Document:

United States Securities & Exchange Commission EDGAR Filing

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;

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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 

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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”); 

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(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 unresolved Claim shall be retained by the Escrow Agent until an acceptance (actual or deemed) or a Resolution has been received by the Escrow Agent with respect to such Claim and the Escrow Agent shall not reduce the Escrow Fund by the amount of such Claim until such time as there is an acceptance (actual or deemed) or a Resolution received by the Escrow Agent.

(e)

Sole and Exclusive Source of Funds. The parties acknowledge and agree that the Escrow Fund is the sole and exclusive source of funds for satisfaction of SAB Losses, regardless of whether the amount of the SAB Losses exceed the Escrow Fund.  In connection with any distribution to SAB hereunder, the Escrow Agent shall distribute to SAB certificate(s) representing the number of Escrow Shares (or the cash equivalent) whose value is equal to the amount set forth in the Resolution or Claim, as the case may be.  The value of the Escrow Shares to be distributed shall be based on the average daily trading price of SAB common stock on the AMEX or other trading market for the ten (10) trading days prior to the distribution.

(f)

Acquisition Transaction Consideration.   In the event that a downward  adjustment to the Acquisition Transaction Consideration is required pursuant to the provisions of Section 2.13 of the Purchase Agreement, the Escrow Agent shall release to SAB the number of Escrow  Shares (or the cash equivalent) specified in:

(i)   the joint written instructions to the Escrow Agent signed by SAB and the Shareholder Representative;  or

(ii)  the written decision of an Uninterested Accounting Firm, as defined in the Purchase Agreement, pursuant to the provisions of Section 2.13(e) and 2.13(g) of the Purchase Agreement, in such case, SAB and the Shareholder Representative shall notify the Escrow Agent that the relevant accounting firm is an “Uninterested Accounting Firm.”

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3.2

Escrow Termination; Disbursements Upon Termination - This Escrow Agreement shall terminate and cease to be of any further force and effect as follows, 

(a)

If, on or prior to the Release Date, the Escrow Agent has not received a Claim pursuant to Section 3.1 hereof or a request for reimbursement pursuant to Section 4.2 hereof, this Escrow Agreement shall terminate and the Escrow Agent shall distribute to the Liquidating Trust, pursuant to the instructions of the Shareholder Representative, the entire Escrow Fund within five (5) Business Days after the Release Date.  This Escrow Agreement shall terminate on the date the Escrow Funds are distributed to the Liquidating Trust.

(b)

If, on or prior to the Release Date, the Escrow Agent has received a Claim or Claims and such Claims have been accepted by the Shareholder Representative or resolved by Resolutions and the Escrow Fund or part thereof has been distributed to SAB accordingly, the Escrow Agent shall distribute the balance of the Escrow Fund to the Liquidating Trust, pursuant to the instructions of the Shareholder Representative, within five (5) Business Days after the Release Date. This Escrow Agreement shall terminate on the date the balance of the Escrow Funds are distributed to the Liquidating Trust.

(c)

If a disputed or unresolved Claim exists on the Release Date, the Escrow Agent shall retain the Escrow Fund representing such disputed and unresolved Claim until a Resolution has been received by the Escrow Agent with respect to such Claim and the Escrow Agent shall disburse the Escrow Fund according to the Resolution.  To the extent any balance remains in the Escrow Fund following the distribution specified in the Resolution, the Escrow Agent shall distribute the balance of the Escrow Fund to the Liquidating Trust, pursuant to the instructions of the Shareholder Representative, within five (5) Business Days after the receipt of such Resolution.  This Escrow Agreement shall terminate upon the distribution of the Escrow Fund, in accordance with this Section 3.2(c).

(d)

If the Escrow Agent deposits the Escrow Fund with a court of competent jurisdiction pursuant to Section 4.6 hereof.

ARTICLE 4

THE ESCROW AGENT

4.1

Authorized Person - SAB shall file with the Escrow Agent a certificate of incumbency setting forth the name of the individual(s) authorized to give instructions, directions, and certifications and notices to the Escrow Agent on its behalf (each such person shall be referred to herein as an “Authorized Person” of SAB), together with a specimen signature of such person(s), and the Escrow Agent shall be entitled to rely on the latest certificate of incumbency filed with it.  The Shareholder Representative shall file with the Escrow Agent a certificate of incumbency setting forth his specimen signature, and the Escrow Agent shall be entitled to rely on the latest certificate of incumbency filed with it.

The Escrow Agent shall be fully protected in acting and relying upon any instrument, direction, certificate or notice reasonably believed by it, acting in good faith, to be genuine and to have been signed by the Authorized Person of SAB and/or the Shareholder Representative, and the Escrow Agent shall be under no duty to make investigations or inquiry as to any statement contained in any such writing, but may accept the same as conclusive evidence of the truth and accuracy of the statements therein contained for the purpose of this Escrow Agreement.

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4.2

Fees and Expenses – 

(a)

SAB and BB shall pay to the Escrow Agent such reasonable remuneration for its services as described in Exhibit A attached hereto, together with all out-of-pocket costs, charges and expenses properly incurred by the Escrow Agent in connection with performing its duties under this Escrow Agreement, including the reasonable fees of any counsel reasonably retained by the Escrow Agent pursuant to Section 4.4 (the “Fees & Expenses”).  SAB on the one hand and BB on the other hand shall be responsible for one-half (1/2) of the Fees & Expenses.  Notwithstanding the prior sentence, as an administrative convenience, SAB shall pay to the Escrow Agent all Fees & Expenses hereunder (including BB’s portion of such Fees & Expenses).  SAB shall request reimbursement from the Escrow Agent for BB’s portion of such Fees & Expenses from the cash portion of the Escrow Fund with a written request to the Escrow Agent and notice to the Shareholder Representative of such request.  Within five (5) Business Days after receipt by the Escrow Agent of the written request for reimbursement, the Escrow Agent shall disburse to SAB the funds so requested from the cash portion of the Escrow Fund.

(b)

In addition to the Fees & Expenses stated in (a) above, SAB shall purchase Directors and Officers Liability Insurance (“D & O Insurance”) coverage for the former members of the Board of Directors of BB as determined by such former directors acting as a group, relating to any prior claims based on their services as directors of BB.  The premium for the D & O Insurance shall be paid by SAB and SAB shall request reimbursement from the Escrow Agent for such premium from the cash portion of the Escrow Fund with a written request to the Escrow Agent and notice to the Shareholder Representative of such request.  Within five (5) Business Days after receipt by the Escrow Agent of the written request for reimbursement, the Escrow Agent shall disburse to SAB the funds so requested from the cash portion of the Escrow Fund.   

(c)

In addition, to (a) and (b) above, any fees, costs and expenses of the Uninterested Accounting Firm, pursuant to the provisions of Section 2.13(e) of the Purchase Agreement, attributable to BB shall be subject to SAB’s reimbursement from the cash portion of the Escrow Fund.  SAB shall request reimbursement from the Escrow Agent for BB’s portion of such fees, costs and expenses from the cash portion of the Escrow Fund with a written request to the Escrow Agent and notice to the Shareholder Representative of such request.  Within five (5) Business Days after receipt by the Escrow Agent of the written request for reimbursement, the Escrow Agent shall disburse to SAB the funds so requested from the cash portion of the Escrow Fund.

(d)

With respect to (a), (b) and (c) above, if there is insufficient cash in the Escrow Fund to pay for (1) BB’s portion of Fees & Expenses, (2) the premium for the D & O Insurance, or (3) the fees, costs and expenses of the Uninterested Accounting Firm, then the Escrow Agent is hereby directed, upon notice by SAB to the Escrow Agent and to the Shareholder Representative, to return to SAB the amount of Escrow Shares having a value equal to said shortfall amount. The value of the Escrow Shares to be distributed shall be based on the average daily trading price of SAB common stock on the AMEX or other trading market for the ten (10) days prior to the distribution.

(e)

Such payments with respect to this Section 4.2 are not subject to any of the limitations provided in Section 3.1(c) hereof or to the SAB Basket (as such term is defined in the Purchase Agreement).

4.3

Indemnity - SAB and BB shall (in addition to any right of indemnity by law given to the Escrow Agent) at all times severally (with SAB on the one hand and BB on the other hand being responsible for one-half (1/2) of the indemnity obligation pursuant to this Section 4.3) indemnify the Escrow Agent and its officers, directors and employees against all taxes, liabilities, damages, losses, 

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actions, proceedings, costs, claims and demands in respect of any matter or thing performed by the Escrow Agent, its officers, directors or employees pursuant to this Escrow Agreement, other than taxes, liabilities, damages, losses, actions, proceedings, costs, claims or demands arising from the gross negligence or willful misconduct on the part of the Escrow Agent, its officers, directors and employees.  The indemnity contained herein shall survive the termination or expiration of this Escrow Agreement.  

4.4

Counsel - The Escrow Agent may employ such counsel as it may reasonably require for the purpose of discharging its duties under this Escrow Agreement and the Escrow Agent may act and shall be protected in acting reasonably and in good faith on the opinion or advice of or information obtained from any such counsel in relation to any matter arising under this Escrow Agreement.  

4.5

Replacement of Escrow Agent - 

(a)

The Escrow Agent may resign and be discharged from all further duties under this Escrow Agreement by giving at least sixty (60) days' prior notice of its resignation in writing to each of SAB and the Shareholder Representative.

(b)

SAB and the Shareholder Representative may at any time on at least ten (10) days' prior notice in writing, signed jointly by the Authorized Person from each of SAB and the Shareholder Representative, remove the Escrow Agent.

(c)

Notwithstanding any contrary provisions herein, if the Escrow Agent has been dissolved, has become bankrupt, has gone into liquidation or has otherwise become incapable of performing its duties under this Escrow Agreement, SAB and the Shareholder Representative may forthwith jointly remove the Escrow Agent without any notice.

(d)

In the event of the resignation or removal of the Escrow Agent according to this Escrow Agreement, SAB and the Shareholder Representative shall jointly appoint a new escrow agent (the “Successor Escrow Agent”) and shall give notice of such appointment to the Escrow Agent within twenty (20) days of the resignation or removal of the Escrow Agent.  If SAB and the Shareholder Representative fail to appoint a Successor Escrow Agent within ten (10) days of the resignation or removal of the Escrow Agent, the Escrow Agent shall apply to a court of competent jurisdiction for the appointment of a Successor Escrow Agent and notify SAB and the Shareholder Representative in writing immediately.

(e)

Any corporation into which the Escrow Agent has merged or with which it has been amalgamated, or any corporation resulting from any merger or amalgamation to which the Escrow Agent is a party, or any corporation to which all or substantially all of the corporate trust business of the Escrow Agent has been transferred, shall be the Successor Escrow Agent under this Escrow Agreement, without the execution or filing of any instrument or the performance of any further act.

(f)

Any Successor Escrow Agent appointed under any provision of this Section 4.5 shall be a corporation authorized to carry on the business of a trust company in the State of Florida.

