EXHIBIT 2.1
Execution
AGREEMENT AND PLAN OF
MERGER
among
SUN AMERICAN BANCORP
SUN AMERICAN BANK
and
INDEPENDENT COMMUNITY
BANK
Dated as of November ___,
2006
Table of Contents
ARTICLE I.
DEFINITIONS AND INTERPRETATION
2
1.1
Definitions
2
1.2
Terms Defined Elsewhere
6
1.3
Interpretation
6
ARTICLE II.
PLAN OF MERGER
7
2.1
The Merger
7
2.2
Effective Time and Effects of the
Merger.
7
2.3
Tax Consequences
7
2.4
Conversion of IB Common Stock.
7
2.5
Proration.
9
2.6
SB Common Stock
10
2.7
Articles of Incorporation and
Bylaws
10
2.8
Directors and Executive
Officers
10
2.9
Election Procedures.
10
2.10
Deposit of Merger
Consideration.
12
2.11
Delivery of Merger
Consideration
12
2.12
Stock Options
14
2.13
Voting Agreements
15
2.14
SAB Closing Deliveries
15
ARTICLE III.
DISCLOSURE SCHEDULES; STANDARDS FOR
REPRESENTATIONS
AND WARRANTIES
15
3.1
Disclosure Schedules
15
3.2
Standards
16
3.3
Subsidiaries
16
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF
IB
16
4.1
Corporate Organization.
16
4.2
Capitalization
17
4.3
Authority
17
4.4
Consents and Approvals
17
4.5
No Violations
17
4.6
Licenses, Franchises and
Permits
18
4.7
Regulatory Reports
18
4.8
Financial Statements
18
4.9
Deposits
19
4.10
Broker’s Fees
19
4.11
Properties
19
4.12
Intellectual Property
19
4.13
Condition of Fixed Assets and
Equipment
20
4.14
Absence of Certain Changes or
Events.
20
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4.15
Legal Proceedings
20
4.16
Taxes.
20
4.17
Employees.
22
4.18
Intentionally Omitted
23
4.19
Certain Contracts.
23
4.20
Agreements with Regulatory
Agencies
24
4.21
Environmental Matters
24
4.22
Opinion
25
4.23
Insurance
25
4.24
Approvals
25
4.25
Loan Portfolio.
25
4.26
Reorganization
26
4.27
State Takeover Laws and Charter
Provisions
26
4.28
Sole Agreement
26
4.29
Disclosure.
26
4.30
Absence of Undisclosed
Liabilities
26
4.31
Allowance for Loan Losses.
27
4.32
Compliance with Laws.
27
4.33
Material Contract Defaults
27
4.34
Certain Regulatory Matters.
27
ARTICLE V.
REPRESENTATIONS AND WARRANTIES OF
SAB
29
5.1
Corporate Organization.
29
5.2
Capitalization
29
5.3
Authority; No Violation.
30
5.4
Consents and Approvals
30
5.5
SEC Reports
30
5.6
Regulatory Reports
31
5.7
Financial Statements
31
5.8
Broker’s Fees
31
5.9
Absence of Certain Changes or
Events
31
5.10
Intentionally Omitted.
31
5.11
SAB Information
31
5.12
Compliance with Laws.
32
5.13
Ownership of IB Common Stock
32
5.14
Approvals
32
5.15
Reorganization
32
ARTICLE VI.
COVENANTS RELATING TO CONDUCT OF
BUSINESS
32
6.1
Covenants of IB
32
6.2
Covenants of SAB
35
ARTICLE VII.
ADDITIONAL AGREEMENTS
35
7.1
Regulatory Matters.
35
7.2
Access to Information and Due Diligence
Investigation.
36
7.3
Certain Actions.
37
7.4
Stockholder Meeting
37
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7.5
Legal Conditions to Merger
37
7.6
Affiliates
38
7.7
AMEX Listing
38
7.8
Employee Benefit Plans; Existing
Agreements.
38
7.9
Additional Agreements
38
7.10
Accounting Matters
39
7.11
IB Information
39
7.12
Disclosure
39
7.13
Transfer Taxes
39
7.14
Access to IB Employees; Retention of IB
Employees
40
7.15
General Cooperation
40
ARTICLE VIII.
CONDITIONS PRECEDENT
40
8.1
Conditions to Each Party’s
Obligation To Effect the Merger
40
8.2
Conditions to Obligations of
SAB
41
8.3
Conditions to Obligations of
IB
42
ARTICLE IX.
TERMINATION AND AMENDMENT
43
9.1
Termination
43
9.2
Effect of Termination
44
9.3
Amendment
45
9.4
Extension; Waiver
45
ARTICLE X.
GENERAL PROVISIONS
45
10.1
Closing
45
10.2
Survival of Representations, Warranties
and Agreements
45
10.3
Expenses
46
10.4
Notices
46
10.5
Counterparts
46
10.6
Entire Agreement
47
10.7
Governing Law
47
10.8
Severability
47
10.9
Publicity
47
10.10
Assignment; Third Party
Beneficiaries
47
10.11
Arbitration; Legal
Proceedings.
47
Exhibit A
Form of Voting Agreement
Exhibit B
Form of Bank Merger Agreement
Exhibit C
Form of Employment Agreement
Exhibit D
Form of Director Non-Competition
Agreement
Exhibit E
Form of Affiliate Agreement
Exhibit F
Form of Opinion of IB Counsel
Exhibit G
Form of Release Letter
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AGREEMENT AND PLAN
OF MERGER
AGREEMENT AND PLAN OF MERGER (this
“Agreement”), dated as of November __, 2006, among
Sun American Bancorp, a Delaware business corporation
(“SAB”), Sun American Bank, a Florida commercial
banking association and a wholly-owned subsidiary of SAB
(“SB”) and Independent Community Bank, a Florida
commercial banking association (“IB”).
RECITALS
The Boards of Directors of SAB, SB and IB
have determined that it is in the best interests of their
respective companies and their stockholders to consummate the
business combination transaction provided for herein in which IB
will, subject to the terms and conditions set forth herein, merge
(the “Merger”) with and into SB.
As an inducement and condition to SAB and
SB entering into this Agreement, certain of the stockholders of IB
(i.e., all of its directors)(the “Voting Agreement
Parties”) have agreed to (i) vote all of their shares of IB
common stock which they are entitled to vote in favor of the
transactions contemplated by this Agreement at the meeting of IB
Stockholders at which this Agreement is considered as set forth in
the form attached hereto as Exhibit A (“Voting
Agreement”) and (ii) to the extent permitted under applicable
law, to recommend that the transaction be approved by the IB
Stockholders.
The parties desire to make certain
representations, warranties and agreements in connection with the
Merger and also to prescribe certain conditions to the
Merger.
AGREEMENT
In consideration of the mutual covenants,
representations, warranties and agreements contained herein, and
intending to be legally bound hereby, the parties agree as
follows:
ARTICLE I.
DEFINITIONS AND
INTERPRETATION
1.1
Definitions . The following terms shall have the indicated
definitions.
Acquisition Proposal
. A proposed tender offer, written
agreement, understanding or other proposal of any nature pursuant
to which any Person or group, other than SAB or any SAB Subsidiary,
would directly or indirectly (i) acquire or participate in a
merger, share exchange, consolidation or any other business
combination involving IB; (ii) acquire the right to vote 10% or
more of the outstanding voting securities of IB; (iii) acquire 10%
or more of the assets or earning power of IB; or (iv) acquire in
excess of 10% of any class of capital stock of IB.
Affiliate . With respect to any Person, any other Person that,
directly or indirectly, through one or more intermediaries,
controls, is controlled by, or is under common control with, such
Person. For the purposes of this definition, “control”
means, when used with respect to any Person, the possession,
directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, whether
through the ownership of voting securities, by contract, or
otherwise, and the terms “controlling” and
“controlled” have correlative meanings.
AMEX . American Stock Exchange.
Articles of Merger
. The articles of merger complying with
the FBA and the NBA reflecting the merger of IB with and into
SB.
