States, or outside the United States in
the case of certain air carriers or vessels or the premises of a United States mission; and to have been committed by an individual or individuals as part of an effort to coerce the civilian population of the United States or to influence the policy
or affect the conduct of the United States Government by coercion.
YOU SHOULD KNOW THAT WHERE COVERAGE IS PROVIDED BY THIS POLICY FOR
LOSSES RESULTING FROM CERTIFIED ACTS OF TERRORISM, SUCH LOSSES MAY BE PARTIALLY REIMBURSED BY THE UNITED STATES GOVERNMENT UNDER A FORMULA ESTABLISHED BY FEDERAL LAW. HOWEVER, YOUR POLICY MAY CONTAIN OTHER EXCLUSIONS WHICH MIGHT AFFECT YOUR
COVERAGE, SUCH AS AN EXCLUSION FOR NUCLEAR EVENTS. UNDER THE FORMULA, THE UNITED STATES GOVERNMENT GENERALLY REIMBURSES 85% OF COVERED TERRORISM LOSSES EXCEEDING THE STATUTORILY ESTABLISHED DEDUCTIBLE PAID BY THE INSURANCE COMPANY PROVIDING THE
COVERAGE. THE PREMIUM CHARGED FOR THIS COVERAGE IS PROVIDED BELOW AND DOES NOT INCLUDE ANY CHARGES FOR THE PORTION OF LOSS THAT MAY BE COVERED BY THE FEDERAL GOVERNMENT UNDER THE ACT.
YOU SHOULD ALSO KNOW THAT THE TERRORISM RISK INSURANCE ACT, AS AMENDED, CONTAINS A $100 BILLION CAP THAT LIMITS U.S. GOVERNMENT REIMBURSEMENT
AS WELL AS INSURERS LIABILITY FOR LOSSES RESULTING FROM CERTIFIED ACTS OF TERRORISM WHEN THE AMOUNT OF SUCH LOSSES IN ANY ONE CALENDAR YEAR EXCEEDS $100 BILLION. IF THE AGGREGATE INSURED LOSSES FOR ALL INSURERS EXCEED $100 BILLION, YOUR
COVERAGE MAY BE REDUCED.
Based upon your election made as part of your signed conditional binder, you have either accepted or rejected
Terrorism Insurance Coverage as set forth below.
Acceptance or Rejection of Terrorism Insurance Coverage
|
|
|
Elected
|
|
I hereby elect to purchase terrorism coverage for a prospective premium of $0,00 (NONE).
|
|
|
o
|
|
I hereby decline to purchase terrorism coverage for certified acts of terrorism. I understand that I will have no
coverage for losses resulting from certified acts of terrorism.
|
A-100
ENDORSEMENT NO: 2
COMPLIANCE WITH
U.S. TREASURY DEPARTMENTS
OFFICE OF FOREIGN ASSETS CONTROL (OFAC)
OFAC administers and enforces sanctions policy, based on Presidential declarations of national emergency. On an ongoing basis OFAC
identifies and lists numerous individuals, entities and sanctions with respect to a particular country as Specially Designated Nationals and Blocked Persons. Such individuals and entities include but are not limited to:
|
|
Terrorist Organizations; and
|
This list of Specially Designated Nationals and Blocked Persons can be located on the United States Treasurys web site -
http://www.treasury.gov/offices/enforcement/ofac/
In accordance with OFAC regulations, if it is determined that an Insured or any
person or entity claiming the benefits of this insurance has violated U.S. sanctions laws or regulations or is a Specially Designated National and Blocked Person, as identified by OFAC, this insurance will be considered a blocked or frozen contract
and all provisions of this insurance are immediately subject to the laws and regulations administered and enforced by OFAC. When an insurance policy is considered to be a blocked or frozen contract, no payment or premium refunds may be made without
authorization from OFAC. Other limitations on the premiums and payments may also apply.
A-101
EXHIBIT 1
INITIAL STOCKHOLDERS REGISTER
A-102
APPENDIX B
INVESTMENT BANKING GROUP
May 3, 2017
Board of Directors
Palm Beach Community Bank
8101 Okeechobee Boulevard
West Palm Beach, FL 33411
Ladies and Gentlemen:
Palm
Beach Community Bank (Company), Seacoast Banking Corporation of Florida (SBC) and Seacoast National Bank, a wholly owned subsidiary of SBC (SNB and together with SBC, Seacoast), are proposing to enter
into an Agreement and Plan of Merger (the Agreement) pursuant to which Company will merge with and into SNB with SNB being the surviving corporation (the Merger). Pursuant to the terms of the Agreement, at the Effective Time,
each share of common stock, $5.00 par value per share, of Company (Company Common Stock) issued and outstanding immediately prior to the Effective Time, except for certain shares of Company Common Stock as specified in the Agreement,
will be converted into the right to receive, subject to certain adjustments summarized below and more fully set forth in the Agreement, (i) the number of shares of SBC Common Stock that is equal to the Exchange Ratio (the Stock
Consideration), and (ii) subject to the terms of the Agreement, $6.33 in cash (the Cash Consideration), which includes estimated S-Corp Expenses. The Stock Consideration and the Cash Consideration are collectively referred to
herein as the Merger Consideration. The Agreement provides, generally, that in the event that the final S-Corp Expenses set forth in the S-Corp Closing Statement (i) exceed the amounts set forth in the Seacoast Disclosure Letter,
the Cash Consideration shall be adjusted downward on an equivalent per share basis, accordingly, or (ii) are less than the amounts set forth in the Seacoast Disclosure Letter, the Cash Consideration shall be adjusted upward on an equivalent per
share basis, accordingly. As defined more fully in the Agreement and subject to certain adjustments as specified in the Agreement, the Exchange Ratio shall be an amount equal to 0.9809, which shall remain fixed if the Seacoast Closing
Price is between $22.75 and $21.00;
provided
, however, if the Seacoast Closing Price is (i) greater than $22.75, then the Exchange Ratio will equal the product of (A) a quotient, the numerator of which is equal to $28.65, and the
denominator of which is the Seacoast Closing Price, (B) multiplied by 0.7789;
or
(ii) less than $21.00 but greater than $19.00, then Seacoast shall have the option of adjusting the Exchange Ratio or the Cash Consideration so that
the aggregate Merger Consideration is $26.93 per share of Company Common Stock;
provided, further,
that if under scenario (ii) Seacoast elects to adjust the Cash Consideration then the Exchange Ratio shall remain 0.9809, however, if
Seacoast elects to instead increase the Stock Consideration then the Exchange Ratio will equal the product of (A) a quotient, the numerator of which is equal to $26.93, and the denominator of which is the Seacoast Closing Price,
(B) multiplied by 0.7648. Capitalized terms used herein without definition have the meanings assigned to them in the Agreement. The terms and conditions of the Merger are more fully set forth in the Agreement. You have requested our opinion as
to the fairness, from a financial point of view, of the Merger Consideration to the holders of Company Common Stock.