(g)

Upon the appointment of the Successor Escrow Agent under this Escrow Agreement, the Escrow Agent shall transfer the Escrow Fund to the Successor Escrow Agent and shall thereupon be released from further duties under this Escrow Agreement.

(h)

Upon its appointment, the Successor Escrow Agent shall be vested with the same powers, rights, duties and responsibilities and shall be subject to and bound by the terms of this Escrow Agreement as if it had been originally named in this Escrow Agreement as Escrow Agent, with any 

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further assurance, conveyance, act or deed being immediately executed, at the expense of SAB and BB in the proportions set forth in Section 4.2 herein as may, in the opinion of counsel to the Successor Agent, acting reasonably, be necessary or advisable for the purpose of transferring the Escrow Fund  to the Successor Escrow Agent.

4.6

Limitation of Duties - The Escrow Agent shall have no duties or liabilities except those which are expressly set forth in this Escrow Agreement.  The Escrow Agent shall have no liability or responsibility arising under any agreement, including any agreement referred to in this Escrow Agreement, to which the Escrow Agent is not a party and shall not be bound by any notice of a claim or demand with respect thereto, or any waiver, modification, amendment, termination or rescission thereof (collectively a “Modification”) unless received by it in writing, and signed by an Authorized Person from SAB and the Shareholder Representative; provided, however, that if the duties or indemnification of the Escrow Agent herein are affected, such Modification will not be valid unless the Escrow Agent shall have given its prior written consent thereto.  Should any dispute or controversy arise concerning the Escrow Agent's duties hereunder, or should SAB and the Shareholder Representative be unable to agree upon any terms or provisions herein, the Escrow Agent reserves the right to seek the order of any court of competent jurisdiction, or if applicable, to petition any arbitrators, at the expense of SAB and BB (with SAB on the one hand and BB on the other hand being severally responsible for such expense in the proportions set forth in Section 4.2 herein).  The Escrow Agent may also deposit the Escrow Fund with a court of competent jurisdiction in the State of Florida for the Court’s disposition, whereupon this Escrow Agreement and the Escrow Agent's appointment and duties shall terminate.  

ARTICLE 5

GENERAL

5.1

Time of the Essence - Time shall be of the essence in this Escrow Agreement.

5.2

Notice - Any notice or other communication or writing required or permitted to be given under this Escrow Agreement or for the purposes of this Escrow Agreement (a “Notice”) shall be in writing and shall be sufficiently given if delivered personally or by nationally recognized courier or sent by prepaid first class mail to:

(a)

if to SAB and SB:

1200 North Federal Hwy. 

Suite 111-A

Boca Raton, FL 33432

Attention:  Michael Golden

with a copy, given in the manner prescribed above, to:

Bruce C. Rosetto, Esquire

Blank Rome LLP

1200 North Federal Hwy. 

Suite 417

Boca Raton, FL 33432

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(b)

if to BB and the Shareholder Representative:

c/o Boies, Schiller & Flexner LLP

100 SE Second Street

Suite 2800

Miami, FL 33131

Attention:  Michael Kosnitzky, Esq.

with a copy, given in the manner prescribed above, to:

Holland & Knight LLP

701 Brickell Avenue

Suite 3000

Miami, Florida 33131

Attention:  Alcides I. Avila, Esq.

(c)

if to Escrow Agent

Northern Trust, NA

700 Brickell Avenue

Miami, Florida 33131

Attn: Ron Frith, Vice President

or to such other address as the party to whom such Notice is to be given shall have last notified all of the other parties to this Escrow Agreement in the manner provided in this Section.  Any Notice so delivered by 4:00 p.m. shall be deemed to have been given and received on the day it is so delivered at such address, provided that if such day is not a Business Day then the Notice shall be deemed to have been given and received on the Business Day next following the day it is so delivered.  Any Notice sent by prepaid first class mail shall be deemed to have been given and received on the fifth (5th) Business Day after the Notice is deposited with the post office in the city where the sender is situate.

5.3

Severability - Any condition hereof that is held to be inoperative, unenforceable or invalid in any jurisdiction shall be inoperative, unenforceable or invalid in that jurisdiction without affecting any other condition hereof in that jurisdiction or in any other jurisdictions, and to this end such conditions hereof are declared to be severable.

5.4

Further Assurances - Each of the parties hereto will at any time and from time to time, upon the request of another party, execute and deliver such further documents and do such further acts and things as may reasonably be requested in order to evidence, carry out and give full effect to the terms, conditions, intent and meaning of this Escrow Agreement.

5.5

No Waiver - No failure or delay on the part of any party hereto in exercising any right, power or remedy provided herein may be, or may be deemed to be, a waiver thereof; nor shall any single or partial exercise of such right, power or remedy hereunder preclude any other or further exercise thereof or the exercise of any right.

5.6

Amendments - This Escrow Agreement may be amended by the parties hereto at any time by a written instrument signed by each of the parties hereto.

5.7

Successors - This Escrow Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective heirs, personal representatives, successors and permitted assigns.  

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Subject to Section 4.5(e) herein, no rights herein may be assigned by any of the parties hereto without prior written consent of all the other parties.

5.8

Counterparts - This Escrow Agreement may be executed by the parties hereto by facsimile and in separate counterparts each of which when so executed and delivered shall be an original, but all such counterparts shall together constitute one and the same instrument.

5.9

Dispute Resolution - In the event of a controversy or dispute arising between SAB or SB, on the one hand, and BB or the Shareholder Representative, on the other hand, in respect of this Escrow Agreement or performance hereunder by such above referenced parties, such controversy or dispute shall be resolved in accordance with Section 10.11 of the Purchase Agreement.

ARTICLE 6

Liquidating Trust

6.1

Covenants.  – The Liquidating Trust hereby covenants and agrees to the following:

(a)

During the period starting from which a disputed Claim is presented to an arbitrator, the number of shares held in the Escrow Fund equal to the amount of such Claim shall not be voted.

(b)

During the time that any Escrow Shares are in the Escrow Fund, if any vote is required of the holders of SAB Common Stock at a special or annual meeting, the Trustee shall, in accordance with applicable federal and state securities laws, provide notice and request instruction from the beneficiaries of the Liquidating Trust, and the Trustee shall vote the Escrow Shares based upon the written instructions of the beneficiaries of their beneficial interests in the Escrow Shares.  With respect to any Escrow Shares for which the Trustee does not receive written instructions, the Trustee shall vote such non-voted Escrow Shares in the same proportion as the Escrow Shares so voted by the beneficiaries on the proposal or matter for which a vote is required.  

[SIGNATURE PAGE TO FOLLOW]

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IN WITNESS WHEREOF, the undersigned have duly executed this Escrow Agreement on the date and year first above-written.

			
	 
	SUN AMERICAN BANCORP:

	 
	 

	 

	 
	By:

	/s/ Michael E. Golden

	 
	Name:

	Michael E. Golden

	 
	Title:

	President and Chief Executive Officer

	 
	 

	 

	 
	SUN AMERICAN BANK:

	 
	 

	 

	 
	By:

	/s/ Michael E. Golden

	 
	Name:

	Michael E. Golden

	 
	Title:

	President, Chief Executive Officer and Chairman

	 
	 

	 

	 
	BEACH BANK:

	 
	 

	 

	 
	By:

	/s/ Michael Kosnitzky

	 
	Name:

	Michael Kosnitzky

	 
	Title:

	Chairman of the Board

	 
	 
	 

	 
	 

	 

	 
	/s/ Michael Kosnitzky

	 
	MICHAEL KOSNITZKY, as the Shareholder Representative

	 
	 
	 

	 
	 

	 

	 
	/s/ Michael Kosnitzky

	 
	MICHAEL KOSNITZKY, as the Trustee of the Liquidating Trust

	 
	 

	 

	 
	ESCROW AGENT:

	 
	 

	 

	 
	NORTHERN TRUST, NA

	 
	 

	 

	 
	By:

	/s/ Ronald G. Frith

	 
	Name:

	Ronald G. Frith

	 
	Title:

	Vice President

12

EXHIBIT A

Escrow Agent fees and expenses

·

$4,000 per year

·

$200/hour for any administrative work conducted pursuant to the Escrow Agreement

13SUN AMERICAN BANCORP

EXHIBIT 10.2

SUN AMERICAN BANCORP

AMENDED AND RESTATED 2005 STOCK OPTION 

AND STOCK INCENTIVE PLAN

1.

Purpose of Plan  

The purpose of this Amended and Restated Amended and Restated 2005 Stock Option and Stock Incentive Plan (the “Plan”) is to provide additional incentive to officers and directors of, and other key employees of and important consultants and/or advisors to, Sun American Bancorp (the “Company”), and each present or future parent or subsidiary corporation of the Company (“Affiliates”), by encouraging them to invest in shares of the Company’s common stock (the “Common Stock”) and providing for awards in the form of options to purchase Common Stock and restricted shares of Common Stock (collectively, “Awards”) in order to promote a proprietary interest in the Company and an increased personal interest in the Company’s continued success and progress.  

2.

Aggregate Number of Shares  

A maximum of 4,000,000 shares of Common Stock may be issued under this Plan either in the form of restricted shares or upon the exercise of options issued pursuant to the Plan subject to the restrictions described below.  Up to 3,000,000 shares of Common Stock may be issued upon the exercise of Incentive Stock Options (as defined in Section 5(a) of the Plan).  

Notwithstanding the foregoing, in the event of any change in the outstanding shares of Common Stock by reason of a stock dividend, stock split, combination of shares, recapitalization, merger, consolidation, transfer of assets, reorganization, conversion or what the Committee (as defined in Section 4(a)), deems in its sole discretion to be similar circumstances, the aggregate number of shares which may be issued under this Plan shall be appropriately adjusted in a manner determined in the sole discretion of the Committee.  Reacquired shares of Common Stock, as well as unissued shares, may be used to grant Awards under this Plan.  Common Stock subject to options which have terminated unexercised, either in whole or in part, and restricted shares which are forfeited prior to vesting shall be available for future grants under this Plan.  

3.

Class of Persons Eligible to Receive Awards

All officers, directors and key employees of and important consultants and/or advisors to the Company and of or to any present or future Company parent or subsidiary corporation are eligible to receive Awards under this Plan.  The individuals who shall, in fact, receive Awards shall be selected by the Committee, in its sole discretion, except as otherwise specified in Section 4 hereof, and are referred to herein as participants.  No outside director may receive Awards under this Plan which in the aggregate equal more than 20% of the total number of shares of Common Stock authorized for issuance under this Plan and no officer, employee or consultant may receive Awards under this Plan which in the aggregate equal more than 60% of the total number of shares of common stock authorized for issuance under this Plan.  

4.