Balance Sheet . The consolidated balance sheet of IB prepared based
upon GAAP applicable to interim financial statements as
consistently applied by IB for prior interim periods and based upon
the materiality standards established by IB’s external
auditors in connection with the most recently completed
audit.
BHC Act . The Bank Holding Company Act of 1956, as
amended.
Cash Consideration
. The aggregate sum of $15,813,486.00
plus an amount necessary to pay for all fractional shares pursuant
to Section 2.11(f) hereof, subject to adjustment in the event any
IB Option granted under the IB Option Plan is exercised between the
execution date hereof and the Effective Time , by increasing such
amount by 42% of the amount determined by multiplying $34.81 by the
number of shares issued upon the exercise of such options
.
Code . The Internal Revenue Code of 1986, as
amended.
Dissenting Shares
. Any shares of IB stockholders who
exercise their dissenters rights under applicable Florida
law.
Effective Time . The effective time of the Merger as specified in
the Articles of Merger.
Environmental Laws
. All federal, state and local laws,
including common- law statutes, regulations, ordinances, codes,
rules and other governmental restrictions, standards and
requirements relating to the discharge of air pollutants, water
pollutants or process waste water or substances, as now or at any
time hereafter in effect, including, but not limited to, the
Federal Solid Waste Disposal Act, the Federal Hazardous Materials
Transportation Act, the Federal Clean Air Act, the Federal Clean
Water Act, the Federal Resource Conservation and Recovery Act of
1976, the Federal Comprehensive Environmental Responsibility
Cleanup and Liability Act of 1980, as amended
(“CERCLA”), regulations of the Environmental Protection
Agency, regulations of the Nuclear Regulatory Agency, regulations
of the Occupational Safety and Health Administration, and any
so-called “Superfund” or “Superlien”
Laws.
ERISA . The Employee Retirement Income Security Act of
1974, as amended.
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Exchange Act . The Securities Exchange Act of 1934, as
amended.
Exchange Agent . The current or the successor stock transfer agent
of SAB, which shall be responsible for the exchange of the Merger
Consideration for the IB Common Stock.
Expenses . All reasonable in amount and reasonably incurred
out-of-pocket expenses (including all reasonable fees and
reasonable expenses of counsel, accountants, investment bankers,
experts and consultants to the applicable Party and its Affiliates)
incurred by or on behalf of a Party to this Agreement in connection
with this Agreement or the transactions contemplated by this
Agreement.
FBA . Florida Interstate Branching Act, as amended, and
the Florida Banking Corporation Act, as amended.
FDB . Florida Department of Banking.
FDB Consent . The consent of the FDB necessary to consummation of
the Merger.
FDIC . The Federal Deposit Insurance
Corporation.
FRB . The Board of Governors of the Federal Reserve
System.
GAAP . Generally accepted accounting principles
consistently applied during the periods involved.
Governmental Entity
. Any court, administrative agency or
commission or other governmental authority or
instrumentality.
Hazardous Materials
. Any chemicals, pollutants,
contaminants, wastes, toxic substances, petroleum or other
regulated substances or materials.
IB Ancillary Documents
. Any certificate, agreement, document or
other instrument, other than this Agreement, to be executed and
delivered by IB in connection with the transactions contemplated
hereby.
IB Common Stock
. The common stock, par value $5.00 per
share, of IB.
IB Option Plan . Collectively, the Independent Community Bank 1999
Stock Option Plan, 2004 Director Stock Plan and 2006 Employee
Option Plan.
IB Stock Certificate
. A certificate, which previous to the
Merger represented any shares of IB Common Stock.
Intellectual Property
. (i) trademarks, service marks, trade
names, Internet
3
domain names, designs, logos, slogans,
and general intangibles of like nature, together with all goodwill,
registrations and applications related to the foregoing; (ii)
patents and industrial designs (including any continuations,
divisionals, continuations-in-part, renewals, reissues, and
applications for any of the foregoing); (iii) copyrights (including
any registrations and applications for any of the foregoing); (iv)
Software; and (v) technology, trade secrets and other confidential
information, know-how, proprietary processes, formulae, algorithms,
models, and methodologies.
IRS . The Internal Revenue Service.
Knowledge or aware
. Any term of similar import means, (i)
with respect to IB, the actual knowledge of each director and
executive officer of IB, and (ii) with respect to SAB, the actual
knowledge of each director and executive officer of SAB or any SAB
Subsidiary.
Loan Property . Any property in which IB holds a security interest,
and, where required by the context, such term means the owner or
operator of such property.
Material Adverse Effect
. With respect to SAB or IB, as the case
may be, a material adverse effect on (i) the business, results of
operations or financial condition of such party and its
Subsidiaries taken as a whole, (ii) the ability of the parties to
perform their obligations under this Agreement or otherwise
consummate the transactions contemplated hereby, or (iii) any
decrease in the deposit accounts or loan accounts of IB in excess
of 10% or more from what is stated on the balance sheet dated
September 30, 2006, excluding decreases arising from the
termination of the deposit accounts or loan accounts set forth in
Section 1.1 of the Disclosure Schedules (as defined in Section
3.1).
Merger Consideration
. The merger consideration shall be equal
to the Cash Consideration plus the Stock Consideration.
NASDAQ . Nasdaq Global Market.
Participation Facility.
Any facility in which IB participates in
the management and, where required by the context, such term means
the owner or operator of such facility.
Per Share Amount
. The amount of $34.81 per share of IB
Common Stock.
Person . An individual, partnership (general or limited),
corporation, joint venture, business trust, limited liability
company, cooperative association or other form of business
organization, trust, estate or any other entity.
Regulatory Agencies
. The FDB, the FRB, the FDIC and any
other regulatory authority or applicable self-regulatory
organization with jurisdiction over the Merger.
Rights . Subscriptions, options, warrants, calls,
commitments or agreements of any character to purchase capital
stock.
4
SAB Common Stock
. The common stock, par value $0.01 per
share, of SAB.
SEC . The Securities and Exchange Commission.
Share Ratio . As of the date hereof, each share of IB Common
Stock that is converted into shares of SAB Common Stock shall be
converted at a rate of 6.4463 shares of SAB Common Stock per share
of IB Common Stock, subject to adjustment pursuant to Section
2.4(d) hereof.
Software . Computer programs, whether in source code or object
code form (including any and all software implementation of
algorithms, models and methodologies), databases and compilations
(including any and all data and collections of data), and all
documentation (including user manuals and training materials)
related to the foregoing.
Stock Consideration
. An aggregate of 4,044,013 shares of SAB
Common Stock, subject to adjustment in the event any IB Option
granted under the IB Option Plan is exercised between the execution
date hereof and the Effective Time , by increasing such number by a
number of shares determined by multiplying the Share Ratio by 58%
of the number of shares issued upon the exercise of such options
.
Subsidiary . The word “Subsidiary” (1) when used
with respect to IB shall mean any corporation, partnership or other
organization, whether incorporated or unincorporated, which is
consolidated with such party for financial reporting purposes, and
(2) when used with respect to SAB shall mean each Subsidiary of SAB
that is a “Significant Subsidiary” within the meaning
of Rule 1-02 of Regulation S-X of the SEC.
Surviving Bank . The surviving bank to the Merger, which shall be
SB.
Taxes . Tax or Taxes shall mean (a) any foreign, federal,
state or local income, earnings, profits, gross receipts,
franchise, capital stock, net worth, sales, use, value added,
occupancy, general property, real property, personal property,
intangible property, transfer, fuel, excise, escheat, unclaimed
property, payroll, withholding, unemployment compensation, social
security, retirement, environmental (including any Taxes imposed
under Section 59A of the Code) or other tax of any nature; (b) any
foreign, federal, state or local organization fee, qualification
fee, annual report fee, filing fee, occupation fee, assessment,
sewer rent or other fee or charges of any nature; or (c) any
deficiency, interest or penalty imposed with respect to any of the
foregoing.