SANDLER ONEILL + PARTNERS, L.P.
1251 Avenue of the
Americas, 6th Floor, New York, NY 10020
T: (212) 466-7700 / (800) 635-6855
www.sandleroneill.com
B-1
|
|
|
|
|
INVESTMENT BANKING GROUP
|
Sandler ONeill & Partners, L.P. (Sandler
ONeill, we or our), as part of its investment banking business, is regularly engaged in the valuation of financial institutions and their securities in connection with mergers and acquisitions and other corporate
transactions. In connection with this opinion, we have reviewed and considered, among other things: (i) a draft of the Agreement, dated May 2, 2017; (ii) certain publicly available financial statements and other historical financial
information of Company that we deemed relevant; (iii) certain publicly available financial statements and other historical financial information of Seacoast that we deemed relevant; (iv) certain internal financial projections for Company
for the year ending December 31, 2017, as provided by the senior management of Company, as well as estimated long-term earnings per share and balance sheet growth rates for the years thereafter, as confirmed by the senior management of Company;
(v) publicly available consensus median analyst earnings per share estimates for Seacoast for the years ending December 31, 2017 and December 31, 2018, as well as an estimated long-term earnings per share growth rate for the years
thereafter, as confirmed by the senior management of Seacoast; (vi) the pro forma financial impact of the Merger on Seacoast based on certain assumptions relating to purchase accounting adjustments, cost savings and transaction expenses, as
provided by the senior management of Seacoast; (vii) the publicly reported historical price and trading activity for Seacoast Common Stock, including a comparison of certain stock market information for Seacoast Common Stock and certain stock
indices as well as publicly available information for certain other similar companies, the securities of which are publicly traded; (viii) a comparison of certain financial information for Company and Seacoast with similar financial
institutions for which information is publicly available; (ix) the financial terms of certain recent business combinations in the banking industry (on a regional basis), to the extent publicly available; (x) the current market environment
generally and the banking environment in particular; and (xi) such other information, financial studies, analyses and investigations and financial, economic and market criteria as we considered relevant. We also discussed with certain members
of the senior management of Company the business, financial condition, results of operations and prospects of Company and held similar discussions with certain members of the senior management of Seacoast regarding the business, financial condition,
results of operations and prospects of Seacoast.
In performing our review, we have relied upon the accuracy and
completeness of all of the financial and other information that was available to and reviewed by us from public sources, that was provided to us by Company or Seacoast or their respective representatives or that was otherwise reviewed by us, and we
have assumed such accuracy and completeness for purposes of rendering this opinion without any independent verification or investigation. We have relied on the assurances of the respective managements of Company and Seacoast that they are not aware
of any facts or circumstances that would make any of such information inaccurate or misleading. We have not been asked to and have not undertaken an independent verification of any of such information and we do not assume any responsibility or
liability for the accuracy or completeness thereof. We did not make an independent evaluation or perform an appraisal of the specific assets, the collateral securing assets or the liabilities (contingent or otherwise) of Company or Seacoast or any
of their respective subsidiaries, nor have we been furnished with any such evaluations or appraisals. We render no opinion or evaluation on the collectability of any assets or the future performance of any loans of Company or Seacoast. We did not
make an independent evaluation of the adequacy of the allowance for loan losses of Company or Seacoast, or of the combined entity after the Merger, and we have not
SANDLER ONEILL + PARTNERS, L.P.
1251 Avenue of the
Americas, 6th Floor, New York, NY 10020
T: (212) 466-7700 / (800) 635-6855
www.sandleroneill.com
B-2
|
|
|
|
|
INVESTMENT BANKING GROUP
|
reviewed any individual credit files relating to Company or Seacoast. We have assumed, with your consent, that the respective allowances for loan losses for both Company and Seacoast are adequate
to cover such losses and will be adequate on a pro forma basis for the combined entity.
In preparing its analyses,
Sandler ONeill used certain internal financial projections for Company for the year ending December 31, 2017, as provided by the senior management of Company, as well as estimated long-term earnings per share and balance sheet growth
rates for the years thereafter, as confirmed by the senior management of Company. In addition, Sandler ONeill used publicly available consensus median analyst earnings per share estimates for Seacoast for the years ending December 31,
2017 and December 31, 2018, as well as an estimated long-term earnings per share growth rate for the years thereafter, as confirmed by the senior management of Seacoast. Sandler ONeill also received and used in its pro forma analyses
certain assumptions relating to purchase accounting adjustments, cost savings and transaction expenses, as provided by the senior management of Seacoast. With respect to the foregoing information, the respective senior managements of Company and
Seacoast confirmed to us that such information reflected (or, in the case of the publicly available consensus median analyst earnings per share estimates and growth rates referred to above, were consistent with) the best currently available
estimates and judgments of those respective senior managements as to the future financial performance of Company and Seacoast, respectively, and the other matters covered thereby, and we assumed that the future financial performance reflected in
such information would be achieved. We express no opinion as to such information, or the assumptions on which such information is based. We have also assumed that there has been no material change in the respective assets, financial condition,
results of operations, business or prospects of Company or Seacoast since the date of the most recent financial statements made available to us. We have assumed in all respects material to our analysis that Company and Seacoast will remain as going
concerns for all periods relevant to our analysis.