Administration of Plan

(a)

This Plan shall be administered either by the Company’s Board of Directors or a Compensation Committee appointed by the Company’s Board of Directors.  The Compensation Committee shall consist of a minimum of two and a maximum of five members of the Board of Directors, each of whom shall be a “Non-Employee Director” within the meaning of Rule 16b-3(b)(3) under the Securities Exchange Act of 1934, as amended, or any future corresponding rule, except that the failure of the Compensation Committee for any reason to be composed solely of Non-Employee Directors shall not prevent an Award from being considered granted under this Plan.  The term “Committee,” as used herein, shall refer to either the Company’s Board of Directors or such Compensation Committee, depending upon who is administering the Plan.  The Committee shall, in addition to its other authority and subject to the provisions of this Plan, determine which individuals shall in fact be granted an option or options, whether the option shall be an Incentive Stock Option or a Non-Qualified Stock Option (as such terms are defined in Section 5(a)), the number of shares to be subject to each of the options, the time or times at which the options shall be granted, the rate of option exercisability, and, subject to Section 5 hereof, the price at which each of the options is exercisable and the duration of the option.  The Committee shall further have full and complete authority, subject to the provisions of the Plan, to grant restricted shares and, in addition to the terms and conditions contained in Sections 6 and 9 hereof, to provide such other terms and conditions (which need not be identical among participants) with respect to such restricted shares and the lapsing of restrictions thereon, as the Committee shall determine in its sole discretion.  The dollar value of restricted shares granted under the Plan shall be calculated based upon the fair market value of the Common Stock on the date of the grant as such term is defined in Section 5(a) of the Plan.  

(b)

The Committee shall adopt such rules for the conduct of its business and administration of this Plan as it considers desirable.  A majority of the members of the Committee shall constitute a quorum for all purposes.  The vote or written consent of a majority of the members of the Committee on a particular matter shall constitute the act of the Committee on such matter.  The Committee shall have the right to construe the Plan and the Awards granted pursuant thereto, to correct defects and omissions and to reconcile inconsistencies to the extent necessary to effectuate the Plan and the Awards granted pursuant thereto, and such action shall be final, binding and conclusive upon all parties concerned.  No member of the Committee or the Board of Directors shall be liable for any act or omission (whether or not negligent) taken or omitted in good faith, or for the exercise of an authority or discretion granted in connection with the Plan to a Committee or the Board of Directors, or for the acts or omissions of any other members of a Committee or the Board of Directors.  Subject to the numerical limitations on Committee membership set forth in Section 4(a) hereof, the Board of Directors may at any time appoint additional members of the Committee and may at any time remove any member of the Committee with or without cause.  Vacancies in the Committee, however caused, may be filled by the Board of Directors, if it so desires.

5.

Incentive Stock Options and Non-Qualified Stock Options

(a)

Options issued pursuant to this Plan may be either Incentive Stock Options granted pursuant to Section 5(b) hereof or Non-Qualified Stock Options granted pursuant to Section 5(c) hereof, as determined by the Committee.  An “Incentive Stock Option” is an option 

2

which satisfies all of the requirements of Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”) and the regulations thereunder, and a “Non-Qualified Stock Option” is an option which either does not satisfy all of those requirements or the terms of the option provide that it will not be treated as an Incentive Stock Option.  The Committee may grant both an Incentive Stock Option and a Non-Qualified Stock Option to the same person, or more than one of each type of option to the same person.  The option price for Incentive Stock Options issued under this Plan shall be equal at least to the fair market value (as defined below) of the Common Stock on the date of the grant of the option.  Options shall be granted at an option price equal to at least 100% of the fair market value (as defined below) of the common stock on the date of the grant of the option.  The fair market value of the Common Stock on any particular date shall mean the closing price of a share of the Common Stock on any stock exchange on which such stock is then listed or admitted to trading, including but not limited to the American Stock Exchange, the NASDAQ Stock Market or any other exchange, on such date, or if no sale took place on such day, the last such date on which a sale took place, or if the Common Stock is not then quoted on the American Stock Exchange, NASDAQ Stock Market, or listed or admitted to trading on any stock exchange, the average of the bid and asked prices in the over-the-counter market on such date, or if none of the foregoing, a price determined in good faith by the Committee to equal the fair market value per share of the Common Stock.

(b)

Subject to the authority of the Committee set forth in Section 4(a) hereof, Incentive Stock Options issued pursuant to this Plan shall be issued substantially in the form set forth in Appendix I hereof, which form is hereby incorporated by reference and made a part hereof, and shall contain substantially the terms and conditions set forth therein.  Except as otherwise provided by the Committee in the agreement evidencing the grant of Incentive Stock Options, all Incentive Stock Options granted under the Plan shall vest at a rate of one-fifth (1/5) of the initial award per year over a period of five (5) years, commencing on January 1st of the calendar year following the calendar year in which the Incentive Stock Options were granted.  Incentive Stock Options shall not be exercisable after the expiration of ten years from the date such options are granted, unless terminated earlier under the terms of the option, except that options granted to individuals described in Section 422(b)(6) of the Code shall conform to the provisions of Section 422(c)(5) of the Code.  At the time of the grant of an Incentive Stock Option hereunder, the Committee may, in its discretion, amend or supplement any of the option terms contained in Appendix I for any particular optionee, provided that the option as amended or supplemented satisfies the requirements of Section 422 of the Code and the regulations thereunder.  Subject to the restrictions set forth in Section 2 hereof, each of the options granted pursuant to this Section 5(b) is intended, if possible, to be an “Incentive Stock Option” as that term is defined in Section 422 of the Code and the regulations thereunder.  In the event this Plan or any option granted pursuant to this Section 5(b) is in any way inconsistent with the applicable legal requirements of the Code or the regulations thereunder for an Incentive Stock Option, this Plan and such option shall be deemed automatically amended as of the date hereof to conform to such legal requirements, if such conformity may be achieved by amendment.  If such conformity may not be achieved by amendment, such option shall be deemed to be a Non-Qualified Stock Option.  

(c)

Subject to the authority of the Committee set forth in Section 4(a) hereof, Non-Qualified Stock Options issued to officers and other key employees pursuant to this Plan shall be issued substantially in the form set forth in Appendix II hereof, which form is hereby 

3

incorporated by reference and made a part hereof, and shall contain substantially the terms and conditions set forth therein.  Except as otherwise provided by the Committee in the agreement evidencing the grant of Non-Qualified Stock Options, all Non-Qualified Stock Options granted under the Plan shall vest at a rate of one-fifth (1/5) of the initial award per year over a period of five (5) years, commencing on January 1st of the calendar year following the calendar year in which the Non-Qualified Stock Options were granted.  Subject to the authority of the Committee set forth in Section 4(a) hereof, Non-Qualified Stock Options issued to directors and important consultants and/or advisors pursuant to this Plan shall be issued substantially in the form set forth in Appendix III hereof, which form is hereby incorporated by reference and made a part hereof, and shall contain substantially the terms and conditions set forth therein.  Non-Qualified Stock Options shall expire ten years after the date they are granted, unless terminated earlier under the option terms.  At the time of granting a Non-Qualified Stock Option hereunder, the Committee may, in its discretion, amend or supplement any of the option terms contained in Appendix II or Appendix III for any particular optionee.

(d)

Neither the Company nor any of its current or future parent, subsidiaries or affiliates, nor their officers, directors, shareholders, stock option plan committees, employees or agents shall have any liability to any optionee in the event (i) an option granted pursuant to Section 5(b) hereof does not qualify as an “Incentive Stock Option” as that term is used in Section 422 of the Code and the regulations thereunder; (ii) any optionee does not obtain the tax treatment pertaining to an “Incentive Stock Option;” or (iii) any option granted pursuant to Section 5(c) hereof is an “Incentive Stock Option.”

(e)

Except as otherwise provided in Section 422 of the Code and regulations thereunder or any successor provision, no Incentive Stock Option granted pursuant to this Plan shall be transferable other than by will or the laws of descent and distribution.  Except as otherwise provided by the Rules and Regulations of the Securities and Exchange Commission, the Committee at the time of grant of a Non-Qualified Stock Option may provide that such stock option is transferable to any “family member” of the optionee by gift or qualified domestic relations order.  For purposes of this section, a family member includes any child, stepchild, grandchild, parent, step-parent, grandparent, spouse, former spouse, sibling, niece, nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law, including adoptive relationships, any person sharing the grantee’s household (other than a tenant or employee), a trust in which these persons have more than 50% of the beneficial interest, a foundation in which these persons (or the grantee) controls the management of assets, and any other entity in which these persons or the grantee own more than 50% of the voting interests.  

6.

Restricted Shares

(a)

At the time of an award of restricted shares, in addition to any other terms and conditions the Committee shall provide, the Committee shall establish for each participant a period of time during which restricted shares granted under the Plan are subject to forfeiture by the participant if the conditions established by the Committee, if any, are not met or upon the expiration of which the restricted shares shall vest and no longer be subject to restriction (the “Restricted Period”).  Unless otherwise provided by the Committee in the agreement evidencing the award of restricted shares, all restricted shares shall have a Restricted Period of five (5) years and such restrictions shall lapse at a rate of one-fifth (1/5) of the initial award per year, 

4

commencing on January 1st of the calendar year following the calendar year in which the restricted shares were granted.  Restricted shares may not be sold, assigned, transferred, pledged or otherwise encumbered by the participant, except as hereinafter provided, during the Restricted Period.  Except for such restrictions, and subject to paragraphs (d) and (f) of this Section 6 and Section 9 hereof, the participant as owner of such restricted shares shall have all the rights of a shareholder, including the right to vote the shares.

(b)

Except as provided in paragraph (i) of this Section 6, if a participant ceases to maintain Continuous Service for any reason (other than death or disability), all restricted shares theretofore awarded to such participant and which at the time of such termination of Continuous Service are subject to the restrictions imposed by paragraph (a) of this Section 6 shall upon such termination of Continuous Service be forfeited and returned to the Company.  If a participant ceases to maintain Continuous Service by reason of death or disability, restricted shares then still subject to restrictions imposed by paragraph (a) of this Section 6 will be free of those restrictions.  “Continuous Service,” as used herein, means the absence of any interruption or termination of service as an officer, director or employee of or consultant to the Company or any Affiliate.  Service shall not be considered interrupted in the case of sick leave, military leave or any other leave of absence approved by the Company or any Affiliate or in the case of transfers between payroll locations of the Company, or between the Company, or its subsidiaries.  

(c)

The Committee shall have the authority, in its discretion, to accelerate the time at which any or all of the restrictions shall lapse with respect to restricted shares, or to remove any or all of such restrictions, whenever it may determine that such action is appropriate by reason of changes in applicable tax or other laws or other changes in circumstances occurring after the commencement of such Restricted Period.

(d)

Each certificate in respect of restricted shares awarded under the Plan shall be registered in the name of the participant and deposited by the participant, together with a stock power endorsed in blank, with the Company and shall bear the following (or a similar) restricted legend (the “Restricted Legend”):

The transferability of this certificate and the shares of stock represented hereby are subject to the terms and conditions (including forfeiture) contained in the Amended and Restated 2005 Stock Option and Stock Incentive Plan of Sun American Bancorp.  Copies of such Plan are on file in the office of the Secretary of Sun American Bancorp, 3400 Coral Way, Miami, Florida 33145.