Tax Return . Any return (including any information return),
report, statement, schedule, notice, form, declaration, claim for
refund or other document or information filed with or submitted to,
or required to be filed with or submitted to, any governmental body
in connection with the determination, assessment, collection or
payment of any Tax or in connection with the administration,
implementation or enforcement of or compliance with any law
relating to any Tax, including any amendment thereto, all taxes,
charges, fees, levies, penalties or other assessments imposed by
any United States federal, state, local or foreign taxing
authority, including, but not limited to income, excise, property,
sales, transfer, franchise,
5
payroll, withholding, social security or
other taxes, including any interest, penalties or additions
attributable thereto.
Trust Account Shares
. Shares of IB Common Stock or SAB Common
Stock held directly or indirectly in trust accounts, managed
accounts and the like or otherwise held in a fiduciary capacity for
the benefit of third parties.
1.2
Terms Defined Elsewhere
. The capitalized terms set forth below
are defined in the following sections:
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“Agreement”
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Preamble
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“Closing”
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Section 10.1
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“Closing Date”
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Section 10.1
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“Code”
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Section 2.3
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“ERISA Affiliate”
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Section 4.17(a)
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“Exchange Fund”
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Section 2.10 “
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“IB”
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Preamble
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“IB Contract”
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Section 4.19(a)
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“IB Disclosure Schedule”
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Section 3.1
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“IB Financial Statements”
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Section 4.8
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“Injunction”
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Section 8.1(e)
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“Loans”
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Section 4.25(a)
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“Merger”
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Recitals
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“Plans”
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Section 4.17(a)
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“Prospectus”
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Section 4.4
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“Regulatory Agreement”
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Section 4.20
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“Representatives”
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Section 7.3(a)
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“Requisite Regulatory Approvals”
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Section 8.1(c)
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“S-4”
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Section 4.18
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“SAB”
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Preamble
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“SAB Financial Statements”
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Section 5.7
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“SAB Reports”
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Section 5.4
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“SB”
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Preamble
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“Securities Act”
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Section 5.5
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“State Banking Approvals”
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Section 4.4
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1.3
Interpretation . When a reference is made in this Agreement to
Sections, Exhibits or Schedules, such reference shall be to a
Section of or Exhibit or Schedule to this Agreement unless
otherwise indicated. 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. Whenever the words
“include”, “includes” or
“including” are used in this Agreement, they shall be
deemed to be followed by the words “without
limitation”. The phrases “the date hereof” and
terms of similar import, unless the context otherwise requires,
shall be deemed to refer to the date of this Agreement. No
provision of this Agreement shall be
6
construed to require IB, SAB or any of
their respective Affiliates to take any action that would violate
any applicable law (including common law), rule or
regulation.
ARTICLE II.
PLAN OF MERGER
2.1
The Merger . Subject to the terms and conditions of this
Agreement, in accordance with the FBA, at the Effective Time, IB
shall merge with and into SB. SB shall be the Surviving Bank, and
shall continue its corporate existence under the laws of the United
States of America. The name of the Surviving Bank shall continue to
be “Sun American Bank” Upon consummation of the Merger,
the separate corporate existence of IB shall terminate.
2.2
Effective Time and Effects of the
Merger .
(a)
Subject to the provisions of this
Agreement, on the Closing Date, the Articles of Merger shall be
duly prepared, executed and delivered for filing with the Secretary
of State of the State of Florida. The Merger shall become effective
at the Effective Time. At and after the Effective Time, the Merger
shall have the effects set forth in the FBA.
(b)
At the Effective Time, the separate
existence of IB shall cease, and SB, as the Surviving Bank, shall
thereupon and thereafter possess all of the assets, rights,
privileges, appointments, powers, licenses, permits and franchises
of the two merged corporations, whether of a public or a private
nature, and shall be subject to all of the liabilities,
restrictions, disabilities and duties of IB.
(c)
At the Effective Time, all rights,
assets, licenses, permits, franchises and interests of IB in and to
every type of property, whether real, personal, or mixed, whether
tangible or intangible, and choses in action shall be deemed to be
vested in SB as the Surviving Bank by virtue of the Merger becoming
effective and without any deed or other instrument or act of
transfer whatsoever.
(d)
At the Effective Time, and except as
otherwise expressly provided herein, the Surviving Bank shall
become and be liable for all debts, liabilities, obligations and
contracts of IB whether the same shall be matured or unmatured;
whether accrued, absolute, contingent or otherwise; and whether or
not reflected or reserved against in the balance sheets, other
financial statements, books of account or records of IB.
2.3
Tax Consequences
. It is intended that the Merger shall
constitute a reorganization within the meaning of Section 368(a) of
the Internal Revenue Code of 1986, as amended (the
“Code”) and that this Agreement shall constitute a plan
of reorganization for the purposes of Sections 354 and 361 of the
Code.
2.4
Conversion of IB Common
Stock .
(a)
At the Effective Time, by virtue of the
Merger and without any action on the part of IB, SAB, SB or the
holder of any of the following securities, subject to
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Sections 2.4(d) and 2.5, each share
of IB Common Stock, except for shares of IB Common Stock owned by
IB or SAB (other than Trust Account Shares) or any of
SAB’s Subsidiaries, shall be converted, at the election of
the holder thereof, in accordance with the procedures set forth in
this Section 2.4 and Section 2.9, into the right to receive
the following, without interest:
(i) for each share of IB Common Stock
with respect to which an election to receive cash has been
effectively made and not revoked or deemed revoked pursuant to
Article II (a “ Cash Election ”), the right
to receive in cash from SAB an amount equal to the Per Share Amount
(collectively, the “ Cash Election Shares
”);
(ii) for each share of IB Common
Stock with respect to which an election to receive SAB Common Stock
has been effectively made and not revoked or deemed revoked
pursuant to Article II (a “Stock Election”), the
right to receive from SAB the number of shares of SAB Common Stock
as is equal to the Share Ratio (collectively, the “Stock
Election Shares”); and
(iii) for each share of IB Common
Stock other than shares as to which a Cash Election or a Stock
Election has been effectively made and not revoked or deemed
revoked pursuant to Article II (collectively, the
“Non-Election Shares”), the right to receive from SAB
such Stock Consideration and/or Cash Consideration as is determined
in accordance with Section 2.5(b).
(b)
All of the shares of IB Common Stock
converted into the right to receive the Merger Consideration
pursuant to this Article II shall no longer be outstanding and
shall automatically be cancelled and shall cease to exist as of the
Effective Time, and each certificate previously representing any
such shares of IB Common Stock (each, a “ Certificate
”) shall thereafter represent only the right to receive the
Merger Consideration and/or cash in lieu of fractional shares, into
which the shares of IB Common Stock represented by such Certificate
have been converted pursuant to this Section 2.4 and
Section 2.11(f), as well as any dividends to which holders of
IB Common Stock become entitled in accordance with
Section 2.11(c).
(c)
At the Effective Time, all shares of IB
Common Stock that are owned directly or indirectly by IB, SAB or
any of SAB’s Subsidiaries (other than Trust Account Shares)
shall be cancelled and shall cease to exist and no stock of SAB,
cash or other consideration shall be delivered in exchange
therefor.
(d)
If, between the date hereof and the
Effective Time, (i) the shares of SAB Common Stock shall be changed
(or SAB establishes a record date for changing such shares which is
prior to the Effective Time) into a different number or class of
shares by reason of any reclassification, recapitalization,
split-up, combination, exchange of shares or readjustment, (ii) a
stock dividend shall be declared (or SAB establishes a record date
for such dividend which is prior to the Effective Time) in respect
of SAB Common Stock, or (iii) any distribution is made (or SAB
establishes a record date for such distribution which is prior to
the Effective Time) in respect of SAB Common Stock other than a
regular quarterly cash dividend consistent with past practice,
proportionate adjustments shall be made to the Share
Ratio.
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2.5 Proration .
