|
EXHIBIT 10.1
ESCROW AGREEMENT
This Escrow Agreement ("Escrow Agreement") is made and entered
into as of this 29th day of December, 2006, by and among Sun
American Bancorp., a Delaware corporation ("SAB"), Sun American
Bank, a Florida commercial banking association ("SB"), Beach Bank,
a Florida chartered commercial bank ("BB"), Michael Kosnitzky, in
his capacity as the Shareholder Representative for BB and the
shareholders of BB (the "Shareholder Representative") and as
Trustee pursuant to that certain Liquidating Trust Agreement dated
as of November 17, 2006 with BB ("Liquidating Trust"), and Northern
Trust, NA, a national association and its successors in interest
and assigns (the "Escrow Agent").
BACKGROUND
A.
Pursuant to that certain Asset Acquisition and Assumption
Agreement dated as of May 17th, 2006 (the "Purchase Agreement") by
and among SAB, SB and BB, BB has agreed to sell substantially all
of its assets and SB has agreed to purchase substantially all of
BB’s assets and assume substantially all of the liabilities
of BB in exchange for the payment of consideration in SAB Common
Stock.
B.
Pursuant to the Purchase Agreement and in connection with the
consummation of the transactions contemplated by the Purchase
Agreement, SAB, SB and BB have agreed to establish the Escrow Fund
to be maintained and dealt with by the Escrow Agent according to
the terms and conditions set out in this Escrow Agreement.
C.
Capitalized terms used but not otherwise defined herein shall
have the meanings assigned to them in the Purchase Agreement.
D.
All references to BB hereunder shall also be references to the
Liquidating Trust. The parties agree that to the extent BB is
liquidated or otherwise ceases to exist, the Liquidating Trust
shall have all of the rights and shall assume all of the
obligations of BB under this Escrow Agreement. All
instructions, notices or consents to be delivered by either BB or
the Liquidating Trust hereunder shall be provided by the
Shareholder’s Representative.
E.
The foregoing statements and recitals are made by the parties
hereto other than the Escrow Agent.
NOW THEREFORE , in consideration of the foregoing
and the mutual promises and covenants contained herein, and for
other good and valuable consideration, the receipt and adequacy of
which are hereby acknowledged, and intending to be legally bound
hereby, the parties hereto agree as follows:
ARTICLE I
INTERPRETATION
1.1
Definitions - The following terms, when used herein,
shall have the following meanings:
"Authorized Person" means a person authorized to give
instructions, directions, certifications, notice or any other
communication to the Escrow Agent hereunder on behalf of SAB, as
contemplated by Section 4.1 herein;
"Business Day" means a day, other than
a Saturday or Sunday or a statutory holiday, on which the Escrow
Agent is open for business in the City of Miami, Florida;
"Claim" shall have the meaning set out in Section
3.1 of this Escrow Agreement.
"Closing" means the time on the Closing Date (as defined
in the Purchase Agreement) at which the transactions contemplated
by the Purchase Agreement are consummated;
" D&O Insurance " shall have the meaning set out in
Section 4.2 of this Escrow Agreement;"
" Dispute Notice " shall have the meaning set out in
Section 3.1(b) of this Escrow Agreement;
"Escrow Fund" at any time means (i) the Escrow Shares
deposited hereunder with the Escrow Agent, as adjusted pursuant to
Section 2.13(g) of the Purchase Agreement, less any amounts, if
any, disbursed by the Escrow Agent pursuant to the provisions of
this Escrow Agreement; and (ii) any proceeds from the sale of
Escrow Shares pursuant to the provisions of this Escrow
Agreement;
"Escrow Shares" means Two Million Seven Hundred and Sixty
Seven Thousand Seven Hundred and Fifty Seven (2,767,757) shares of
SAB Common Stock represented by four (4) separate stock
certificates issued in the name of BB and deposited with Escrow
Agent hereunder pursuant to Section 2.4 of the Purchase
Agreement;
"Fees & Expenses" shall have the meaning set out in
Section 4.2 of this Escrow Agreement;
"Modification" shall have the meaning set out in Section
4.6 of this Escrow Agreement;
"Notice" shall have the meaning set out in Section 5.2 of
this Escrow Agreement;
"Reduction Date 1 " shall have the meaning set out in
Section 3.1(c)(i) of this Escrow Agreement;
"Reduction Date 2 " shall have the meaning set out in
Section 3.1(c)(ii) of this Escrow Agreement;
"Reduction Date 3 " shall have the meaning set out in
Section 3.1(c)(iii) of this Escrow Agreement;
"Reduction Dates " shall have the meaning set out in
Section 3.1(d) of this Escrow Agreement;
"Release Date" shall have the meaning set out in Section
3.1(a) of this Escrow Agreement;
"Resolution" shall have the meaning set out in Section
3.1(b) of this Escrow Agreement;
"SAB Losses " shall have the meaning set out in Section
11.1 of the Purchase Agreement;
"Shareholder Representative" shall mean Michael
Kosnitzky, or in his absence or upon his resignation, George
Scholl, acting in accordance with Section 11.5 of the Purchase
Agreement;
"Successor Escrow Agent" shall have the meaning set out
in Section 4.5(d) of this Escrow Agreement;
2
1.2
Gender and Number - Words importing the singular include
the plural and vice versa; and words importing gender include all
genders.