(e)

At the time of any award of restricted shares, the participant shall enter into an agreement with the Company in a form attached hereto as Appendix IV, as modified by the Committee, agreeing to the terms and conditions of the restricted shares and such other matters as the Committee, in its sole discretion, shall determine (the “Restricted Stock Agreement”).

(f)

The payment to a participant of cash dividends declared or paid on such restricted shares by the Company shall be deferred until the lapsing of any restrictions imposed under paragraph (a) of this Section 6.  Such deferred dividends shall be held by the Company for the account of the participant.  In such event, there shall be credited at the end of each year (or portion thereof) interest on the amount of the account at the beginning of the year at a rate per 

5

annum as the Committee, in its discretion, may determine.  Payment of deferred dividends, together with interest accrued thereon, shall be made upon the earlier to occur of the lapsing of the restrictions imposed under paragraph (a) of this Section 6 or upon death or disability of the participant.

(g)

At the expiration of the Restricted Period, if any, imposed by paragraph (a) of this Section 6, the Company shall redeliver to the participant (or where the relevant provision of paragraph (b) of this Section 6 applies in the case of a deceased participant, to his legal representative, beneficiary or heir) the certificate(s) and stock power deposited with it pursuant to paragraph (d) of this Section 6 and the shares represented by such certificate(s) shall be free of the Restricted Legend referred to in paragraph (d) of this Section 6.  Notwithstanding the foregoing, the Securities Legend described in paragraph (g) of Section 9 shall continue to be included on all certificates as long as registration has not occurred.  

(h)

During the Restricted Period, no Award nor any right of interest of a participant in such Award set forth in any instrument evidencing any Award under the Plan may be assigned, encumbered or transferred except, in the event of the death of a participant, by will or the laws of descent and distribution.  

(i)

The Committee may provide in the Restricted Stock Agreement if the Continuous Service of any participant (as defined in Section 6) is involuntarily terminated for whatever reason, except for cause, as defined by the Committee, at any time within a specified period after a change in control, unless the Committee shall otherwise provide, any Restricted Period with respect to restricted shares shall lapse upon such termination and all restricted shares shall become fully vested in the participant.  

(j)

Upon the termination of any Restricted Period with respect to restricted shares (or at any such earlier time, if any, that an election is made by the participant under Section 83(b) of the Code, or any successor provision thereto, to include the value of such shares in taxable income), the Company may withhold from any payment or distribution made under this Plan sufficient shares or may withhold from the participant’s compensation or require to be paid by participant sufficient cash to cover any applicable withholding and employment taxes.  The Company shall have the right to deduct from all dividends paid with respect to restricted shares the amount of any taxes which the Company is required to withhold with respect to such dividend payments.  No discretion or choice shall be conferred upon any participant with respect to the form, timing or method of any such tax withholding.

7.

Amendment, Supplement, Suspension and Termination

Awards shall not be granted pursuant to this Plan after the expiration of ten years from the date the Plan is adopted by the Board of Directors of the Company.  The Board of Directors reserves the right at any time, and from time to time, to amend or supplement this Plan, including the forms of option or restricted stock agreement attached hereto, in any way, or to suspend or terminate it, effective as of such date, which date may be either before or after the taking of such action, as may be specified by the Board of Directors; provided, however, that such action shall not affect Awards granted under the Plan prior to the actual date on which such action occurred.  If an amendment or supplement of this Plan is required by the Code or the regulations thereunder 

6

to be approved by the shareholders of the Company in order to permit the granting of “Incentive Stock Options” (as that term is defined in Section 422 of the Code and regulations thereunder) pursuant to the amended or supplemented Plan, such amendment or supplement shall also be approved by the shareholders of the Company in such manner as is prescribed by the Code and the regulations thereunder.  If the Board of Directors voluntarily submits a proposed amendment, supplement, suspension or termination for shareholder approval, such submission shall not require any future amendments, supplements, suspensions or terminations (whether or not relating to the same provision or subject matter) to be similarly submitted for shareholder approval.

8.

Effectiveness of Plan

This Plan shall become effective on the date of its adoption by the Company’s Board of Directors, subject however to approval by the holders of the Common Stock in the manner as prescribed in the Code and the regulations thereunder.  Options may be granted under this Plan prior to obtaining shareholder approval, provided such options shall not be exercisable until shareholder approval is obtained.  No grants of restricted shares may be made under the Plan prior to the receipt of shareholder approval.  

9.

General Conditions

(a)

Nothing contained in this Plan or any Award granted pursuant to this Plan shall confer upon any employee the right to continue in the employ of the Company or any affiliated or subsidiary corporation or interfere in any way with the rights of the Company or any affiliated or subsidiary corporation to terminate his employment in any way.

(b)

Nothing contained in this Plan or any Award granted pursuant to this Plan shall confer upon any director or consultant the right to continue as a director of, or consultant to, the Company or any affiliated or subsidiary corporation or interfere in any way with the rights of the Company or any affiliated or subsidiary corporation, or their respective shareholders, to terminate the directorship of any such director or the consultancy relationship of any such consultant.

(c)

Corporate action constituting an offer of stock for sale to any person under the terms of the options to be granted hereunder shall be deemed complete as of the date when the Committee authorizes the grant of the option to the such person, regardless of when the option is actually delivered to such person or acknowledged or agreed to by him.

(d)

The terms “parent corporation” and “subsidiary corporation” as used throughout this Plan, and the options granted pursuant to this Plan, shall (except as otherwise provided in the option form) have the meaning that is ascribed to that term when contained in Section 422(b) of the Code and the regulations thereunder, and the Company shall be deemed to be the grantor corporation for purposes of applying such meaning.

(e)

References in this Plan to the Code shall be deemed to also refer to the corresponding provisions of any future United States revenue law.

7

(f)

The use of the masculine pronoun shall include the feminine gender whenever appropriate.  

(g)

To the extent restricted shares or Common Stock issued upon the exercise of options granted pursuant to the Plan have not been registered under the federal and state securities laws or an exemption is otherwise unavailable, the certificates for Common Stock to be issued pursuant to the Plan shall bear the following securities legend (the “Securities Legend”):

The shares represented by this certificate have not been registered under the Securities Act of 1933, as amended, or under applicable state securities laws.  The shares have been acquired for investment and may not be offered, sold, transferred, pledged or otherwise disposed of without an effective registration statement under the Securities Act of 1933, as amended, and under any applicable state securities laws or an opinion of counsel acceptable to the Company that the proposed transaction will be exempt from such registration.  

The foregoing legend shall be removed upon registration of the legended shares under the Securities Act of 1933, as amended, and under any applicable state laws or upon receipt of any opinion of counsel acceptable to the Company that said registration is no longer required.  

(h)

Each of the events specified in the following clauses (i) and (ii) of this subsection (h) shall be deemed a “change in control”:  (i) a change within a twelve-month period in the holders of more than 50% of the outstanding voting stock of the Company; or (ii) any other events deemed to constitute a “change in control” by the Committee.  

(i)

In the event of any change in the outstanding shares of the Common Stock of the Company by reason of a stock dividend, stock split, combination of shares, recapitalization, merger, consolidation, transfer of assets, reorganization, conversion or what the Committee deems in its sole discretion to be similar circumstances, the number and kind of shares subject to options and the option price of such shares shall be appropriately adjusted and outstanding Awards shall be treated like all other outstanding shares of Common Stock.  Any shares of stock or other securities received, as a result of any of the foregoing adjustment by the Committee or as part of an adjustment provided to shareholders in general, by a participant with respect to restricted shares shall be subject to the same restrictions and the certificate(s) or other instruments representing or evidencing such shares or securities shall be legended and deposited with the Company in the manner provided in Section 5 hereof.   

Adopted by the Board of Directors this 21st day of September 2005.  

Amended by the Board of Directors this 31st day of August 2006.  

8

APPENDIX I

INCENTIVE STOCK OPTION

To:

____________________________________________________________

Name

Address:

____________________________________________________________

Date of Grant:

____________________________________________________________

You are hereby granted an option, effective as of the date hereof, to purchase __________ shares of common stock (“Common Stock”) of Sun American Bancorp (the “Company”) at a price of $____________  per share pursuant to the Company’s Amended and Restated 2005 Stock Option and Stock Incentive Plan (the “Plan”). 

Your Option may first be exercised at any time on or after __________ for up to __% of the total number of shares subject to the Option and thereafter pursuant to the following schedule until the total number of shares subject to the Option are fully exercisable:  

Vesting Date

Percent of Initial Award Vested

%

Thus, this Option is fully exercisable on or after __ years from the Date of Grant.  This Option shall terminate and is not exercisable after 10 years from the Date of Grant (the “Scheduled Termination Date”)  This Option shall be adjusted for any change in the outstanding shares of the Common Stock of the Company by reason of a stock dividend or distribution, supplemental offering of shares, stock split, combination of shares, recapitalization, merger, consolidation, exchange of shares, reorganization, conversion or what the Committee deems in its sole discretion to be similar circumstances.  No fractional shares shall be issued or delivered.  

In the event of a “Change of Control” (as defined below) of the Company, your option may, from and after the date of the Change of Control, and notwithstanding the immediately preceding paragraph, be exercised for up to 100% of the total number of shares then subject to the option minus the number of shares previously purchased upon exercise of the option (as adjusted for stock dividends, stock splits, combinations of shares and what the Committee deems in its sole discretion to be similar circumstances) and your vesting date may accelerate accordingly.  A “Change of Control” shall be deemed to have occurred upon the happening of any of the following events:

1.

A change within a twelve-month period in the holders of more than 50% of the outstanding voting stock of the Company; or

2.

Any other event deemed to constitute a “Change of Control” by the Committee.

I-1

You may exercise your option by giving written notice to the Secretary of the Company on forms supplied by the Company at its then principal executive office, accompanied by payment of the option price for the total number of shares you specify that you wish to purchase.  The payment may be in any of the following forms: (a) cash, which may be evidenced by a check and includes cash received from a stock brokerage firm in a so-called “cashless exercise”; (b) unless prohibited by the Committee, certificates representing shares of Common Stock, which will be valued by the Secretary of the Company at the fair market value per share of Common Stock (as determined in accordance with the Plan) on the date of delivery of such certificates to the Company, accompanied by an assignment of the stock to the Company; or (c) unless prohibited by the Committee, any combination of cash and Common Stock valued as provided in clause (b).  The use of the so-called “attestation procedure” to exercise a stock option may be permitted by the Committee. Any assignment of stock shall be in a form and substance satisfactory to the Secretary of the Company, including guarantees of signature(s) and payment of all transfer taxes if the Secretary deems such guarantees necessary or desirable.

