EXHIBIT 10.1

 

 

EXECUTION COPY

 

OBSERVER RIGHTS AGREEMENT

 

Observer Rights Agreement (this “Agreement”) dated as of March 23, 2016 by and
between Seacoast Banking Corporation of Florida, a Florida corporation (the
“Company”), Basswood Capital Management, L.L.C. (“Basswood”) and Matthew
Lindenbaum (“Lindenbaum”).

 

WHEREAS, Basswood is the investment manager or adviser to certain private
investment funds and managed accounts (Basswood “clients”) that collectively
Beneficially Own approximately 7% of the outstanding shares of the Company’s
common stock; and

 

WHEREAS, Lindenbaum is a principal of Basswood and has broad experience in
investing in, and serving on the boards of directors of, financial institutions
similar to the Company; and

 

WHEREAS, Basswood has requested that Lindenbaum be granted certain information
and observation rights with respect to the board of directors of the Company
(the “Board”); and

 

WHEREAS, the Board has determined that granting Lindenbaum such information and
observation rights on the terms and conditions hereof is in the best interests
of the Company.

 

NOW THEREFORE, the Company, Basswood and Lindenbaum agree as follows:

 

1. Board Observer Right. During the term of this Agreement, Lindenbaum shall
have the right to attend all meetings of the Board (in each case whether in
person, by telephone or otherwise) in a non-voting observer capacity, subject to
the provisions hereof. Regardless of the foregoing, the Company shall have the
right to exclude Lindenbaum from meetings of the Board or omit to provide
Lindenbaum with certain information and materials if (but only to the extent)
the Company’s legal counsel or a majority of the Board determines in good faith
that such exclusion or omission is necessary in order to (i) preserve
attorney-client or other legal privilege, (ii) comply with its fiduciary
obligations under applicable law, (iii) comply with applicable law or
regulation, including to protect confidential supervisory information under any
order, notice or regulation of a bank regulatory authority, (iv) comply with any
obligation of confidentiality existing as of the date hereof or (v) address any
conflict of interest. In the event that Lindenbaum is excluded from a meeting of
the Board, the Company shall inform Lindenbaum of the general nature of the
subject matter discussed and explain the Board’s rationale for the decision to
exclude Lindenbaum.

 

2. Information Right. The Company shall provide to Lindenbaum notice of any and
all Board meetings and, subject to the provisions and exclusions hereof
(including, without limitation, the exclusions described in Section 1 hereof), a
copy of the materials provided to all members of the Board and the committees
thereof at the time such materials are provided to members of the Board and such
committees, including without limitation, the minutes of all Board meetings and
committee meetings (all of which information shall be subject to the
confidentiality provisions set forth in Section 3 hereof).

 

 

 

 

3. Confidentiality; Trading in Company Securities.

 

a.Lindenbaum agrees that he will hold all Evaluation Material in strict
confidence and will not disclose or divulge any Evaluation Material to any
person. Further, neither Basswood nor Lindenbaum shall use such information for
any purpose other than to monitor and seek to enhance the value of the
investments of Basswood’s clients in the Company and, in the case of Lindenbaum,
other than in connection with his status as a Board observer. For purposes of
this Agreement, the term “Evaluation Material” means any and all information
concerning or relating to the Company or any of its subsidiaries or affiliates
that is furnished to Lindenbaum in his capacity as a Board observer (regardless
of the manner in which it is furnished, including in written or electronic
format or orally, gathered by visual inspection or otherwise), together with all
notes, analyses, reports, models, compilations, studies, interpretations,
documents, records or extracts thereof containing, referring, relating to, based
upon or derived from such information, in whole or in part. The term “Evaluation
Material” shall not include such information that (a) can be shown to have been
or becomes available to Lindenbaum on a non-confidential basis from a source
other than the Company or any of its affiliates not known by Lindenbaum,
Basswood or any of their respective affiliates or Representatives to be bound by
an agreement or obligation of confidentiality with respect to such information,
(b) is or becomes generally available to the public other than as a result of a
disclosure by Lindenbaum, Basswood or any of their respective affiliates or
Representatives in violation of this Agreement, or (c) has been or is
independently developed by Lindenbaum, Basswood or any of their respective
affiliates or Representatives without the use of any Evaluation Material.
Notwithstanding the foregoing, Lindenbaum may provide Evaluation Material to any
Basswood officer or employee (each, a “Representative” (for the avoidance of
doubt, Bennett Lindenbaum shall be a “Representative” for all purposes
hereunder, including Section 4 hereof)) who has a need to know such information
for the purpose of monitoring and seeking to enhance the value of the
investments of Basswood’s clients in the Company provided that any such
Representative provided with any such information shall keep it confidential to
the same extent as Lindenbaum is required under this Agreement and use it only
for such purposes; and, in any event, Basswood and Lindenbaum shall be
responsible for any non-compliance with such confidentiality and use
requirements by any Representative who is provided with such information.
Basswood and Lindenbaum agree to take all reasonable measures to restrain their
Representatives from prohibited or unauthorized disclosure of the Evaluation
Material. In furtherance, and not in limitation, of the foregoing, Basswood and
Lindenbaum shall, and shall instruct their Representatives to, use all
reasonable and prudent efforts to protect and safeguard the Evaluation Material
from disclosure to at least the same extent that they do so with respect to
Basswood’s own confidential information.