(a)
Notwithstanding any other provision
contained in this Agreement, the total number of shares of IB
Common Stock to be converted into Cash Consideration pursuant to
Section 2.4 (the “ Cash Conversion Number
”) shall be equal to 42% of the shares of IB Common Stock
outstanding at the Effective Time (other than shares of IB Common
Stock to be cancelled as provided in Section 2.4(c)). All
other shares of IB Common Stock shall be converted into Stock
Consideration (other than shares of IB Common Stock to be cancelled
as provided in Section 2.4(c)).
(b)
Within five Business Days after the
Effective Time, SAB shall cause the Exchange Agent (as defined
below) to effect the allocation among holders of IB Common Stock of
rights to receive the Cash Consideration and the Stock
Consideration as follows:
(i)
If the aggregate number of shares of IB
Common Stock with respect to which Cash Elections shall have been
made (the “ Cash Election Number ”) exceeds the
Cash Conversion Number, then all Stock Election Shares and all
Non-Election Shares shall be converted into the right to receive
the Stock Consideration, and Cash Election Shares of each holder
thereof will be converted into the right to receive the Cash
Consideration in respect of that number of Cash Election Shares
equal to the product obtained by multiplying (x) the number of
Cash Election Shares held by such holder by (y) a fraction,
the numerator of which is the Cash Conversion Number and the
denominator of which is the Cash Election Number (with the Exchange
Agent to determine, consistent with Section 2.5(a), whether
fractions of Cash Election Shares shall be rounded up or down),
with the remaining number of such holder’s Cash Election
Shares being converted into the right to receive the Stock
Consideration; and
(ii)
If the Cash Election Number is less than
the Cash Conversion Number (the amount by which the Cash Conversion
Number exceeds the Cash Election Number being referred to herein as
the “ Shortfall Number ”), then all Cash
Election Shares shall be converted into the right to receive the
Cash Consideration and the Non-Election Shares and Stock Election
Shares shall be treated in the following manner:
(A)
If the Shortfall Number is less than or
equal to the number of Non-Election Shares, then all Stock Election
Shares shall be converted into the right to receive the Stock
Consideration, and the Non-Election Shares of each holder thereof
shall convert into the right to receive the Cash Consideration in
respect of that number of Non-Election Shares equal to the product
obtained by multiplying (x) the number of Non-Election Shares
held by such holder by (y) a fraction, the numerator of which
is the Shortfall Number and the denominator of which is the total
number of Non-Election Shares (with the Exchange Agent to
determine, consistent with Section 2.5(a), whether fractions
of Non-Election Shares shall be rounded up or down), with the
remaining number of such holder’s Non-Election Shares being
converted into the right to receive the Stock
Consideration; or
(B)
If the Shortfall Number exceeds the
number of Non-Election Shares, then all Non-Election Shares shall
be converted into the right to receive
9
the Cash Consideration, and Stock
Election Shares of each holder thereof shall convert into the right
to receive the Cash Consideration in respect of that number of
Stock Election Shares equal to the product obtained by multiplying
(x) the number of Stock Election Shares held by such holder by
(y) a fraction, the numerator of which is the amount by which
(1) the Shortfall Number exceeds (2) the total number of
Non-Election Shares, and the denominator of which is the total
number of Stock Election Shares (with the Exchange Agent to
determine, consistent with Section 2.5(a), whether fractions
of Stock Election Shares shall be rounded up or down), with the
remaining number of such holder’s Stock Election Shares being
converted into the right to receive the Stock
Consideration.
2.6
SB Common Stock
. The shares of SB Common Stock issued
and outstanding immediately prior to the Effective Time shall be
unaffected by the Merger and such shares shall remain issued and
outstanding and 99.9% owned by SAB.
2.7
Articles of Incorporation and
Bylaws . At the Effective
Time, the Articles of Incorporation of SB, as in effect immediately
prior to the Effective Time, shall be the Articles of Incorporation
of the Surviving Bank. At the Effective Time, the Bylaws of SB, as
in effect immediately prior to the Effective Time, shall be the
Bylaws of the Surviving Bank until thereafter amended in accordance
with applicable law.
2.8
Directors and Executive
Officers . At and after the
Effective Time, the directors of SB shall consist of all of the
directors of SB serving immediately prior to the Effective Time,
each to hold office in accordance with the Articles of
Incorporation and Bylaws of the Surviving Bank until their
respective successors are duly elected or appointed and qualified.
The executive officers of SB immediately prior to the Effective
Time shall be the officers of the Surviving Bank, each to hold
office in accordance with the Articles of Incorporation and Bylaws
of the Surviving Bank until their respective successors are duly
elected or appointed and qualified.
2.9
Election Procedures
. Each holder of record of shares of IB
Common Stock (“ Holder ”) shall have the right,
subject to the limitations set forth in this Article II, to
submit an election in accordance with the following
procedures:
(a)
Each Holder may specify in a request made
in accordance with the provisions of this Section 2.9 (herein
called an “ Election ”) (i) the number of
shares of IB Common Stock owned by such Holder with respect to
which such Holder desires to make a Stock Election and
(ii) the number of shares of IB Common Stock owned by such
Holder with respect to which such Holder desires to make a Cash
Election.
(b)
SAB shall prepare a form reasonably
acceptable to IB (the “Form of Election”) which shall
be mailed to record holders of IB Common Stock so as to permit
those holders to exercise their right to make an Election prior to
the Election Deadline.
(c)
SAB shall make the Form of Election
initially available not less than twenty (20) Business Days
prior to the anticipated Election Deadline and shall use
all
10
reasonable efforts to make available as
promptly as possible a Form of Election to any stockholder of IB
who requests such Form of Election following the initial mailing of
the Forms of Election and prior to the Election
Deadline.
(d)
Any Election shall have been made
properly only if the Exchange Agent, pursuant to an agreement (the
“Exchange Agent Agreement”) entered into prior to the
mailing of the Form of Election to IB stockholders, shall have
received, by the Election Deadline, a Form of Election properly
completed and signed and accompanied by Certificates to which such
Form of Election relates or by an appropriate customary guarantee
of delivery of such certificates, as set forth in such Form of
Election, from a member of any registered national securities
exchange or a commercial bank or trust company in the United
States; provided, that such Certificates are in fact delivered to
the Exchange Agent by the time required in such guarantee of
delivery. Failure to deliver shares of IB Common Stock covered by
such a guarantee of delivery within the time set forth on such
guarantee shall be deemed to invalidate any otherwise properly made
Election, unless otherwise determined by SAB, in its sole
discretion and any shares of IB Common Stock held by such Holder
shall be deemed Non-Election Shares. As used herein, unless
otherwise agreed in advance by the parties, “Election
Deadline” means 5:00 p.m. local time (in the city in
which the principal office of the Exchange Agent is located) on the
day prior to the IB Stockholders’ meeting at which the
approval of this Agreement is considered or such other time and
date as SAB and IB may mutually agree. IB and SAB shall cooperate
to issue a press release reasonably satisfactory to each of them
announcing the date of the Election Deadline not more than
fifteen (15) Business Days before, and at least five
(5) Business Days prior to, the Election Deadline. SAB shall
provide IB with the form of Exchange Agent Agreement and both the
letter of transmittal and the instructions prior to the Effective
Time, each of which shall be subject to the approval of IB in its
reasonable discretion.
(e)
Any IB stockholder may, at any time prior
to the Election Deadline, change or revoke his or her Election by
written notice received by the Exchange Agent prior to the Election
Deadline accompanied by a properly completed and signed revised
Form of Election. Subject to the terms of the Exchange Agent
Agreement, if SAB shall determine in its reasonable discretion that
any Election is not properly made with respect to any shares of IB
Common Stock (neither SAB nor IB nor the Exchange Agent being under
any duty to notify any stockholder of any such defect), such
Election shall be deemed to be not in effect, and the shares of IB
Common Stock covered by such Election shall, for purposes hereof,
be deemed to be Non-Election Shares, unless a proper Election is
thereafter timely made.