We have also assumed, with your consent, that (i) each of the
parties to the Agreement will comply in all material respects with all material terms and conditions of the Agreement and all related agreements, that all of the representations and warranties contained in such agreements are true and correct in all
material respects, that each of the parties to such agreements will perform in all material respects all of the covenants and other obligations required to be performed by such party under such agreements and that the conditions precedent in such
agreements are not and will not be waived, (ii) in the course of obtaining the necessary regulatory or third party approvals, consents and releases with respect to the Merger, no delay, limitation, restriction or condition will be imposed that
would have an adverse effect on Company, Seacoast or the Merger or any related transaction, (iii) the Merger and any related transactions will be consummated in accordance with the terms of the Agreement without any waiver, modification or
amendment of any material term, condition or agreement thereof and in compliance with all applicable laws and other requirements, and (iv) the Merger will qualify as a tax-free reorganization for federal income tax purposes. Finally, with your
consent, we have relied upon the advice that Company has received from its legal, accounting and tax advisors as to all legal, accounting and tax matters relating to the Merger and the other transactions contemplated by the Agreement. We express no
opinion as to any such matters.
Our opinion is necessarily based on financial, economic, market and other conditions as
in effect on, and the information made available to us as of, the date hereof. Events occurring after the date hereof could materially
SANDLER ONEILL + PARTNERS, L.P.
1251 Avenue of the
Americas, 6th Floor, New York, NY 10020
T: (212) 466-7700 / (800) 635-6855
www.sandleroneill.com
B-3
|
|
|
|
|
INVESTMENT BANKING GROUP
|
affect this opinion. We have not undertaken to update, revise, reaffirm or withdraw this opinion or otherwise comment upon events occurring after the date hereof. We express no opinion as to the
trading value of Seacoast Common Stock at any time or what the value of Seacoast Common Stock will be once it is actually received by the holders of Company Common Stock.
We have acted as Companys financial advisor in connection with the Merger and will receive a fee for our services, which
fee is contingent upon the closing of the Merger. We will also receive a fee for rendering this opinion, which opinion fee will be credited in full towards the transaction fee which will become payable to Sandler ONeill on the day of closing
of the Merger. Company has also agreed to indemnify us against certain claims and liabilities arising out of our engagement and to reimburse us for certain of our out-of-pocket expenses incurred in connection with our engagement. We have not
provided any other investment banking services to Company in the two years preceding the date of this opinion. In the two years preceding the date hereof, Sandler ONeill has provided certain investment banking services to, and received fees
from, Seacoast. Most recently, Sandler ONeill acted as financial advisor to the Board of Directors of Seacoast in connection with Seacoasts acquisition of Grand Bankshares, Inc., which transaction closed in July 2015. In addition, in the
ordinary course of our business as a broker-dealer, we may purchase securities from and sell securities to Seacoast and its affiliates. We may also actively trade the equity and debt securities of Seacoast and its affiliates for our own account and
for the accounts of our customers.
Our opinion is directed to the Board of Directors of Company in connection with its
consideration of the Agreement and the Merger and does not constitute a recommendation to any shareholder of Company as to how any such shareholder should vote at any meeting of shareholders called to consider and vote upon the approval of the
Agreement and the Merger. Our opinion is directed only to the fairness, from a financial point of view, of the Merger Consideration to the holders of Company Common Stock and does not address the underlying business decision of Company to engage in
the Merger, the form or structure of the Merger or any other transactions contemplated in the Agreement, the relative merits of the Merger as compared to any other alternative transactions or business strategies that might exist for Company or the
effect of any other transaction in which Company might engage. We also do not express any opinion as to the fairness of the amount or nature of the compensation to be received in the Merger by any officer, director or employee of Company or
Seacoast, or any class of such persons, if any, relative to the compensation to be received in the Merger by any other shareholder. This opinion has been approved by Sandler ONeills fairness opinion committee. This opinion shall not be
reproduced without Sandler ONeills prior written consent;
provided,
however, Sandler ONeill will provide its consent for the opinion to be included in regulatory filings to be completed in connection with the .Merger.
Based upon and subject to the foregoing, it is our opinion that, as of the date hereof, the Merger Consideration is fair to
holders of Company Common Stock from a financial point of view.
Very truly yours,
SANDLER ONEILL + PARTNERS, L.P.
1251 Avenue of the Americas, 6th Floor, New York, NY 10020
T:
(212) 466-7700 / (800) 635-6855
www.sandleroneill.com
B-4
APPENDIX C
607.1301 Appraisal rights; definitions. The following definitions apply to ss. 607.1302-607.1333:
(1) Affiliate means a person that directly or indirectly through one or more intermediaries controls, is
controlled by, or is under common control with another person or is a senior executive thereof. For purposes of s. 607.1302(2)(d), a person is deemed to be an affiliate of its senior executives.
(2) Beneficial shareholder means a person who is the beneficial owner of shares held in a voting trust or by a
nominee on the beneficial owners behalf.
(3) Corporation means the issuer of the shares held by a
shareholder demanding appraisal and, for matters covered in ss. 607.1322-607.1333, includes the surviving entity in a merger.
(4) Fair value means the value of the corporations shares determined:
(a) Immediately before the effectuation of the corporate action to which the shareholder objects.
(b) Using customary and current valuation concepts and techniques generally employed for similar businesses in the context of
the transaction requiring appraisal, excluding any appreciation or depreciation in anticipation of the corporate action unless exclusion would be inequitable to the corporation and its remaining shareholders.
(c) For a corporation with 10 or fewer shareholders, without discounting for lack of marketability or minority status.
(5) Interest means interest from the effective date of the corporate action until the date of payment, at the rate
of interest on judgments in this state on the effective date of the corporate action.
(6) Preferred shares
means a class or series of shares the holders of which have preference over any other class or series with respect to distributions.
(7) Record shareholder means the person in whose name shares are registered in the records of the corporation or
the beneficial owner of shares to the extent of the rights granted by a nominee certificate on file with the corporation.
(8) Senior executive means the chief executive officer, chief operating officer, chief financial officer, or
anyone in charge of a principal business unit or function.
(9) Shareholder means both a record shareholder
and a beneficial shareholder.
History. s. 118, ch. 89-154; s. 21, ch. 2003-283; s. 2, ch. 2005-267.