 

 

 

 

b.In the event that Basswood, Lindenbaum or any Representative becomes legally
compelled to disclose any Evaluation Material, Basswood and Lindenbaum agree,
unless prohibited by law, to provide the Company with reasonable advance notice
under the circumstances prior to any such disclosure to enable the Company to
seek a protective order or other appropriate remedy (and if the Company seeks
such an order or other remedy, Basswood and Lindenbaum will provide such
cooperation as the Company shall reasonably request, at the Company’s sole cost
and expense). If in the absence of a protective order or the receipt of a waiver
hereunder Basswood, Lindenbaum or such Representative is nonetheless, based on
the advice of Lindenbaum’s or Basswood’s legal counsel, required to disclose any
such information, Basswood, Lindenbaum or such Representative, as the case may
be, may make the required disclosure (solely to the extent required) without
liability under this Agreement. In no event will Basswood, Lindenbaum or any of
their Representatives oppose action by the Company to obtain a protective order
or other remedy to prevent the disclosure of Evaluation Material or to obtain
reliable assurance that confidential treatment will be accorded the Evaluation
Material. For the avoidance of doubt, it is understood that there shall be no
“legal requirement” requiring Basswood, Lindenbaum or any of their
Representatives to disclose any Evaluation Material solely by virtue of the fact
that, absent such disclosure, any of them or any of their respective affiliates,
or any of Basswood’s clients, would be prohibited from purchasing, selling or
engaging in derivative or other voluntary transactions with respect to, the
Company’s common stock or the securities of any other company or otherwise
proposing or making an offer to do any of the foregoing, or any of them would be
unable to file any proxy materials in compliance with Section 14(a) of the
Securities Exchange Act of 1934, as amended (the “Exchange Act”) or the rules
and regulations promulgated thereunder. In addition, nothing contained in this
Agreement shall require any notice to be given or limit or prohibit Lindenbaum,
Basswood or any such Representative from providing any information demanded or
requested in the course of a routine examination or inquiry by a regulatory
authority having jurisdiction over Lindenbaum, Basswood, Basswood’s clients or
such Representative so long as such examination or inquiry is not known by
Lindenbaum, Basswood or any such Representative to be targeted at the Company or
any of its affiliates or Basswood’s clients’ investment in the Company.

 

c.Basswood and Lindenbaum acknowledge that (a) none of the Company or any of its
representatives makes any representation or warranty, express or implied, as to
the accuracy or completeness of any Evaluation Material, and (b) none of the
Company or any of its representatives shall have any liability to Basswood,
Lindenbaum, any Basswood client, any Representative of Basswood or Lindenbaum or
any of their respective affiliates relating to or resulting from the use of the
Evaluation Material or any errors therein or omissions therefrom.

 

d.All Evaluation Material shall remain the property of the Company. No other
person shall by virtue of any disclosure of and/or use of any Evaluation
Material acquire any rights with respect thereto, all of which rights shall
remain exclusively with the Company. At any time after the date on which this
Agreement has been terminated pursuant to Section 9 hereof, Basswood and
Lindenbaum will promptly return to the Company or destroy all hard copies of the
Evaluation Material and use reasonable best efforts to permanently erase or
delete all electronic copies of the Evaluation Material in their or any of their
Representatives’ possession or control (and, upon the request of the Company,
shall certify to the Company in writing that such Evaluation Material has been
erased or deleted, as the case may be); provided, however, that Basswood shall
be entitled to retain copies of the Evaluation Material to the extent required
by applicable law or regulation or by its internal document retention and
compliance policies. Notwithstanding the return or erasure or deletion of
Evaluation Material, Lindenbaum, Basswood and their Representatives will
continue to be bound by the obligations contained herein.