(f)
Any IB stockholder may, at any time prior
to the Election Deadline, revoke his or her Election by written
notice received by the Exchange Agent prior to the Election
Deadline or by withdrawal prior to the Election Deadline of his or
her Certificates, or of the guarantee of delivery of such
Certificates, previously deposited with the Exchange Agent. All
Elections shall be automatically deemed revoked upon receipt by the
Exchange Agent of written notification from SAB or IB that this
Agreement has been terminated in accordance with
Article IX.
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(g)
Subject to the terms of the Exchange
Agent Agreement, SAB, in the exercise of its reasonable discretion,
shall have the right to make all determinations, not inconsistent
with the terms of this Agreement, governing (i) the validity
of the Forms of Election and compliance by any IB stockholder with
the Election procedures set forth herein, (ii) the manner and
extent to which Elections are to be taken into account in making
the determinations prescribed by Section 2.5, (iii) the
issuance and delivery of certificates representing the whole number
of shares of SAB Common Stock into which shares of IB Common Stock
are converted in the Merger and (iv) the method of payment of
cash for shares of IB Common Stock converted into the right to
receive the Cash Consideration and cash in lieu of fractional
shares of SAB Common Stock.
2.10
Deposit of Merger
Consideration . At or prior to
the Effective Time, SAB shall deposit, or shall cause to be
deposited, with the Exchange Agent (i) certificates
representing the shares of SAB Common Stock constituting the
aggregate Stock Consideration, and SAB shall instruct the Exchange
Agent to timely deliver, the aggregate Stock Consideration, and
(ii) immediately available funds constituting the aggregate Cash
Consideration (collectively, the “ Exchange Fund
”) and SAB shall instruct the Exchange Agent to timely pay
the Cash Consideration in accordance with this
Agreement.
2.11
Delivery of Merger
Consideration .
(a)
As soon as reasonably practicable after
the Effective Time, the Exchange Agent shall mail to each holder of
record of Certificate(s) which immediately prior to the Effective
Time represented outstanding shares of IB Common Stock whose shares
were converted into the right to receive the Merger Consideration
pursuant to Section 2.4 and any cash in lieu of fractional
shares of SAB Common Stock to be issued or paid in consideration
therefor who did not properly complete and submit an Election Form,
(i) a letter of transmittal (which shall specify that delivery
shall be effected, and risk of loss and title to Certificate(s)
shall pass, only upon delivery of Certificate(s) (or affidavits of
loss in lieu of such Certificate(s))) (the “ Letter of
Transmittal ”) to the Exchange Agent and shall be
substantially in such form and have such other provisions as shall
be prescribed by the Exchange Agent Agreement and
(ii) instructions for use in surrendering Certificate(s) in
exchange for the Merger Consideration and any cash in lieu of
fractional shares of SAB Common Stock to be issued or paid in
consideration therefor in accordance with Section 2.11(f) upon
surrender of such Certificate and any dividends or distributions to
which such holder is entitled pursuant to
Section 2.11(c).
(b)
Upon surrender to the Exchange Agent of
its Certificate(s), accompanied by a properly completed Form of
Election or a properly completed Letter of Transmittal, a holder of
IB Common Stock will be entitled to receive, promptly after the
Effective Time, the Merger Consideration (elected or deemed elected
by it, subject to, and in accordance with Sections 2.4 and
2.5) and any cash in lieu of fractional shares of SAB Common Stock
to be issued or paid in consideration therefor in respect of the
shares of IB Common Stock represented by its Certificate(s). Until
so surrendered, each such Certificate shall represent after the
Effective Time, for all purposes, only the right to receive,
without interest, the Merger Consideration and any cash in lieu of
fractional shares of SAB Common Stock to be issued or
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paid in consideration therefor upon
surrender of such Certificate in accordance with, and any dividends
or distributions to which such holder is entitled pursuant to, this
Article II.
(c)
No dividends or other distributions with
respect to SAB Common Stock shall be paid to the holder of any
unsurrendered Certificate with respect to the shares of SAB Common
Stock represented thereby, in each case unless and until the
surrender of such Certificate in accordance with this
Article II. Subject to the effect of applicable abandoned
property, escheat or similar laws, following surrender of any such
Certificate in accordance with this Article II the record
holder thereof shall be entitled to receive, without interest,
(i) the amount of dividends or other distributions with a
record date after the Effective Time theretofore payable with
respect to the whole shares of SAB Common Stock represented by such
Certificate and not paid and/or (ii) at the appropriate
payment date, the amount of dividends or other distributions
payable with respect to shares of SAB Common Stock represented by
such Certificate with a record date after the Effective Time (but
before such surrender date) and with a payment date subsequent to
the issuance of the SAB Common Stock issuable with respect to such
Certificate.
(d)
In the event of a transfer of ownership
of a Certificate representing IB Common Stock that is not
registered in the stock transfer records of IB, the proper amount
of cash and/or shares of SAB Common Stock shall be paid or issued
in exchange therefor to a person other than the person in whose
name the Certificate so surrendered is registered if the
Certificate formerly representing such IB Common Stock shall be
properly endorsed or otherwise be in proper form for transfer and
the person requesting such payment or issuance shall pay any
transfer or other similar Taxes required by reason of the payment
or issuance to a person other than the registered holder of the
Certificate or establish to the satisfaction of SAB that the Tax
has been paid or is not applicable. The Exchange Agent (or,
subsequent to the first anniversary of the Effective Time, SAB)
shall be entitled to deduct and withhold from any cash portion of
the Merger Consideration, any cash in lieu of fractional shares of
SAB Common Stock, cash dividends or distributions payable pursuant
to Section 2.11(c) hereof and any other cash amounts otherwise
payable pursuant to this Agreement to any holder of IB Common Stock
such amounts as the Exchange Agent or SAB, as the case may be, is
required to deduct and withhold under the 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
Agent or SAB, 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 IB Common Stock in respect of whom such
deduction and withholding was made by the Exchange Agent or SAB, as
the case may be.
(e)
After the Effective Time, there shall be
no transfers on the stock transfer books of IB of any shares of IB
Common Stock that were issued and outstanding immediately prior to
the Effective Time other than to settle transfers of IB Common
Stock that occurred prior to the Effective Time. If, after the
Effective Time, Certificates representing such shares are presented
for transfer to the Exchange Agent, they shall be cancelled and
exchanged for the Merger Consideration and any cash in lieu of
fractional shares of SAB Common Stock to be issued or paid in
consideration therefor in accordance with Section 2.5 and the
procedures set forth in this Article II.
13
(f)
Notwithstanding anything to the contrary
contained in this Agreement, no certificates or scrip representing
fractional shares of SAB Common Stock shall be issued upon the
surrender of Certificates for exchange, no dividend or distribution
with respect to SAB Common Stock shall be payable on or with
respect to any fractional share, and such fractional share
interests shall not entitle the owner thereof to vote or to any
other rights of a stockholder of SAB. In lieu of the issuance of
any such fractional share, SAB shall pay to each former stockholder
of IB who otherwise would be entitled to receive such fractional
share, an amount in cash (rounded to the nearest whole cent)
determined by multiplying (i) the Fair Market Value of the SAB
Common Stock by (ii) the fraction of a share (after taking
into account all shares of IB Common Stock held by such holder at
the Effective Time and rounded to the nearest one thousandth when
expressed in decimal form) of SAB Common Stock to which such holder
would otherwise be entitled to receive pursuant to
Section 2.4. For purposes of this paragraph, Fair Market Value
shall mean the average of the closing prices for the SAB Common
Stock for the 20 trading days prior to the Effective
Time.
(g)
Any portion of the Exchange Fund that
remains unclaimed by the stockholders of IB as of the first
anniversary of the Effective Time shall be paid to SAB. Any former
stockholders of IB who have not theretofore complied with this
Article II shall thereafter look only to SAB with respect to
the Merger Consideration, any cash in lieu of any fractional shares
and any unpaid dividends and distributions on the SAB Common Stock
deliverable in respect of each share of IB Common Stock such
stockholder holds as determined pursuant to this Agreement, in each
case, without any interest thereon. Notwithstanding the foregoing,
none of SAB, IB, the Exchange Agent or any other person shall be
liable to any former holder of shares of IB Common Stock for any
amount delivered in good faith to a public official pursuant to
applicable abandoned property, escheat or similar laws.