607.1302 Right of shareholders to appraisal.
(1) A shareholder of a domestic corporation is entitled to appraisal rights, and to obtain payment of the fair value of that
shareholders shares, in the event of any of the following corporate actions:
(a) Consummation of a conversion of
such corporation pursuant to s. 607.1112 if shareholder approval is required for the conversion and the shareholder is entitled to vote on the conversion under ss. 607.1103 and 607.1112(6), or the consummation of a merger to which such corporation
is a party if shareholder approval is required for the merger under s. 607.1103 and the shareholder is entitled to vote on the merger or if such corporation is a subsidiary and the merger is governed by s. 607.1104;
C-1
(b) Consummation of a share exchange to which the corporation is a party as the
corporation whose shares will be acquired if the shareholder is entitled to vote on the exchange, except that appraisal rights shall not be available to any shareholder of the corporation with respect to any class or series of shares of the
corporation that is not exchanged;
(c) Consummation of a disposition of assets pursuant to s. 607.1202 if the shareholder
is entitled to vote on the disposition, including a sale in dissolution but not including a sale pursuant to court order or a sale for cash pursuant to a plan by which all or substantially all of the net proceeds of the sale will be distributed to
the shareholders within 1 year after the date of sale;
(d) An amendment of the articles of incorporation with respect to
the class or series of shares which reduces the number of shares of a class or series owned by the shareholder to a fraction of a share if the corporation has the obligation or right to repurchase the fractional share so created;
(e) Any other amendment to the articles of incorporation, merger, share exchange, or disposition of assets to the extent
provided by the articles of incorporation, bylaws, or a resolution of the board of directors, except that no bylaw or board resolution providing for appraisal rights may be amended or otherwise altered except by shareholder approval; or
(f) With regard to a class of shares prescribed in the articles of incorporation prior to October 1, 2003, including any
shares within that class subsequently authorized by amendment, any amendment of the articles of incorporation if the shareholder is entitled to vote on the amendment and if such amendment would adversely affect such shareholder by:
1. Altering or abolishing any preemptive rights attached to any of his or her shares;
2. Altering or abolishing the voting rights pertaining to any of his or her shares, except as such rights may be affected by
the voting rights of new shares then being authorized of any existing or new class or series of shares;
3. Effecting an
exchange, cancellation, or reclassification of any of his or her shares, when such exchange, cancellation, or reclassification would alter or abolish the shareholders voting rights or alter his or her percentage of equity in the corporation,
or effecting a reduction or cancellation of accrued dividends or other arrearages in respect to such shares;
4. Reducing
the stated redemption price of any of the shareholders redeemable shares, altering or abolishing any provision relating to any sinking fund for the redemption or purchase of any of his or her shares, or making any of his or her shares subject
to redemption when they are not otherwise redeemable;
5. Making noncumulative, in whole or in part, dividends of any of
the shareholders preferred shares which had theretofore been cumulative;
6. Reducing the stated dividend preference
of any of the shareholders preferred shares; or
7. Reducing any stated preferential amount payable on any of the
shareholders preferred shares upon voluntary or involuntary liquidation.
(2) Notwithstanding subsection (1), the
availability of appraisal rights under paragraphs (1)(a), (b), (c), and (d) shall be limited in accordance with the following provisions:
(a) Appraisal rights shall not be available for the holders of shares of any class or series of shares which is:
1. Listed on the New York Stock Exchange or the American Stock Exchange or designated as a national market system security on
an interdealer quotation system by the National Association of Securities Dealers, Inc.; or
C-2
2. Not so listed or designated, but has at least 2,000 shareholders and the
outstanding shares of such class or series have a market value of at least $10 million, exclusive of the value of such shares held by its subsidiaries, senior executives, directors, and beneficial shareholders owning more than 10 percent of such
shares.
(b) The applicability of paragraph (a) shall be determined as of:
1. The record date fixed to determine the shareholders entitled to receive notice of, and to vote at, the meeting of
shareholders to act upon the corporate action requiring appraisal rights; or
2. If there will be no meeting of
shareholders, the close of business on the day on which the board of directors adopts the resolution recommending such corporate action.
(c) Paragraph (a) shall not be applicable and appraisal rights shall be available pursuant to subsection (1) for the
holders of any class or series of shares who are required by the terms of the corporate action requiring appraisal rights to accept for such shares anything other than cash or shares of any class or any series of shares of any corporation, or any
other proprietary interest of any other entity, that satisfies the standards set forth in paragraph (a) at the time the corporate action becomes effective.
(d) Paragraph (a) shall not be applicable and appraisal rights shall be available pursuant to subsection (1) for the
holders of any class or series of shares if:
1. Any of the shares or assets of the corporation are being acquired or
converted, whether by merger, share exchange, or otherwise, pursuant to the corporate action by a person, or by an affiliate of a person, who:
a. Is, or at any time in the 1-year period immediately preceding approval by the board of directors of the corporate action
requiring appraisal rights was, the beneficial owner of 20 percent or more of the voting power of the corporation, excluding any shares acquired pursuant to an offer for all shares having voting power if such offer was made within 1 year prior to
the corporate action requiring appraisal rights for consideration of the same kind and of a value equal to or less than that paid in connection with the corporate action; or
b. Directly or indirectly has, or at any time in the 1-year period immediately preceding approval by the board of directors of
the corporation of the corporate action requiring appraisal rights had, the power, contractually or otherwise, to cause the appointment or election of 25 percent or more of the directors to the board of directors of the corporation; or
2. Any of the shares or assets of the corporation are being acquired or converted, whether by merger, share exchange, or
otherwise, pursuant to such corporate action by a person, or by an affiliate of a person, who is, or at any time in the 1-year period immediately preceding approval by the board of directors of the corporate action requiring appraisal rights was, a
senior executive or director of the corporation or a senior executive of any affiliate thereof, and that senior executive or director will receive, as a result of the corporate action, a financial benefit not generally available to other
shareholders as such, other than:
a. Employment, consulting, retirement, or similar benefits established separately and
not as part of or in contemplation of the corporate action;
b. Employment, consulting, retirement, or similar benefits
established in contemplation of, or as part of, the corporate action that are not more favorable than those existing before the corporate action or, if more favorable, that have been approved on behalf of the corporation in the same manner as is
provided in s.607.0832; or
c. In the case of a director of the corporation who will, in the corporate action, become a
director of the acquiring entity in the corporate action or one of its affiliates, rights and benefits as a director that are provided on the same basis as those afforded by the acquiring entity generally to other directors of such entity or such
affiliate.
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(e) For the purposes of paragraph (d) only, the term beneficial
owner means any person who, directly or indirectly, through any contract, arrangement, or understanding, other than a revocable proxy, has or shares the power to vote, or to direct the voting of, shares, provided that a member of a national
securities exchange shall not be deemed to be a beneficial owner of securities held directly or indirectly by it on behalf of another person solely because such member is the recordholder of such securities if the member is precluded by the rules of
such exchange from voting without instruction on contested matters or matters that may affect substantially the rights or privileges of the holders of the securities to be voted. When two or more persons agree to act together for the purpose of
voting their shares of the corporation, each member of the group formed thereby shall be deemed to have acquired beneficial ownership, as of the date of such agreement, of all voting shares of the corporation beneficially owned by any member of the
group.