 

 

 

 

e.Lindenbaum and Basswood hereby acknowledge that they are aware that the United
States securities laws prohibit any person who has received from an issuer any
material, non-public information from purchasing or selling securities of such
issuer or from communicating such information to any other person under
circumstances in which it is reasonably foreseeable that such person is likely
to purchase or sell such securities.

  

f.Lindenbaum and Basswood agree that, while this Agreement is in effect, neither
Lindenbaum nor Basswood will purchase or sell securities of the Company
(including for the account of Basswood’s clients) other than (i) at times when
members of the Board are permitted to purchase or sell Company securities (i.e.,
during “trading windows”) or (ii) in a transaction that a member of the Board
would otherwise be permitted to effect pursuant to the Company’s policy on
securities transactions by members of the Board (the “Trading Policy”). The
Company represents and warrants to Lindenbaum and Basswood that it has provided
to them a true and complete copy of the Trading Policy and agrees to provide to
Lindenbaum and Basswood promptly from time to time (but in no event later than
when provided to members of the Board), including for a period ending on the six
(6) months following the time when Lindenbaum ceases to have observer rights
pursuant to Section 1 of this Agreement, copies of all updates to the Trading
Policy and all notices provided to members of the Board concerning the closing
of a trading window or the failure of a trading window to open and the opening
or re-opening of any trading window under the Trading Policy. Notwithstanding
the foregoing agreements in this Section 3(f), neither Lindenbaum, Basswood nor
Basswood’s clients shall be subject to the Trading Policy.

  

4. Certain Agreements. During the term of this Agreement, Basswood and
Lindenbaum shall not, and shall cause their respective Representatives and
affiliates not to, directly or indirectly:

 

a.acquire, offer, seek or propose to acquire, or agree to acquire, by purchase
or otherwise, Beneficial Ownership of Company common stock if after giving
effect to such acquisition Basswood and its clients and their respective
affiliates would collectively Beneficially Own more than 9.99% of the
outstanding shares of Company common stock;

 

b.make, or in any way participate, in any “solicitation” of “proxies” to vote
(as such terms are used in the rules of the Securities and Exchange Commission
(the “SEC”)), or seek to advise or influence any person with respect to the
voting of (including engaging in any withhold the vote campaign) any Company
common stock;

 

c.separately or in conjunction with any other person, submit a proposal for or
offer of (with or without conditions) (including to the Board if any such
proposal would reasonably be expected to be required to be disclosed by
Basswood, Lindenbaum or the Company), any Extraordinary Transaction.
“Extraordinary Transaction” means any of the following involving the Company or
any of its subsidiaries or its or their securities or a material amount of the
assets or businesses of the Company or any of its subsidiaries: any tender offer
or exchange offer, merger, acquisition, business combination, reorganization,
restructuring, recapitalization, spin-off, split-off, licensing, sale or
acquisition of, or joint venture or other partnership with respect to, material
assets, sale or purchase of securities, liquidation or dissolution, or any
similar transaction;

 

 

 

 

d.form, join or in any way participate in a 13D Group with any person other than
Lindenbaum, Basswood, Basswood’s clients or any of their respective affiliates;

 

e.present at any annual meeting or any special meeting of the Company’s
shareholders or through action by written consent any proposal for consideration
for action by shareholders, conduct any shareholder referendum, seek to call a
special meeting of the Company’s shareholders, propose any nominee for election
to the Board or seek the removal of any member of the Board;

 

f.grant any proxy, consent or other authority to vote with respect to any
matters (other than to the named proxies included in the Company’s proxy card
for an annual meeting or a special meeting) or deposit any of the Company common
stock (or any securities convertible into, exchangeable for or otherwise
exercisable to acquire such common stock) held by any of them in a voting trust
or other arrangement of similar effect, or subject them to a voting agreement or
other arrangement of similar effect;