1.3
Headings - Article and Section headings contained in this
Escrow Agreement are included solely for convenience, are not
intended to be full or accurate descriptions of content and shall
not affect the construction or interpretation of this Escrow
Agreement.
1.4
Applicable Law - This Escrow Agreement shall be governed
by and construed in accordance with the laws of the State of
Florida.
ARTICLE 2
ESTABLISHMENT OF ESCROW
2.1
Designation of Escrow Agent – BB, the Liquidating
Trust, SB and SAB hereby appoint the Escrow Agent, and the Escrow
Agent hereby agrees to act, as escrow agent pursuant to the terms
and conditions of this Escrow Agreement.
2.2
Deposit - The parties hereto acknowledge and agree that
at Closing, SAB deposited the Escrow Shares with the Escrow Agent
and the Escrow Agent hereby acknowledges receipt of the Escrow
Shares and agrees that it will deal with and dispose of the Escrow
Fund according to the terms and conditions of this Escrow
Agreement. The certificates representing the Escrow Shares shall be
endorsed in blank by BB for transfer or accompanied by a separate
stock power executed in blank by BB for transfer, and held by the
Escrow Agent pursuant to the terms and conditions of this Escrow
Agreement. The Escrow Fund shall be held by the Escrow Agent
in the State of Florida. Any cash that forms part of the
Escrow Fund shall be invested by the Escrow Agent in accordance
with the written instructions of the Shareholder Representative;
provided, however, that such investments shall be limited to (i)
money market funds; (ii) AAA rated investments; (iii) government
securities; or (iv) any other investment that SAB and the
Shareholder Representative agree upon.
2.3
Issuances or Distributions in Respect of Escrow Shares -
The Escrow Shares, together with all certificates, options, rights
and other distributions issued in respect of or in exchange for or
on account of any Escrow Shares or any additional securities or
interests delivered in respect of the Escrow Shares during the term
of this Escrow Agreement (excluding cash dividends, but including
without limitation, any securities issued on or in exchange for any
Escrow Shares as a result of any stock dividend, recapitalization,
stock split-up, consolidation of shares, reclassification, merger,
or consolidation or reorganization of SAB) and all proceeds of the
foregoing (due to any redemption, call or other acquisition
thereof) shall be delivered to the Escrow Agent and shall form part
of the Escrow Fund. Any and all cash dividends paid on
account of the Escrow Shares shall not form part of the Escrow Fund
and shall be distributed to the Liquidating Trust pursuant to the
instructions of the Shareholder Representative as soon as
practicable after payment thereof.
2.4
Ownership of Escrow Shares; Voting Rights - BB is the
legal and beneficial owner of the Escrow Fund, including the Escrow
Shares and all distributions of dividends made in respect thereof
(subject to the provisions of this Escrow Agreement), and shall
have all voting rights and privileges with respect to the Escrow
Shares in the manner set forth in the Liquidating Trust and Section
6.1 hereof.
2.5
Sale of Escrow Shares . Notwithstanding anything
else contained in this Escrow Agreement or the Purchase Agreement,
the parties hereto agree that the Shareholder Representative, on
behalf of BB, has the right to sell the Escrow Shares at any time,
subject to applicable securities laws, if any, by providing written
instructions to the Escrow Agent, provided that any proceeds from
such sales
3
shall be held and distributed by Escrow Agent in
accordance with this Escrow Agreement. The Escrow Agent
shall provide prior written notice of any such sale to
SAB.