(3) Notwithstanding any other provision of this section, the articles of incorporation as originally filed or any
amendment thereto may limit or eliminate appraisal rights for any class or series of preferred shares, but any such limitation or elimination contained in an amendment to the articles of incorporation that limits or eliminates appraisal rights for
any of such shares that are outstanding immediately prior to the effective date of such amendment or that the corporation is or may be required to issue or sell thereafter pursuant to any conversion, exchange, or other right existing immediately
before the effective date of such amendment shall not apply to any corporate action that becomes effective within 1 year of that date if such action would otherwise afford appraisal rights.
(4) A shareholder entitled to appraisal rights under this chapter may not challenge a completed corporate action for which
appraisal rights are available unless such corporate action:
(a) Was not effectuated in accordance with the applicable
provisions of this section or the corporations articles of incorporation, bylaws, or board of directors resolution authorizing the corporate action; or
(b) Was procured as a result of fraud or material misrepresentation.
History. s. 119, ch. 89-154; s. 5, ch. 94-327; s. 31, ch. 97-102; s. 22, ch. 2003-283; s. 1, ch. 2004-378; s. 3, ch.
2005-267.
607.1303 Assertion of rights by nominees and beneficial owners.
(1) A record shareholder may assert appraisal rights as to fewer than all the shares registered in the record
shareholders name but owned by a beneficial shareholder only if the record shareholder objects with respect to all shares of the class or series owned by the beneficial shareholder and notifies the corporation in writing of the name and
address of each beneficial shareholder on whose behalf appraisal rights are being asserted. The rights of a record shareholder who asserts appraisal rights for only part of the shares held of record in the record shareholders name under this
subsection shall be determined as if the shares as to which the record shareholder objects and the record shareholders other shares were registered in the names of different record shareholders.
(2) A beneficial shareholder may assert appraisal rights as to shares of any class or series held on behalf of the shareholder
only if such shareholder:
(a) Submits to the corporation the record shareholders written consent to the assertion
of such rights no later than the date referred to in s. 607.1322(2)(b)2.
(b) Does so with respect to all shares of the
class or series that are beneficially owned by the beneficial shareholder.
History. s. 23, ch. 2003-283.
607.1320 Notice of appraisal rights.
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(1) If proposed corporate action described in s. 607.1302(1) is to be submitted
to a vote at a shareholders meeting, the meeting notice must state that the corporation has concluded that shareholders are, are not, or may be entitled to assert appraisal rights under this chapter. If the corporation concludes that appraisal
rights are or may be available, a copy of ss. 607.1301-607.1333 must accompany the meeting notice sent to those record shareholders entitled to exercise appraisal rights.
(2) In a merger pursuant to s. 607.1104, the parent corporation must notify in writing all record shareholders of the
subsidiary who are entitled to assert appraisal rights that the corporate action became effective. Such notice must be sent within 10 days after the corporate action became effective and include the materials described in s. 607.1322.
(3) If the proposed corporate action described in s. 607.1302(1) is to be approved other than by a shareholders meeting,
the notice referred to in subsection (1) must be sent to all shareholders at the time that consents are first solicited pursuant to s. 607.0704, whether or not consents are solicited from all shareholders, and include the materials described in
s. 607.1322.
History. s. 120, ch. 89-154; s. 35, ch. 93-281; s. 32, ch. 97-102; s. 24, ch. 2003-283.
607.1321 Notice of intent to demand payment.
(1) If proposed corporate action requiring appraisal rights under s. 607.1302 is submitted to a vote at a shareholders
meeting, or is submitted to a shareholder pursuant to a consent vote under s. 607.0704, a shareholder who wishes to assert appraisal rights with respect to any class or series of shares:
(a) Must deliver to the corporation before the vote is taken, or within 20 days after receiving the notice pursuant to s.
607.1320(3) if action is to be taken without a shareholder meeting, written notice of the shareholders intent to demand payment if the proposed action is effectuated.
(b) Must not vote, or cause or permit to be voted, any shares of such class or series in favor of the proposed action.
(2) A shareholder who does not satisfy the requirements of subsection (1) is not entitled to payment under this chapter.
History. s. 25, ch. 2003-283; s. 7, ch. 2004-378.
607.1322 Appraisal notice and form.
(1) If proposed corporate action requiring appraisal rights under s. 607.1302(1) becomes effective, the corporation must
deliver a written appraisal notice and form required by paragraph (2)(a) to all shareholders who satisfied the requirements of s. 607.1321. In the case of a merger under s. 607.1104, the parent must deliver a written appraisal notice and form
to all record shareholders who may be entitled to assert appraisal rights.
(2) The appraisal notice must be sent no
earlier than the date the corporate action became effective and no later than 10 days after such date and must:
(a)
Supply a form that specifies the date that the corporate action became effective and that provides for the shareholder to state:
1. The shareholders name and address.
2. The number, classes, and series of shares as to which the shareholder asserts appraisal rights.
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3. That the shareholder did not vote for the transaction.
4. Whether the shareholder accepts the corporations offer as stated in subparagraph (b)4.
5. If the offer is not accepted, the shareholders estimated fair value of the shares and a demand for payment of the
shareholders estimated value plus interest.
(b) State:
1. Where the form must be sent and where certificates for certificated shares must be deposited and the date by which those
certificates must be deposited, which date may not be earlier than the date for receiving the required form under subparagraph 2.
2. A date by which the corporation must receive the form, which date may not be fewer than 40 nor more than 60 days after the
date the subsection (1) appraisal notice and form are sent, and state that the shareholder shall have waived the right to demand appraisal with respect to the shares unless the form is received by the corporation by such specified date.
3. The corporations estimate of the fair value of the shares.
4. An offer to each shareholder who is entitled to appraisal rights to pay the corporations estimate of fair value set
forth in subparagraph 3.
5. That, if requested in writing, the corporation will provide to the shareholder so requesting,
within 10 days after the date specified in subparagraph 2., the number of shareholders who return the forms by the specified date and the total number of shares owned by them.