 

g.make or issue, or cause to be made or issued, any public disclosure, statement
or announcement (including the filing or furnishing of any document or report
with the SEC or any other governmental agency or any disclosure to any
journalist, member of the media or securities analyst) (x) in support of any
solicitation described in clause (b) above or otherwise inconsistent with the
restrictions set forth in this Section 4, or (y) negatively commenting upon the
Company, including the Company’s corporate strategy, business, corporate
activities, Board or management (and including making any statements critical of
the Company’s business, strategic direction, capital structure or compensation
practices);

 

h.institute, solicit, assist or join, as a party, any litigation, arbitration or
other proceeding against or involving the Company or any of its current or
former directors or officers (including derivative actions) other than to
enforce the provisions of this Agreement;

 

i.make any request under Section 607.1602 of the Florida Business Corporation
Act;

 

j.sell shares of Company common stock representing 5% or more of the outstanding
shares of Company common stock to a single purchaser (or group of affiliated
purchasers) or any 13D Group or sell shares of Company common stock to any
single purchaser (or group of affiliated purchasers) or any 13D Group if as a
result thereof such purchaser (or group of affiliated purchasers) or 13D Group
would Beneficially Own 5% or more of the outstanding shares of Company common
stock;

 

k.request the Company or any of its representatives, directly or indirectly, to
amend or waive any provision of this Section 4, in each case which would
reasonably be expected to result in a public announcement of such request;

 

 

 

 

l.enter into any discussions, negotiations, agreements or undertakings with any
person with respect to the foregoing or advise, assist, encourage or seek to
persuade others to take any action with respect to any of the foregoing.

 

Basswood and Lindenbaum agree to promptly advise the Company if they receive an
approach or inquiry regarding a potential proposed acquisition or proxy contest
with respect to the Company.

 

5. Basswood Beneficial Ownership. Basswood and Lindenbaum represent and warrant
that they, together with their affiliates and Basswood’s clients, Beneficially
Own 2,385,972 shares of the Company’s common stock as of the date of this
Agreement, all of which are “physical” shares (i.e., none are Beneficially Owned
through options or other rights to acquire or as a Receiving Party of a
Derivatives Contract).

 

6. No Waiver. No failure or delay by the Company in exercising any right, power
or privilege under this Agreement shall operate as a waiver thereof, and no
modification hereof shall be effective, unless in writing and signed by all
parties hereto.

  

7. Governing Law; Jurisdiction; Waiver of Jury Trial. This Agreement shall be
governed by, and construed in accordance with, the laws of the State of Florida,
without giving effect to choice of law doctrines. Each of the parties hereto
consents to personal jurisdiction in such State and voluntarily submits to the
jurisdiction of the courts of such State in any action or proceeding with
respect to this Agreement, including the federal district courts located in such
State. Each party agrees that it/him may be served with process at the address
set forth on the signature page hereof, and further agrees not to commence any
action, suit or proceeding related hereto except in such courts. EACH PARTY
HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT
MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY CLAIM, ACTION, SUIT OR PROCEEDING
DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS
AGREEMENT. EACH PARTY (I) CERTIFIES THAT NO REPRESENTATIVE OF THE OTHER PARTY
HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE
EVENT OF ANY CLAIM, ACTION, SUIT OR PROCEEDING, SEEK TO ENFORCE THE FOREGOING
WAIVER AND (II) ACKNOWLEDGES THAT IT AND THE OTHER PARTY HAVE BEEN INDUCED TO
ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION 7.

  

8. Counterparts. This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original, but all of which shall constitute the
same Agreement. One or more counterparts of this Agreement may be delivered by
telecopier or pdf electronic transmission, with the intention that they shall
have the same effect as an original counterpart hereof.

  

9. Termination. This Agreement and (subject to the next following sentence) the
rights granted herein, shall terminate upon the earlier of (i) following the six
(6) month anniversary of the date of this Agreement, Lindenbaum’s delivery of
written notice to the Company that he has terminated this Agreement; and (ii)
following the six (6) month anniversary of the date of this Agreement, the
Company’s delivery of written notice to Lindenbaum that it has terminated this
Agreement. The obligations of Basswood, Lindenbaum and any Representatives
pursuant to Sections 3(a)-(e) hereof shall survive any termination of this
Agreement for a period of twenty four (24) months following such termination,
and the obligation of the Company pursuant to Section 3(f) hereof to provide
certain information with respect to the Trading Policy, shall survive any
termination of this Agreement for a period of six (6) months following such
termination.