(h)
In the event any Certificate shall have
been lost, stolen or destroyed, upon the making of an affidavit of
that fact by the person claiming such Certificate to be lost,
stolen or destroyed and, if reasonably required by SAB or the
Exchange Agent, the posting by such person of a bond in such amount
as SAB may determine is reasonably necessary as indemnity against
any claim that may be made against it with respect to such
Certificate, the Exchange Agent will issue in exchange for such
lost, stolen or destroyed Certificate the Merger Consideration
deliverable in respect thereof pursuant to this
Agreement.
2.12
Stock Options . At the Effective Time, each option granted by IB
under the IB Option Plan (whether or not then vested or unvested),
which is outstanding and unexercised immediately prior thereto
shall cease to represent a right to acquire shares of IB Common
Stock and shall have no effect and the agreements evidencing grants
of options that are unexercised thereunder, and any other
agreements between IB and an optionee regarding IB Option shall be
terminated by IB and the optionee prior to the Effective Time, and
each such option shall be converted, at the option of the option
holder, into (i) the right to receive a cash payment from SAB
promptly after the Effective Time in an amount equal to (a) any
positive difference between the amount of $34.81 and the per share
exercise price of each such stock option multiplied by (b) the
number of shares subject to such stock option, or (ii) an option to
purchase shares of SAB Common Stock, in which event SAB shall
assume each such IB Option, in accordance with the terms of the
applicable SAB Stock Plan and stock option
14
or other agreement by which it is
evidenced, except that from and after the Effective Time, (a) SAB
and the human resources department of SAB shall be substituted for
IB and the committee of the IB Board of Directors administering
such IB stock option plan, (b) each IB Stock Option assumed by SAB
may be exercised solely for shares of SAB Common Stock, (c) the
number of shares of SAB Common Stock subject to such IB Stock
Option shall be equal to the number of shares of IB Common Stock
subject to such IB Stock Option immediately prior to the Effective
Time multiplied by the Share Ratio, rounded down to the nearest
share, and (d) the per share exercise price under each such IB
Stock Option shall be adjusted by dividing the per share exercise
price under each such IB Stock Option by the Share Ratio, provided
that such exercise price shall be rounded up to the nearest cent.
Notwithstanding clauses (ii)(c) and
(ii)(d) of the preceding sentence, each IB Stock Option which is an
“incentive stock option” shall be adjusted as required
by Section 424 of the Code, and the regulations promulgated
thereunder, so as not to constitute a modification, extension or
renewal of the option within the meaning of Section 424(h) of the
Code. SAB and IB agreed to take all necessary steps to effect the
foregoing provisions of this Section 2.12. IB shall deliver to SAB
prior to the Effective Time a list of all option holders, and shall
use its best efforts to deliver to SAB prior to the Effective Time
a letter from each stating his or her election to receive cash or
an option for SAB Common Stock. If IB does not deliver a letter
from an option holder stating his or her election to receive cash
or an option for SAB Common Stock, then such holder shall be deemed
to have elected to receive a cash payment.
2.13
Voting Agreemen ts . As a
material inducement for SAB and SB entering into this Agreement,
simultaneously with the execution of this Agreement by the Parties,
each director of IB shall agree to vote all of his or her shares of
IB common stock which he or she is entitled to vote in favor of the
transactions contemplated by this Agreement at the meeting of IB
Stockholders at which this Agreement is considered as set forth in
the Voting Agreement, which shall become effective upon the
execution of this Agreement.
2.14
SAB Closing Deliveries
. At the Closing, SAB shall deliver,
or cause to be delivered, to IB all documents required to be
entered into or delivered by SAB at the Closing pursuant
hereto.
ARTICLE
III. DISCLOSURE SCHEDULES;
STANDARDS FOR REPRESENTATIONS AND WARRANTIES
3.1
Disclosure Schedules
. Prior to the execution and delivery of
this Agreement, IB has delivered to SAB one or more disclosure
schedules (the “IB Disclosure Schedule”) 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 IB’s representations or warranties contained in Article
IV, or to one or more of IB’s covenants contained in Article
VI (it being understood and agreed that if an item is properly set
forth in one IB Disclosure Schedule, it shall be deemed to be set
forth in any other relevant IB Disclosure Schedule; provided,
however, that notwithstanding anything in this Agreement to the
contrary (a) no such item is required to be set forth in the
Disclosure Schedule as an exception to a representation
or
15
warranty 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 a Disclosure Schedule as an
exception to a representation or warranty shall not be deemed an
admission by a party that such item represents a material exception
or material fact, event or circumstance or that such item has had
or would have a Material Adverse Effect with respect to
IB.
3.2
Standards . No representation or warranty of IB contained in
Article IV or of SAB contained in Article V shall be deemed untrue
or incorrect for any purpose under this Agreement, and no party
hereto shall be deemed to have breached a representation or
warranty for any purpose under this Agreement, in any case as a
consequence of the existence or absence of any fact, circumstance
or event unless such fact, circumstance or event, individually or
when taken together with all other facts, circumstances or events
inconsistent with any representations or warranties contained in
Article IV, in the case of IB, or Article V, in the case of SAB,
has had or would have a Material Adverse Effect with respect to IB
or SAB, respectively.
3.3
Subsidiaries . Where the context permits, “SAB” shall
refer to SAB and each of its Subsidiaries and “IB”
shall refer to IB.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF
IB
Subject to Article III, IB hereby
represents and warrants to SAB and SB as follows:
4.1
Corporate Organization
.
(a)
IB is a Florida chartered commercial
banking association duly organized, validly existing and in good
standing under the laws of the State of Florida and a member of the
FRB. IB has the corporate power and authority to own or lease all
of its properties and assets and to carry on its business as it is
now being conducted, holds properties and assets only of the types
permitted by the laws of the State of Florida, the United States,
the rules and regulations promulgated by the FDB and the FRB for
insured depository institutions, and is duly licensed or qualified
to do business in each jurisdiction in which the nature of the
business conducted by it or the character or location of the
properties and assets owned or leased by it makes such licensing or
qualification necessary. The deposit accounts of IB are insured by
the FDIC through the Bank Insurance Fund to the fullest extent
permitted by law, and all premiums and assessments required in
connection therewith have been paid when due.
(b)
IB has no, and since December 31,
2005, IB has not had any, Subsidiaries. IB neither owns nor
controls, directly or indirectly 5% or more of the outstanding
equity securities, either directly or indirectly, of any
Person.
(c)
The minute books of IB contain true and
correct records of all meetings and other corporate actions held or
taken since December 31, 2005 of its stockholders and Board of
Directors (including committees of the Board of Directors). IB has
provided to SAB true, correct and complete copies of the charter
documents and bylaws of IB .
16
4.2
Capitalization . The authorized capital stock of IB consists of
2,000,000 shares of common stock, par value $5.00 per share. As of
the date hereof, (1) there are 1,081,619 shares of IB Common Stock
issued and outstanding, (2) no shares of IB Common Stock held by IB
as treasury stock, and (3) options to purchase 134,291 shares of IB
Common Stock issued and outstanding and exercisable at various
exercise prices. Except for the aforementioned stock options and as
set forth on Section 4.2 of the IB Disclosure Schedule, as of the
date hereof, there are no shares of IB Common Stock reserved for
issuance for any reason or purpose. All of the issued and
outstanding shares of IB Common Stock have been duly authorized and
validly issued and are fully paid, nonassessable and free of
preemptive rights, with no personal liability attaching to the
ownership thereof. Except as set forth on the IB Disclosure
Schedule, IB does not have and is not bound by any outstanding
Rights calling for the purchase or issuance of any shares of IB
Common Stock or any other equity security of IB or any securities
representing the right to purchase or otherwise receive any shares
of IB Common Stock or any other equity security of IB.