6. The date by which the notice to withdraw under s. 607.1323 must be received, which date must be within 20 days after the
date specified in subparagraph 2.
(c) Be accompanied by:
1. Financial statements of the corporation that issued the shares to be appraised, consisting of a balance sheet as of the end
of the fiscal year ending not more than 15 months prior to the date of the corporations appraisal notice, an income statement for that year, a cash flow statement for that year, and the latest available interim financial statements, if any.
2. A copy of ss. 607.1301-607.1333.
History. s. 26, ch. 2003-283.
607.1323 Perfection of rights; right to withdraw.
(1) A shareholder who wishes to exercise appraisal rights must execute and return the form received pursuant to s. 607.1322(1)
and, in the case of certificated shares, deposit the shareholders certificates in accordance with the terms of the notice by the date referred to in the notice pursuant to s. 607.1322(2)(b)2. Once a shareholder deposits that shareholders
certificates or, in the case of uncertificated shares, returns the executed forms, that shareholder loses all rights as a shareholder, unless the shareholder withdraws pursuant to subsection (2).
(2) A shareholder who has complied with subsection (1) may nevertheless decline to exercise appraisal rights and withdraw
from the appraisal process by so notifying the corporation in writing by the date set forth in the appraisal notice pursuant to s. 607.1322(2)(b)6. A shareholder who fails to so withdraw from the appraisal process may not thereafter withdraw without
the corporations written consent.
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(3) A shareholder who does not execute and return the form and, in the case of
certificated shares, deposit that shareholders share certificates if required, each by the date set forth in the notice described in subsection (2), shall not be entitled to payment under this chapter.
History. s. 27, ch. 2003-283.
607.1324 Shareholders acceptance of corporations offer.
(1) If the shareholder states on the form provided in s. 607.1322(1) that the shareholder accepts the offer of the corporation
to pay the corporations estimated fair value for the shares, the corporation shall make such payment to the shareholder within 90 days after the corporations receipt of the form from the shareholder.
(2) Upon payment of the agreed value, the shareholder shall cease to have any interest in the shares.
History. s. 28, ch. 2003-283.
607.1326 Procedure if shareholder is dissatisfied with offer.
(1) A shareholder who is dissatisfied with the corporations offer as set forth pursuant to s. 607.1322(2)(b)4. must
notify the corporation on the form provided pursuant to s. 607.1322(1) of that shareholders estimate of the fair value of the shares and demand payment of that estimate plus interest.
(2) A shareholder who fails to notify the corporation in writing of that shareholders demand to be paid the
shareholders stated estimate of the fair value plus interest under subsection (1) within the timeframe set forth in s. 607.1322(2)(b)2. waives the right to demand payment under this section and shall be entitled only to the payment
offered by the corporation pursuant to s. 607.1322(2)(b)4.
History. s. 29, ch. 2003-283.
607.1330 Court action.
(1) If a shareholder makes demand for payment under s. 607.1326 which remains unsettled, the corporation shall commence a
proceeding within 60 days after receiving the payment demand and petition the court to determine the fair value of the shares and accrued interest. If the corporation does not commence the proceeding within the 60- day period, any shareholder who
has made a demand pursuant to s.607.1326 may commence the proceeding in the name of the corporation.
(2) The proceeding
shall be commenced in the appropriate court of the county in which the corporations principal office, or, if none, its registered office, in this state is located. If the corporation is a foreign corporation without a registered office in this
state, the proceeding shall be commenced in the county in this state in which the principal office or registered office of the domestic corporation merged with the foreign corporation was located at the time of the transaction.
(3) All shareholders, whether or not residents of this state, whose demands remain unsettled shall be made parties to the
proceeding as in an action against their shares. The corporation shall serve a copy of the initial pleading in such proceeding upon each shareholder party who is a resident of this state in the manner provided by law for the service of a summons and
complaint and upon each nonresident shareholder party by registered or certified mail or by publication as provided by law.
(4) The jurisdiction of the court in which the proceeding is commenced under subsection (2) is plenary and exclusive. If
it so elects, the court may appoint one or more persons as appraisers to receive evidence and recommend a decision on the question of fair value. The appraisers shall have the powers described in the order appointing them or in any amendment to the
order. The shareholders demanding appraisal rights are entitled to the same discovery rights as parties in other civil proceedings. There shall be no right to a jury trial.
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(5) Each shareholder made a party to the proceeding is entitled to judgment for
the amount of the fair value of such shareholders shares, plus interest, as found by the court.
(6) The corporation
shall pay each such shareholder the amount found to be due within 10 days after final determination of the proceedings. Upon payment of the judgment, the shareholder shall cease to have any interest in the shares.
History. s. 2, ch. 2004-378.
607.1331 Court costs and counsel fees.
(1) The court in an appraisal proceeding shall determine all costs of the proceeding, including the reasonable compensation
and expenses of appraisers appointed by the court. The court shall assess the costs against the corporation, except that the court may assess costs against all or some of the shareholders demanding appraisal, in amounts the court finds equitable, to
the extent the court finds such shareholders acted arbitrarily, vexatiously, or not in good faith with respect to the rights provided by this chapter.
(2) The court in an appraisal proceeding may also assess the fees and expenses of counsel and experts for the respective
parties, in amounts the court finds equitable:
(a) Against the corporation and in favor of any or all shareholders
demanding appraisal if the court finds the corporation did not substantially comply with ss. 607.1320 and 607.1322; or
(b) Against either the corporation or a shareholder demanding appraisal, in favor of any other party, if the court finds that
the party against whom the fees and expenses are assessed acted arbitrarily, vexatiously, or not in good faith with respect to the rights provided by this chapter.
(3) If the court in an appraisal proceeding finds that the services of counsel for any shareholder were of substantial benefit
to other shareholders similarly situated, and that the fees for those services should not be assessed against the corporation, the court may award to such counsel reasonable fees to be paid out of the amounts awarded the shareholders who were
benefited.
(4) To the extent the corporation fails to make a required payment pursuant to s. 607.1324, the shareholder
may sue directly for the amount owed and, to the extent successful, shall be entitled to recover from the corporation all costs and expenses of the suit, including counsel fees.
History. s. 30, ch. 2003-283; s. 98, ch. 2004-5.