Your option will, to the extent not previously exercised by you, terminate three months after the date on which your employment by the Company or a Company subsidiary corporation is terminated (whether such termination be voluntary or involuntary) other than by reason of disability as defined in Section 22(e)(3) of the Internal Revenue Code of 1986, as amended (the “Code”), and the regulations thereunder, or death (but in no event later than the Scheduled Termination Date).  After the date your employment is terminated, as aforesaid, you may exercise this option only for the number of shares which you had a right to purchase and did not purchase on the date your employment terminated.  If you are employed by a Company subsidiary corporation, your employment shall be deemed to have terminated on the date your employer ceases to be a Company subsidiary corporation, unless you are on that date transferred to the Company or another Company subsidiary corporation.  Your employment shall not be deemed to have terminated if you are transferred from the Company to a Company subsidiary corporation, or vice versa, or from one Company subsidiary corporation to another Company subsidiary corporation.

If you die while employed by the Company or a Company subsidiary corporation, your executor or administrator, as the case may be, may, at any time within one year after the date of your death (but in no event later than the Scheduled Termination Date), exercise the option as to any shares which you had a right to purchase and did not purchase during your lifetime.  If your employment with the Company or a Company parent or subsidiary corporation is terminated by reason of your becoming disabled (within the meaning of Section 22(e)(3) of the Code and the regulations thereunder), you or your legal guardian or custodian may at any time within one year after the date of such termination (but in no event later than the Scheduled Termination Date), exercise the option as to any shares which you had a right to purchase and did not purchase prior to such termination.  Your executor, administrator, guardian or custodian must present proof of his authority satisfactory to the Company prior to being allowed to exercise this option.

Notwithstanding anything to the contrary contained in this option, in the event of a sale or a proposed sale of the majority of the stock or assets of the Company or a proposed Change of Control, the Committee shall have the right to terminate this option upon thirty (30) days prior written notice to you, subject to your right to exercise such option to the extent vested prior to such termination.  

I-2

This option is not transferable otherwise than by will or the laws of descent and distribution, and is exercisable during your lifetime only by you, including, for this purpose, your legal guardian or custodian in the event of disability.  Until the option price has been paid in full pursuant to due exercise of this option and the purchased shares are delivered to you, you do not have any rights as a shareholder of the Company.  The Company reserves the right not to deliver to you the shares purchased by virtue of the exercise of this option during any period of time in which the Company deems, in its sole discretion, that such delivery would violate a federal, state, local or securities exchange rule, regulation or law.

Notwithstanding anything to the contrary contained herein, this option is not exercisable until all the following events occur and during the following periods of time:

(a)

Until the Plan pursuant to which this option is granted is approved by the shareholders of the Company in the manner prescribed by the Code and the regulations thereunder;

(b)

Until this option and the optioned shares are approved and/or registered with such federal, state and local regulatory bodies or agencies and securities exchanges as the Company may deem necessary or desirable; 

(c)

During any period of time in which the Company deems that the exercisability of this option, the offer to sell the shares optioned hereunder, or the sale thereof, may violate a federal, state, local or securities exchange rule, regulation or law, or may cause the Company to be legally obligated to issue or sell more shares than the Company is legally entitled to issue or sell; or 

(d)

Until you have paid or made suitable arrangements to pay (which may include payment through the surrender of Common Stock, unless prohibited by the Committee) (i) all federal, state and local income tax withholding required to be withheld by the Company in connection with the option exercise, and (ii) your portion of other federal, state and local payroll and other taxes due in connection with the option exercise.

The following two paragraphs shall be applicable if, on the date of exercise of this option, the Common Stock to be purchased pursuant to such exercise has not been registered under the Securities Act of 1933, as amended, and under applicable state securities laws, and shall continue to be applicable for so long as such registration has not occurred:

(a)

The optionee hereby agrees, warrants and represents that he will acquire the Common Stock to be issued hereunder for his own account for investment purposes only, and not with a view to, or in connection with, any resale or other distribution of any of such shares, except as hereafter permitted.  The optionee further agrees that he will not at any time make any offer, sale, transfer, pledge or other disposition of such Common Stock to be issued hereunder without an effective registration statement under the Securities Act of 1933, as amended, and under any applicable state securities laws or an opinion of counsel acceptable to the Company to the effect that the proposed transaction will be exempt from such registration.  The optionee shall execute such instruments, representations, acknowledgments and agreements as the Company may, in its sole discretion, deem advisable to avoid any violation of federal, state, local or securities exchange rule, regulation or law.

I-3

(b)

The certificates for Common Stock to be issued to the optionee hereunder shall bear the following legend:

The shares represented by this certificate have not been registered under the Securities Act of 1933, as amended, or under applicable state securities laws.  The shares have been acquired for investment and may not be offered, sold, transferred, pledged or otherwise disposed of without an effective registration statement under the Securities Act of 1933, as amended, and under any applicable state securities laws or an opinion of counsel acceptable to the Company that the proposed transaction will be exempt from such registration.  

The foregoing legend shall be removed upon registration of the legended shares under the Securities Act of 1933, as amended, and under any applicable state laws or upon receipt of any opinion of counsel acceptable to the Company that said registration is no longer required.

The sole purpose of the agreements, warranties, representations and legend set forth in the two immediately preceding paragraphs is to prevent violations of the Securities Act of 1933, as amended, and any applicable state securities laws.

It is the intention of the Company and you that this option shall, if possible, be an “Incentive Stock Option” as that term is used in Section 422 of the Code and the regulations thereunder.  In the event this option is in any way inconsistent with the legal requirements of the Code or the regulations thereunder for an “Incentive Stock Option,” this option shall be deemed automatically amended as of the date hereof to conform to such legal requirements, if such conformity may be achieved by amendment.  If such conformity may not be achieved by amendment, such option shall be deemed to be a Non-Qualified Stock Option.  

Nothing herein shall modify your status as an at-will employee of the Company.  Further, nothing herein guarantees you employment for any specified period of time.  This means that either you or the Company may terminate your employment at any time for any reason, or no reason.  You recognize that, for instance, you may terminate your employment or the Company may terminate your employment prior to the date on which your option becomes vested.

Any dispute or disagreement between you and the Company with respect to any portion of this option or its validity, construction, meaning, performance or your rights hereunder shall be settled by arbitration in accordance with the Commercial Arbitration Rules of the American Arbitration Association or its successor, as amended from time to time.  However, prior to submission to arbitration you will attempt to resolve any disputes or disagreements with the Company over this option amicably and informally, in good faith, for a period not to exceed two weeks.  Thereafter, the dispute or disagreement will be submitted to arbitration.  At any time prior to a decision from the arbitrator(s) being rendered, you and the Company may resolve the dispute by settlement.  You and the Company shall equally share the costs charged by the American Arbitration Association or its successor, but you and the Company shall otherwise be solely responsible for your own respective counsel fees and expenses.  The decision of the arbitrator(s) shall be made in writing, setting forth the award, the reasons for the decision and award and shall be binding and conclusive on you and the Company.  Further, neither you nor 

I-4

the Company shall appeal any such award.  Judgment of a court of competent jurisdiction may be entered upon the award and may be enforced as such in accordance with the provisions of the award.

This option shall be subject to the terms of the Plan in effect on the date this option is granted, which terms are hereby incorporated herein by reference and made a part hereof. In the event of any conflict between the terms of this option and the terms of the Plan in effect on the date of this option, the terms of the Plan shall govern.  This option constitutes the entire understanding between the Company and you with respect to the subject matter hereof and no amendment, supplement or waiver of this option, in whole or in part, shall be binding upon the Company unless in writing and signed by the President of the Company.  This option and the performances of the parties hereunder shall be construed in accordance with and governed by the laws of the State of Florida.  

Please sign the copy of this option and return it to the Company’s Secretary, thereby indicating your understanding of and agreement with its terms and conditions.    

SUN AMERICAN BANCORP

By: ___________________________________

I hereby acknowledge receipt of a copy of the foregoing stock option and the Amended and Restated 2005 Stock Option and Stock Incentive Plan and, having read them hereby signify my understanding of, and my agreement with, its terms and conditions.  I accept this option in full satisfaction of any previous written or verbal promises made to me by the Company with respect to option grants.  

__________________

_________________________________

(Date)

(Signature)

I-5

APPENDIX II

NON-QUALIFIED STOCK OPTION FOR OFFICERS

AND OTHER KEY EMPLOYEES

To:

____________________________________________________________

Name

Address:

____________________________________________________________

Date of Grant:

____________________________________________________________

You are hereby granted an option, effective as of the date hereof, to purchase __________ shares of common stock (“Common Stock”) of Sun American Bancorp (the “Company”) at a price of $_______ per share pursuant to the Company’s Amended and Restated 2005 Stock Option and Stock Incentive Plan (the “Plan”). 

Your Option may first be exercised at any time on or after ________ for up to ___% of the total number of shares subject to the Option and thereafter pursuant to the following schedule until the total number of shares subject to the Option are fully exercisable:  

Vesting Date

Percent of Initial Award Vested

%

Thus, this Option is fully exercisable on or after __ years from the Date of Grant.  This Option shall terminate and is not exercisable after 10 years from the Date of Grant (the “Scheduled Termination Date”).  This Option shall be adjusted for any change in the outstanding shares of the Common Stock of the Company by reason of a stock dividend or distribution, supplemental offering of shares, stock split, combination of shares, recapitalization, merger, consolidation, exchange of shares, reorganization, conversion or what the Committee deems in its sole discretion to be similar circumstances.  No fractional shares shall be issued or delivered.  

In the event of a “Change of Control” (as defined below) of the Company, your option may, from and after the date of the Change of Control, and notwithstanding the immediately preceding paragraph, be exercised for up to 100% of the total number of shares then subject to the option minus the number of shares previously purchased upon exercise of the option (as adjusted for stock dividends, stock splits, combinations of shares and what the Committee deems in its sole discretion to be similar circumstances) and your vesting date may accelerate accordingly.  A “Change of Control” shall be deemed to have occurred upon the happening of any of the following events:

1.

A change within a twelve-month period in the holders of more than 50% of the outstanding voting stock of the Company; or

2.

Any other event deemed to constitute a “Change of Control” by the Committee.

II-1

You may exercise your option by giving written notice to the Secretary of the Company on forms supplied by the Company at its then principal executive office, accompanied by payment of the option price for the total number of shares you specify that you wish to purchase.  The payment may be in any of the following forms: (a) cash, which may be evidenced by a check and includes cash received from a stock brokerage firm in a so-called “cashless exercise”; (b) unless prohibited by the Committee, certificates representing shares of Common Stock, which will be valued by the Secretary of the Company at the fair market value per share of Common Stock (as determined in accordance with the Plan) on the date of delivery of such certificates to the Company, accompanied by an assignment of the stock to the Company; or (c) unless prohibited by the Committee, any combination of cash and Common Stock valued as provided in clause (b).  The use of the so-called “attestation procedure” to exercise a stock option may be permitted by the Committee. Any assignment of stock shall be in a form and substance satisfactory to the Secretary of the Company, including guarantees of signature(s) and payment of all transfer taxes if the Secretary deems such guarantees necessary or desirable.