ARTICLE 3
DISBURSEMENT OF ESCROW FUNDS
3.1
Claim on Escrow Fund -
(a)
If a claim for indemnification for SAB Losses is made pursuant
to Article XI of the Purchase Agreement on or prior to the date
that is 48 months from the Closing Date (the "Release Date"), SAB
shall send to the Shareholder Representative and the Escrow Agent,
on or prior to the Release Date, a written request (the "Claim") to
disburse part or all of the Escrow Fund to it. The Claim
shall specify the amount of the Claim (which shall represent a bona
fide amount estimated by SAB, acting reasonably, due and owing to
it pursuant to the indemnity provisions of the Purchase Agreement)
against BB, the basis of the Claim, and the manner of the
disbursement of the Escrow Shares to be disbursed based upon the
claim procedure set out in Article XI of the Purchase
Agreement.
(b)
Upon the receipt by the Escrow Agent of a Claim on or prior to
the Release Date, the Escrow Agent shall deal with the Escrow Fund
in the following manner: if the Escrow Agent receives a written
response from the Shareholder Representative within ten (10)
Business Days of its receipt of a Claim which accepts the Claim,
the Escrow Agent shall disburse to SAB, from the Escrow Fund,
Escrow Shares (or the cash equivalent) having a value equal to the
amount set forth in such Claim within five (5) Business Days after
the Escrow Agent receives the notice of acceptance. If the
Escrow Agent does not receive the written notice of acceptance from
the Shareholder Representative within ten (10) Business Days from
the receipt of the notice of Claim by the Shareholder
Representative, the Shareholder Representative is deemed to have
accepted the Claim and the Escrow Agent shall disburse to SAB, from
the Escrow Fund, Escrow Shares (or the cash equivalent) having a
value equal to the amount set forth in such Claim within five (5)
Business Days after the expiration of the said ten (10) Business
Days. If the Escrow Agent receives a written notice from the
Shareholder Representative disputing all or any portion of the
Claim (the "Dispute Notice"), within the said ten (10) Business
Days, the Escrow Agent shall not disburse the amount in dispute
until either (i) the Escrow Agent receives a certified copy of a
final decision of an arbitrator in respect of the amount in
dispute, or (ii) if applicable, the Escrow Agent receives a
certified copy of a judgement in respect of the amount in dispute
issued by a court of competent jurisdiction and a certificate from
each of the Shareholder Representative and SAB indicating that all
rights of appeal have expired and no appeal has been filed or there
is no further right to appeal the judgement, or (iii) the Escrow
Agent receives a joint written direction with respect to the
settlement of the amount in dispute signed by an Authorized Person
of SAB and the Shareholder Representative (each of the writings
referenced in (i), (ii) and (iii) above shall be referred to herein
as a "Resolution"). Within five (5) Business Days of the
receipt of a Resolution, the Escrow Agent shall disburse to SAB
from the Escrow Fund, Escrow Shares (or the cash equivalent) having
a value equal to the amount set forth in such Resolution.
(c)
Limitation of Claims . Notwithstanding anything to
the contrary set forth herein, the liability of BB pursuant to
Article XI of the Purchase Agreement shall be limited in dollar
amount to:
(i) 75% of the Acquisition Transaction Consideration for Claims
made during the period commencing on the Closing Date and ending on
the six month anniversary of the Closing Date ("Reduction Date
1");
4
(ii) 50% of the Acquisition Transaction
Consideration for Claims made during the period commencing on the
date immediately following Reduction Date 1 and ending on the one
year anniversary of the Closing Date ("Reduction Date
2");
(iii) 25% of the Acquisition Transaction Consideration for
Claims made during the period commencing on Reduction Date 2 and
ending on the eighteenth month anniversary of the Closing Date
("Reduction Date 3" and collectively with Reduction Date 1 and
Reduction Date 2, the "Reduction Dates"); and
(iv) 10% of the Acquisition Transaction Consideration for Claims
made during the period commencing on Reduction Date 3 and ending on
the four year anniversary of the Closing Date.
(d)
Reduction Dates .
(i)
Within five (5) Business Days after each Reduction Date the
Escrow Agent shall reduce the balance of the Escrow Fund
accordingly and distribute the appropriate amount of Escrow Shares
(or the cash equivalent) to the Liquidating Trust, pursuant to the
instructions of the Shareholder Representative and the terms and
conditions herein.
(ii)
If, on or prior to a Reduction Date, there is an unaccepted,
disputed or unresolved Claim, the amount of Escrow Shares
representing the unaccepted, disputed or unreso
| 