607.1332 Disposition of acquired shares.
Shares acquired by a corporation pursuant to payment of the agreed value thereof or pursuant to payment of the judgment entered therefor, as
provided in this chapter, may be held and disposed of by such corporation as authorized but unissued shares of the corporation, except that, in the case of a merger or share exchange, they may be held and disposed of as the plan of merger or share
exchange otherwise provides. The shares of the surviving corporation into which the shares of such shareholders demanding appraisal rights would have been converted had they assented to the merger shall have the status of authorized but unissued
shares of the surviving corporation.
History. s. 31, ch. 2003-283.
607.1333 Limitation on corporate payment.
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(1) No payment shall be made to a shareholder seeking appraisal rights if, at the
time of payment, the corporation is unable to meet the distribution standards of s. 607.06401. In such event, the shareholder shall, at the shareholders option:
(a) Withdraw his or her notice of intent to assert appraisal rights, which shall in such event be deemed withdrawn with the
consent of the corporation; or
(b) Retain his or her status as a claimant against the corporation and, if it is
liquidated, be subordinated to the rights of creditors of the corporation, but have rights superior to the shareholders not asserting appraisal rights, and if it is not liquidated, retain his or her right to be paid for the shares, which right the
corporation shall be obliged to satisfy when the restrictions of this section do not apply.
(2) The shareholder shall
exercise the option under paragraph (1)(a) or paragraph (b) by written notice filed with the corporation within 30 days after the corporation has given written notice that the payment for shares cannot be made because of the restrictions
of this section. If the shareholder fails to exercise the option, the shareholder shall be deemed to have withdrawn his or her notice of intent to assert appraisal rights.
History. s. 32, ch. 2003-283.
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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 20. Indemnification of Directors and Officers of Seacoast
The Florida Business Corporation Act, as amended, or the FBCA, permits, under certain circumstances, the
indemnification of officers, directors, employees and agents of a corporation with respect to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, to which such person was or is a
party or is threatened to be made a party, by reason of his or her being an officer, director, employee or agent of the corporation, or is or was serving at the request of, such corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, against liability incurred in connection with such proceeding, including appeals thereof;
provided, however,
that the officer, director, employee or agent acted in good faith
and in a manner that he or she reasonably believed to be in, or not opposed to, the best interests of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his or her conduct was unlawful. The
termination of any such third-party action by judgment, order, settlement, or conviction or upon a plea of
nolo contendere
or its equivalent does not, of itself, create a presumption that the person (i) did not act in good faith and in a
manner which he or she reasonably believed to be in, or not opposed to, the best interests of the corporation or (ii) with respect to any criminal action or proceeding, had reasonable cause to believe that his or her conduct was unlawful.
In the case of proceedings by or in the right of the corporation, the FBCA permits for indemnification of any person by reason
of the fact that such person is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of, such corporation as a director, officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise, against liability incurred in connection with such proceeding, including appeals thereof;
provided, however
, that the officer, director, employee or agent acted in good faith and in a manner that he or she
reasonably believed to be in, or not opposed to, the best interests of the corporation, except that no indemnification is made where such person is adjudged liable, unless a court of competent jurisdiction determines that, despite the adjudication
of liability but in view of all circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which such court shall deem proper.
To the extent that such person is successful on the merits or otherwise in defending against any such proceeding, Florida law
provides that he or she shall be indemnified against expenses actually and reasonably incurred by him or her in connection therewith.
Our Bylaws contain indemnification provisions similar to the FBCA, and further provide that we may purchase and maintain
insurance on behalf of directors, officers, employees and agents in their capacities as such, or serving at the request of the corporation, against any liabilities asserted against such persons whether or not we would have the power to indemnify
such persons against such liability under our Bylaws.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933, as amended, may be permitted to our directors, officers and controlling persons pursuant to the foregoing provisions, or otherwise, we have 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.
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Item 21. Exhibits and Financial Statement Schedules.
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Exhibit 2.1
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Agreement and Plan of Merger, dated May
4, 2017, by and between Seacoast Banking Corporation of Florida, Seacoast National Bank and Palm Beach Community Bank (attached as Appendix A to the proxy statement/prospectus).
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Certain exhibits and schedules to the Agreement and Plan of Merger have been omitted. Such exhibits and schedules are
described in the Agreement and Plan of Merger. Seacoast Banking Corporation of Florida hereby agrees to furnish to the Securities and Exchange Commission, upon its request, any or all of such omitted exhibits and schedules.
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Exhibit 3.1.1
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Amended and Restated articles of incorporation
(incorporated herein by reference from Exhibit 3.1 to Seacoasts Quarterly Report on Form 10-Q, filed May 10, 2006).
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Exhibit 3.1.2
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Articles of Amendment to the Amended
and Restated articles of incorporation (incorporated herein by reference from Exhibit 3.1 to Seacoasts Form 8-K, filed December 23, 2008).
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Exhibit 3.1.3
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Articles of Amendment to the Amended
and Restated articles of incorporation
(
incorporated herein by reference from Exhibit 3.4 to Seacoasts Form S-1, filed June 22, 2009).
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Exhibit 3.1.4
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Articles of Amendment to the Amended and
Restated articles of incorporation (incorporated herein by reference from Exhibit 3.1 to Seacoasts Form 8-K, filed July 20, 2009).
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Exhibit 3.1.5
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Articles of Amendment to the Amended and
Restated articles of incorporation (incorporated herein by reference from Exhibit 3.1 to Seacoasts Form 8-K, filed December 3, 2009).
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Exhibit 3.1.6
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Articles of Amendment to the Amended
and Restated articles of incorporation (incorporated herein by reference from Exhibit 3.1 to Seacoasts Form 8-K/A, filed July 14, 2010).
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Exhibit 3.1.7
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Articles of Amendment to the Amended and
Restated articles of incorporation (incorporated herein by reference from Exhibit 3.1 to Seacoasts Form 8-K, filed June 25, 2010).
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Exhibit 3.1.8
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Articles of Amendment to the Amended and
Restated articles of incorporation (incorporated herein by reference from Exhibit 3.1 to Seacoasts Form 8-K, filed June 1, 2011).
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Exhibit 3.1.9
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Articles of Amendment to the Amended
and Restated articles of incorporation (incorporated herein by reference from Exhibit 3.1 to Seacoasts Form 8-K, filed December 13, 2013).
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Exhibit 3.2
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Amended and Restated By-laws
of the Corporation (incorporated herein by reference from Exhibit 3.2 to Seacoasts Form 8-K, filed December 21, 2007).