Your option will, to the extent not previously exercised by you, terminate three months after the date on which your employment by the Company or a Company subsidiary corporation is terminated (whether such termination be voluntary or involuntary) other than by reason of disability as defined in Section 22(e)(3) of the Internal Revenue Code of 1986, as amended (the “Code”), and the regulations thereunder, or death (but in no event later than the Scheduled Termination Date).  After the date your employment is terminated, as aforesaid, you may exercise this option only for the number of shares which you had a right to purchase and did not purchase on the date your employment terminated.  If you are employed by a Company subsidiary corporation, your employment shall be deemed to have terminated on the date your employer ceases to be a Company subsidiary corporation, unless you are on that date transferred to the Company or another Company subsidiary corporation.  Your employment shall not be deemed to have terminated if you are transferred from the Company to a Company subsidiary corporation, or vice versa, or from one Company subsidiary corporation to another Company subsidiary corporation.

If you die while employed by the Company or a Company subsidiary corporation, your executor or administrator, as the case may be, may, at any time within one year after the date of your death (but in no event later than the Scheduled Termination Date), exercise the option as to any shares which you had a right to purchase and did not purchase during your lifetime.  If your employment with the Company or a Company parent or subsidiary corporation is terminated by reason of your becoming disabled (within the meaning of Section 22(e)(3) of the Code and the regulations thereunder), you or your legal guardian or custodian may at any time within one year after the date of such termination (but in no event later than the Scheduled Termination Date), exercise the option as to any shares which you had a right to purchase and did not purchase prior to such termination.  Your executor, administrator, guardian or custodian must present proof of his authority satisfactory to the Company prior to being allowed to exercise this option.

In the event of any change in the outstanding shares of the Common Stock of the Company by reason of a stock dividend, stock split, combination of shares, recapitalization, merger, consolidation, transfer of assets, reorganization, conversion or what the Committee deems in its sole discretion to be similar circumstances, the number and kind of shares subject to this option and the option price of such shares shall be appropriately adjusted in a manner to be determined in the sole discretion of the Committee.  

II-2

Notwithstanding anything to the contrary contained in this option, in the event of a sale or a proposed sale of the majority of the stock or assets of the Company or a proposed Change of Control, the Committee shall have the right to terminate this option upon thirty (30) days prior written notice to you, subject to your right to exercise such option to the extent vested prior to such termination.  

Except for transfers to ___________ under the terms set forth in the Plan, this option is not transferable otherwise than by will or the laws of descent and distribution, and is exercisable during your lifetime only by you, including, for this purpose, your legal guardian or custodian in the event of disability.  Until the option price has been paid in full pursuant to due exercise of this option and the purchased shares are delivered to you, you do not have any rights as a shareholder of the Company.  The Company reserves the right not to deliver to you the shares purchased by virtue of the exercise of this option during any period of time in which the Company deems, in its sole discretion, that such delivery would violate a federal, state, local or securities exchange rule, regulation or law.

Notwithstanding anything to the contrary contained herein, this option is not exercisable until all the following events occur and during the following periods of time:

(a)

Until the Plan pursuant to which this option is granted is approved by the shareholders of the Company in the manner prescribed by the Code and the regulations thereunder;

(b)

Until this option and the optioned shares are approved and/or registered with such federal, state and local regulatory bodies or agencies and securities exchanges as the Company may deem necessary or desirable; 

(c)

During any period of time in which the Company deems that the exercisability of this option, the offer to sell the shares optioned hereunder, or the sale thereof, may violate a federal, state, local or securities exchange rule, regulation or law, or may cause the Company to be legally obligated to issue or sell more shares than the Company is legally entitled to issue or sell; or

(d)

Until you have paid or made suitable arrangements to pay (which may include payment through the surrender of Common Stock, unless prohibited by the Committee) (i) all federal, state and local income tax withholding required to be withheld by the Company in connection with the option exercise and (ii) your portion of other federal, state and local payroll and other taxes due in connection with the option exercise.

The following two paragraphs shall be applicable if, on the date of exercise of this option, the Common Stock to be purchased pursuant to such exercise has not been registered under the Securities Act of 1933, as amended, and under applicable state securities laws, and shall continue to be applicable for so long as such registration has not occurred:

(a)

The optionee hereby agrees, warrants and represents that he will acquire the Common Stock to be issued hereunder for his own account for investment purposes only, and not with a view to, or in connection with, any resale or other distribution of any of such shares, except as hereafter permitted.  The optionee further agrees that he will not at any time make any 

II-3

offer, sale, transfer, pledge or other disposition of such Common Stock to be issued hereunder without an effective registration statement under the Securities Act of 1933, as amended, and under any applicable state securities laws or an opinion of counsel acceptable to the Company to the effect that the proposed transaction will be exempt from such registration.  The optionee shall execute such instruments, representations, acknowledgments and agreements as the Company may, in its sole discretion, deem advisable to avoid any violation of federal, state, local or securities exchange rule, regulation or law.

(b)

The certificates for Common Stock to be issued to the optionee hereunder shall bear the following legend:

“The shares represented by this certificate have not been registered under the Securities Act of 1933, as amended, or under applicable state securities laws.  The shares have been acquired for investment and may not be offered, sold, transferred, pledged or otherwise disposed of without an effective registration statement under the Securities Act of 1933, as amended, and under any applicable state securities laws or an opinion of counsel acceptable to the Company that the proposed transaction will be exempt from such registration.”

The foregoing legend shall be removed upon registration of the legended shares under the Securities Act of 1933, as amended, and under any applicable state laws or upon receipt of any opinion of counsel acceptable to the Company that said registration is no longer required.

The sole purpose of the agreements, warranties, representations and legend set forth in the two immediately preceding paragraphs is to prevent violations of the Securities Act of 1933, as amended, and any applicable state securities laws.

It is the intention of the Company and you that this option shall not be an “Incentive Stock Option” as that term is used in Section 422 of the Code and the regulations thereunder.

Nothing herein shall modify your status as an at-will employee of the Company.  Further, nothing herein guarantees you employment for any specified period of time.  This means that either you or the Company may terminate your employment at any time for any reason, or no reason.  You recognize that, for instance, you may terminate your employment or the Company may terminate your employment prior to the date on which your option becomes vested.

Any dispute or disagreement between you and the Company with respect to any portion of this option or its validity, construction, meaning, performance or your rights hereunder shall be settled by arbitration in accordance with the Commercial Arbitration Rules of the American Arbitration Association or its successor, as amended from time to time.  However, prior to submission to arbitration you will attempt to resolve any disputes or disagreements with the Company over this option amicably and informally, in good faith, for a period not to exceed two weeks.  Thereafter, the dispute or disagreement will be submitted to arbitration.  At any time prior to a decision from the arbitrator(s) being rendered, you and the Company may resolve the dispute by settlement.  You and the Company shall equally share the costs charged by the American Arbitration Association or its successor, but you and the Company shall otherwise be solely responsible for your own respective counsel fees and expenses.  The decision of the 

II-4

arbitrator(s) shall be made in writing, setting forth the award, the reasons for the decision and award and shall be binding and conclusive on you and the Company.  Further, neither you nor the Company shall appeal any such award.  Judgment of a court of competent jurisdiction may be entered upon the award and may be enforced as such in accordance with the provisions of the award.

This option shall be subject to the terms of the Plan in effect on the date this option is granted, which terms are hereby incorporated herein by reference and made a part hereof. In the event of any conflict between the terms of this option and the terms of the Plan in effect on the date of this option, the terms of the Plan shall govern.  This option constitutes the entire understanding between the Company and you with respect to the subject matter hereof and no amendment, supplement or waiver of this option, in whole or in part, shall be binding upon the Company unless in writing and signed by the President of the Company.  This option and the performances of the parties hereunder shall be construed in accordance with and governed by the laws of the State of Florida.

Please sign the copy of this option and return it to the Company’s Secretary, thereby indicating your understanding of and agreement with its terms and conditions. 

SUN AMERICAN BANCORP

By: __________________________________

I hereby acknowledge receipt of a copy of the foregoing stock option and the Amended and Restated 2005 Stock Option and Stock Incentive Plan and, having read them hereby signify my understanding of, and my agreement with, its terms and conditions.  I accept this option in full satisfaction of any previously written or verbal promises made to me by the Company with respect to option grants.  

________________________

________________________________

(Date)

(Signature)

II-5

APPENDIX III

NON-QUALIFIED STOCK OPTION FOR OUTSIDE DIRECTORS

AND IMPORTANT CONSULTANTS AND/OR ADVISORS

To: 

____________________________________________________________

Name

Address: 

____________________________________________________________

Date of Grant:

____________________________________________________________

You are hereby granted an option, effective as of the date hereof, to purchase __________ shares of common stock (“Common Stock”) of Sun American Bancorp (the “Company”), at a price of $_______  per share pursuant to the Company’s Amended and Restated 2005 Stock Option and Stock Incentive Plan (the “Plan”). 

Your Option may first be exercised at any time on or after ______ for up to __% of the total number of shares subject to the Option and thereafter pursuant to the following schedule until the total number of shares subject to the Option are fully exercisable:  

Vesting Date

Percent of Initial Award Vested

%

Thus, this Option is fully exercisable on or after __ years from the Date of Grant.  This Option shall terminate and is not exercisable after 10 years from the Date of Grant (the “Scheduled Termination Date”).  This Option shall be adjusted for any change in the outstanding shares of the Common Stock of the Company by reason of a stock dividend or distribution, supplemental offering of shares, stock split, combination of shares, recapitalization, merger, consolidation, exchange of shares, reorganization, conversion or what the Committee deems in its sole discretion to be similar circumstances.  No fractional shares shall be issued or delivered.  

In the event of a “Change of Control” (as defined below) of the Company, your option may, from and after the date of the Change of Control, and notwithstanding the immediately preceding paragraph, be exercised for up to 100% of the total number of shares then subject to the option minus the number of shares previously purchased upon exercise of the option (as adjusted for stock dividends, stock splits, combinations of shares and what the Committee deems in its sole discretion to be similar circumstances) and your vesting date may accelerate accordingly.  A “Change of Control” shall be deemed to have occurred upon the happening of any of the following events:

1.

A change within a twelve-month period in the holders of more than 50% of the outstanding voting stock of the Company; or

III-1

2.

Any other event deemed to constitute a “Change of Control” by the Committee.

You may exercise your option by giving written notice to the Secretary of the Company on forms supplied by the Company at its then principal executive office, accompanied by payment of the option price for the total number of shares you specify that you wish to purchase.  The payment may be in any of the following forms: (a) cash, which may be evidenced by a check and includes cash received from a stock brokerage firm in a so-called “cashless exercise”; (b) unless prohibited by the Committee, certificates representing shares of Common Stock, which will be valued by the Secretary of the Company at the fair market value per share of  Common Stock (as determined in accordance with the Plan) on the date of delivery of such certificates to the Company, accompanied by an assignment of the stock to the Company; or (c) unless prohibited by the Committee, any combination of cash and Common Stock valued as provided in clause (b).  The use of the so-called “attestation procedure” to exercise a stock option may be permitted by the Committee. Any assignment of stock shall be in a form and substance satisfactory to the Secretary of the Company, including guarantees of signature(s) and payment of all transfer taxes if the Secretary deems such guarantees necessary or desirable.