 

 

 

 

10. No Fiduciary. Nothing in this Agreement shall render Lindenbaum a fiduciary
of the Company or of any affiliate, shareholder or creditor of the Company.

 

11. Specific Performance. The parties hereto agree that irreparable damage would
occur in the event that the provisions contained in this Agreement were not
performed in accordance with their specific terms or were otherwise breached. It
is accordingly agreed that the parties shall be entitled (without bond) to seek
an injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the terms and provisions thereof, this being in addition to
any other remedy to which they may be entitled by law or equity, and any party
sued for breach of this Agreement expressly waives any defense that a remedy in
damages would be adequate.

 

12. Certain Definitions. For purposes of this Agreement, the term:

 

a.“13D Group” means any group of persons formed for the purpose of acquiring,
holding, voting or disposing of shares of Company common stock (or any
securities convertible, exchangeable for or otherwise exercisable to acquire
such Company common stock) which would be required under Section 13(d) of the
Exchange Act, and the rules and regulations promulgated thereunder, to file a
statement on Schedule 13D pursuant to Rule 13d-l(a) or Schedule 13G pursuant to
Rule 13d-1(c) with the SEC as a “person” within the meaning of Section 13(d)(3)
of the Exchange Act if such group beneficially owned (within the meaning set
forth in Rule 13d-3 or Rule 13d-5(b)(1) of the rules and regulations promulgated
under the Exchange Act) shares of Company common stock representing more than 5%
of the shares thereof then outstanding.

 

b.“Beneficially Own,” “Beneficial Owner” or “Beneficial Ownership” shall have
the meaning (or the correlative meaning, as applicable) set forth in Rule 13d-3
and Rule 13d-5(b)(1) of the rules and regulations promulgated under the Exchange
Act; provided that, “Beneficially Own” and “Beneficial Ownership” shall include
securities which are beneficially owned, directly or indirectly, by a person as
a Receiving Party; provided further, that the number of shares of Company common
stock that a person is deemed to beneficially own pursuant to this proviso in
connection with a particular Derivatives Contract shall not exceed the number of
Notional Common Shares with respect to such Derivatives Contract.

 

 

 

 

c.“Derivatives Contract” shall mean a contract between two parties (the
“Receiving Party” and its counterparty) that is designed to produce economic
benefits and risks to the Receiving Party that correspond substantially to the
ownership by the Receiving Party of a number of shares of Company common stock
specified or referenced in such contract (the number corresponding to such
economic benefits and risks, the “Notional Common Shares”), regardless of
whether (i) obligations under such contract are required or permitted to be
settled through the delivery of cash, shares of Company common stock or other
property or (b) such contract conveys any voting rights in shares of Company
common stock, without regard to any short or similar position under the same or
any other Derivatives Contract. For the avoidance of doubt, interests in
broad-based index options, broad-based index futures and broad-based publicly
traded market baskets of stocks approved for trading by the appropriate federal
governmental authority shall not be deemed to be Derivatives Contracts.

 

d.“person” shall be broadly interpreted to include the media, the internet and
any individual, corporation, partnership, limited liability company, group,
trust, estate, joint venture, organization and any governmental, administrative,
arbitral or regulatory representative or authority (including any court) or
other entity of any kind or nature.

 

 

 

 

IN WITNESS WHEREOF, the Company, Basswood and Lindenbaum have caused this
Agreement to be executed as of the date first set forth above. 

 

    Seacoast Banking Corporation of Florida     815 Colorado Avenue     Stuart,
Florida 34994         Dated:  March 23, 2016 By: /s/ Dennis S. Hudson, III    
Name:       Title:                            Basswood Capital Management,
L.L.C.     645 Madison Avenue, 10th Floor     New York, NY 10022

   

Dated:  March 23, 2016 By /s/ Matthew Lindenbaum     Name:       Title:        
              Matthew Lindenbaum     c/o Basswood Capital Management, L.L.C.    
645 Madison Avenue, 10th Floor     New York, NY 10022

   

Dated:  March 23, 2016 By: /s/ Matthew Lindenbaum      

  

 

[Signature page to Observer Rights Agreement]