4.3
Authority . IB has full corporate power and authority to
execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of
this Agreement and the consummation of the transactions
contemplated hereby have been duly and validly approved by the
Board of Directors of IB. The Board of Directors of IB has directed
that this Agreement and the transactions contemplated hereby be
submitted to IB’s stockholders for approval at a meeting of
such stockholders and, except for the adoption of this Agreement by
the requisite vote of IB’s stockholders, no other corporate
proceedings on the part of IB are necessary to approve this
Agreement and to consummate the transactions contemplated hereby.
This Agreement has been duly and validly executed and delivered by
IB and (assuming due authorization, execution and delivery by SAB)
this Agreement constitutes a valid and binding obligation of IB,
enforceable against IB in accordance with its terms, except as
enforcement may be limited by general principles of equity whether
applied in a court of law or a court of equity and by bankruptcy,
insolvency and similar laws affecting creditors’ rights and
remedies generally.
4.4
Consents and Approvals
. Except for (a) the filing with the SEC
of the S-4, including the prospectus therein relating to the
meetings of IB’s stockholders and SAB stockholders to be held
in connection with the transactions contemplated herein (the
“Prospectus”) and the SEC’s declaration of the
effectiveness of the S-4, (b) the approval of this Agreement by the
requisite vote of the stockholders of each of IB and SAB, (c) the
filing of applications and notices, as applicable, with the FRB,
and approval of such applications and notices, (d) the filing of
such applications, filings, authorizations, orders and approvals as
may be required under applicable state law (the “State
Banking Approvals”), (e) the filing of notices and
applications and approvals as required under the applicable state
securities laws or as may required by AMEX, and (f) any consents or
approvals listed in Section 4.4 of the IB Disclosure Schedule, no
consents or approvals of or filings or registrations with any
Governmental Entity or with any third party are required to be made
by IB in connection with (1) the execution and delivery by IB of
this Agreement or (2) the consummation by IB of the Merger and the
other transactions contemplated hereby.
4.5
No Violations . Except as may be set forth in Section 4.5 of the IB
Disclosure Schedule, neither the execution and delivery of this
Agreement
17
by IB, nor the consummation by IB of the
transactions contemplated hereby, nor compliance by IB with any of
the terms or provisions hereof, will (i) violate any provision of
the Articles of Incorporation or Bylaws of IB, or (ii) assuming
that the consents and approvals referred to in Section 4.4 hereof
are duly obtained, (x) violate any statute, code, ordinance, rule,
regulation, judgment, order, writ, decree or injunction applicable
to IB or any of its properties or assets, or (y) violate, conflict
with, result in a breach of any provision of or the loss of any
benefit under, constitute a default (or an event which, with notice
or lapse of time, or both, would constitute a default) under,
result in the termination of or a right of termination or
cancellation under, accelerate the performance required by, or
result in the creation of any lien, pledge, security interest,
charge or other encumbrance upon any of the properties or assets of
IB under, any of the terms, conditions or provisions of any note,
bond, mortgage, indenture, deed of trust, license, lease, agreement
or other instrument or obligation to which IB is a party, or by
which it or its properties or assets may be bound or
affected.
4.6
Licenses, Franchises and
Permits . IB holds all
licenses, franchises, permits and authorizations necessary for the
lawful conduct of its business, except where the failure to hold
such licenses, franchises, permits and authorizations would not
reasonably be expected to have a Material Adverse Effect. All of
such licenses, franchises, permits and authorizations are in full
force and effect and are transferable to a successor to IB in
connection with or subsequent to the Closing of the transactions
contemplated herein without any Consent, other than the State
Banking Approvals and the approval of the FRB, subject to the legal
right and authority of such successor to engage in the activities
licensed, franchised, permitted or authorized thereby and except
where the failure of such licenses, franchises, permits and
authorizations to be in full force and effect and transferable to a
successor to IB would not reasonably be expected to have a Material
Adverse Effect. IB has not received notice of any Proceeding for
the suspension or revocation of any such license, franchise,
permit, or authorization and no such Proceeding is pending or, to
IB’s Knowledge, has been threatened by any Governmental
Authority.
4.7
Regulatory Reports
. IB has timely filed all reports,
notices, registrations and statements, together with any amendments
required to be made with respect thereto, that it was required to
file since December 31, 2005 with the Regulatory Agencies and
has paid all fees and assessments due and payable in connection
therewith. Except for matters set forth on Section 4.7 of the
Disclosures Schedules, no Regulatory Agency has initiated any
proceeding or, to the Knowledge of IB, investigation into the
business or operations of IB since December 31, 2005. Except
for matters set forth on Section 4.7 of the Disclosures Schedules,
there is no unresolved violation or exception by any Regulatory
Agency with respect to any report or statement relating to any
examinations of IB. Except as disclosed on Section 4.7 of the
Disclosures Schedules, no Regulatory Agency has initiated any
proceeding or, to the Knowledge of IB, investigation into the
business or operations of IB since December 31, 2005, and
there is no unresolved violation or exception by any Regulatory
Agency with respect to any report or statement relating to any
examinations of IB.
4.8
Financial Statements
. IB has previously made available to SAB
(1) copies of the balance sheets of IB as of December 31 for
the fiscal years 2004 and 2005, and the related statements of
earnings, stockholders’ equity and cash flows for the fiscal
years 2004 through 2005, inclusive, as reported in IB’s
Annual Report to
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Stockholders for the fiscal year ended
December 31, 2005 (“Balance Sheet Date”),
accompanied by the audit reports of Crowe Chizek, independent
public accountants with respect to IB, and (2) copies of unaudited
balance sheets and the related statements of earnings and
stockholders’ equity of IB at and for the quarter ended
September 30, 2006 (collectively, the “IB Financial
Statements”). Subject, in the case of the unaudited
statements, to audit adjustments reasonable in nature and amount,
the IB Financial Statements fairly present the financial position
of IB as of the dates indicated therein, and when included in the
Prospectus will fairly present the results of the operations and
financial position of IB for the respective fiscal periods or as of
the respective dates therein set forth. Subject, in the case of the
unaudited statements, to audit adjustments reasonable in nature and
amount, each of the IB Financial Statements (including the related
notes, where applicable) complies, and IB’s Financial
Statements to be included in the Prospectus after the date hereof
will comply, with applicable accounting requirements; and each of
such statements (including the related notes, where applicable) has
been, and IB’s Financial Statements to be included in the
Prospectus will be, prepared in accordance with GAAP, except as
indicated in the notes thereto. The books and records of IB have
been, and are being, maintained in accordance with GAAP and any
other applicable legal and accounting requirements.
4.9
Deposits . Except as set forth on Disclosure Schedule 4.9,
none of the IB deposits (consisting of certificates of deposit,
savings accounts, NOW accounts, money market accounts and checking
accounts), is a brokered deposit.
4.10
Broker’s Fees
. Neither IB nor any of its officers or
directors has employed any broker or finder or incurred any
liability for any broker’s fees, commissions or
finder’s fees in connection with any of the transactions
contemplated by this Agreement, except that IB has engaged, and
will pay a fee or commission to Hovde Financial in accordance with
the terms of a letter agreement between it and IB, a true and
correct copy of which has been previously made available by IB to
SAB.
4.11
Properties . Section 4.11 of the IB Disclosure Schedule contains
a true and complete list of all material real property owned or
leased by IB. Except as set forth in Section 4.11 of the IB
Disclosure Schedule, IB has good and marketable title, free and
clear of all material liens, encumbrances, charges, defaults, or
equities of whatever character to all of the material properties
and assets, real or personal, reflected in the IB Financial
Statements as being owned by IB as of the dates thereof. All
buildings, and all fixtures, equipment, and other property and
assets that are material to the business of IB and held under
leases or subleases by IB, are held under valid instruments
enforceable in accordance with their respective terms (except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, or other laws affecting the enforcement
of creditors’ rights generally, or by equitable principles),
and neither IB nor, to IB’s Knowledge, any other party
thereto is in material breach or material default
thereunder.