Your option will, to the extent not previously exercised by you, terminate three months after the date on which you cease for any reason to be a director of, or consultant to, the Company or a subsidiary corporation (whether by death, disability, resignation, removal, failure to be reappointed, reelected or otherwise, or the expiration of any consulting arrangement, and regardless of whether the failure to continue as a director or consultant was for cause or without cause or otherwise), but in no event later than ten years from the date this option is granted.  After the date you cease to be a director or consultant, you may exercise this option only for the number of shares which you had a right to purchase and did not purchase on the date you ceased to be a director or consultant.  If you are a director of a subsidiary corporation, your directorship shall be deemed to have terminated on the date such company ceases to be a subsidiary corporation, unless you are also a director of the Company or another subsidiary corporation, or on that date became a director of the Company or another subsidiary corporation.  Your directorship or consultancy shall not be deemed to have terminated if you cease being a director of, or consultant to, the Company or a subsidiary corporation but are or concurrently therewith become (a) a director of, or consultant to, the Company or another subsidiary corporation or (b) an employee of the Company or a subsidiary corporation.

In the event of any change in the outstanding shares of the Common Stock of the Company by reason of a stock dividend, stock split, combination of shares, recapitalization, merger, consolidation, transfer of assets, reorganization, conversion or what the Committee deems in its sole discretion to be similar circumstances, the number and kind of shares subject to this option and the option price of such shares shall be appropriately adjusted in a manner to be determined in the sole discretion of the Committee.  

Notwithstanding anything to the contrary contained in this option, in the event of a sale or a proposed sale of the majority of the stock or assets of the Company or a proposed Change of Control, the Committee shall have the right to terminate this option upon thirty (30) days prior written notice to you, subject to your right to exercise such option to the extent vested prior to such termination.  

III-2

Except for transfers to __________ under the terms set forth in the Plan, this option is not transferable otherwise than by will or the laws of descent and distribution, and is exercisable during your lifetime only by you, including, for this purpose, your legal guardian or custodian in the event of disability.  Until the option price has been paid in full pursuant to due exercise of this option and the purchased shares are delivered to you, you do not have any rights as a shareholder of the Company.  The Company reserves the right not to deliver to you the shares purchased by virtue of the exercise of this option during any period of time in which the Company deems, in its sole discretion, that such delivery would violate a federal, state, local or securities exchange rule, regulation or law.  

Notwithstanding anything to the contrary contained herein, this option is not exercisable until all the following events occur and during the following periods of time:

(a)

Until the Plan pursuant to which this option is granted is approved by the shareholders of the Company in the manner prescribed by the Code and the regulations thereunder;

(b)

Until this option and the optioned shares are approved and/or registered with such federal, state and local regulatory bodies or agencies and securities exchanges as the Company may deem necessary or desirable; 

(c)

During any period of time in which the Company deems that the exercisability of this option, the offer to sell the shares optioned hereunder, or the sale thereof, may violate a federal, state, local or securities exchange rule, regulation or law, or may cause the Company to be legally obligated to issue or sell more shares than the Company is legally entitled to issue or sell; or

(d)

Until you have paid or made suitable arrangements to pay (which may include payment through the surrender of Common Stock, unless prohibited by the Committee) (i) all federal, state and local income tax withholding required to be withheld by the Company in connection with the option exercise and (ii) your  portion of other federal, state and local payroll and other taxes due in connection with the option exercise.

The following two paragraphs shall be applicable if, on the date of exercise of this option, the Common Stock to be purchased pursuant to such exercise has not been registered under the Securities Act of 1933, as amended, and under applicable state securities laws, and shall continue to be applicable for so long as such registration has not occurred:

(a)

The optionee hereby agrees, warrants and represents that he will acquire the Common Stock to be issued hereunder for his own account for investment purposes only, and not with a view to, or in connection with, any resale or other distribution of any of such shares, except as hereafter permitted.  The optionee further agrees that he will not at any time make any offer, sale, transfer, pledge or other disposition of such Common Stock to be issued hereunder without an effective registration statement under the Securities Act of 1933, as amended, and under any applicable state securities laws or an opinion of counsel acceptable to the Company to the effect that the proposed transaction will be exempt from such registration. The optionee shall execute such instruments, representations, acknowledgements and agreements as the Company 

III-3

may, in its sole discretion, deem advisable to avoid any violation of federal, state, local or securities exchange rule, regulation or law.

(b)

The certificates for Common Stock to be issued to the optionee hereunder shall bear the following legend:

“The shares represented by this certificate have not been registered under the Securities Act of 1933, as amended, or under applicable state securities laws.  The shares have been acquired for investment and may not be offered, sold, transferred, pledged or otherwise disposed of without an effective registration statement under the Securities Act of 1933, as amended, and under any applicable state securities laws or an opinion of counsel acceptable to the Company that the proposed transaction will be exempt from such registration.”

The foregoing legend shall be removed upon registration of the legended shares under the Securities Act of 1933, as amended, and under any applicable state laws or upon receipt of any opinion of counsel acceptable to the Company that said registration is no longer required.

The sole purpose of the agreements, warranties, representations and legend set forth in the two immediately preceding paragraphs is to prevent violations of the Securities Act of 1933, as amended, and any applicable state securities laws.

It is the intention of the Company and you that this option shall not be an “Incentive Stock Option” as that term is used in Section 422 of the Code and the regulations thereunder.

Any dispute or disagreement between you and the Company with respect to any portion of this option or its validity, construction, meaning, performance or your rights hereunder shall be settled by arbitration in accordance with the Commercial Arbitration Rules of the American Arbitration Association or its successor, as amended from time to time.  However, prior to submission to arbitration you will attempt to resolve any disputes or disagreements with the Company over this option amicably and informally, in good faith, for a period not to exceed two weeks.  Thereafter, the dispute or disagreement will be submitted to arbitration.  At any time prior to a decision from the arbitrator(s) being rendered, you and the Company may resolve the dispute by settlement.  You and the Company shall equally share the costs charged by the American Arbitration Association or its successor, but you and the Company shall otherwise be solely responsible for your own respective counsel fees and expenses.  The decision of the arbitrator(s) shall be made in writing, setting forth the award, the reasons for the decision and award and shall be binding and conclusive on you and the Company.  Further, neither you nor the Company shall appeal any such award.  Judgment of a court of competent jurisdiction may be entered upon the award and may be enforced as such in accordance with the provisions of the award.

This option shall be subject to the terms of the Plan in effect on the date this option is granted, which terms are hereby incorporated herein by reference and made a part hereof. In the event of any conflict between the terms of this option and the terms of the Plan in effect on the date of this option, the terms of the Plan shall govern.  This option constitutes the entire understanding between the Company and you with respect to the subject matter hereof and no 

III-4

amendment, supplement or waiver of this option, in whole or in part, shall be binding upon the Company unless in writing and signed by the President of the Company.  This option and the performances of the parties hereunder shall be construed in accordance with and governed by the laws of the State of Florida.

Please sign the copy of this option and return it to the Company’s Secretary, thereby indicating your understanding of and agreement with its terms and conditions.

SUN AMERICAN BANCORP

By: _________________________________

I hereby acknowledge receipt of a copy of the foregoing stock option and the Amended and Restated 2005 Stock Option and Stock Incentive Plan and, having read them hereby signify my understanding of, and my agreement with, its terms and conditions.  I accept this option in full satisfaction of any previous written or verbal promises made to me by the Company with respect to option grants.  

________________________

_______________________________

(Date)

(Signature)

III-5

 

APPENDIX IV

RESTRICTED STOCK AGREEMENT

RS No. ___________

An Award of Restricted Stock is hereby awarded on ___________, 20__ (the “Award Date”) by Sun American Bancorp (the “Company”), to ___________________ (the “Grantee”), in accordance with the following terms and conditions and the conditions contained in the Company’s Amended and Restated 2005 Stock Option and Stock Incentive Plan (the “Plan”):

1.

Share Award.  The Company hereby awards the Grantee ___________ shares (the “Shares”) of common stock of the Company (the “Common Stock”) pursuant to the Plan, as the same may from time to time be amended, and upon the terms and conditions and subject to the restrictions therein and hereinafter set forth.  A copy of the Plan as currently in effect is incorporated herein by reference and is attached hereto.

2.

Restrictions on Transfer and Restricted Period.  During the period (the “Restricted Period”) commencing on the Award Date and terminating on _________________, 20__, the Shares may not be sold, assigned, transferred, pledged, or otherwise encumbered by the Grantee, except as hereinafter provided.

Except as set forth below, the Restricted Period with respect to the Shares will lapse at a rate of ___% of the initial award for every ____ months of Continuous Service (as defined in the Plan) completed since the Award Date according to the following schedule: _______________.  Subject to the restrictions set forth in the Plan, the Committee referred to in Section 4 of the Plan or its successor (the “Committee”) shall have the authority, in its discretion, to accelerate the time at which any or all of the restrictions shall lapse with respect to any Shares thereto, or to remove any or all of such restriction, whenever the Committee may determine that such action is appropriate by reason of changes in applicable tax or other laws, or other changes in circumstances occurring after the commencement of the Restricted Period.  

3.

Termination of Service.  Except as provided in Section 9 below, if the Grantee ceases to maintain “Continuous Service” (as defined in the Plan) for any reason other than death or disability, all Shares which at the time of such termination of Continuous Service are subject to the restrictions imposed by Section 2 above shall upon such termination of Continuous Service be forfeited to the Company.  If the Grantee ceases to maintain “Continuous Service” (as defined in the Plan) by reason of death or disability, the Shares then still subject to restrictions imposed by Section 2 will be free of those restrictions and shall not be forfeited.

4.

Certificates for the Shares.  The Company shall issue a certificate (or certificates) in the name of the Grantee with respect to the Shares, and shall hold such certificate (or certificates) on deposit for the account of the Grantee until the expiration of the Restricted Period with respect to the Shares represented thereby.  Such certificate (or certificates) shall bear the following restricted legend (the “Restricted Legend”):

The transferability of this certificate and the shares of stock represented hereby are subject to the terms and conditions 

IV-1

 

(including forfeiture) contained in the Amended and Restated 2005 Stock Option and Stock Incentive Plan of Sun American Bancorp  Copies of such Plan are on file in the office of the Secretary of Sun American Bancorp, 3400 Coral Way, Miami, Florida 33145.  

The Grantee further agrees that simultaneously with the execution of the Agreement, the Grantee shall execute stock powers in favor of the Company with respect to the Shares and that the Grantee shall promptly deliver such stock powers to the Company.