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Exhibit 4.1
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Specimen Common Stock Certificate
(incorporated herein by reference from Exhibit 4.1 to Seacoasts Form 10-K, filed March, 17, 2014).
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Exhibit 5.1
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Legal Opinion of Alston & Bird,
LLP *
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Exhibit 8.1
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Tax Opinion of Alston & Bird,
LLP *
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Exhibit 8.2
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Tax Opinion of Holland & Knight
LLP *
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Exhibit 21.1
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Subsidiaries of the Registrant (incorporated
herein by reference from Exhibit 21 Seacoasts Form 10-K, filed March 16, 2017).
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Exhibit 23.1
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Consent of Alston & Bird (included
in Exhibit 5.1) *
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Exhibit 23.2
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Consent of Crowe Horwath LLP
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Exhibit 24
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Power of Attorney *
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Exhibit 99.1
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Form of Proxy to be used at Palm Beach Community Bank Special Shareholders Meeting
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Exhibit 99.2
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Consent of Sandler ONeill & Partners, L.P.
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(b)
Financial Statement Schedules
None. All other schedules for which provision is made in Regulation S-X of the Securities and Exchange Commission are not
required under the related restrictions or are inapplicable, and, therefore, have been omitted.
(c)
Opinion of Financial Advisors
Furnished as Appendix B to the proxy statement/prospectus, which forms a part of this Registration Statement on Form S-4.
Item 22. Undertakings.
The undersigned registrant hereby undertakes to file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3)
of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after the effective date of
the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, 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 20 percent change in the maximum aggregate offering price set forth in the Calculation of
Registration Fee table in the effective Registration Statement; and
(iii) To include any material information with
respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement.
The undersigned registrant hereby undertakes that, for the purpose of determining any liability under the Securities Act of
1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial
bona fide
offering
thereof.
The undersigned registrant hereby undertakes to remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of the offering.
The undersigned registrant
hereby undertakes that, for purposes of determining any liability under the Securities Act of 1933, each filing of the registrants annual report pursuant to section 13(a) or section 15(d) of the Securities Exchange Act of 1934, as amended
(and, where applicable, each filing of an employee benefit plans annual report pursuant to section 15(d) of the Securities Exchange Act of 1934) that is incorporated by reference in the registration statement shall be deemed to be a new
registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial
bona fide
offering thereof.
The undersigned registrant hereby undertakes as follows: that prior to any public reoffering of the securities registered
hereunder through use of a prospectus which is a part of this registration statement, by any person or party who is deemed to be an underwriter within the meaning of Rule 145(c), the issuer undertakes that such reoffering prospectus will contain the
information called for by the applicable registration form with respect to reofferings by persons who may be deemed underwriters, in addition to the information called for by the other items of the applicable form.
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The registrant undertakes that every prospectus (i) that is filed pursuant
to the immediately preceding paragraph, or (ii) that purports to meet the requirements of Section 10(a)(3) of the Act and is used in connection with an offering of securities subject to Rule 415, will be filed as a part of an
amendment to the registration statement and will not be used until such amendment is effective, and that, for purposes of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial
bona fide
offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers
and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in
the 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 Act and will be governed by the final adjudication of such issue.
The undersigned registrant hereby undertakes to respond to requests for information that is incorporated by reference into the
prospectus pursuant to Items 4, 10(b), 11 or 13 of this Form, within one business day of receipt of such request, and to send the incorporated documents by first class mail or other equally prompt means. This includes information contained in
documents filed subsequent to the effective date of the registration statement through the date of responding to the request.
The undersigned registrant hereby undertakes to supply by means of a post-effective amendment all information concerning a
transaction, and the company being acquired involved therein, that was not the subject of and included in the registration statement when it became effective.
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SIGNATURES
Pursuant to the requirements of the Securities Act, the registrant has duly caused this registration statement to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City of Stuart and State of Florida, on September 6, 2017.
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SEACOAST BANKING CORPORATION OF FLORIDA
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By:
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/s/ Dennis S. Hudson, III
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Name:
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Dennis S. Hudson, III
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Title:
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Chief Executive Officer
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Pursuant to the requirements of the Securities Act of 1933, this registration statement
has been signed by the following persons in the capacities and on the dates indicated.
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Signature
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Title
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Date
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/s/ Dennis S. Hudson, III
Dennis S. Hudson, III
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Chairman of the Board of Directors, Chief Executive Officer and Director (principal executive officer)
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|
September 6, 2017
|
|
|
|
/s/ Charles M. Shaffer
Charles M. Shaffer
|
|
Executive Vice President and Chief Financial Officer (principal financial and accounting officer)
|
|
September 6, 2017
|
|
|
|
*
Dennis J. Arczynski
|
|
Director
|
|
September 6, 2017
|
|
|
|
Stephen E. Bohner
|
|
Director
|
|
September 6, 2017
|
|
|
|
*
Jacqueline L. Bradley
|
|
Director
|
|
September 6, 2017
|
|
|
|
*
H. Gilbert Culbreth, Jr.
|
|
Director
|
|
September 6, 2017
|
|
|
|
*
Julie H. Daum
|
|
Director
|
|
September 6, 2017
|
|
|
|
*
Christopher E. Fogal
|
|
Director
|
|
September 6, 2017
|
|
|
|
*
Maryann B. Goebel
|
|
Director
|
|
September 6, 2017
|
|
|
|
*
Roger O. Goldman
|
|
Director
|
|
September 6, 2017
|
II-5
|
|
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|
Signature
|
|
Title
|
|
Date
|
|
|
|
|
|
|
Dennis S. Hudson, Jr.
|
|
Director
|
|
September 6, 2017
|
|
|
|
|
|
|
*
Timothy Huval
|
|
Director
|
|
September 6, 2017
|
|
|
|
|
|
|
*
Herbert Lurie
|
|
Director
|
|
September 6, 2017
|
|
|
|
|
|
|
*
Alvaro J. Monserrat
|
|
Director
|
|
September 6, 2017
|
|
|
|
|
|
|
Thomas E. Rossin
|
|
Director
|
|
September 6, 2017
|
|
|
|
|
*
|
|
/s/ Dennis S. Hudson, III
Dennis S. Hudson, III
Attorney-in-Fact
|
|
|
|
|
II-6
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