4.12
Intellectual Property
. Section 4.12 of the IB Disclosure
Schedule contains a true and complete list of all material IB
Intellectual Property. IB owns or has a valid license to use all IB
Intellectual Property, free and clear of all liens, encumbrances,
royalty or other payment obligations (except for royalties or
payments with respect to off-the-shelf Software at standard
commercial rates). IB Intellectual Property
19
constitutes all of the Intellectual
Property necessary to carry on the business of IB as currently
conducted, except where the failure to have such property would not
reasonably be expected to have a Material Adverse Effect. The IB
Intellectual Property is valid and has not been cancelled,
forfeited, expired or abandoned, and IB has not received any notice
challenging the validity or enforceability of IB Intellectual
Property, other than as would not reasonably be expected to have a
Material Adverse Effect. To IB’s Knowledge, the conduct of
the business of IB does not violate, misappropriate or infringe
upon the Intellectual Property rights of any third Person. The
consummation of the transactions contemplated by this Agreement
will not result in the material loss or material impairment of the
right of IB to own or use any of the IB Intellectual Property, and
SAB and its Subsidiaries will have substantially the same rights to
own or use the IB Intellectual Property following the consummation
of such transactions as IB had prior to the consummation of such
transactions, except such rights as would not reasonably be
expected to have a Material Adverse Effect.
4.13
Condition of Fixed Assets and
Equipment . Section 4.13 of
the IB Disclosure Schedule contains a list of all material fixed
assets and equipment used in the conduct of the business of IB as
of the Balance Sheet Date. Each such item of fixed assets and
equipment having a net book value in excess of $1,000 is, to
IB’s Knowledge, in good operating condition and repair,
normal wear and tear excepted.
4.14
Absence of Certain Changes or
Events .
(a)
Except as disclosed in any IB filings
with the FDB or the FRB, as applicable, prior to the date hereof,
since December 31, 2005, (i) there has been no change or
development or combination of changes or developments which,
individually or in the aggregate, has had a Material Adverse Effect
on IB, and (ii) IB has carried on its business in the ordinary
course of business consistent with past practices.
(b)
Except as may be set forth in Section
4.14(b) of the IB Disclosure Schedule, since December 31, 2005
and solely with respect to executive officers (senior vice
president or above) and directors, IB has not (1) increased the
wages, salaries, compensation, pension, or other fringe benefits or
perquisites payable to any such person from the amount thereof in
effect as of December 31, 2005, (2) granted any severance or
termination pay to such person or entered into any contract to make
or grant any severance or termination pay to such person, (3) paid
any bonus to such person or (4) entered into any employment- or
compensation-related agreement with such person.
4.15
Legal Proceedings
. Except as may be set forth in Section
4.15 of the IB Disclosure Schedule, (a) IB is not a party to any,
and there are no pending or, to IB’s Knowledge, threatened,
legal, administrative, arbitral or other proceedings, claims,
actions or governmental or regulatory investigations of any nature
against IB or challenging the validity or propriety of the
transactions contemplated by this Agreement and (b) there is no
injunction, order, judgment or decree imposed upon IB or its
assets.
4.16
Taxes .
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(a)
Except as may be set forth in Section
4.16 of the IB Disclosure Schedule, IB has (i) duly and timely
filed (including applicable extensions granted without penalty) all
Tax Returns required to be filed at or prior to the Effective Time,
and all such Tax Returns are true, correct and complete, and (ii)
paid in full or made adequate provision in the financial statements
of IB (in accordance with GAAP) for all Taxes (whether or not shown
on a Tax Return). Except as set forth in Section 4.16 of the IB
Disclosure Schedule, (i) as of the date hereof IB has not requested
any extension of time within which to file any Tax Returns in
respect of any fiscal year which have not since been filed and no
request for waivers of the time to assess any Taxes are pending or
outstanding. Except as set forth on Section 4.16 of the IB
Disclosure Schedule, no audits or other administrative proceedings
or court proceedings have ever been conducted, are presently
pending or, to the knowledge of IB, threatened with regard to any
Taxes or Tax Return of IB or any affiliated, consolidated, combined
or unitary group of which IB is a member and, to the knowledge of
IB, no material issues have been raised by any Tax authority in
connection with any Tax or Tax Return. No claim has ever been made
by an authority in a jurisdiction where IB does not file Tax
Returns that IB is or may be subject to taxation by such
jurisdiction.
(b)
IB has not agreed to make, nor is it
required to make, any adjustment under Section 481(a) of the Code
(or any similar provision of state, local or foreign law) by reason
of a change in accounting method or otherwise, and, the Internal
Revenue Service has not proposed any such adjustment or change in
accounting method. IBS will not be required to include any item of
income in, or exclude any item of deduction from, taxable income
for any taxable period (or portion thereof) ending after the
Closing Date as a result of any: (i) “closing
agreement” as described in Section 7121 of the Code (or any
corresponding provision of state, local or foreign income Tax law);
(ii) installment sale or open transaction disposition made on or
prior to the Closing Date; (iii) prepaid amount received on or
prior to the Closing Date or (iv) intercompany transactions or any
excess loss accounts described in the Treasury Regulations
promulgated under Section 1502 of the Code (or any corresponding or
similar provision of state, local or foreign income Tax
law).
(c)
Except as may be set forth in Section
4.16 of the IB Disclosure Schedule, IB has complied (and until the
Closing Date will comply) in all material respects with the
provisions of the Code relating to the withholding and payment of
Taxes, including, without limitation, the withholding and reporting
requirements under Code sections 1441 through 1446, 3401 through
3406, and 6041 through 6049, as well as similar provisions under
any other state, local or foreign laws, and have, within the time
and in the manner prescribed by law, withheld from employee wages
and paid over to the proper taxing authorities all amounts
required. IB has under taken in good faith to appropriately
classify all service providers as either employees or independent
contractors for all Tax purposes.
(d)
IB has disclosed
to the Internal Revenue Service on the appropriate Tax
Returns any Reportable Transaction in which it has
participated. IB has retained all documents and other records
pertaining to any Reportable Transaction in which it has
participated, including documents and other records listed in
Treasury Regulation Section 1.6011-4(g) and any other
documents or other records which are related to any Reportable
Transaction in which it has participated but not listed in Treasury
Regulation
21
Section 1.6011-4(g). For purposes of
this Agreement, the term “Reportable Transaction” shall
mean any transaction listed in Treasury Regulation
Section 1.6011-4(b).
(e)
IB has never been
a member of an affiliated group of corporations, within the meaning
of Section 1504 of the Code, other than as a common parent
corporation, and each former Subsidiary of IB has never been a
member of an affiliated group of corporations, within the meaning
of Section 1504 of the Code, except where IB was the common parent
of such affiliated group.
(f)
IB (i) is not a party to, is bound by or
has any obligation under any Tax sharing agreement or similar
contract (whether or not written) or (ii) has any liability for
Taxes of any Person under Treasury Regulation Section 1.1502-6 or
any similar provision of state, local or foreign law, as a
transferee or successor, by contract or otherwise.
(i)
IB does not have a contract, agreement,
plan, or other similar type of arrangement currently in place
covering any person that, individually or collectively, could give
rise to the payment of any amount that would not be deductible by
reason of Section 280G of the Code, or would constitute
compensation in excess of the limitation set forth in Section
162(m) of the Code. IB is not obligated to make any
“gross-up” or similar payment to any Person on account
of any Tax under Section 4999 of the Code.
(j)
IB has not been the “distributing
company” (within the meaning of Section 355(a)(1) of the
Code) nor the “controlled corporation” (within the
meaning of Section 355(a)(1) of the Code) (i) within the two-year
period ending as of the date of this Agreement or (ii) in a
distribution that could otherwise constitute part of a
“plan” or “series of transactions” (within
the meaning of Section 355(e) of the Code) in conjunction with this
Agreement.
(k)
Except as set forth on Section 4.16 of
the IB Disclosure Schedule, there are n