The following two paragraphs shall be applicable if, on the Award Date, the Common Stock subject to such Award has not been registered under the Securities Act of 1933, as amended, and under applicable state securities laws, and shall continue to be applicable for so long as such registration has not occurred:

The Grantee hereby agrees, warrants and represents that Grantee is acquiring the Common Stock to be issued pursuant to this Agreement for Grantee’s own account for investment purposes only, and not with a view to, or in connection with, any resale or other distribution of any of such shares, except as hereafter permitted.  The Grantee further agrees that Grantee will not at any time make any offer, sale, transfer, pledge or other disposition of such Common Stock to be issued hereunder without an effective registration statement under the Securities Act of 1933, as amended, and under any applicable state securities laws or an opinion of counsel acceptable to the Company to the effect that the proposed transaction will be exempt from such registration.  The Grantee shall execute such instruments, representations, acknowledgments and agreements as the Company may, in its sole discretion, deem advisable to avoid any violation of federal, state, local or securities exchange rule, regulation or law.

The certificates for Common Stock to be issued pursuant to this Agreement shall bear the following securities legend (the “Securities Legend”):  

The shares represented by this certificate have not been registered under the Securities Act of 1933, as amended, or under applicable state securities laws.  The shares have been acquired for investment and may not be offered, sold, transferred, pledged or otherwise disposed of without an effective registration statement under the Securities Act of 1933, as amended, and under any applicable state securities laws or an opinion of counsel acceptable to the Company that the proposed transaction will be exempt from such registration.  

The Securities Legend shall be removed upon registration of the legended shares under the Securities Act of 1933, as amended, and under any applicable state laws or upon receipt of any opinion of counsel acceptable to the Company that said registration is no longer required.  

The sole purpose of the agreements, warranties, representations and legend set forth in the two immediately preceding paragraphs is to prevent violations of the Securities Act of 1933, as amended, and any applicable state securities laws.

IV-2

 

5.

Grantee’s Rights.  Except as otherwise provided herein, the Grantee, as owner of the Shares, shall have all rights of a shareholder.  During any Restricted Period, the Grantee shall be entitled to vote such Shares as to which the Restricted Period has not yet lapsed or expired (the “Restricted Shares”) in Grantee’s sole discretion, at any annual and special meetings of the shareholders of the Company and at any continuations and adjournments of such meetings, upon any matters coming before such meetings or adjournments.  

6.

Cash Dividends.  Cash dividends, if any, paid on the Restricted Shares shall be held by the Company for the account of the Grantee and paid to the Grantee upon the expiration of the Restricted Period or upon the death or disability of the Grantee.  All such withheld dividends shall earn interest at an annual rate determined by the Committee.

7.

Expiration of Restricted Period.  Upon the lapse or expiration of the Restricted Period with respect to any portion of the Shares, the Company shall deliver to the Grantee (or in the case of a deceased Grantee, to Grantee’s legal representative) the certificate in respect of such Shares and the related stock powers held by the Company pursuant to Section 4 above.  The Shares as to which the Restricted Period shall have lapsed or expired shall be free of the restrictions referred to in Section 2 above and such certificate shall not bear the Restricted Legend provided for in Section 4 above.  Notwithstanding the foregoing, the Securities Legend described in Section 4 shall continue to be included on the certificates as long as registration has not occurred.  

8.

Adjustments for Changes in Capitalization of the Company.  In the event of any change in the outstanding shares of Common Stock by reason of any reorganization, recapitalization, stock split, stock dividend, combination or exchange of shares, merger, consolidation, or any change in the corporate structure of the Company or in the shares of Common Stock, the number and class of Shares covered by this Agreement shall be appropriately adjusted by the Committee in the same manner as other outstanding shares are adjusted.   Any shares of Common Stock or other securities received, as a result of the foregoing, by the Grantee with respect to Shares subject to the restrictions contained in Section 2 above also shall be subject to such restrictions and the certificate or other instruments representing or evidencing such shares or securities shall be legended and deposited with the Company in the manner provided in Section 4 above.  

9.

Change in Control.  If the “Continuous Service” (as defined in the Plan) of the Grantee is involuntarily terminated for whatever reason, other than for cause (as defined by the Committee), at any time within 18 months of a “change in control” (as defined in the Plan), the Restricted Period with respect to all Shares shall lapse upon such termination and all Shares shall become fully vested in the Grantee.  

10.

Delivery and Registration of Shares of Common Stock.  The Company’s obligation to deliver Shares hereunder shall be conditioned upon the receipt of a representation as to the investment intention of the Grantee or any other person to whom such Shares are to be delivered, in such form as the Committee shall determine to be necessary or advisable to comply with the provisions of the Securities Act of 1933, as amended, or any other Federal, state or local securities legislation or regulation.  Any representation regarding investment intent shall become 

IV-3

 

inoperative upon the registration of such shares or other action eliminating the necessity of such representation under such Securities Act or other securities regulation.  

The Company shall not be required to deliver any Shares under the Plan prior to the completion of such registration or other qualification of such Shares under any state or federal law, rule or regulation, as the Committee shall determine to be necessary or advisable.  

11.

Plan and Plan Interpretations as Controlling.  The Shares hereby awarded and the terms and conditions herein set forth are subject in all respects to the terms and conditions of the Plan, which are controlling.  All determinations and interpretations by the Committee shall be binding and conclusive upon the Grantee or Grantee’s legal representatives with regard to any question arising hereunder or under the Plan.  

12.

Grantee Service.  Nothing in this Agreement shall limit the right of the Company or any of its Affiliates to terminate the Grantee’s service as an officer or employee, or otherwise impose upon the Company or any of its Affiliates any obligation to employ or accept the services of the Grantee.  

13.

Withholding and Social Security Taxes.  Upon the termination of any Restricted Period with respect to any Shares (or any such earlier time, if any, that an election is made under Section 83(b) of the Code, or any successor provision thereto, to include the value of such Shares in taxable income), the Company shall have the right to withhold from the Grantee’s compensation an amount sufficient to fulfill its or its Affiliate’s obligations for any applicable withholding and employment taxes.  Alternatively, the Company may require the Grantee to pay the Company the amount of any taxes which the Company is required to withhold with respect to the Shares, or, in lieu thereof, to retain or sell without notice a sufficient number of Shares to cover the amount required to be withheld.  The Company shall withhold from any cash dividends paid on the Restricted Stock an amount sufficient to cover taxes owed as a result of the dividend payment.  The Company’s method of satisfying its withholding obligations shall be solely in the discretion of the Company, subject to applicable federal, state and local laws.

14.

Tax Consequences.  Grantee has reviewed with Grantee’s own tax advisors the federal, state, local and foreign tax consequences of this investment and the transactions contemplated by this Agreement.  Grantee is relying solely on such advisors and not on any statements or representations of Company or any of its agents.  Grantee understands that Grantee (and not Company) shall be responsible for Grantee’s own tax liability that may arise as a result of this investment or the transactions contemplated by this Agreement.  Grantee understands that Section 83 of the Internal Revenue Code of 1986, as amended (the “Code”), taxes (as ordinary income) the fair market value of the Shares as of the date any “restrictions” on the Shares lapse.  To the extent that a grant hereunder is not otherwise an exempt transaction for purposes of Section 16(b) of the Securities and Exchange Act of 1934, as amended (the “1934 Act”), with respect to officers, directors and 10% shareholders, a “restriction” on the Shares includes for these purposes the period after the grant of the Shares during which such officers, directors and 10% shareholders could be subject to suit under Section 16(b) of the 1934 Act.  Alternatively, Grantee understands that Grantee may elect to be taxed at the time the Shares are granted rather than when the restrictions on the Shares lapse, or the Section 16(b) period expires, by filing an election under Section 83(b) of the Code with the I.R.S. within 30 days from the date of grant.

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GRANTEE ACKNOWLEDGES THAT IT IS GRANTEE’S SOLE RESPONSIBILITY AND NOT THE COMPANY’S TO FILE TIMELY THE ELECTION AVAILABLE TO GRANTEE UNDER SECTION 83(B) OF THE CODE, EVEN IF GRANTEE REQUESTS THAT THE COMPANY OR ITS REPRESENTATIVES MAKE THIS FILING ON GRANTEE’S BEHALF.

15.

Arbitration.  Any dispute or disagreement between Grantee and the Company with respect to any portion of this Agreement or its validity, construction, meaning, performance or Grantee’s rights hereunder shall be settled by arbitration in accordance with the Commercial Arbitration Rules of the American Arbitration Association (“AAA”) or its successor, as amended from time to time by a sole arbitrator.  However, prior to submission to arbitration Grantee agrees to attempt to resolve any disputes or disagreements with the Company over this Agreement amicably and informally, in good faith, for a period not to exceed 14 days.  Thereafter, the dispute or disagreement will be submitted to arbitration.  The arbitrator shall be independent and impartial, mutually acceptable to the parties and appointed by AAA.  The arbitration shall be held in Philadelphia, Pennsylvania or such other location as the parties may agree.  At any time prior to a decision from the sole arbitrator being rendered, Grantee and the Company may resolve the dispute by settlement.  The Grantee and the Company shall equally share the arbitrator’s fee and the costs charged by the AAA or its successor, but Grantee and the Company shall otherwise be solely responsible for their own respective counsel fees and expenses.  The decision of the sole arbitrator shall be made in writing, setting forth the award, the reasons for the decision and award and shall be binding and conclusive on Grantee and the Company.  Further, neither Grantee nor the Company shall appeal any such award.  Judgment of a court of competent jurisdiction may be entered upon the Award and may be enforced as such in accordance with the provisions of the Award.

16.

Amendment/Choice of Law.  This Agreement constitutes the entire understanding between the Company and the Grantee with respect to the subject matter hereof and no amendment, supplement or waiver of this Agreement, in whole or in part, shall be binding upon the Company unless in writing and signed by the President of the Company.  This Agreement and the performances of the parties hereunder shall be construed in accordance with and governed by the laws of the State of Florida.  

17.

Grantee Acceptance.  The Grantee shall signify Grantee’s acceptance of the terms and conditions of this Agreement by signing in the space provided below and signing the attached stock powers and returning a signed copy of this Agreement and the original attached stock powers to the Company.  IF A FULLY EXECUTED COPY HEREOF AND THE ATTACHED STOCK POWERS HAVE NOT BEEN RECEIVED BY THE COMPANY, THE COMPANY HAS THE RIGHT TO REVOKE THIS AWARD, AND AVOID ALL OBLIGATIONS UNDER THIS AGREEMENT.

IV-5

 

IN WITNESS WHEREOF, the parties hereto have caused this RESTRICTED STOCK AGREEMENT to be executed as of the date first above written.

SUN AMERICAN BANCORP

By: ________________________________________

Name:

Title:

ACCEPTED:

________________________________________

________________________________________

(Street Address)

________________________________________

(City, State & Zip Code)

IV-6

 

STOCK POWER

For value received, I hereby sell, assign, and transfer to Sun American Bancorp (the “Company”) ____________ shares of the common stock of the Company, standing in my name on the books and records of the aforesaid Company, represented by Certificate No. _____ and do hereby irrevocably constitute and appoint the Secretary of the Company attorney, with full power of substitution, to transfer this stock on the books and records of the aforesaid Company.

________________________________________

Dated:  ____________

In the presence of:

__________________________

Name

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